The United States-Colombia Free Trade Agreement took effect on Tuesday, making 80 percent of US exports to and imports from the South American nation duty-free immediately.
The agreement is good news for Massachusetts companies. Massachusetts exported nearly $97 million worth of goods to Colombia in 2011. Auto parts, information technology, and medical and scientific equipment manufactured in Massachusetts are considered “key exports” for which tariffs have been eliminated. Other products will see tariffs phased out over the next 10 years. Typical tariffs on US-manufactured industrial products range from 7 to 14 percent, so the savings for Massachusetts companies will be considerable.
What’s the economic situation in Colombia? It’s stable, with a healthy growth rate of 6 percent, low inflation at 3.7 percent, and relatively low unemployment. With a population of 47 million, Colombia is the third-largest economy in South America behind powerhouses Argentina (#2) and Brazil (#1). Colombia has a long-term, strong relationship with the US, and the US is Colombia’s largest trading partner. Colombia is a constitutional republic.
Challenges to trade still exist in Colombia. Poverty rates remain high and land ownership is lopsided, with nearly half of the land in the hands of only 1 percent of the people. Human rights and labor rights remain a concern. And security, though vastly improved, is still an issue.
Opportunities abound, however, for Massachusetts companies interested in pursuing trade. Colombians like US products. GM, Kimberly Clark, Unilever, Avon, HP and IBM have operations in Colombia. The country has ports on both the Atlantic and Pacific Oceans. Colombia has significant infrastructure needs. Tax incentives, which vary by industry, encourage companies to do business in Colombia. And the services industry is being opened to US companies and is estimated to be $170 billion. Massachusetts exports to Colombia have increased 30 percent in each of the past two years, indicating that many Massachusetts manufacturers are already finding success in trading with Colombia.
How can Massachusetts companies pursue trade opportunities with Colombia? One resource is ProExport Colombia, the Colombian government agency promoting foreign investment, tourism and exports. On a recent visit to Boston, ProExport Colombia’s Regional Executive Francisco Sierra invited Massachusetts firms to contact him at firstname.lastname@example.org and visit the agency’s website at www.proexport.com.co.
Businesses interested in meeting Colombian companies and pursuing partnerships or joint ventures should consider attending the June 28-29 matchmaking event in New York City, which will feature 500 Colombian companies. Visit www.macrorruedasproexport.com/nuevayork2012. The Boston Colombian Consulate is at www.consuladodecolombiaboston.com.
Closer to home, companies should contact the Massachusetts Export Center (www.mass.gov/export), the US Commercial Service Boston office (email@example.com) or the Mass. Office of International Trade & Investment (MOITI) at www.mass.gov/moiti.