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Trade agreements

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Trade Agreements signed by Colombia

Countries are turning to economic integration as an important way to achieve sustained economic growth and modernize productive sectors. The Colombian government, in conjunction with the private sector, has encouraged a policy of involvement in international markets through the country’s membership in the World Trade Organization, through trade agreements and by taking advantage of unilateral tariff preferences.

World Trade Organization

Colombia has been part of the WTO since April 30, 1995. Membership in this organization implies adherence to all its multilateral agreements, with the exception of certain reserves in the agreements on aircraft and beef. Given the benefits of the progress made towards multilateral deregulation, Colombia has been active in the Doha Round of trade talks, particularly on issues of special importance to the country, such as agriculture and services, among others.

Bilateral and Regional Integration Schemes

Andean Community – CAN

The Andean Community is a sub-regional organization established by Bolivia, Colombia, Ecuador and Peru. It is comprised of the bodies and institutions that make up the Andean Integration System.

Venezuela was part of this regional integration group until it announced its withdrawal in April 2006.

Merchandise trade between Bolivia, Colombia, Ecuador and Peru is virtually duty-free. In other words, goods traded between these countries enter without tariffs, and the four countries make up a duty-free zone.

Group of Three – G3

The G-3 Treaty creates a free-trade zone between Mexico, Colombia and Venezuela. However, in May of 2006, Venezuela announced its withdrawal from the G-3. This will not affect the preferential treatment between Mexico and Colombia. 

The G-3 is intended to ensure broad and secure access to these markets by gradually eliminating tariffs. Consideration, however, is given to the sensitive sectors in each country. It took effect on January 1, 1995. The annual reduction in tariffs on most of the products produced in these countries also began on that date and continued for a period of ten years. Virtually all were duty-free by January 1, 2004. However, the agricultural and automotive sectors are subject to special arrangements. The treaty also includes commitments and rules on safeguards, unfair business practices, settlement of disputes and lifting restrictions on services.

CAN – Mercosur

On October 2004, CAN and Mercosur signed the Economic Complementation Agreement Nº 59, which came into force for Colombia on February 1st 2005, finally completing the Free Trade Area between the two blocks.

The agreement between the Andean Community and Mercosur creates important opportunities for Colombian producers by affording preferential access to the largest expanded market in South America. It offers consumers and producers more opportunities for access to raw materials, capital goods and finished products at competitive prices.

Colombia – Chile

Economic Complementation Agreement No. 24 was signed by Colombia and Chile on December 1993 to create an expanded market.

On the other hand, during two negotiation rounds on November 2006, Colombia and Chile signed a Free Trade Agreement with the purpose of increasing bilateral trade.

This agreement encompasses the following issues: Investment, Labor Affairs, Public Contracting, Trade Defense, Phytosanitary and Sanitary Measures, Rules of Origin, Environment, Institutional Affairs and Solution of Controversies, Cooperation, Trade Facilitation,
Technical Services and Trade Barriers.

Colombia – Caricom

Colombia has preferential access to the CARICOM market under the conditions outlined in Partial Scope Agreement Nº 31, which was signed within the framework of ALADI.

Colombia offers these countries preferential tariffs on 1,128 sub-items and receives preferential treatment on 1,074 from Trinidad and Tobago, Jamaica, Barbados and Guyana. The tariff preferences on negotiated items are now 100%. In other words, either party charges no duties.

Colombia – Cuba

Partial Scope Economic Complementation Agreement No. 49 was signed by Colombia and Cuba on September 15, 2000 to replace Partial Scope Agreement No. 33 signed on July 8, 1994 and its three additional protocols and attachments. As a result, the tariff preferences granted by both countries now average 50%. Colombia has extended tariff preferences on 625 sub-items and Cuba, on 966.

Given the current economic complementation agreement between Colombia and Cuba, both governments have embarked on talks to broaden bilateral trade between these nations and to make their economies more complementary. The negotiations include important aspects such as access to markets for new products and further preferences for items that have been negotiated already, in addition to rules on sanitary and phytosanitary measures, technical standards and conformity assessment, conflict management, and rules of origin.

Free Trade Agreement between Colombia and the United States

A free trade agreement (FTA) with the United States would give Colombian exports permanent tariff benefits for access to the world’s largest market. The United States has become Colombia’s major trading partner and accounts in 2008 for 32,1% of its exports and 30,5% of its imports. FTA negotiations were initiated in May 2004 and completed in April 2006, following 16 rounds of talks.

After been approved by the Colombian House and Senate Floors, the Agreement underwent a constitutional-ly mandated court review, according to Colombian regulations and was deemed to conform to the Colombian Constitution by Colombia's Constitutional Court in July 2008. 

