COSTA RICA 

 

                               Key Economic Indicators 

                  (Millions of U.S. dollars unless otherwise noted) 

 

 

                                               1992      1993      1994 

 

          Income, Production and Employment: 

 

          Real GDP (in current USD)         6,737.3   7,563.1   8,325.1 

          Growth Rate (pct.) (1966 colones)     7.7       6.1       4.7 

          By Sector: 

            Agriculture                         3.9       2.2       0.0 





            Industry                           10.3       6.5       5.5 

            Electricity/Water                     6         7         6 

            Construction                        2.6       4.7       7.5 

            Commerce                           12.5       8.2       4.0 

            Transportation/Communications      14.0      11.3       8.7 

            Financial/Insurance                10.8      12.4      10.7 

            General Government                  1.0       2.0       2.5 

            Other Personal Services             4.2       4.5       5.5 

          Real GDP Per Capita 

            1966 Colones                      4,302     4,464     4,590 

            Current U.S. Dollars              2,292     2,317     2,543 

          Labor Force (OOOs)                  1,087     1,109     1,131 

          Unemployment (pct.)                   4.1       4.1       4.1 

 

          Money and Prices: 

 

          Money Supply (M1, daily avg.) 

            (millions current col.)          90,390   107,022   126,714 

          Interest Rate (lending pct.)           28        37        38 

          Interest Rate (deposit pct.)           20        25        27 

          Gross Domestic Investment 

            (pct. of GDP)                      23.4      25.9      26.0 

          Consumer Price Index 

            (pct. change Dec to Dec)             17         9        19 

          Colon to USD Rate 

            (avg. balance of payments)        134.3     142.4     155.0 

          Colon to USD Exchange Rate 

            (December, parallel market)         138       152       168 

 

          Balance of Payments and Trade: 

 

          Total Exports (FOB)               1,814.3   2,044.6   2,300.0 

            Exports to U.S. (FOB)             789.8     850.0     915.0 

          Total Imports (CIF)               2,455.8   2,900.7   3,400.0 

            Imports from U.S. (CIF)         1,148.5   1,300.0   1,470.0 

          Assistance from U.S.                17.4 1/    20.5     3.317 

          Assistance from Other Countries       N/A       N/A       N/A 

          Foreign Public Debt               3,263.8   3,158.4   3,192.8 

          Annual Debt Service Paid            496.6     481.6     181.5 

          Gold Reserves                           9         9        13 

          Net International Reserves        1,096.0   1,076.7     900.0 

            IMF Methodology                   354.0     457.5     277.5 

          Current Account Balance              -357      -470      -600 

 

 

 

 

 

 

 

          1/ Included ESF obligated but never disbursed. 

 

          Source:  Central Bank of Costa Rica, for table and text. 

 

 

 

          1.  General Policy Framework 

 

              The Government of Costa Rica continues trade and economic 

          policies in favor of open markets, international competition and 





          freer trade.  These policies are supported through active IMF and 

          World Bank programs.  Significant setbacks to this general policy 

          have resulted from European Community restrictions on banana 

          exports, domestic pressure to restrict foreign competition, 

          constitutional protection of state-owned monopoly enterprises, 

          disagreements with major trade partners within the GATT 

          framework, and domestic political pressures resulting from uneven 

          economic growth.  Many reforms are lacking permanent legal 

          backing or are still too new to gauge their efficacy, and some 

          recent reforms have become political issues. 

 

              The reforms have contributed to an improving economy.  The 

          economy of Costa Rica showed significant growth during 1993, but 

          slightly less than in 1992.  Gross Domestic Product (GDP) 

          increased 6.1 percent in 1993 (7.7 percent growth in 1992). 

