PRESS/TPRB/41
26September 1996
TRADE POLICY REVIEW BODY
Review ofColombia
TPRB 'sEvaluation
TheTrade Policy Review Body oftheWorld Trade Organization (WTO) conducted itsfirst
review ofColombia 'strade policies on25and26September 1996. ThetextoftheChairman 's
concluding remarks isattached asasummary ofthesalient points which emerged during thetwo-day
discussion.
Thereview enables theTPRB toconduct acollective examination ofthefullrange oftrade
policies andpractices ofeachWTO member country atregular periodic intervals tomonitor significant
trends anddevelopments which mayhaveanimpact ontheglobal trading system.
Thereview isbased ontworeports which areprepared respectively bytheWTO Secretariat
andthegovernment under review andwhich cover allaspects ofthecountry 'stradepolicies, including:
itsdomestic lawsandregulations; theinstitutional framework; bilateral, regional andother preferential
agreements; thewider economic needs andtheexternal environment.
Arecord ofthediscussions andtheChairman 'ssumming-up, together withthese tworeports,
willbepublished induecourse asthecomplete tradepolicy review ofColombia andwillbeavailable
from theWTO Secretariat, Centre William Rappard, 154ruedeLausanne, 1211 Geneva 21.
Since December 1989, thefollowing reports havebeencompleted: Argentina (1992), Australia
(1989 &1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992), Cameroon (1995),
Canada (1990, 1992 &1994), theCzech Republic (1996), Chile (1991), Colombia (1990 &1996),
Costa Rica(1995), Côted'Ivoire (1995), theDominican Republic (1996), Egypt (1992), theEuropean
Communities(1991,1993&1995),Finland(1992),Ghana(1992),HongKong(1990&1994),Hungary
(1991), Iceland (1994), India (1993), Indonesia (1991 and1994), Israel (1994), Japan (1990, 1992
&1995), Kenya (1993), Korea, Rep.of(1992), Macau (1994), Malaysia (1993), Mauritius (1995),
Mexico (1993), Morocco (1989 &1996), NewZealand (1990), Nigeria (1991), Norway (1991 &1996),
Pakistan (1995), Peru(1994), thePhilippines (1993), Poland (1993), Romania (1992), Senegal (1994),
Singapore (1992 &1996), Slovak Republic (1995), South Africa (1993), SriLanka (1995), Sweden
(1990 &1994), Switzerland (1991 &1996), Thailand (1991 &1995), Tunisia (1994), Turkey (1994),
theUnited States (1989, 1992&1994), Uganda (1995), Uruguay (1992), Venezuela (1996), Zambia
(1996) andZimbabwe (1994).
MORE 96-3867PRESS/TPRB/41
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TRADE POLICY REVIEW BODY
Review ofColombia, 25-26 September 1996
CONCLUDING REMARKS BYTHE CHAIRPERSON
Over thepasttwodays, theTrade Policy Review Body hasconducted thefirstreview of
Colombia 'strade policies andpractices under theWTO framework. These remarks, intended to
summarize thesalient points, aremade onmyownresponsibility anddonotsubstitute fortheBody's
collective evaluation andappreciation. Details ofthediscussion willbereflected intheminutes of
themeeting.
Thediscussion developed under fourmain themes: (i)general issues concerning reforms;
(ii)regional andmultilateral issues; (iii)general trade issues; and(iv)sectoral issues.
General issues concerning reforms
MemberscommendedColombiaonthepositivemacroeconomicdevelopmentssincetheprevious
review in1990aswellasthelegislative, policy andinstitutional reforms, including theliberalization
oftheforeign trade, exchange andinvestment régimes. These hadbeenreflected insolid economic
growth, adecline intherateofinflation, strong capital inflows andimproved public finances. Concern
wasexpressed thatrecently, thereappeared tohavebeensome economic slowdown andslight increase
ininflation. Questions wereposed withrespect to:thefrequency oftaxchanges; theimpact ofthe
anti-inflationary Social Pact; possible increases inpublic expenditure arising from social spending
under theDevelopment Plan; fiscal andstructural implications oftheprivatization programmes; the
compatibility between constitutional provisions onexpropriation andnewlawsguaranteeing investors '
rights; thepossible impact ofoilrevenues andoil-related investment ontheeconomy, including the
operation oftheOilStabilization Fund; andthesocial costsoftheadjustment programme. Questions
were alsoposed onthestage ofimplementation ofvarious legislative reforms.
