1. INTERNATIONAL TRADE NEWS
1.1 BILATERAL AND REGIONAL TRADE AGREEMENTS SIGNED BY COLOMBIA: THEIR PROGRESS AND PERPECTIVES
With this new edition, we continue with our compromise to contribute and support the economic recuperation and business development, growing in the legal services we render focused on Customs and International Trade. We direct our services to facilitate the development of your business projects, searching opportunities in new markets and taking into account the current situation involving cross- border trade and the crisis in foreign markets.
In this edition we offer a full vision of the development of Colombian international trade treaties negotiations, since Colombia is expanding its market horizons and with these agreements it has the purpose to improve its access to trade in goods and services around the world.
1.2 US APPROVED ONE YEAR EXTENSION OF THE ANDEAN TRADE PREFERENCE ACT (ATPDEA)
On January 6th 2010, President Barack Obama signed the Act by which the Generalized System of Preferences (GSP) and the Andean Trade Preference Act (ATPDEA) would be extended for one more year to continue being of benefit to exports original from Colombia, Peru and Ecuador. The House of Representatives and Senate approved the Bill on December 14 and 23 of 2009.
The ATPDEA has been in force since 1991 and its objective is to give tariffs preferences to certain products original from Colombia, Ecuador and Peru, as a contribution for their effort to fight against drugs and improve their economic activities. The Generalized System of Preferences (GSP), is a program designed, in accordance with the commitments of the World Trade Organization, to promote economic growth in developing countries providing preferential duty-free entry for about 4,700 products imported by the United States.
According to the Colombian Ministry of Trade, 6,300 products are beneficiaries of the approved extension. Furthermore, clothes and other related products receive unilateral concessions.
The Ministry It also established that in 2008 the general exports of the countries beneficiaries of the ATDEA summed up to USD $13.012 million, Colombia being the principal beneficiary with USD $4.971 million in exports to the United States. Moreover, it must be taken into account that the products that benefit the most from the Act, and the access to the American market are: roses, other flowers, fresh buds, petroleum, mineral oils and manufactures.
1.3 COLOMBIA AND PANAMA WILL NEGOTIATE A FREE TRADE AGREEMENT
The Colombian Ministry of Trade announced that after studying different possibilities to enhance commercial relations with Panama, both governments decided to begin a negotiation of a Free Trade Agreement this year. The decision was taken after the reunion held by the Ministers of Trade of both countries the 15th of January 2010.
Both parties expressed that the main goal of the negotiation is to reach a more profound trade relation, under solid and stable rules. At the moment, Colombia and Panama only have a Partial Reach Agreement in force, signed within the ALADI forum, which scope only benefits 300 products with a preferential access.
The decision was taken after performing a study on the possibility of negotiating new trade agreements with Panama and defining whether to sign a Bilateral Investment Treaty, a Free Trade Agreement or an Economic Complementation Agreement, under the ALADI rules.
Among the goods covered by the Partial Reach Agreement now in force are: fish, tropical fruits, medicines, paper, security windows, handbags and backpacks, cellulose padding and rubber.
With the beginning of this negotiation, both countries hope to find new possibilities for their international trade and to overcome past discussions on customs and trade matters.
1.4 COLOMBIA COMPLIES WITH WTO MANDATE ON PORT ACCESS BY BOGOTA AND BARRANQUILLA
In compliance with the Report of the Panel on Colombia's restrictions on port access to Panama's products, adopted by the Dispute Solution Body of the World Trade Organization (WTO) on May 20th 2009, the Colombian Ministry of Trade announced the decision to eliminate the restrictions on port entry for textile products incoming from Panama, which had access only by the ports of Barranquilla and Bogota.
The measure was adopted on December 11 of 2009, in accordance with the considerations of the National Tax and Customs Department (DIAN) on the matter. Nonetheless, both governments agreed to cooperate in order to fight against smuggling through other Colombian ports, for this was the main reason why the Colombian government adopted the measure studied by the WTO Panel.
In consequence, from the mentioned date on, any merchandise incoming from Panama into Colombia may enter through any Colombian port or airport.
1.5 COLOMBIAN GOVERNMENT APPROVED FTA WITH EFTA
On the 7th of January 2010, the Colombian government signed Act No. 1372 of 2010, which approves the Free Trade Agreement (FTA) between Colombia and the European Free Trade Association (EFTA), whose members are Swiss Confederation, Republic of Iceland, Principality of Lichtenstein and Kingdom of Norway. By constitutional mandate, now the Act must be studied and approved by the Colombian Constitutional Court, in order to be able to ratify the international treaty.
According to the Colombian Ministry of Trade, with this Agreement, Colombia acquires new commercial opportunities with a market that annually imports more than USD $263 billion in goods and about USD $77 billion in services. Currently, from the American Hemisphere, Mexico, Chile and Canada already have a trade agreement with EFTA.
During the FTA negotiation, the parties agreed to decrease market access tariffs for several goods. Fruits received a special treatment, eliminating completely the tariffs. Finally, Colombian exports of industrial goods to EFTA countries will no longer pay tariffs for entering those markets.
On the other hand, Colombia will remove tariffs on 85.7% of the industrial imports incoming from EFTA countries immediately. The products that benefit from the Agreement are: capital goods and machinery that does not have a national production registered.
The next step for the Agreement is the study and approval of the Colombian Constitutional Court, in order to be able to present its ratification, according to the international treaty signature and ratification procedure.
