Initially, the import tariff was primarily for revenue raising purposes, but in 1954 it was increased to protect Costa Rican industry. In 1962, tariffs were raised so high that they virtually prohibited foreign competition in certain fields. Import duties usually included a specific duty on the gross weight in kilograms and ad valorem duties of varying percentages of the CIF (cost, insurance, and freight) value of the imported goods.
Since Costa Rica's entry into GATT, tariffs have been lowered. As of 2002, customs duties range from 1% to 15%. However, food tariffs were between 14% and 19%. Import duties on raw materials, bulk grains, and oilseeds were reduced to 1% in 1996. Capital goods and most finished products have a tariff of 1% and 10% to 15% respectively. There is a 13% value-added tax (VAT). Excise taxes range between 5% and 75%, applying to about half of all products imported. For example, arms and munitions are taxed at 75%; costume jewelry, fireworks, and whiskey at 50%; wine and beer at 40%.
Costa Rica has a bilateral free trade agreement with Mexico and was planning future agreements in 1999 with Dominican Republic, Panama, Chile, and Trinidad and Tobago. Costa Rica is also a member of the Central American Common Market (CACM) with El Salvador, Guatemala, Honduras, and Nicaragua. The CACM has a common external tariff of 5% to 20% for most products.