San José, Costa Rica, since 1956

Opportunities Created as Europe Expands

SATURDAY will mark a historic day for Europe, as 10 countries – eight which lived under the “Iron Curtain” of socialism during most of the second half of the 20th century – will officially become part of the European Union (EU). Their incorporation is expected to create new diplomatic and economic opportunities and challenges for Costa Rica.“It’s a historic achievement; in the world’s history there are few events like this one,” said Ryszard Schnepf, Poland’s Ambassador to Costa Rica. “… For Costa Rica, this will be very positive. All of the EU’s rules will be extended to nearly 80 million additional inhabitants. Instead of 15 countries, there will be 25.”Vladimir Eisenbruk, Czech Republic’s Ambassador to Costa Rica, said the enlargement will increase trade and tourism between Costa Rica and the new members.“I believe this expansion will be very significant for Costa Rica,” he said.THE 15 current members – Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and the United Kingdom – will be joined by very diverse new members.These include Central European republics of Poland, Czech Republic, Slovakia and Hungary, as well as Slovenia, which up until 1991 was part of Yugoslavia. Also joining are the three Baltic Sea countries – Estonia, Latvia and Lithuania – which were the first to declare their independence from the Soviet Union. The Mediterranean island nations of Malta and southern Cyprus will also join.Upon joining, the new members will become part of the EU’s joint customs regimen and their products can move freely through the region without having to go through customs or pay duties.New members will adopt the EU’s foreign trade, agriculture, foreign relations, defense and environmental policies, and will have representation in the European Parliament.Gradually, they will adopt the Euro as their currency. Eventually, after a transition period, citizens of the 10 countries will be allowed to live and work anywhere in the EU.OF the 10 countries, only two – Poland and Czech Republic – have embassies in Costa Rica. Another five – Estonia, Hungary, Malta, Latvia, Lithuania and Slovakia – have loose diplomatic ties with the country, according to Costa Rica’s Foreign Ministry.Costa Rica has no embassies in any of the 10 countries. Diplomatic relations usually are handled through the country’s embassies in Western European countries such as Germany and Norway (not an EU member).Foreign Minister Roberto Tovar has said it is one of his priorities to strengthen ties between Costa Rica and the new EU members.EXPORTERS are optimistic an expanded EU will offer more economic opportunities for the country.Last year, Costa Rica exported nearly $1.1 billion to the EU’s 15 members. The only new member that Costa Rica has significant trade with is Poland. Exports to Poland totaled $3.4 million last year, according to the Foreign Trade Promotion Office (PROCOMER).“The new members are a large market where we can find niches for our products,” said Sergio Navas, executive vicepresident of the Costa Rican Chamber of Exporters (CADEXCO). “Under the EU, the economies of these countries will grow, improving the buying power of their residents.These countries will become better markets for our exports.”Nick Meijer, consultant for the Netherlands’ Center for the Promotion of Imports from Developing Countries, believes a 25-member EU is both an opportunity and a challenge for Costa Rica.“These countries are attractive markets, but also competitors,” Meijer explained during a workshop organized by CADEXCO. “They have very efficient industries (…) and many companies have begun investing there.”More foreign investment in the EU’s new members means less investment in Latin America, he said.MEIJER agreed new members could become interesting markets for Costa Rican products. However, he warned, entering them would be difficult.“The first problem is I doubt whether the new members know much about Costa Rica,” he said. “A major effort must be made to let people in those countries know what Costa Rica is about.”He recommended exporters and the Costa Rican Tourism Board (ICT) conduct joint missions to the new EU countries to spread the word about Costa Rica.“It’s not going to be easy, but there are definite opportunities for Costa Rica to export to the expanded EU,” he said.Navas agreed, and said CADEXCO would conduct market studies of the new members to spot potential opportunities. “Europe is a good market. They demand quality, but pay well,” he said.NAVAS believes strengthening diplomatic ties is crucial for increasing trade.“It’s important to strengthen our relations with them so they can serve as our allies when the EU renegotiates trade preferences or a free-trade agreement. Establishing diplomatic relations with these countries is a challenge that is up to the country’s leaders to meet,” Navas said.Last year, the EU and Central America agreed to strengthen ties and discussed the possibility of negotiating a trade agreement (TT, Oct. 17, 2003). Europeans have conditioned the negotiation of a trade pact with Central America on the success of regional integration efforts.

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