RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/172 
18 October 2006  
 
(06-5013) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
COLOMBIA 
 
  
 
This report, prepared for the third Trade Policy Review of Colombia, has been 
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has, 
as required by the Agreement establishing the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), sought clarification from Colombia on its trade policies and 
practices. 
 
Any technical questions arising from this report may be addressed to 
Mr Karsten Steinfatt (tel. 022 739 67 59) , Mr Mario Berrios (tel. 022 739 63 97) 
or Mr Raymundo Valdés (tel. 022 739 53 46). 
 
Document WT/TPR/G/172 contains the policy statement submitted by 
Colombia. 
 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Colombia. Colombia WT/TPR/S/172 
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CONTENTS 
 
  Page 
SUMMARY OBSERVATIONS vii 
(1) I NTRODUCTION  vii 
(2) E CONOMIC ENVIRONMENT  vii 
(3) T RADE AND INVESTMENT POLICY FRAMEWORK  vii 
(4) M ARKET ACCESS FOR GOODS  viii 
(5) E XPORT MEASURES  ix 
(6) O THER MEASURES AFFECTING TRADE  ix 
(7) S ECTORAL POLICIES  x 
I. ECONOMIC ENVIRONMENT 1 
(1) O VERVIEW  1 
(2) M ACROECONOMIC TRENDS  1 
(i) Structure, growth and employment 1 
(ii) Fiscal policy 4 
(iii) Monetary and exchange-rate policy 6 (iv) Balance of payments 8 
(3) T
RADE AND INVESTMENT FLOWS  10 
(i) Developments in trade in goods 10 
(ii) Trade in services 11 
(iii) Foreign direct investment 12 
(4) O UTLOOK  13 
II. TRADE AND INVESTMENT REGIME 14 
(1) O VERVIEW  14 
(2) G ENERAL LEGAL FRAMEWORK  14 
(3) T RADE POLICY FORMULATION AND OBJECTIVES  16 
(4) F OREIGN INVESTMENT REGIME  18 
(i) Introduction 18 
(ii) Authorization and registration requirements 18 
(iii) Sectoral restrictions 19 (iv) Protection 19 
(v) International investment agreements 20 
(5) I
NTERNATIONAL TRADE RELATIONS  21 
(i) WTO 21 
(ii) Preferentia l agreements 22 
(iii) Partial scope agreements  negotiated within LAIA 23 
(iv) Other agreements and arrangements in force 25 
(v) Other trade agreements 25 
 
 
  
 
 WT/TPR/S/172 Trade Policy Review 
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Page 
III. TRADE POLICY BY MEASURE 27 
(1) O VERVIEW  27 
(2) M EASURES AFFECTING IMPORTS  29 
(i) Customs documentation and procedures 29 
(ii) Customs valuation 30 
(iii) Rules of origin 32 (iv) Tariffs 34 
(v) Other charges 39 
(vi) Prohibitions 41 (vii) Licences, registration and other requirements 41 
(viii) Anti-dumping, countervailing and safeguard measures 46 
(ix) Standards and technical regulations 53 (x) Sanitary and phytosanitary measures 57 
(3) M
EASURES AFFECTING EXPORTS  62 
(i) Registration, documentation and export licences 62 (ii) Other charges and minimum prices 63 
(iii) Restrictions on exports 63 
(iv) Subsidies and other export-related tax concessions 65 
(v) Financing, insurance and guarantees 71 
(vi) Export promotion and marketing assistance 72 
(4) M
EASURES AFFECTING PRODUCTION AND TRADE  72 
(i) Legal framework for business 72 
(ii) Competition policy 73 (iii) Price controls 76 
(iv) State trading, State-owned enterprises and privatization 77 
(v) Incentives 78 (vi) Government procurement 81 
(vii) Intellectual property rights 83 
IV. TRADE POLICY BY SECTOR 87 
(1) O
VERVIEW  87 
(2) A GRICULTURAL SECTOR  88 
(i) Main features 88 
(3) M INING , EXCLUDING HYDROCARBONS  97 
(4) H YDROCARBONS (INCLUDING PETROLEUM BY-PRODUCTS ) 99 
(5) M ANUFACTURES  101 
(6) E LECTRICITY  103 
(7) S ERVICES  105 
(i) Telecommunications 106 
(ii) Financial services 111 
(iii) Transport 117 (iv) Professional services 124
 