          Financial intermediation continued to be the fastest growing 

          activity in Costa Rica, growing 12.4 percent in 1993, followed by 

          communications, transportation and storage which grew 11.3 

          percent in 1993, and electricity and water which grew 7.0 percent 

          in 1993, largely the consequence of price increases in 

          state-supplied services.  Industry grew 6.5 percent, and 

          agriculture 2.2 percent, in 1993.  Commerce, restaurants and 

          hotels grew 8.2 percent in 1993.  The general price level, as 

          measured by the Consumer Price Index (CPI), increased 9 percent 

          in 1993, a significant improvement after an increase of 17 

          percent in 1992.  However, the CPI had increased 10.5 percent by 

          the end of August 1994, and is expected to be close to 20 percent 

          by the end of 1994.  1993's lower price levels were the result of 

          tight money controls by the Central Bank and continuing decreases 

          in tariff rates.  These reduced tariffs also caused 

          record-breaking increases in imports of cheaper goods.  While 

          increased taxation and public sector revenue reduced disposable 

          income in 1992 and 1993, the relative stability of the exchange 

          rate, plus the gradual reduction of tariffs, contributed to a 

          record 40 percent increase in imports from the United States in 

          1993. 

 

              The Central Government's fiscal deficit reached USD 145.7 

          million in 1993, vs. USD 129.8 in 1992 and USD 173.9 million in 

          1991.  Despite the increase in nominal terms, the Central 

          Government deficit in 1993 remained equivalent to 1.9 percent of 

          GDP, the same share as in 1992, and much lower than the 3.1 

          percent of GDP share in 1991.  According to Central Bank data, 

          the consolidated Public Sector fiscal deficit totalled USD 66.5 

          million in 1993, equivalent to 0.9 percent of GDP, an improvement 

          over 1992 when the deficit was 1.1 percent of GDP.  While tax 

          income increased 15.8 percent in 1993, government 

 

 

 

 

 

 

 

 

 

          bond sales (USD 686.2 million in 1993) increased 92.2 percent, 

          becoming a critical source of financing.  Monetary measures taken 

          by the Central Bank in the second half of 1993 and rising 

          interest and exchange rates made the cost of borrowing higher for 





          the GOCR.  On the revenue side, decreased tariff revenues (caused 

          by lower tariff rates) and reduced export tax revenues (due in 

          large part to low world coffee prices) resulted in lower tax 

          revenues. 

 

              In 1993 the Central Bank continued to use a range of tools to 

          control the growth of the money supply, including open market 

          operations, restriction of public sector credit, and increases in 

          the reserve requirements to commercial banks.  Starting August 1, 

          1993, the Central Bank raised by 2 percent per month the reserve 

          requirement for local currency demand deposits.  By the end of 

          1993, the rate was 36 percent.  The reserve requirement for time 

          deposits in local currency (less than 180 days) increased from 14 

          percent at the end of 1992, to 17 percent at year-end 1993. 

          Reserve requirements for foreign currency deposits were made 

          equal to those applied to deposits in local currency.  This 

          measure consisted of a 13 percentage points increase in reserve 

          requirements for dollar deposits of less than 30 days, and 5 

          percentage points for dollar deposits of more than 30 days but 

          less than 180 days.  The rate of interest paid by the Central 

          Bank for its bonds was increased gradually by 18 percentage 

          points from June to September 1993, in an effort to capture 

          excess liquidity.  On October 31, 1994, the Central Bank 

          announced forthcoming increased reserve requirements for on-sight 

          deposits from 36 percent to 43 percent, and from 17 percent to 30 

          percent for time deposit less than 6 months, effective at the end 

          of November 1994.  The reasons given for the increases were the 

          need to capture excess liquidity, and for the Central Bank to 

          cover some of the losses resulting from the closing of Banco 

          Anglo.  Also for reasons of excess liquidity, limits were put by 

          the Central Bank on amounts that could be used by public 

          institutions from donations previously made by USAID and 

          deposited in the form of bonds with the Central Bank. 

