72563 v1 World Trade Indicators 2009/10 Colombia Trade Brief Trade Policy Food price inflation during the January 2006-March Since Colombia’s dramatic liberalization in 1991, the 2008 period was lower in Colombia compared to the county has made substantial progress in the LAC average and the government did not use specific modernization and liberalization of its trade regime, trade policies to address the food price crisis, focusing although it is still only ranked 108th (out of 125 more on conditional cash transfers. To support countries) on the latest MFN Tariff Trade exporters in the face of an appreciating peso the Restrictiveness Index (TTRI).1 At 12.9 percent, the government issued extended tax rebate certificates Colombian TTRI is substantially above the average (CERTs) to exporters of apparel and footwear, scores for the Latin America and Caribbean (LAC) furniture, auto parts and food in May and August region and upper-middle income countries (7.8 and 6.9 2008.2 After initiating only one anti-dumping percent respectively). Agricultural protection (with a investigation in 2007, Colombia was the 10th most TTRI of 16.4 percent) is higher than that for non- active initiator of anti-dumping investigations in 2008, agriculture, and exceeds the levels for the regional and with 6 initiations. As of the second quarter, it has income group comparators. The 2008 simple average initiated one investigation in 2009. MFN tariff is 12.5 percent, and drops to 11.8 percent when preferences are included. The country applies the Andean Price Band System to imports of a External Environment number of agricultural products, where import duties Looking at barriers that Colombia’s exports face rise or fall in response to changes in international abroad, the latest Market Access TTRI3 (including prices. Colombia has maintained its maximum tariff preferential tariffs) ranks the country as facing the (excluding alcohol and tobacco) at 80 percent. The 25th lowest restrictions abroad out of 125 countries. trade policy space, as measured by the distance Colombia’s MA-TTRI of 1.2 percent, is lower than its between bound and applied tariff levels (the LAC and upper-middle-income country comparators overhang), has remained stable at 30.5 percent. A (2.0 percent and 2.3 percent, respectively). Although moderate user of trade remedy laws, Colombia Colombia’s 2008 rest of the world simple average initiated 43 anti-dumping investigations over 1995- applied tariff (incl. preferences) is a high 9.5 percent, 2008, being the 17th largest initiator of 44 countries. when weighted by actual Colombian exports, it drops Regarding its commitment to trade liberalization in to a low 1.5 percent (with its agricultural exports services, Colombia scores highly and ranks 25th out of facing 4 percent and its manufactured exports 0.7 148 countries according to the GATS Commitment percent tariffs). Colombia has not faced any anti- Index. Foreign investors receive national treatment dumping initiations since 2003. The national currency, and 100 percent foreign ownership is allowed in most the Colombian peso, appreciated by 4 percent in real, sectors. trade-weighted terms in 2008, making exports less competitive abroad. Along with Bolivia, Ecuador and Peru, Colombia has established a free trade area under the Andean Community of Nations (CAN). Colombia accesses its Unless otherwise indicated, all data are as of August 2009 largest export market, the United States, through and are drawn from the World Trade Indicators 2009/10 preferences granted under the Andean Trade Database. The database, Country Trade Briefs and Partnership and Drug Eradication Agreement Trade-at-a-Glance Tables, are available at (ATPDEA), which was renewed until December 2009. http://www.worldbank .org/wti. The Colombia-US Trade Promotion Agreement, a If using information from this brief, please provide the comprehensive free trade agreement (FTA) was signed following source citation: World Bank. 2010. ―Colombia in 2006. Although, ratified in Colombia in 2008 it has Trade Brief.‖ World Trade Indicators 2009/10: Country Trade yet to be taken up by the US Congress. In November Briefs. Washington, DC: World Bank. Available at 2008, two separate bilateral FTAs were signed with http://www.worldbank.org/wti. Canada and EFTA (European Free Trade Association) World Trade Indicators 2009/10 Colombia Trade Brief countries, but these too still have to go through their Trade Outcomes respective legislatures. In May 2009 a FTA between Chile and Colombia, signed in 2006, came in to force.4 Colombia’s real (in constant 2000 US dollars) trade A member of CAN, Colombia has been engaged in growth slowed to 5 percent in 2008 from a robust 12.9 ongoing FTA talks with the EU, but the negotiations percent in 2007. Growth of both exports and imports have taken a bilateral track with Peru’s and Colombia’s of goods and services decelerated in 2008, and are talks progressing furthest. expected to turn negative in 2009. There have been recent disruptions