 
REFERENCES 129 
 APPENDIX TABLES 133 
 Colombia WT/TPR/S/172 
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TABLES 
 
Page 
 
I. ECONOMIC ENVIRONMENT  
I.1 Basic economic indicators, 1997-2005 2 
I.2 Structure of GDP by expenditure, 1997-2005 3 I.3 Central government finances, 1997-2005 4 
I.4 Leading monetary indicators, 1997-2005 7 
I.5 Balance of payments, 1997-2005 8 
I.6 Trade in services, 1997-2005 12 
I.7 Net foreign direct investment by economic sector, 1997-2005 12 I.8 Net foreign direct investment by country of origin, 1997-2005 13 
 
 III. TRADE POLICY BY MEASURE 
III.1 Summary analysis of MFN tariff, January 2006 34 
III.2 MFN tariff structure, 2006 35 III.3 Tariff concessions granted under special customs regimes, July 2006 37 
III.4 Prior import licensing regime 42 
III.5 Requirements for the granting of import licences 44 III.6 Relationship between anti-dumping measures and domestic consumption 
 of the products concerned 47 
III.7 Relationship between anti-dumping measures and domestic consumption  of the products concerned 49 
III.8 Safeguard investigations (excluding special agricultural safeguards) 
 notified to the WTO, 1996-2006 50 III.9 Prior authorizations to export 62 
III.10 Temporary export restrictions, 2000-April 2006 64 
III.11 Incentives that have existed for free zone users 65 
III.12 Statistical data on the impact of the SIEX programme, 1998-2005 67 
III.13 Bancoldex disbursements, 1998-2005:  Foreign intermediaries 71 III.14 Andean competition proceedings involving Colombian enterprises, January 2006 76 
III.15 Participation in intellectual pr operty protection treaties, March 2006 84 
  
IV. TRADE POLICY BY SECTOR 
 IV.1 Group of agricultural and livestock products subject to tariff quotas and the SAFP 92 
IV.2 Manufacturing industries, 2003 101 
IV.3 Telecommunications indicators, 1996-2004 107 IV.4 Legal framework for the operation of telecommunications services, May 2006 110 
IV.5 Structure of the financial sector, February – March 2006 112 
 WT/TPR/S/172 Trade Policy Review 
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APPENDIX TABLES 
 
Page 
 
I. ECONOMIC ENVIRONMENT 
 AI.1 Merchandise exports by product, 1997-2004 135 
AI.2 Merchandise imports by product, 1997-2004 136 
AI.3 Merchandise imports by trading partner, 1997-2004 138 
AI.4 Merchandise exports by trading partner, 1997-2004 139 
  
II. TRADE AND INVESTMENT REGIME 
 AII.1 Selected notifications to the WTO, January 2006 140 
AII.2 Status of WTO dispute settlement pro ceedings involving Colombia, 1995-2005 144 
AII.3 Main proposals and submissions by Colombia within the framework of the  Doha Work Programme, August 2006 145
 
AII.4 Complaints filed against Colombia with th e Court of Justice of the Andean Community 146 
  
III. TRADE POLICY BY MEASURE 
 AIII.1 Tariff rates by preferential agreement, 2006 147 
AIII.2 VAT rates according to the Tax Code, July 2006 149 
AIII.3 General aspects of intellectual property right protection, 2006 150  
 