 

 

          2.  Exchange Rate Policy 

 

              The exchange rate policy in 1993 continued practices set in 

          March 1992 by the Central Bank, aimed at primarily allowing the 

          market to determine the exchange rate.  The single exchange rate 

          is set indirectly every morning by the Central Bank through its 

          sale or purchase of foreign currency.  Exporters are allowed to 

          keep 60 percent of incoming dollars, but must sell the remaining 

          40 percent to a commercial bank, which in turn must sell 25 

          percent to the Central Bank, facilitating the Central Bank's 

          acquisition of reserves.  Additionally, all foreign transactions 

          by state institutions are channeled through the Central Bank. 

          Commercial banks are free to negotiate foreign exchange prices. 

          However, the difference between the sell and buy rates cannot 

          exceed 1 percent, and from that limited spread, 0.39 colon per 

          dollar is a tax, and 0.68 colon is a fee paid to the Central 

          Bank.  Commercial banks must liquidate their foreign exchange 

          positions daily. 

 

 

 

 

 

 

 





 

 

              This exchange policy resulted in an essentially unchanged 

          exchange rate during 1993, as freely traded dollars from tourism 

          and capital investment continued to flow into Costa Rica.  The 

          free and sufficient supply of foreign currency continued to be 

          the most significant factor in increasing imports during 1993, 

          particularly from the United States, aided by the relative 

          devaluation of the U.S. dollar vs. other major currencies. 

          Between June and August of 1993, high demand for dollars forced 

          the Central Bank to depreciate the exchange rate.  By the end of 

          1993, the exchange rate had depreciated 9 percent with respect to 

          the end of 1992, resulting in an increase of 13.52 colones per 

          dollar. 

 

 

          3.  Structural Policies 

 

              While consumer protection laws in Costa Rica fix prices, 

          regulate profit margins, and prohibit price speculation, most 

          price controls and all margin controls are currently suspended by 

          executive decree.  Pending legislation would remove most price 

          and all profit margin controls, impose antitrust rules and 

          protect consumers against product misrepresentation and price 

          fixing.  This change in pricing laws is a requirement for the 

          World Bank's Third Structural Adjustment Loan (SAL III), which 

          was signed by the Government of Costa Rica in 1993, but which has 

          not been ratified by the Legislative Assembly. 

 

              Other laws and regulations affecting U.S. exports to Costa 

          Rica include the exclusive use of metric units, detailed labeling 

          requirements, including the required use of Spanish, and strength 

          requirements for car bumpers.  Phytosanitary and zoosanitary 

          restrictions on the import of fresh produce, as well as import 

          permit requirements for many agricultural products limit or act 

          as a de facto ban on U.S. exports of these products. 

          Pharmaceuticals, veterinary drugs and chemicals, including 

          chemicals that are component parts, must be registered and 

          approved by the Ministry of Health before the chemicals or 

          finished products can be imported.  Chemicals and pesticides 

          exported to Costa Rica must be legally available in the exporting 

          country. 

 

              Government purchasing and contracting are highly regulated 

          and often frustrating due to protracted appeals of contract 

          awards, and bid and performance bond requirements.  Despite this, 

          no special requirements apply to foreign suppliers and U.S. 

          companies regularly win public contracts.  Competition is fierce 

          among international suppliers and frequently the winner must 

          propose comprehensive packages that include performance 

          guarantees and financing.  All exporters must have a legally 

          responsible representative in Costa Rica in order to sell goods 

          or services in Costa Rica. 

