Costa Rica proposes two-track settlement to end Panama’s trade restrictions
Costa Rica has formally proposed a memorandum and WTO arbitration to resolve the restrictions affecting its agricultural exports to Panama since January 2019. The plan would address Panama’s sanitary concerns while creating an enforceable route to settle its stalled appeal.
Two parallel agreements proposed
Costa Rica has submitted a formal proposal to Panama aimed at fully restoring bilateral trade and permanently resolving a dispute that has restricted Costa Rican agricultural exports since January 2019. According to Infobae and Teletica, Costa Rican Foreign Trade Minister Indiana Trejos sent the initiative to Panama’s Minister of Commerce and Industries, Julio Moltó. The proposal calls for two parallel agreements intended to address the concerns raised by both governments.
The first agreement would be a memorandum of understanding covering Panamanian concerns about selected export products. Costa Rica would undertake the procedures needed to process any export applications submitted by Panama, with an international organization accompanying the work to strengthen transparency and confidence. The available reports do not identify the organization or specify deadlines for completing the procedures.
WTO arbitration would unlock the stalled case
The second agreement would send Panama’s appeal in the trade dispute to arbitration at the World Trade Organization. Panama filed the appeal in February 2025 against a ruling that found its restrictions on Costa Rican exports inconsistent with WTO rules. The WTO Appellate Body, where Panama lodged the appeal, has been inoperative since December 2019, leaving the case without a final resolution through the normal appeals process.
Under Costa Rica’s proposal, both countries would agree in advance to respect the international arbitrators’ decision. This would provide an alternative route around the Appellate Body’s paralysis while keeping the dispute within the WTO framework. Trejos described the proposal as a rapid option for restoring trade, supporting producers and expanding consumer choice on both sides of the border.
Restrictions cover fruit, meat and dairy products
The dispute began in January 2019, when Panama adopted measures that closed its market to Costa Rican bananas, plantains, strawberries, pineapples, beef, chicken, pork and dairy products. Panama cited sanitary considerations and the failure to renew permits held by Costa Rican exporting companies. Costa Rica initiated WTO dispute proceedings in 2021. According to both publications, the resulting ruling supported Costa Rica and identified more than thirty violations of WTO rules by Panama.
Tensions expanded beyond agricultural trade in May, when Costa Rican President Laura Fernández said her government would pursue international action over Panama’s restrictions. Infobae reported that Panamanian President José Raúl Mulino responded by suspending electricity sales to Costa Rica. The new proposal attempts to return the conflict to formal dispute-settlement channels. Its commercial impact will depend on Panama’s response, the scope of the memorandum and how quickly product approvals can resume. For affected producers and processors, a settlement could reopen a neighboring market after more than six years, but neither source reports an agreement, implementation timetable or estimate of the trade value involved.
