Regional Trade Agreements in Colombia and Related Issues

Introduction

Colombia has a flexible RTA (Regional Trade Agreements) with many European and Caribbean countries. Colombia has continued to bolster its trade policy to provide openness, while emphasizing on closer integration with Latin America and Caribbean countries, through the initialization of preferential agreements to increase the external trade and foreign investment flows. Colombia is connected side by side with WTO as part of its trade policy strategy (Secretariate, Trade Policy Review of Colombia, 2012).

List of Some Major RTA’s

Following is the list of some of the major RTA’s that Colombia has with other countries to the date: —

  1. Andean Community: — The original agreement was signed in the year 1969 in the context of the 1960 Treaty of Montevideo. This was the same treaty that established the Latin American Free Trade Association (ALALC). This agreement contains some South American countries like Bolivia, Ecuador, Peru etc.
  2. Canada-Colombia: — This is a Free Trade and Economic Integration Agreement between the two countries, which was originally signed in the year 2008.
  3. Chile-Colombia: — A Free Trade and Economic Integration Agreement between the two countries that was originally signed in the year 2006; having a bilateral composition of RTA.
  4. Colombia-Mexico: — A Free Trade and Economic Integration Agreement between the two countries, which was originally signed in the year 1994, having a bilateral composition of RTA.
  5. US-Colombia: — A Free Trade and Economic Integration Agreement, originally signed in the year 2006, having a bilateral RTA composition(Secretariate, List of notified RTAs in force, 2016).

Obstacles in Trade with Colombia

There are many obstacles existing within the Trade policies of Colombia. Many economic integration agreements of Colombia have encouraged to overlap tariff application. For example, a product would have to go through a more than 10 different duties, depending on whether it is coming from the Andean Community, Caribbean Community, or the Latin American Integration Agreement.

There are around 97 percent of the CHTS (Colombian Harmonized Tariff Schedule) products that are imported without any import license, yet the company must pay tariffs and VAT for these products. Colombia’s bureaucracy is still a major obstacle for trading with both local and foreign companies. Many cases of pilferage and robberies of trucks are still a major problem in trading, but the cases have abated dramatically.

Ethical and Legal Issues for Trading in Colombia

Colombia has three tariff levels duty criteria: from 0-5% on capital goods, industrial goods, and raw material that has not produced in Colombia; 10% on manufactured products having some exceptions; 15-20% on consumer based and sensitive goods, having an exception of automobile that has a duty of around 35%; beef and rice subjected to 80% duty; and finally, milk and cream, having a whopping 98% duty.

It has been understood from this fact that the duty of Colombia can demotivate some foreign exporters who are willing to export rice, beef, milk and other products made up of milk. Colombia has imposed a common Andean Community price band in the year 1995 to support the import of various food products, milk products, and meat products from the countries of the Andean Community, but this price band system lacks the transparency and can be manipulated to provide unpredictable levels of import protection (Rico, 2016).

References

Rico, D. (2016). Trade Regulations and Standards in Colombia. Retrieved March 1, 2016, from export.gov: http://export.gov/Colombia/doingbusinessincolombia/traderegulationsstandards/index.asp

Secretariate. (2016). List of notified RTAs in force. Retrieved March 1, 2016, from rtais.wto.org: http://rtais.wto.org/UI/PublicSearchByMemberResult.aspx?MemberCode=170&lang=1&redirect=1

Secretariate. (2012). Trade Policy Review of Colombia. World Trade Organization.

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One Comment

  1. Davis Shen said:

    Wohh just what I was looking for, thanks for putting up.

    March 12, 2019
    Reply

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