President Bush sent legislation to implement the U.S.-Colombia Trade Promotion Agreement to Congress for its approval on April 7, 2007. Due to a controversy over the safety of Colombian labor leaders, it was not approved by the end of President Bush's term in January, 2009. President Obama has remarked there is not a "strict timetable” to the agreement .

Colombia's Congress approved the agreement and a protocol of amendment in 2007. Colombia's Constitu-tional Court completed its review in July 2008, and concluded that the Agreement conforms to Colombia's Constitution. President Obama tasked the Office of the U.S. Trade Representative with seeking a path to address outstanding issues surrounding the Colombia FTA. The United States Congress then took on the agreement and passed it on October 12, 2011.

On October 21, 2011, President Obama signed legislation approving the CTPA (U.S.-Colombia Trade Pro-motion Agreement). The agreement went into effect on May 15, 2012.

Free Trade Agreement between Colombia and the Northern Central American Triangle (Guatemala, El Salvador and Honduras).

Colombia and the countries of the Northern Central American Triangle (El Salvador, Guatemala and Honduras) entered into a free trade agreement that allows the four countries to improve the conditions of access to their respective markets and take advantage of the complementation of their economies.

Colombia – Canada

The negotiation process that included 5 encounters between the teams of negotiators of each country was concluded in June of 2008, producing excellent results for Colombia, among which outstands immediate access for Colombia for almost the totality of the exportable offer of the country in products such as fruits, flowers and vegetables, among others.

The industrial sector was also extensively negotiated; Colombia will have immediate access to approximately 98% of the sector. During 2010 the Treaty was approved by the Canadian Senate and entered into force last August 15, 2011.

EFTA – Colombia Agreement

Part of the Commercial agenda defined by the Colombian government is the negotiation with the EFTA countries Switzerland, Norway, Iceland and Liechtenstein, which have a GDP near to 622 billion dollars and represent almost 2% of the goods world trade, which places them in the ninth position around the world in this subject. In the topic related to services, they have a participation of almost 3% and occupy the fourth place, after United States, China and Japan.

The Treaty with EFTA is not only about taking the tariffs off, or to warrant the preferential access, but it also contains intellectual property, investments, government procurement, standardization and different areas that will create the frame for regulating the trade. Competition and public tendering are very important topics as well.

The EFTA market would be an important destination for products such as plastics, derivatives of polypropylene and their manufactures, jewelry and precious stones, flowers, exotic fruits different from the banana tree; coffee and derivatives of the coffee, among others. About investments, the country is interested in expansion and diversification of that sector, as the relocation of the International Airport El Dorado, a project that has been of the EFTA interest, Not only due to the participation of the consorcium Opain supported by the Swiss company Unique (Flughafen Zürich AG), but also because it will become a strategic point in South America for transportation of goods and people.

The Colombia-EFTA Free Trade Agreement was signed in Geneva, Switzerland on 25 November 2008. The Swiss Parliament and the Colombian Congress approved it in 2009 and was reviewed by the Colombian Constitutional Court in 2010. The FTA entered into force July 1st 2011.

Andean Community – European Union

The Andean Community was founded in 1969 and currently comprises 4 countries that straddle the Andes: Bolivia, Colombia, Ecuador and Peru. The EU political dialogue with the Andean Community began in 1996 with the Declaration of Rome (1996).

Following the breakdown of negotiations in view of a fully fledged three pillar Association Agreement in the second half of 2008, a new negotiating format has been put in place offering a thematic and geographical split of these negotiations: continued regional negotiations with the Andean Community as a whole on political dialogue and cooperation (an update of the 2003 Agreement referred to above) and 'multi-party' trade negotiations with as many Andean Community countries as willing to embark upon ambitious and comprehensive trade negotiations compatible with World Trade Organization. Only the latter negotiations have started so far and only with three of the Andean Community countries (Peru, Colombia and Ecuador).

The idea of obtaining bilateral agreements between the EU and these Latin American countries comes from the collapse, in February 2009, of the association agreement between the EU and the countries of the Andean Community (CAN: Bolivia, Colombia, Ecuador and Peru). In December 2006, the European Commission had asked the Council for a mandate in order to be able to launch EU-CAN negotiations aiming for an association agreement.

After the withdrawal of Bolivia, in 2008, due to a division among the Andean countries as to the targeted objectives, it was Ecuador’s turn to suspend its participation. This was due to disagreement on the restrictions imposed by the EU on banana imports. In fact, Ecuador blames the EU for not having respected the judgements of the World Trade Organisation in favour of Quito in the banana conflict. Ecuador is the world’s leading exporter of bananas, and rejects the EU restrictions.

