Grow Ahead

Costa Rica’s ability to attract FDI since the 1990s has helped transform its economy from a primary product exporter to a high-tech manufacturing and services exporter. Costa Rica has done this all while acting as a global leader in environmentally friendly policies, as exemplified by its high use of green energy. However, restrictions on new biotech innovations and Genetically Modified Organisms (GMOs) have the potential to disrupt FDI inflows into its agriculture sector, a key sector in Costa Rica’s effort to become a more knowledge-based economy.

A draft law that would place a moratorium on Costa Rica’s National Technical Biosafety Commission (NTBC) from issuing new GMO product registration for 15 years is being discussed in the Environmental Issues committee. This draft law, called the “Law for the Restriction of the Release into the environment of genetically modified organisms,“ would not affect already existing GMO projects, but it would prevent future projects that could transform Costa Rica’s agriculture sector with the assistance of biotech. Upon learning of the Minister of Agriculture’s support for this new bill, the Ambassador from the US, Costa Rica’s largest trading partner, wrote a concerned letter to Costa Rica’s Foreign Minister urging reassessment of the draft. In the letter, he highlighted biotech’s track record of fostering research within Costa Rica while mentioning the CAFTA-DR trade agreement in which each country participates.

Restrictions on new biotech products were catalyzed in 2013 when US-based Monsanto’s request for approval to plant a new variety of biotech corn received significant negative media attention. Even though Monsanto’s proposal was only for the propagation and re-export of the corn seeds, and not for commercial production within Costa Rica, environmental groups strongly opposed the plan and raised the issue to the Constitutional Court, effectively preventing the NTBC from issuing new permits.

Environmental groups have been campaigning against planting genetically modified plants since 2004, when, in response to pressure from environmental groups, a presidential decree changed the composition of the NTBC, the commission that reviews biotech proposals. The NTBC gained two new members from environmental groups and one from the Environment Ministry.

This potential ban on biotech innovation could impact investment in Costa Rica’s R&D. It already has a relatively low investment rate in R&D at 0.4%, compared to the OECD average of 2.3% in 2010. The share of its private sector R&D investment is also relatively low at 33%, compared to Singapore (60%), China (70%), and Malaysia (84%). Costa Rica’s ban could impact existing research projects, such as fungus resistant bananas and more pineapples with a higher content of antioxidants.

Motivations behind this potential biotech ban range from anti-biotech sentiment within Costa Rica, and also from Costa Rican efforts to expand its own organic product industry. After the highly visible debate over Monsanto’s new seed in 2013, over 80% of Costa Rica’s cantons declared themselves to be GMO-free. But Costa Rica has its own organic sector, and current legislation in place acts to encourage organic product development. One such piece of legislation restricts the planting of GMOs within a distance of organic crops that could be affected by wind or proximity. The process of approving new biotech projects includes consulting with local organic farmers on the potential impact on their organic crops.

As a signatory to the Cartegena Protocol, Costa Rica has the right to ban GMOs that it feels are not scientifically safe. But bans on biotech also introduce potential issues to existing trade patterns. In 2014, Costa Rica imported USD210 million in biotech commodities from the United States, with a portion of these imports going to feed Costa Rica’s cattle industry. There is currently no organized effort against meat products raised on GMOs, but environmental groups are endorsing stronger labeling standards for retail consumers.
Efforts to ban new GMO planting satisfy demands by increasingly organized environmental groups. However, it raises concerns about potential reduced FDI inflows, which are needed for Costa Rica’s continued transition away from a labor-based economy.