Therepresentative ofColombia began hisresponse byindicating thatthetradepolicy changes,
begun inthe1990s, hadtaken place inthecontext ofmuch wider changes intheConstitution andthe
rôleoftheState, which werestillcontinuing. Heoutlined changes inthemanagement oftradepolicy
andinmacro-economic management, aswellasthelatest trends ineconomic indicators. Hegavedetails
oftheColombianGovernment'sexpectationsfortheperiodahead,withacontinuedreductionininflation
andthefiscal deficit, non-traditional andpetroleum exports wereexpected tocontinue growing while
thegrowth ofimports would slowdown. Theprivatization programme wascontinuing, withelectricity
supply andCARBOCOL currently ontheagenda.
Therepresentative went ontoprovide details ofthemost recent changes intheinvestment
régime, continuing thetrend togreater openness; there werefewincentives forinvestment other than
arecent taxpremium provision. Heclarified thatexpropriation without compensation provisions
contained inthe1991Constitution hadnever beenapplied; aconstitutional amendment hadachieved
firstapproval byCongress andwould continue theprocess inthenextlegislature. Further legislative
changes allowing forforeign investment insectors suchaslegal andinsurance services were under
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consideration. Landspeculation andmoney laundering wasthemaintarget ofrestrictions onrealestate
purchases.
Therepresentative emphasized thattheColombian Government wasconscious oftheneedto
maintain thestability oftherealexchange rateandhadtaken steps toavoid anydisruptive effects of
large capital inflows. Measures hadbeentaken togenerate sufficient savings toensure BOPstability
andmaintain ahighrateofpublic andprivate investment. Thenewpetroleum sources wereexpected
tobring innewearnings for10-20 years: thePetroleum Savings andStabilization Fund, which was
toinvest abroad, wasintended topromote prudent useofthese earnings andavoid inflationary and
other macroeconomic pressures. The"wartax"wasintended tosupport anti-guerilla activity; ithad
beeneliminated forinvestments made after1995 andwould becompletely eliminated in2001.
Regional andmultilateral issues
MemberstooknoteoftheimportanceattachedbyColombiatoincreasedparticipationinregional
trade agreements, including those withtheAndean Group, theGroup ofThree andChile, aswellas
itsactive involvement intheplans fortheestablishment ofaFreeTrade Area oftheAmericas.
Colombia 'sinterest instrengthening economic links withtheAsia-Pacific region countries through
PECC andAPEC wasalsonoted. Members sought Colombia 'sviews ontheprospects foropen,
outward-oriented andtrade-creating regionalism aswellasonthefurther development ofrelations with
MERCOSUR intradeandinvestment. Some participants recalled thatColombia hadyettomeetfully
itsWTO notification obligations relating toregional agreements.
Members welcomed theexpansion ofColombia 'smultilateral commitments, particularly with
respect totariff bindings, andnoted theerosion ofpreferential treatment asaresult ofthe
Uruguay Round. They asked forup-to-date information onColombia 'simplementation ofthe
WTO Agreements, particularly those withlonger periods forimplementation bydeveloping countries.
SomeparticipantsinquiredabouttheprospectsforColombia'sbecomingamemberofcertainPlurilateral
Agreements.
Therepresentative ofColombia indicated thateconomic integration wasapillar ofColombia 's
model ofoutward-oriented economic development; itwasseenasstrongly complementary tounilateral
liberalization. Closer relations with other Latin American countries -including therecent
Andean-Mercosur framework agreement andanagreement withChile, wereseenbyColombia assteps
onthewaytotheFree-Trade AreaoftheAmericas andtofurther multilateral liberalization; inthis
context, herecalled thattheUruguay Round commitments were partoftheoverall framework that
allcountries nowapplied. TheCartagena Agreement hadbeennotified toGATT under theprovisions
oftheEnabling Clause; theagreement withChile hadsimilar status. Thecommon external tariff
(CET) applied since January 1995 wasconsistent withmore open regionalism, obliging industry to
become more competitive. While intra-regional growth hadbeenstrong, thiswasnotattheexpense
ofother trading partners. National exceptions totheAndean CETwerebeing progressively eliminated
andshould disappear bytheyear2000. Theexclusion ofagricultural products intheG3Agreement
wasrelated tothesensitivity ofthese products, butthecoverage wasverylow; thisAgreement was
concluded within theLAIA framework andhadbeennotified totheWTO Committee onTrade and
Development.
