Costa Rica proposes solution to 2019 trade dispute with Panama

Costa Rica has submitted a proposal to Panama aimed at ending a trade dispute that has soured bilateral relations since 2019. The conflict centers on Panama's restrictions on Costa Rican agricultural exports, including bananas, beef, and dairy products, which Panama claims are based on insufficient scientific evidence.

The proposal, detailed by Costa Rica's Ministry of Foreign Trade (COMEX), outlines a two-pronged approach. Firstly, it seeks a commitment from both governments to engage in World Trade Organization arbitration to resolve Panama's appeal against a ruling that favored Costa Rica. This arbitration is crucial as the relevant WTO body has been inoperative since December 2019.

Secondly, Costa Rica suggests signing a memorandum of understanding. Under this agreement, Costa Rica would facilitate Panama's export requests, with oversight from an international organization to ensure transparency. Foreign Trade Minister Indiana Trejos expressed optimism, stating the proposal offers an "agile alternative" to quickly restore bilateral trade, benefiting producers and consumers while fostering good relations.

The dispute escalated recently when Costa Rican President Laura Fernández denounced the "commercial blockade" and ordered international action. Panamanian President José Raúl Mulino responded with surprise and suspended energy sales to Costa Rica in a move of diplomatic reciprocity. The ongoing restrictions affect a wide range of products, including bananas, beef, chicken, pork, strawberries, dairy, and pineapple.