Trade and the Canadian Economy
Canada–Costa Rica Free Trade Agreement
ensures balanced access to markets
Stories of the Week - November 4, 2002:
Canadians doing business in Costa Rica have reason to be pleased: the Canada–Costa Rica Free Trade Agreement has come into effect.
This agreement will yield considerable benefits to both parties. It provides for balanced access to each others' market, and is a step toward new cooperation in such fields as trade facilitation and competition policy.
Most industrial products will receive immediate duty-free access, including some key Canadian exports such as automotive and environmental goods, newsprint, prefabricated buildings and some construction products.Tariffs on the remainder of these goods will be gradually phased out. The Agreement will also reduce red tape and border formalities for Canadians exporting to Costa Rica.
Environmental and labour cooperation agreements between Canada and Costa Rica also came into effect on November 1. They will ensure that respect for legislation in these areas remains a key aspect of the economic prosperity that comes with freer trade.
This week, Stories of the Week features Canadian companies doing business in Costa Rica, including one with over 20 years of experience in that country.
Stories of the Week - November 4, 2002
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Costa Rica's First Sanitary Landfill Site
EBI Group, Berthierville, Quebec
EBI Group, an integrated waste management company based in Bethierville, Quebec, has developed the first sanitary landfill site in Costa Rica. It is also the first site in Central America to be managed according to the strict standards prescribed by industrialized countries, with a leak-proof system to collect and treat leachate and biogases. The site was inaugurated in November 2000 at a ceremony attended by dignitaries, including the President of Costa Rica, the Minister of Health and the Canadian Ambassador.
EBI first started working in Costa Rica in 1997. "We sent several trucks to the greater San José area, where they are used for household domestic waste collection," says Pierre Sylvestre, company president. "After several months of research, we identified a suitable area to set up a sanitary landfill site, then applied for licences and conducted environmental assessments on the area. We had to obtain authorizations from 15 organizations and ministries before construction could begin. Fortunately, the Canadian embassy in San José was extremely helpful."
To ensure community acceptance of the project, EBI and CIDA funded, in equal parts and with a contribution from the municipality of San José, the construction of a primary school near the site in La Carpio, one of the poorest sections of the capital. "With 75 local employees, we are now the largest waste management and environmental protection company in Costa Rica," adds Sylvestre.
In Quebec, EBI manages a fleet of more than 300 trucks, which collect, transport and dispose of residual waste throughout the province. It also operates a sanitary landfill site, two sorting centres, a composting centre and a septic tank sludge treatment plant. With the completion of a biogas treatment facility currently under construction, EBI will become the first company in Canada to produce natural gas from green energy gas.
Homes Built in Western Canada
Pacific Homes, Cobble Hill, British Columbia
Costa Rica is a small but very active market for Pacific Homes, which specializes in manufacturing "homes in a box." Since 2000, the company has sold more than 25 of its steel package houses there through its agent, but is now focussing on wood frame packages. "We recently stopped producing the steel packages, as we found they were not cost competitive by the time the entire home was finished," says Grant McKinnon, a partner with Pacific Homes. "In contrast with steel frame, which requires expertise to assemble, wood frame panels need only to be erected on site. We have already built one wood frame house in Costa Rica and several more are in the design stage." Pacific Homes has sent Canadian carpenters to supervise the erection and provides all the materials needed to finish the house, including roof trusses, windows, doors, drywall, siding, roofing materials and the customer's choice of interior finish materials.
Pacific Homes and its agent have used the services of the Canadian embassy in San José to obtain market prospects and arrange face-to-face briefings. "We have been very pleased with their help," says McKinnon. In order to secure financing guarantees on behalf of their customers, Pacific Homes also works with EDC. "Costa Rica can be a good introduction into other Central American markets, as the style of business is very similar to Canada's," he adds. "There is also a long history of Canadian investment and tourism in the country and Canadians are generally well received there."
About 75 percent of the houses built by Pacific Homes are exported worldwide—primarily to the United States and Korea—but also to countries such as Chile, Costa Rica, Germany, Iceland, Israel and Japan. The company is part of the Pacific Group, which operates three truss plants, three building supply stores, a construction company and a lumber brokerage company. Production facilities and offices are located in Cobble Hill on Vancouver Island, in Surrey and Creston, British Columbia, and in Calgary and Drumheller, Alberta.