A free trade agreement between the EU with Colombia and Peru has been negotiated. Discussions related to the two sections that have been sensitive since the beginning: are banana exports and pharmaceutical patents. The EU, Colombia and Peru announced the conclusion of negotiations on May 2010 during the EU-LAC summit. In April 2011, EU Trade Commissioner Karel De Gucht, the Minister of Trade, Industry and Tourism of Colombia and the Deputy Minister for Foreign Trade of Peru welcomed the initialling of the Trade Agreement after the conclusion of legal review.

This Agreement is estimated to be worth half a billion Euros in duties saved alone and is expected to boost Colombia and Peru's economies by close to 1% of GDP. Above all, it recognizes that the partnership between the EU, Colombia and Peru is based on the respect of democratic principles, fundamental human rights and the respect for the principle of the rule of law. 

The text of the Trade Agreement which has been signed and ratified by the parties and will now follow the internal processes according to each Party's domestic procedures. It entered in force in August 1st, 2013.

Unilateral Preference Schemes

Law for the Andean Trade Promotion and Drug Eradication Act (ATPDEA)

The Act for Customs Preferences for the Andes and Eradication of Drugs, ATPDEA, extends in time and scope the preferences of the ATPA, created initially as a component of the program of the “War Against Drugs” of President George Bush senior, that was issued on December 4th of 1991 and was in force until the 4th of December of 2006, the ATPDEA extends the benefits until 2006, also includes the goods initially covered by ATPA (5.600 products) as well as goods of the sector of garments, oil and its derivates, footwear, leather goods and tuna fish, among others.

After continuous extensions to the period of the preferences, at the end of 2008, the Committee on Ways and Means of the United States approved the extension for a period of 1 more year of the customs preferences granted under this mechanism, which means that the preferences was in force until February 2011 and has not been extended any longer.

Generalized System of Preferences– GSP

The Generalized System of Preferences is a program that calls for developed countries to grant preferential tariffs on certain imports from developing countries, including Colombia.

The United States, the member countries of the European Union, Australia, Canada, Japan, Switzerland, Luxembourg, the Russian Federation and New Zealand are among the countries that participate in this system.

European Union– Generalized System of Preferences – GSP Plus

In addition to the GSP established by the European Union for developing countries, the EU affords special preferences to countries that are forced to deal with illicit crops. Known as GSP-Drugs, this program has been in effect since 1990 to support the war on drugs, based on the principle of shared responsibility.

In June 2005, the European Union approved the regulations for GSP Plus – Drugs and affords duty-free access to agricultural and industrial goods from several developing countries, such as those in Central America and the Andean Community of Nations. This scheme represents a new incentive to sustainable development, governance, the war on drugs, and observance of labor and environmental obligations.

For the period 2009-2011, 16 beneficiary countries have qualified to receive the additional preferences of-fered under the GSP Plus incentive arrangement. Any GSP plus beneficiary country must be considered "vulnerable" in terms of its size or the limited diversification in its exports. Poor diversification and depend-ence is defined as meaning that the five largest sections of its GSP-covered imports to the Community must represent more than 75% of its total GSP-covered imports. GSP-covered imports from that country must also represent less than 1% of total EU imports under GSP.

GSP plus beneficiaries must also have ratified and effectively implemented 27 specified international con-ventions in the fields of human rights, core labor standards, sustainable development and good governance.

From 1 January 2014, there is a reformed GSP, which applies as focuses support on developing countries most in need.

Treaties with Switzerland

Bilateral Investment Treaty (BIT)

On May 2006, Colombia and Switzerland signed a Bilateral Investment Treaty (BIT) which looks for warranting treatment and protection of international standards for investors from any of the two countries, covering companies as well as individuals.

The BIT has a big interest for both countries. In the case of Colombia, Switzerland has become one of the main investment sources of the country. In 2010, the European country had a direct investment of nearly US$ 47,5 millions.

The investment coming from Switzerland has been of great importance for the Colombian industry. The signature of the BIT opens opportunities to strengthen the economic relations and take advantage of the excellent moment of the Colombian economy. This treaty took effect on October 6, 2009.

Double Taxation Treaty

Colombia and Switzerland signed a double taxation treaty on October 26 2007, was ratified by Constitutional Court of Colombia in June 2010 and entered into force in January 1st 2012.

This treaty is expected to encourage foreign investment, guarantee legal stability, to reduce the overall tax burden and to avoid double taxation in both countries. Double taxation treaties also provide important means for the exchange of fiscal information to avoid and control tax evasion.

Last Updated ( Thursday, 25 September 2014 22:23 )  

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Tel. + 571  601 76 84

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colsuizacam@colsuizacam.com

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Embajada de Suiza en Colombia

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Bogotá

 

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Fax  +571 310 63 01

vertretung@bog.rep.admin.ch

www.eda.admin.ch/bogota

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