With this agreement approved, Colombia now has three FTAs in force (Chile, G-2 and North Triangle)1, and three signed (USA, Canada and EFTA). The Colombian Congress has already approved all of them and the Constitutional Court is analyzing two of them (EFTA and Canada).
1.6 EUROPEAN UNION AND LATIN AMERICA REACH AN AGREEMENT ON BANANA TARIFFS
After several years of dispute, the European Union (EU) and the Latin American countries that produce bananas (Ecuador, Costa Rica, Colombia, Venezuela, Nicaragua, Brazil, Peru and Honduras), finally reached an agreement that complies with the Most Favored Nation Clause, reducing banana's tariffs. The parties to the dispute signed the agreement on December 15, 2009 in Geneva, Switzerland, and it was informed to the General Council of the World Trade Organization (WTO) on December 17, 2009.
With this agreement one of the longest disputes in the history of the WTO comes to an end. According to the Director General of the Organization, Pascal Lamy, this has been "one of the most technically complex, politically sensitive and commercially meaningful legal disputes ever brought to the WTO. It has also been one of the longest running "sagas" in the history of the post-WWII multilateral trading system". Also, Dr. Eduardo Muñoz, Colombian Ambassador in the WTO, established that this agreement was the first step to reach other accords in the Doha Round.
Now, the Agreement must be introduced in the WTO system, in order to begin its application in a retroactive manner, according to its terms.
The Agreement establishes that the EU must reduce the tariffs on bananas up to 114 euro in a period of 7 years. Additionally, all pending disputes in the WTO regarding this matter terminate with the Agreement.
According to the Colombian Ministry of Trade, the banana's Colombian industry represents an important sector for the economic development of the country, for it represents 69,000 employments in rural areas. Moreover, the EU is the principal recipient of Colombian exports of this product, sending 72% of its production.
Furthermore, this agreement represents an important step in order to conclude the negotiations of the FTA between Colombia, Peru and the EU, since this was one of the principle problems that the negotiation was encountering.
1.7 COLOMBIA AND SOUTH KOREA BEGIN FTA NEGOTIATIONS
After receiving the approval of the Colombian Superior Council on International Trade, Colombia held the first round of negotiations with South Korea during the first week of December, in order to sign a Free Trade Agreement (FTA). The next round will be in Bogotá, the 1st of Mars, 2010.
South Korea is the first Asian country with which Colombia negotiates an FTA, in order to expand its market horizons in Asia and reinforce the bilateral relation.
According to the Colombian Chief Negotiator, during the first round the subjects, objectives, principles and structure of the negotiation were established. The negotiation will take place in Colombia and South Korea.
The Colombian Ministry of Trade pointed out that the Colombian exports to South Korea, between January and September 2009 summed up to USD $74 million: Coffee (48%), scrap metal (19%), ferronickel (18%) and chemical products (9%). On the other hand, Korean exports to Colombia in the same period reached USD $482 million: vehicles and parts (41%), machinery (29%), chemicals (19%), metallurgic products (3,4%) and textiles (3,2%).
Additionally, between 2002 and 2008, Colombia received Foreign Direct Investment from South Korea estimated in about USD $41.4 million, mostly directed to the trade sector.
If the parties reach an agreement, Colombia will have access to a market of 48.9 million people, in economic sectors such as coal, sugar, natural gas, petroleum, metals and others.
1.8 COLOMBIA WILL NEGOTIATE TRADE AGREEMENTS WITH AUSTRALIA
The Colombian Ministry of Trade announced that this year Colombia would initiate a negotiation with Australia to sign a Free Trade Agreement, a Bilateral Investment Treaty and a Double Taxation Agreement. With these negotiations, Colombia continues in the search of new markets.
The Colombian Minister and the Australian Minister signed in December a Memorandum of Understanding (MoU), which contains commitments on bilateral cooperation in matters such as: agriculture, services, infrastructure, telecommunications and information technologies. The MoU establishes the intention to sign different agreements, in order to protect foreign investment in both countries and to promote their commercial relations.
The Colombian Ministry of Trade pointed out that between January and September 2009, Colombian exports to Australia, added up to USD $14,5 million: coffee, chemicals, copolymers, salts, confections, flowers, mangos, dippers, cookies, among others. On the other hand, Colombian imports from that country summed up to USD $44,5 million: machinery and chemicals for the most part. Furthermore, in 2009 Colombia received up to USD $33,8 million in Foreign Direct Investment from Australia.
Additionally, in December 2009, the Colombian Minister of Trade announced the plan to begin negotiations of a new FTA with Singapore this year.
1.9 COLOMBIAN SENATE APPROVED BILATERAL INVESTMENT TREATY WITH CHINA
On November 24 of 2009, the Colombian Senate approved Bill No. 283/09S, by which the Bilateral Investment Treaty with China, signed in Lima the 22nd of November 2008, will be approved. Now, it has to be approved by the Chamber of Representatives and signed by the President, in order to proceed to its study by the Constitutional Court.
It represents an important agreement to improve commercial relations with this country and Asia, since Colombia receives a large amount of Foreign Direct Investment form this part of the world. Last year the amount of foreign investment form China in Colombia added up to USD $98.200: transportation (88%), industry (2%), mining (1%) and commerce (8%), according to data from the Colombian Ministry of Trade.
1. North Triangle: Guatemala, Honduras and El Salvador G-2: Colombia and Mexico
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