Latin America's First Nation-wide 911 Service
Positron Public Safety Systems, Montreal, Quebec
For Positron Public Safety Systems (PPSS), the repercussions of the Team Canada 1998 trade mission keep resounding as its emergency response systems are implemented throughout Latin America. Since the trip, PPPS supplied a 911 system for the city of Medellin in Colombia—the company's first major project in Latin America—then went on to win contracts to provide systems for the province of Cordoba in Argentina and for all of Costa Rica.
Costa Rica had a 911 service for its capital, San José, and wanted to expand it to the whole country. PPSS was awarded the $2.3-million turnkey contract in 1999 to implement the infrastructure for this first nation-wide 911 service in Latin America. The system consists of a main centre in San José and 30 remote sites located throughout the rest of the country. All emergency calls are received at the main centre, which collects information before dispatching the calls and data to the appropriate agencies in the remote sites.
According to José-Luis Menghini, President of the company's international division, all this burgeoning business was seeded during the Team Canada trade mission to the region. "We attribute our success in Latin America to the wide publicity we garnered as a Team Canada participant, which served as a catalyst in accelerating negotiations and finalizing agreements," says Menghini. "The united front of government and private industry conveyed a powerful sense of confidence and stability, enhancing a company's credibility in the eyes of its foreign counterparts." Menghini recommends Latin America as a natural market for Canadian companies. "Canadian businesses are very well perceived there, and the way Latin Americans conduct business is not that different from the North American way."
With more than 3,000 installations around the world, PPSS has, for over 30 years, been providing end-to-end communications and information systems for public safety services, including emergency call-handling and dispatching. The company makes most of its sales to the United States and Europe, as well as to Africa, Asia, Australia and Latin America.
Engineering Expertise for Hydroelectric Plants
RSW International, Montreal, Quebec
Over the past 30 years, RSW International (RSWI)—the international arm of the engineering consulting firm Groupe RSW—has conducted projects in more than 40 countries throughout the world.
RSWI first worked in Costa Rica in 1979, when it was hired by Instituto Costarricense de Electricidad to provide technical assistance for the design and construction of a power tunnel for the Corobici hydroelectric project. Following a 15-year absence, RSWI returned to Costa Rica with a contract for detailed engineering and construction supervision for the civil works of the 10.65 MW Rio Lajas hydroelectric power station. This project was to relaunch the firm's business activities in Costa Rica.
In 1997, RSWI was hired for the Doña Julia project, a 16-MW mini hydroelectric power station on the Puero Viejo and Quebrada Quebradon rivers. The firm undertook the detailed engineering for the civil works in this project, which was completed in 1998. A year later, RSWI secured three new contracts. The first was to provide detailed engineering for all civil works in the Los Gemelos hydroelectric station as well as technical assistance during the construction phase of the project. This 20-MW plant is powered by the Chirrijo Pacifico River. Toward the end of 1999, RSWI was commissioned to perform a feasibility and final design study for the Rio Jiménez hydroelectric plant and to provide technical assistance during its environmental impact assessment.
Most recently, in August 2002, RSWI was chosen to perform the preliminary studies and optimize the basic design of the water intake, power tunnel and reservoir of the La Joya hydroelectric plant—a facility with a capacity of 50 MW.
"Our international activities are of paramount importance," notes Claudio Vissa, the Vice-President in charge of hydraulic and civil engineering works, adding that "about one third of RSW's revenue and staff are generated by exports." Groupe RSW specializes in engineering and project management in the energy, industrial, urban infrastructure, construction, environment, transportation and mining sectors. It has offices in Quebec City and Montreal, as well as operating centres in Algeria, Costa Rica and India.
Agricultural Machines At Work in Orchards and on Ranches
Schulte Industries Ltd., Englefeld, Saskatchewan
Winner of both a Canada Export Award and the Export Development Canada (EDC) Smaller Exporter Achievement Award in 1999, Schulte Industries Ltd. exports more than 70 percent of its agricultural and industrial equipment around the world. "We turned to exporting to offset slowdowns in the domestic market," says Jim Carnago, President of Schulte Industries Ltd. "Each year we try to expand into a new country."