 

 

          4.  Debt Management Policies 

 

              Costa Rica had a net foreign reserve decrease of USD 19.3 

          million during 1993.  This was the result of a record USD 856.1 

          million deficit in the trade balance, resulting from an 18.1 





          percent increase in imports and a 12.7 percent increase in 

 

 

 

 

 

 

          exports.  The trade deficit was offset by net foreign investments 

          of USD 275.0 million (USD 222.0 million in 1992) and services and 

          transfers mostly due to tourism of USD 486.1 million in 1993 (USD 

          384.5 million in 1992).  Costa Rica imported USD 1,300 million 

          from the United States in 1993, a 13.2 percent increase from 

          1992.  In 1993 Costa Rica exported USD 850 million to the United 

          States, resulting in a trade surplus for the United States of USD 

          450 million.  While the pending (since 1992) SAL III funds, for 

          USD 350 million, are a potential source of foreign exchange, it 

          is unlikely to be disbursed in the near future, if at all, due to 

          the unwillingness of the Legislative Assembly to approve loans 

          and pass quickly the laws that are conditions for its 

          disbursement.  Consequently, Costa Rica will continue to 

          experience pressure on its balance of payments, especially its 

          trade account, and will need to attract more foreign investment 

          and tourism, in order to avoid an eventual foreign exchange 

          shortage. 

 

              Costa Rica paid USD 481.6 million in 1993 (USD 497 million in 

          1992) to service its official foreign debt, equivalent to 24 

          percent of exports.  The debt is now USD 3,158.4 million (Dec. 

          31, 1993), equivalent to 42 percent of GDP.  During 1993, the 

          Government of Costa Rica managed to renegotiate USD 56.7 million 

          of bilateral debts with the members of the Paris Club.  Debt 

          service payments decreased 3 percent in 1993, after an increase 

          of 42.9 percent in 1992 when a concerted effort to reduce the 

          country's debt was made in order to qualify for an eventual 

          partial debt forgiveness by the United States.  Servicing the 

          very large internal debt continues to be a more serious immediate 

          problem.  Almost a third of the government's budget is spent in 

          servicing its domestic debt, more than the amount spent in paying 

          public employees, leaving precious little for making capital 

          improvements and for importing U.S. goods and services.  The 

          Central Bank's anti-inflation policy of keeping interest rates 

          high keeps debt service costs extremely high for the Finance 

          Ministry. 

 

 

          5.  Significant Barriers to U.S. Exports 

 

              Costa Rica requires import permits for dairy products, pork 

          and poultry meat, rice, beans, potatoes, onions, wheat, and 

          sorghum.  Some of these permit requirements can act as de facto 

          bans on U.S. exports.  That the requirements can be met is 

          evidenced by U.S. exports of wheat, which is not produced in 

          Costa Rica, and is almost exclusively imported from the U.S. 

          However, it is expected that on November 24, 1994, in compliance 

          with GATT requirements, import permits will be replaced by 

          tariffs.  Solvents and precursor chemicals are carefully 

          regulated to prevent illegal use.  Surgical and dental 

          instruments and machinery can be sold only to licensed importers 

          and health professionals.  All food products, medicines, toxic 

          substances, chemicals, insecticides, pesticides and agricultural 





          inputs must be registered and certified by the Ministry of Health 

          prior to any sale. 

 

              The Central Bank no longer licenses imports.  All imports and 

          exports are registered for statistical purposes only. 

 

 

 

 

 

 

 

 

          Foreign companies and persons may legally own equity in Costa 

          Rican companies, including real estate.  However, several 

          activities are reserved to the state, including public utilities, 

          insurance, bank demand deposits, the production and distribution 

          of electricity, hydrocarbon and radioactive minerals extraction 

          and refining, and the operation of ports and airports.  (Note: 

          Electricity can be produced, in plants up to 20 KVA capacity, by 

          private entities for sale to the state electricity grid, and 

          legislation is under discussion to increase the percentage of 

          foreign ownership allowed).  However, recognizing the 

          impossibility of public financing of large scale infrastructure 

          projects, the legislature recently passed a law, which, once its 

          implementing regulations are approved, would allow private 

          construction and operation of public projects on a concession 

          basis.  Such facilities would revert to the state after an agreed 

          upon period. 