General trade issues
MembersexpressedtheirappreciationforColombia'stradeliberalizationthroughtariffreductions
andtheelimination ofvirtually allquantitative orlicensing measures. Information wassought onthe
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current listofColombia 'sexceptions totheAndean Group 'sCommon External Tariff. Members sought
clarification onmany aspects ofthepre-shipment inspection régime andprocedures, theconsistency
ofthecustoms valuation system withtheWTO Agreement, standards, thedifferential ratesofVAT
andtheconsumption taxapplicable todomestically produced andimported goods, safeguard and
anti-dumping/countervailing measures, government procurement andSPSprocedures.
Members noted thatnon-traditional exports hadgrown, partly because ofsupport fromexport
assistance schemes suchasCERT andSIEX andinquired about anyplans fortheirphase-out by2003
inrespect ofmanufactured items.
Several members appreciated theintroduction ofnewandimproved legislation onintellectual
property; theyalsoasked fordetails onitsenforcement.
Therepresentative ofColombia tooknoteoftherecognition bymembers oftheprogress
Colombia hadmade initsunilateral tradereforms. Hegavedetails oftheoperation ofthePSIsystem,
which wasdesigned tofacilitate trade andessentially targeted atgoods most susceptible to
under-invoicing; anewdecree rectifying some procedures would benotified. Customs valuation was
nowconsistent withWTO procedures, under Andean Group legislation. TheGovernment wasstudying
howtoeliminate thedifferential VATonsmall, imported vehicles. Details weregiven ontheoperation
oftheconsumption taxonspirits andbeer. Information wasalsogiven onconditions foracceptance
ofcertificates oforigin; theoperation oftheanti-dumping mechanism onspare partsandequipment;
restrictions ontheimportation ofsecond-hand goods, including vehicles andparts which, the
representative said, hadnocommercial significance andwere based ontherelevant Andean Group
Resolution. Henoted thatother restrictions werefounded onArticle XXofGATT 1994andthatthe
new,national information system onstandards wasbased oninternational rulesincluding those ofthe
WTO. Gaps inColombia 'ssafeguards legislation hadalready been filled under thenewLaw170.
therepresentative provided details onnewrules ongovernment procurement; open tendering with
national treatment onareciprocal basis, wasthegeneral rule. Mining andtelecommunications were
alsocovered bythereciprocity principle, which applied tothetreatment given bytrading partners.
Colombia wasanobserver intheAgreement onGovernment Procurement; however, nodecision had
yetbeentaken onitspossible future membership.
Therepresentative alsoprovided further information onColombia 'sexport régime, including
export-linked taxexemptions onimported materials andconcessions oncapital goods available toall
enterprises under thePlanVallejo, which hadbeendulynotified totheWTO Committee onSubsidies.
Colombia wasworking tobring itsCERT ratesintolinewithWTO provisions. There werenoexport
licences except under CITES andgoods subject toimport restrictions inoverseas markets.
Therepresentative ofColombia saidthathisGovernment applied Andean Group decisions on
intellectual property rights, onanm.f.n. basis. Administrative andpenal provisions existed toenforce
these rules. Colombia wasavailing itself ofthetransitional provisions oftheTRIPS Agreement to
bring itslegislation andpractices fullyintoline.
Sectoral issues
Questions wereraised onthecompatibility withtheUruguay Round Agreement onAgriculture
ofmeasures currently inforce intheagricultural sector, including marketing arrangements, reference
prices, import licensing under thedomestic absorption régime. Members alsoquestioned whether the
variable levies under theAndean Price Band System werelegitimate, orcould leadtoviolation oftariff
bindings. Colombia wasalsoasked when aprocedure forimplementation oftariff quotas would be
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implemented. More information wassought ontherôleoftheSectoral Competitiveness Agreements
inagriculture.
Members asked questions about several aspects ofColombia 'sautomotive policy, including
localcontent andexport performance requirements andrestrictions onimports ofusedmotor vehicles.