In proportion to its size, Costa Rica is a significant market for Schulte, with two to three shipments a year through its local agent, Craisa Company. "Schulte agricultural machines are known for their longevity and ability to stand up to Costa Rican conditions," says Carnago. "Our mowers are used to control vegetation between rows of orchards in fruit-growing areas, which eliminates the need for chemicals. They are also used for cutting around ranches and country roads, helping to reduce brush fires, which are a big problem in the spring." Schulte also supplies Costa Rica with rotary cutters for pasture reclamation.
A large portion of Schulte's resources is invested in marketing. "We go to major trade shows and promote our products directly to the end user," says Carnago. "However, we will turn down business if our equipment can't be adapted to a customer's specific needs. For example, we refused to supply rock pickers to an Italian agent because conditions there were not appropriate for our machinery." The United States is by far Schulte's largest export market, but it also sells to Argentina, Australia, Costa Rica, France, Germany, Iceland, Italy, Jamaica, Norway, Sweden and the Ukraine.
The federal government has provided vital help and resources from time to time, notes Mr. Carnago. "Canadian embassies in all the countries we export to are extremely helpful and have been part of our success, as has the Saskatchewan Trade and Export Partnership (STEP). Winning the Canada Export Award has been especially valuable," says Carnago, "because it shows that you don't have to be huge to be good. It also underlines that the key to our success is exporting. If we had to rely solely on the domestic market today, we'd be down to a skeleton staff." Schulte, which employs 100 people at its plant in Englefeld, Saskatchewan, has also won an award from STEP and a Western Region Export award.
Mining and Sustainable Development
Vannessa Ventures Ltd., Vancouver, British Columbia, and
Jacques Whitford Environment Ltd., Dartmouth, Nova Scotia
Two Canadian firms are literally uncovering a gold mine of ecological and economic benefits for the north-central region of Costa Rica. In January 2002, Vannessa Ventures Ltd. was granted a permit by the Costa Rican government to develop the Las Crucitas gold deposit in the province of Alajuela, through its subsidiary, Industrias Infinito S.A. An environmental impact assessment was subsequently carried out by Jacques Whitford Environment Ltd., through its local partner DEPPAT S.A. Las Crucitas, considered one of Central America's premier mineral deposits, lies 105 kilometres north of the capital San José and 16 kilometres northeast of the small town of Coopevega. The average gold production of the mine is estimated to be 88,000 ounces per year.
"The undertaking represents a milestone for local stakeholders on a number of fronts," says Erich Rauguth, President of Industrias Infinito. "Costa Rica had a substantial anti-mining lobby," he explains. "People were fearful of the dangers, particularly the use of cyanide. A big part of our success was seeing this outlook evolve into overwhelming community support for the project." The change in public opinion came about through workshops that gave the lowdown on positive and negative effects—including how cyanide can be dangerous and how it can be benign. "We put the facts squarely on the table," says Rauguth, "and explained how the community could be adversely affected by the industrial application of the mine and how we ensure that doesn't happen." The company continues to keep the public informed of development plans by holding community meetings and hosting radio programs.
Rauguth stresses that interaction such as this is a top priority, along with environmental considerations and a social development plan for the region. "We are trying to keep disruption of the environment to a minimum. Forests that need to be taken down are immediately replaced and doubled in another location. This reforestation program is creating jobs in spin-off industries such as lumber and timber, which can far outlast the life of the mine—a key element in our social considerations."
Both Vannessa Ventures and Jacques Whitford were assisted in this project by Canadian embassy staff. "Trade commissioners in San José gave us advice on business strategy, provided market intelligence and intervened on our behalf with Costa Rican ministers," says Rauguth. The trade section also identified the ideal local partner for the initial feasibility study. "It is only through strong partnerships that we can be successful in overseas markets and offer Canadian standards in terms of quality engineering practice," says Richard Donald, Manager, Environmental Sciences, at Jacques Whitford. "We approached the post and told them we needed the best environmental consultant in Costa Rica as our partner. The staff knew the players and found DEPPAT for us. That in itself is a success story."
Vannessa Ventures is currently involved in 10 mining projects in Costa Rica, Guyana and Venezuela. Jacques Whitford has brought Canadian environmental expertise to some 30,000 projects in over 50 countries.
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Updated on November 4, 2002
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