 

              Many service industries are so rigorously controlled that 

          foreign participation is practically impossible.  Medical 

          practitioners, lawyers, certified public accountants, engineers, 

          architects, teachers and other professionals must be members of 

          local guilds which stipulate residency, and examination and 

          apprenticeship requirements that can only be met by long-time 

          residents of Costa Rica.  Investment in such private sector 

          activities as customs brokerage firms is limited to Costa Rican 

          citizens.  In October 1994, the law limiting ownership of 

          newspapers and radio and TV stations to Costa Rican citizens was 

          repealed by the Constitutional Court.  The law, which had been 

          enacted in 1974 to prevent fugitive American financier Robert 

          Vesco from owning a newspaper, was deemed discriminatory and 

          therefore unconstitutional by the Constitutional Court of Costa 

          Rica. 

 

              While the Government encourages the development of 

          nontraditional exports and tourism, and may provide incentives 

          for U.S. investment, it does not restrict foreign equity 

          participation.  The share of foreign workers in an enterprise is 

          limited by law, but the Ministry of Labor generally grants 

          permission for foreigners to work.  Permits for foreign 

          participation in management have always been granted.  No 

          requirement exists for foreign owners to work in their own 

          companies.  There are no restrictions on the repatriation of 

          profits and capital. 

 

              The government and other state institutions make procurements 

          through open public bidding, but the law allows private tenders 

          and direct contracting of goods and services in limited 





          quantities or in case of emergency, with the consent of the 

          Contraloria (General Accounting Office).  Public bidding is 

          complicated and foreign bidders are frequently disqualified for 

          failure to comply with the detailed procedures.  The lengthy and 

          costly appeal process often causes losses due to interim price 

          changes while bidders cannot alter their bids. 

 

              Customs procedures are legendary for their cost and 

          complexity.  Most large enterprises are forced to have customs 

          specialists on the payroll, in addition to buying the services of 

          customs brokers.  Customs brokers must be bonded Costa Rican 

          companies and enjoy a monopoly on the handling of imports.  All 

          importers and exporters, including U.S. companies, suffer from 

 

 

 

 

 

 

          defective customs procedures, poor administration, theft, graft 

          and inadequate facilities.  The Government of Costa Rica, with 

          USAID and U.S. Customs Service assistance, is implementing a 

          profound reform of the system to automate and streamline to 

          lessen the possibility of corruption and improve efficiency. 

          This project is expected to be completed by December 1995.  In 

          addition, the Government of Costa Rica, again with USAID 

          financial assistance, is setting up a one-stop window to speed up 

          the pre-import permit process. 

 

              The government's expropriation policy is a disincentive to 

          U.S. investment in Costa Rica.  The government has expropriated 

          large amounts of land for national parks, biologic and indigenous 

          reserves, and squatters, and in a number of cases has yet to 

          provide adequate compensation.  Some unpaid U.S. expropriation 

          claims date back over 25 years.  While it is theoretically 

          possible to obtain compensation through the court system, the 

          time, cost and frustration of litigating against the government 

          greatly diminish the value of such efforts.  The government has 

          made some efforts to resolve expropriation cases.  However, 

          several U.S. citizens with long-standing claims have not yet 

          received prompt, adequate or effective compensation.  The U.S. 

          government, through extraordinary means, has been able to 

          encourage progress in some individual cases.  In theory, 

          claimants also have had recourse to international arbitration 

          through the International Center for the Settlement of Investment 

          Disputes since early 1993, although the Government of Costa Rica 

          has thus far not submitted any case to ICSID.  Local arbitration 

          has been employed since 1991.  Landowners in Costa Rica also run 

          the risk of losing their property to squatters, who are often 

          organized and increasingly violent.  Costa Rican land tenure laws 

          favor squatters, and police protection of landowners in rural 

          areas is poor to non-existent. 