IV. TRADE POLICY BY SECTOR 
 
AIV.1
 Analysis of the effect of the price band on tariff rates, 2004 153 
AIV.2 Products subject to access comm itments with tariff quotas 154 
AIV.3 Summary of specific commi tments under the GATS 157 
AIV.4 Selected reforms to the banking system, 1997-2006 159 AIV.5 Selected reforms to the insurance regime, 1997-2006 160 
 
 Colombia WT/TPR/S/172 
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 SUMMARY OBSERVATIONS 
(1) INTRODUCTION  
1. Since its last Trade Policy Review in 
1996, Colombia has made definite progress in 
the modernization and liberalization of its 
trade regime;  non-tariff barriers to trade have been significantly reduced, although average tariff protection has increased slightly.  In parallel, Colombia has embarked on 
ambitious reforms of many economic sectors, 
particularly services, resulting in increased competition, lower prices, and expanded choice for consumers.  To consolidate and broaden these gains, it would be important to address, among others, certain practices 
related to customs, import licensing, local 
content requirements, internal taxes, and the regulation of certain services.  It would also be useful to reassess export promotion and incentive schemes.  Colombia's solid economic 
growth in recent years provides a favourable 
environment to carry out these and other reforms;  anchoring them through expanded multilateral commitments would enhance the predictability of Colombia's trade and investment regime, thus also fostering future 
growth prospects. 
(2) E
CONOMIC ENVIRONMENT  
2. Colombia's annual average real GDP 
growth was 2.2% in the period 1997-05.  This relatively modest economic performance 
partly reflects the effects of a deep financial 
crisis in 1998-99, which was preceded by a rapid expansion of domestic demand financed by private capital inflows, and a subsequent sharp deterioration in external financing 
conditions.  The rate of growth has 
accelerated in recent years, driven largely by private investment, consumption and exports. 3. In the aftermath of the 1998-99 crisis, Colombia embarked on fiscal reform, adopted a flexible exchange rate regime, and 
strengthened financial supervision and 
regulation.  These efforts have contributed significantly to the recent improvement in macroeconomic and prudential indicators in 
the financial sector. 
4. International trade is equivalent to 
some 40% of GDP.  The merchandise trade 
balance has been positive every year since 
1999.  Initially, this reflected a fall in imports following the financial crisis;  however, imports have strengthened recently, largely as a result of strong inflows of capital goods 
linked to higher private investment.  
Accordingly, the positive trade balance since 2003 results largely from increased export earnings, with growth in markets and improved terms of trade which have benefited from improved terms-of-trade and growth in 
export markets.  The increase in investment 
has contributed positively to recent economic performance, and reflects improved investor confidence. 
(3) T
RADE AND INVESTMENT POLICY 
FRAMEWORK  
5. Colombia is an original Member of 
the WTO.  The Multilateral Agreements and domestic ordinary laws have the same hierarchical status in Co lombia's legal system.  
Colombia participated in the extended 
negotiations on telecommunications and 
financial services.  Colombia is an observer in the plurilateral Agreement on Government Procurement;  it does not participate in the Information Technology Agreement.  
Colombia has maintained an active 
programme of notifications to the WTO and has tabled several proposals in the context of the Doha negotiations.  The Colombian authorities recognize and value the 
contribution made by the multilateral trading 
system to the predictability of Colombia's trade regime and its external environment, but perceive as limited Colombia's own influence on the content and speed of WTO negotiations. 
6. Colombia formulates trade policy 
mostly at the national level, taking into 
account its participation in the Andean Community.  Colombia attaches priority to  WT/TPR/S/172 Trade Policy Review 
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preferential trade agreemen ts.  Colombia has 
negotiated two new agreements since its last Review;  the agreement with the United States is particularly important, given that the United 
States is Colombia's main trading partner. 
7. Colombia's foreign investment regime is open.  A Constitutional amendment was adopted in 1999 to eliminate the Government's power to expropriate private property for 
"equity reasons" without compensation.  Since 