in the trade In nominal dollar terms, Colombia’s total trade in relationship with its Andean neighbors Venezuela and goods increased by 26 percent in 2008. Colombia’s Ecuador, who were its second and fourth main export major 2008 exports include petroleum, coal, coffee markets respectively in 2008. In April 2008, Venezuela and nickel. Nominal goods exports grew by 24.5 placed a quota of 10,000 on vehicles originating from percent for the year overall, despite a fall of 6 percent Colombia5 and, most recently, due to geopolitical in the last quarter on a year-on -year basis. However, disagreements, the Venezuelan government said that it national statistics8 show goods exports fell by 18.8 in will stop importing from Colombia altogether. In the first half of 2009 compared to the same period in November 2008 and again in January 2009, Ecuador 2008. Colombia’s top imports include industrial raised import restrictions in the face of balance of equipment, transportation equipment, consumer payments deteriorations. These are expected to expire goods, chemicals, paper products, fuels and electricity. in January 2010. Meanwhile, in July 2009, Ecuador Most goods imports are from the US, China, Mexico, raised import tariffs on over 1000 Colombian goods to Brazil, and Venezuela. Nominal imports increased by protect Ecuadorian producers from cheaper 19.5 percent in 2008, but dropped by 17.7 percent in Colombian goods resulting from a real depreciation the first half of 2009. Exports of services grew by 15 (18.5 per cent over June 2008-June 2009) of the percent in 2008, while imports grew by 11 percent. In Colombian peso against the US dollar, the legal tender the first quarter of 2009, services trade fell but by a in Ecuador. Approved by CAN, some of the small magnitude compared to goods trade, with protection was removed and the rest will be phased services exports dropping by 1.5 percent and services out in six months.6 imports falling by 10.3 percent, on a year-on-year basis. FDI inflows remained relatively stable, accounting for 4.4 percent of GDP in 2008. Behind the Border Constraints In 2008 and 2009, Colombia was in the Top 10 Doing Notes Business Reformers for improving its institutional environment. The country raised its rank in the Ease 1. TTRI calculates the equivalent uniform tariff that of Doing Business index to 37th out of 183 countries would keep domestic welfare constant. It is weighted by in 2009, from 49th place in 2008. The Logistics import shares and import demand elasticity. Performance Index, a measure of the ease of trade 2. USTR, 2009 facilitation, rates Colombia at 2.5 on a scale from 1 to 3. MA-TTRI calculates the equivalent uniform tariff of 5 with 5 being the highest performance, slightly below trading partners that would keep their level of imports the averages for the LAC region 2.57 and upper- constant. It is weighted by import values and import middle income countries (2.85). It ranked 82nd in the demand elasticities of trading partners. world and 15th in the LAC region (with Chile leading 4. SICE, 2009. the regional group). The area in which it performed 5. WTO, 2009. the best was timeliness of shipments in reaching their 6. Wall Street Journal, August 10, 2009. destination and it needs most improvement in 7. World Bank, 2009. increasing the efficiency and effectiveness of customs 8. Banco de la Republica, 2009a, 2009b. procedures. During the global financial crisis, the government has supported trade finance by providing government backed loans to the Foreign Trade Bank References of Colombia (Bancoldex), to finance export sectors.7 Bown, Chad. July 2009. ―Global Antidumping Database.‖ [Version 5.0, July]. Available at www.brandeis.edu/~cbown/global_ad/ . Colombia Trade Brief World Trade Indicators 2009/10 Banco de la Republica Colombia. 2009a. Exportaciones ———. May 2009. Ee. Uu. Abren Camino Para Trabajar Totales (FOB). Total Tradicionales y no Tradicionales. Accuerdos Pendientes Con Colombia Y Panama. Mensual Desde 1970. Vol.6. N.8. 5. . Nuenvo Reves. Vol.6. N.10 3. ———. 2009b. Exportaciones Totales (FOB). United States Trade Representative, 2009. National Trade Importaciones Según Uso o Destino Económico Estimate Report on Foreign Trade Barriers. (CIF). Mensual desde 1980. Wall Street Journal, Aug 10, 2009- Andean Group lets . World Bank , 2009 PREM Trade Group, Update of Foreign Trade Information Service (SICE). 2009. Trade Trade Measures Policy Developments. World Trade Organization (WTO). 2007. Trade Policy . Review Body—Trade Policy Review—Report by the International Monetary Fund (IMF). August 2009. Secretariat—Colombia—Revision. International Financial Statistics (Country Tables). ———. July 15, 2009. Report to the TPRB from the IMF, Washington, DC. Director-General on the Financial and Economic Justine Podur. June 2009. Stalled but Not Dead: Update Crisis and Trade-Related Developments. on the Canada-Colombia Free Trade Agreement. Puentes Quincenal. April 2009. 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