 

          6.  Export Subsidy Policies 

 

              The Government of Costa Rica has attempted to diversify its 

          export production and markets.  Until mid-1992, all goods other 

          than coffee, bananas, beef, sugar and cacao exported outside of 

          Central America and Panama qualified for export subsidies through 

          the issuance of negotiable tax rebate certificates (CATS).  These 





          subsidies proved costly and violated the requirements for Costa 

          Rica's GATT membership.  However, existing export contracts call 

          for the issuance of CATS until 1996.  Costa Rica is a member of 

          GATT but not the GATT subsidies code.  There are no 

          discriminatory import policies.  However under the terms of the 

          Central American Common Market Treaty of 1960, industrial 

          products produced in any of the five countries enter duty-free 

          into the other member countries. 

 

                 Costa Rica did not sign the services agreement or the 

          subsidies code under GATT.  Costa Rica has ratified the Uruguay 

          Round agreements and became a founding member of the World Trade 

          Organization (WTO) on January 1, 1995. 

 

              Export companies wishing to locate in duty free production 

          zones can benefit from exemption from import duties on raw 

          materials and products, from all export, sales and consumer 

          taxes, from taxes on remittance abroad, and from taxes on 

          profits for a period of six years from the beginning of the 

 

 

 

 

 

 

          operations, and a 50 percent exemption for the following four 

          years. 

 

 

          7.  The Protection of U.S. Intellectual Property 

 

              Costa Rica is a signatory to most major intellectual property 

          rights (IPR) conventions and agreements, and is a member of the 

          World Intellectual Property Rights Organization.  However, 

          significant weaknesses exist in the country's IPR system, 

          particularly in enforcement and in patent protection.  Pending 

          legislation would ratify the Paris Convention on Industrial 

          Property and create a Trade Secrets law.  However, prospects for 

          passage of such legislation in 1994 are problematic.  The Uruguay 

          Round TRIPS agreement should improve the Costa Rican IPR regime. 

 

              Copyrights:  Costa Rica is a signatory to the following 

          copyright conventions:  Title 17 USC (October 19, 1899 and April 

          9, 1910); Mexico City Convention on Literary and Artistic 

          copyrights (1902); Rio de Janeiro Convention on Patents, 

          Industrial Designs, Trademarks and Literary and Artistic Property 

          (1906); Buenos Aires Convention on Literary and Artistic 

          Copyrights (1910), and as revised at Havana (1928); 

          Inter-American Convention on the Rights of the Author (1946); 

          Universal Copyright Convention (Paris 1971); Rome Convention for 

          the Protection of Performers, Producers of Phonograms and 

          Broadcasting Organizations (1961); Berne Convention for the 

          Protection of Literary and Artistic Works (Paris Act 1971); 

          Convention for the Protection of Producers of Phonograms (Geneva 

          1971); and Central American Convention (1982). 

 

              Costa Rica's copyright laws are generally adequate.  The 

          major problem for copyright holders is enforcement.  On May 10, 

          1994, the copyright law (No. 6683 of 1 October 1982), was 

          modified to extend protection to all forms of intellectual 





          creations, including music scores, paintings, software programs, 

          books, etc.  The modifications also increase protection by 

          directing the police to prevent non-authorized presentations of 

          protected works.  On May 24, 1994, the Government of Costa Rica 

          issued regulations to Law No. 6683 that provide better protection 

          and mandate police participation.  The cable television industry 

          now operates almost entirely under quitclaim agreements with 

          foreign producers.  However, a number of hotels are pirating 

          transmission signals.  Pirate videocassettes are widely 

          available.  According to industry sources and their legal 

          representatives, no authorized distributor of videocassettes is 

          currently operating in Costa Rica.  The new copyright law has 

          been challenged before the Constitutional Court by video 

          operators.  The Court has not yet decided whether it will hear 

          the challenge. 

 

              Patents:  Costa Rica is a signatory to the following patent 

          conventions:  Convention of Paris (1883); and Rio de Janeiro 

          Convention on Patents, Industrial Design, Trademarks and Literary 

          and Artistic Property (1906). 