Itwasrecognized thattheremoval ofpastrestrictions hadledtosubstantial growth intradeinvehicles.
Questions wereraised onplans relating tothephase-out ofexisting measures under theprovisions of
theTRIMS agreement.
Clarification wasrequested ontherégime affecting long-distance telecommunication services,
including theareareserved fornationals, andforColombia 'sactive participation tothenegotiation
onbasictelecomswasencouraged.Similarinquiriesweremadeaboutrecentderegulationinthefinancial
sector andrestrictions applied inprofessional, insurance andaudiovisual.
Therepresentative ofColombia gaveextensive details ofhiscountry 'sagricultural policies:
domestic absorption policies weredesigned toguarantee theacquisition oflocalproduction, notfor
self-sufficiency goals. These werelessrestrictive thanincreasing tariffs toceiling bindings. Colombia
believed thatthese measures were permitted under provisions oftheTRIMS Agreement, including
exceptionsfordevelopingcountries,andthattheproceduresappliedwerecompatiblewiththeAgreements
onAgriculture andonImport Licensing Procedures.
Therepresentative stated thatColombia hadfullymetitsmarket access commitments. Applied
tariffs were normally below bound levels, including inquota levels. Ofthose products referred to
byoneMember, onlybutter andbeans weresubject tominimum access commitments butthese were
notcovered bydomestic absorption orimport licensing provisions. Forother products, domestic
absorption requirements werenotthereason forthelackofgrowth ofimports, butalsodepended on
supply anddemand forparticular products. Insome cases imports substantially exceeded Colombia 's
access commitments. Bothm.f.n. andpreferential imports werecounted against access commitments.
Therepresentative gavedetails ontheoperation oftheAndean Price Band System, which was
designed tostabilize import costsdespite fluctuations ininternational prices. InColombia 'sview, the
system wascompatible withtheWTO Agreement onAgriculture; ithadresulted inapplied tariffrates
wellbelow bound levels. Theminimum reference prices forcustoms valuation purposes werecovered
byColombia 'sreservation under Article 20andAnnex IIIoftheCustoms Valuation Agreement. The
price bandmechanism hadhelped tomaintain incomes inpoorsectors.
Therepresentative ofColombia explained thatSPSprovisions were based oninternational
standards andonlyapplied afterduenotification totheWTO. Restrictions onimports ofporkand
hamfromaEuropean country related totheincidence ofAfrican Swine Pestintheexporting country;
onevidence oftheelimination ofthedisease, these hadbeenlifted forallAndean countries.
Sectoral Competitiveness Agreements weredesigned toincrease efficiency andcompetitiveness.
These werebeing modified within thetime-frame envisaged bytheWTO Agreements. TheGovernment
haddecided toreduce therôleofthestateagency, IDEMA, inpurchases andstock management, leading
toagreater rôlefortheprivate sector ininternal marketing.
Onservices, therepresentative stated that,while basic telecommunications wasreserved to
theState, themarket fornational longdistance andinternational services wastobeopened totwonew
operators from 1997: mobile telephony hadalsobeenopened up.Thus, thenational monopoly for
long-distance services haddisappeared because ofdeliberate Government decision, notbecause of
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unauthorized call-back services. There werenolimits onforeign participation intheestablishing of
companies toprovide financial services; however, theyweresubject tothesame prudential conditions
asnational companies. Colombia 'soffers intheareaoffinancial services were linked totheoffers
ofitsmajor trade partners.
********************
Overall
Members welcomed theimportant steps taken inrecent years byColombia towards amore
open andliberal economy, through constitutional, legislative andadministrative reform, tariff
simplification andreduction, andprivatization programmes inanumber ofsectors. Concerns about
certain sectors emerged clearly inthediscussion, including agriculture, textiles, automobiles andsome
services. Itwasalsoemphasized thatregional arrangements should befullyconsistent withmultilateral
liberalization andrulesunder theWTO. Overall, however, thethrust ofthediscussion wassupportive
oftheunderlyingdirectionofColombia'seconomicandtradepoliciesduringaperiodofsharptransition.
There wasstrong encouragement fortheColombian authorities toconsolidate andbuild onthe
achievements ofthepastfewyears.
Welookforward toreceiving thewritten replies promised byColombia induetime.
END