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Datamyne Blog

Covering trade & transport, with tips on using import-export data to advantage

Werker on US-Colombia FTA: Part 3

Category: Exports, Markets

Cameron Werker and Bill Armburster discuss the trading partner relationship

Datamyne blog anchor Bill Armbruster conducted an extensive e-mail interview in January regarding the new US-Colombia free trade agreement with Cameron Werker, senior commercial officer with the US Embassy in Colombia.

In Part 1, they covered opportunities and resources for US exporters to Colombia. Part 2 focused on obstacles. In this final installment, they consider the state of the trading partnership between the two countries.

Bill Armbruster: The FTA has been in effect since May 15, 2012. According to Census Bureau statistics, US exports to Colombia from June through October 2012 were up each month over the same month in 2011, totaling almost $7 billion, compared with $5.9 billion in the same period in 2011. That was an increase of $1.1 billion, or 19%.

To what extent, if any, can that growth be attributed to the FTA? Or might it have been more due to other factors, such as growth in the Colombian economy?

Cameron Werker: The implementation of the US-Colombia FTA on May 15, 2012 was a landmark day in our countries’ bilateral relationship.

While it immediately eliminated import duties on approximately 80% of all US-manufactured goods entering Colombia (the remaining 20% will be eliminated over a phase-in period based on Harmonized Tariff Schedule number), it also signaled to the people of Colombia the importance the US places on our relationship. There is no question in my mind that implementation of the FTA was a considerable factor in the impressive increase in US exports to Colombia.

Of course, it is too early to quantify the exact impact the FTA had on these increases, especially given a myriad of contributing factors. Specifically, it is important to note the ever-improving national safety and security situation in Colombia, strong economic growth, and the fact that the Colombian peso was among the top five fastest-appreciating currencies in the world against the dollar, all contributed to strong US exports to Colombia in the second half of 2012.

Armbruster: The US has had a fairly substantial trade deficit with Colombia. Why is that? Is it likely to come down in the future as a result of the FTA?

Werker: While the historical trade statistics do favor Colombia, it is important to note that our economies are very complementary. That is to say the products we export to Colombia are not the same as they export to the United States. Colombia’s largest exports to the US include coal, oil, gold, emeralds, coffee, and tropical fruits.  For example, the US is the top destination worldwide for Colombia’s mangos.  On the other hand, US exports to Colombia include many industrial products such as chemicals and manufacturing equipment as well as high-tech exports such as medical equipment and high-end electronic items.

Looking to the future, I am quite bullish on Colombia as a highly profitable export destination for U.S. exporters of goods and services.  Consider that the United States is Colombia’s number one market for exports while Colombia is our 22nd largest export market and that Colombia has been able to export the vast majority of its products to the US duty free under the Andean Trade Preference Act of 1991 (expanded in 2002).

Now, with the FTA, not only do US products have, or will have, duty-free entry once the tariff reductions are fully phased in, US companies have national treatment in Colombia. This means that they must be treated as though they are Colombian companies. In many cases, this will reduce time to market because US products will not require the same type of certifications, permits, or licenses as other foreign countries’ products do, provided Colombian companies are not required to obtain the same paperwork. Couple this with the fact that Colombia is averaging between 4 and 5% GDP growth per year, the middle class has increased 35% over the past 10 years, and 70% of the population is aged between 20 and 40, and you have arguably a perfect recipe for long-term growth for a country that actually favors US-made goods and services. The sky is the limit for US exporters.

Armbruster: When do Colombia’s FTAs with Europe and Korea take effect?

Werker: Colombia’s FTA with the EU has not yet been implemented.  The EU governing body approved the agreement, but the Colombian Congress has not voted on a law to approve the FTA.  Once that is complete, the Colombian Constitutional Court must approve.  In all likelihood, the process could be complete by mid-2013 at the earliest.  As for Korea, negotiations have concluded, but the agreement has not been signed.  After it is signed, it must go through the same steps as outlined above.  Likely implementation is sometime in 2014.

This means that now is the perfect time for US exporters to take advantage of the competitive advantages afforded them by our FTA.

Cameron Werker is Senior Commercial Officer for the US Department of Commerce’s Foreign Commercial Service in Bogota, Colombia. Mr. Werker joined Commerce in 1998 as an International Trade Specialist administering US anti-dumping duty law. He joined the Commercial Service in 1999. His first assignment was to Boston’s US Export Assistance. He served as Commercial Officer in Beijing and in Belgrade before his current posting to Bogota.

Cameron Werker can be reached at [email protected] or 001-571-275-2519.

The opinions expressed in this article are those of its author and do not purport to reflect the opinions or views or Descartes Datamyne. In addition, this article is for general information purposes only and it’s not intended to provide legal advice or opinions of any kind and my not be used for professional or commercial purposes. No one should act, or refrain from acting, based solely on this article without first seeking appropriate legal or other professional advice.

Date posted: February 7, 2013

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