 

 

 

 

 

 

 

 

 

 

 

 

              Costa Rican patent laws are deficient in several key areas. 

          The patent protection term is far too short.  Patents are granted 

          for non-extendable 12 year terms.  In the case of products deemed 

          "in the public interest," patents are granted only for one year. 

          This exception applies to all pharmaceuticals, items with 

          therapeutic applications, chemical and agricultural fertilizers, 

          agrochemicals and all beverage and food products. 

 

              No patent protection is available for plant or animal 

          varieties, any biological or microbiological process or products, 

          although the government is working on a legislative proposal that 

          would protect such products.  Costa Rica also has broad 

          compulsory licensing requirements that force patent owners to 

          license inventions that are not produced locally.  The limited 

          patent protection available cannot be enforced until local 

          production has begun.  Costa Rican law also provides for 

          compulsory dependent patent licensing and for expropriation of 

          patents. 

 

              Trademarks:  Costa Rica is a signatory to the following 

          trademark conventions:  Paris Convention (1883); Rio de Janeiro 

          Convention on Patents, Industrial Designs, Trademarks and 

          Literary and Artistic Property (1906); and Central American 

          Treaty on Industrial Property (1970). 

 

              Trademarks, service marks, trade names and slogans can be 

          registered in Costa Rica.  There is no actual use requirement. 

          Registration is for renewable ten-year periods from the date of 





          registration.  Counterfeit goods are widely available in Costa 

          Rica and compete with goods manufactured under trademark 

          authorization.  Another problem is registration of famous marks 

          by speculators, who demand to be bought out if and when the 

          legitimate rights holders come to Costa Rica.  Litigation to 

          remove such speculative registrations can be lengthy and 

          expensive. 

 

              Trade Secrets are protected by existing laws, and Article 24 

          of the Constitution protects the confidentiality of 

          communications.  The penal code stipulates prison sentences for 

          divulging trade, employment or other secrets, and doubles the 

          punishment for public servants.  Some existing laws also 

          stipulate criminal and civil penalities for divulging trade 

          secrets.  The burden of enforcement is on the affected party. 

 

 

          8.  Worker Rights 

 

              a.  The Right of Association 

 

              Workers are nominally free to join unions of their choosing 

          without prior authorization, although barriers exist in practice. 

          Unions are independent of government control and are generally 

          free to form federations and confederations, and to affiliate 

          internationally.  Various trade union organizations contend that 

          trade unionism's right of association has been hurt by Costa 

          Rica's "solidarismo" (solidarity) movement.  This movement 

          espouses cooperation between employers and workers, offering such 

          services as credit unions and savings plans in return for their 

          renunciation of the right to strike and 

 

 

 

 

 

 

          bargain collectively.  However, in practice, solidarity 

          associations have been accused of acting as collective bargaining 

          agents.  In 1993, the Government of Costa Rica approved a package 

          of reforms that, in part, addressed the International Labor 

          Organization's (ILO) concerns about the effect of solidarity 

          organizations on workers' right to association.  Prominent among 

          these reforms was a provision explicitly prohibiting solidarity 

          associations from participating in collective bargaining or 

          direct agreements affecting labor conditions.  In June 1994, the 

          ILO's Committee of Experts ruled that, with the 1993 changes to 

          the Labor Code and the promise of further reforms made by the 

          Government of Costa Rica, progress has been made in assuring 

          worker rights. 

 

              Costa Rican law restricts the right of public sector workers 

          to strike, but two articles of the Penal Code that mandated tough 

          punishment for striking government workers were repealed in 1993. 

          There are no restrictions on the rights of private workers to 

          strike, but the Labor Code contains clauses that employers have 

          used to fire employees who try to organize or strike.  Very few 

          private sector workers are union members. 

