The World Trade Organization conducted a Trade Policy Review (TPR) of Colombia last week, the first such review of Colombia since 2006. TPRs are a standard practice in the WTO and every member is subject to them every few years. Bigger participants in world trade get reviewed more often, so the European Union, for instance, would be reviewed more frequently than Colombia, while Botswana would come up less often. There are usually 15-18 reviews each year.
The TPRs give WTO members a chance to look at and comment on each others’ trade policies in a less confrontational fashion than the WTO’s dispute settlement regime offers. TPR discussions rarely get heated and are based on a dispassionate document prepared by the WTO secretariat to give an even-handed view of what each member is up to. The general procedure is for the secretariat paper to be published, the country being reviewed gets a chance to comment and correct things, and then other WTO members have a chance to ask questions. It is usually quite civil and often boring. Buried in all this, however, is that the WTO review document can be a very useful look at one country’s practices – and it is freely available for anybody to look at, not just for member governments.While I don’t know what happened in the actual review sessions in Geneva, Colombia comes out of the secretariat review document in impressive shape. The country’s economy and market is pretty open, and Colombia’s trade policy is largely conducted on the basis of negotiating agreements to open other countries’ markets. Colombia’s free trade agreement with the the United States wasn’t the only one in recent years, but part of a concerted policy by the Colombian government. In fact, another FTA was wrapped up Monday between Colombia and South Korea. Partially owing to Colombia’s growing number of trade agreements, average customs duties have dropped considerably since the previous review in 2006, from 12% to 6.2%. That doesn’t mean all is perfect and the WTO secretariat points out a number of areas in which Colombia might improve:
Although the general trend is towards greater openness and reduced obstacles to foreign trade, some non-tariff restrictions remain in place, mainly related to registration and import licensing requirements. The trade regime is also somewhat complex, owing to the large number of regulations.
Colombia has made progress simplifying its entry requirements, but administrative procedures can still be cumbersome. The WTO secretariat emphasized that Colombia uses a system of “reference prices”, rather than using what appears on invoices, that can arbitrarily change the value of imports when assessed for tariffs. While most imports, like domestic production, are subject to value-added tax, some imported products are exempt from the VAT if they do not have Colombian competitors. Could be worth checking on.
Colombia has the usual import controls against goods that may harm public health or morals. The country has an import licensing system, but it is mostly automatic and used to collect trade statistics. The prime exception is that licensing can be stiff if you are shipping something that can be considered a precursor to production of illicit drugs.
There is an emphasis on protecting agricultural production. Colombia’s average tariff on food products is 14.5%, much higher than the 4.9% average customs duty on manufactured goods.
Colombia initiated 25 antidumping investigations between 2006 and 2011, and assessed duties in 13 of the cases. Interestingly, considering China’s many loud protests against antidumping findings by the United States and the European Union, 12 out of Colombia’s 13 antidumping duties were against products dumped by China. Could it be that there is more dumping going on than Beijing cares to admit? Just a thought.
Product standards can be tough to figure out just because they are administered by multiple agencies. That’s not unusual and the WTO admits that Colombia’s standards are usually based on accepted international practice, have been duly reported to the WTO, and haven’t been that big an issue to most importers.
Colombia has few export restrictions. There was a temporary ban on exports of live female cattle to replenish the national herd. And there are small taxes assessed on exports of mild coffee, coal and emeralds. The proceeds go into economic development funds.
This is just a small taste of the information in the Colombia TPR. Any company considering doing business in Colombia will find it worth a glance.