 

              b.  The Right to Organize and Bargain Collectively 





 

              The right to organize is protected by the Constitution. 

          Specific provisions of the 1993 Labor Code reforms provide 

          protection from dismissal for union organizers and members during 

          the period of union formation.  Previously, employers used a 

          clause in the Labor Code, permitting employees to be discharged 

          "at the will of the employer" provided the employee received 

          severance benefits.  The payment of severance benefits to 

          dismissed workers has often been circumvented in practice. 

          Public sector workers cannot engage in collective bargaining 

          because the Public Administration Act of 1978 makes labor laws 

          inapplicable in relations between the Government and its 

          employees.  Collective bargaining is allowed in the private 

          sector but, due to the dearth of unions, is not a widespread 

          practice. 

 

              c.  Prohibition of Forced or Compulsory Labor 

 

              The Constitution prohibits forced or compulsory labor, and 

          there are no known instances of either. 

 

              d.  Minimum Age of Employment of Children 

 

              The Constitution provides special employment protection for 

          women and minors and establishes the minimum working age at 12 

          years, with special regulations in force for workers under 15.  A 

          child welfare agency, in cooperation with the Labor Ministry, is 

          responsible for enforcement.  Enforcement in the formal sector is 

          reasonably effective.  Nonetheless, child labor appears to be an 

          integral part of the large informal economy, although data on 

          this is lacking. 

 

              e.  Acceptable Conditions of Work 

 

              The Constitution provides the right to a minimum wage.  A 

          National Wage Board sets minimum wage and salary levels for all 

          sectors.  The monthly minimum wage ranges from USD 115 for 

 

 

 

 

 

 

          domestic servants to USD 557 for certain professionals.  Public 

          sector negotiations normally follow the settlement of private 

          sector negotiations.  In addition, the Constitution sets the 

          workday hours, remuneration for overtime, days of rest, and 

          annual vacation rights.  Maximum work hours are eight during the 

          day and six at night, up to weekly totals of 48 and 36 hours, 

          respectively.  Ten-hour days are permitted for work not 

          considered unhealthful or dangerous, but weekly totals may not 

          exceed 48 hours.  Nonagricultural workers receive an overtime 

          premium of 50 percent of regular wages for work in excess of the 

          daily work shift.  Agricultural workers are not paid overtime, 

          however, if they work beyond their normal hours voluntarily.  A 

          1967 law governs health and safety at the workplace, but there 

          are too few labor inspectors, especially outside of the San Jose 

          metropolitan area, to ensure that minimum conditions of safety 

          and sanitation are maintained. 

 





              f.  Rights in Sectors with U.S. Investment 

 

              Generally, in industries with significant U.S. investment 

          (primarily food and related products and other manufacturing), 

          respect for worker rights is good.  This holds for those plants 

          and operations under U.S. management and capital and does not 

          necessarily hold for the industry as a whole.  Outside of these 

          U.S. companies, working conditions and respect for worker rights 

          vary enormously, often to the detriment of workers seeking to 

          organize trade unions. 

 

 

 

            Extent of U.S. Investment in Selected Industries.--U.S. Direct 

          Investment Position Abroad on an Historical Cost Basis--1993 

 

                              (Millions of U.S. dollars) 

 

                      Category                          Amount 

 

          Petroleum                                               2 

          Total Manufacturing                                   339 

            Food & Kindred Products                   134 

            Chemicals and Allied Products              97 

            Metals, Primary & Fabricated               21 

            Machinery, except Electrical                0 

            Electric & Electronic Equipment            35 

            Transportation Equipment                    0 

            Other Manufacturing                        53 

          Wholesale Trade                                        67 

          Banking                                                 0 

          Finance/Insurance/Real Estate                           0 

          Services                                                6 

          Other Industries                                      -30 

          TOTAL ALL INDUSTRIES                                  385 

 

          Source: U.S. Department of Commerce, Bureau of Economic Analysis