2005, investors have been able to subscribe contracts with the Government to guarantee the stability of the legal regime.  Under Colombia's investment statutes, the Government may limit foreign investment in 
any sector;  however, it has never exercised 
this power. 
(4) M
ARKET ACCESS FOR GOODS  
8. Since its last Review, Colombia has 
continued to modernize its trade regime, 
including simplifying and computerizing 
customs procedures.  Colombia applies the 
WTO Agreement on Customs Valuation since 2000.  Nevertheless, reference prices are used, which in the case of shoes and textiles, vary according to the origin of products.  Some 
imports originating from certain custom 
territories must use specific points of entry or require additional information to clear customs. 
9. The tariff is Colombia's main trade 
instrument;  all tariffs are ad valorem .  
Between 1996-06, the average applied MFN 
tariff increased slightly, from 11.5% to 12%.  The average tariff for agricultural products (16.5%, WTO definition) is higher than the 
average tariff for other products (11.3%).  In 
the framework of the Andean price band system, Colombia sets the tariff level for certain agricultural products according to their international prices.  The tariff structure shows signs of escalation.  Colombia has 
bound all its tariff lines thus providing greater 
predictability to its trade regime which, however, is reduced by a substantial gap between applied and bound tariffs.  The average bound tariff is 43%.  10. In the context of the Andean 
Community, Colombia grants duty-free treatment to imports originating from Bolivia, Ecuador, Peru and Venezuela.  It also grants 
preferential treatment to imports from other 
countries as provided by agreements subscribed under LAIA. 
11. In addition to tariffs, imports are 
subject to a value added tax and a 
consumption tax.  In general, imports receive 
national treatment in the application of these taxes.  However, the valu e added tax is levied 
at higher rates on imports of certain motor vehicles, motorcycles, airplanes and ships than on domestic products.  The application of 
the consumption tax also imposes a heavier 
burden on imported wine, liquors, spirits, cigarettes and tobacco than on domestic goods. 
12. During the period under examination, 
25 anti-dumping (AD) measures were applied, 
many of them on industrial inputs.  Most investigations initiated resulted in the imposition of definite dutie s.  Various products 
subject to AD measures constituted an important part of domestic consumption.  
Since 1996, Colombia has notified to the WTO 
nine safeguard investigations, four of which resulted in final measures.  The application of safeguard measures has largely affected textiles and clothing, particularly from China.  
Colombia applied no co untervailing measures 
between January 1996 and May 2006. 
13. Colombia has been active in adopting 
sanitary and phytosanitary (SPS) measures and technical regulations.  From April 1997 to 
August 2006, Colombia submitted to the WTO 
151 SPS notifications, the majority adopted in relation to animal diseases.  Between January 1995 and June 2006, Colombia submitted to the WTO 120 notifications in connection with the Agreement on Technical Barriers to Trade 
(TBT), the majority related to finished 
products, chemicals and processed foods.  During that period, Colombia carried out an extensive programme to eliminate official standards. Colombia WT/TPR/S/172 
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 14. Colombia prohibits the importation of 
used goods such as automobiles and their parts.  It imposes non-automatic licenses on 133 tariff lines, in a handful of cases to protect 
the domestic industry.  Colombia also applies 
import registry and automatic authorizations.  It would be important to ensure that such requirements do not become unduly restrictive. 
(5) E
XPORT MEASURES  
15. Colombia has sought to promote 
exports through various schemes.  It has notified the WTO that the free-zone regime and the special import-export system for capital goods (SIEX) were programmes 
containing export subsidies.  The WTO 
Committee on Subsidies and Countervailing Measures granted Colombia an extension of the transition period to eliminate export subsidies;  Colombia subsequently adopted 
various measures to accomplish this.  In 2002 
Colombia notified the elimination of export subsidies granted through the fiscal reimbursement certificates. 
16. The incentives Colombia provides in 
the context of its international 
commercialization regime continue to be 
conditioned on the expor tation of goods of 
Colombian origin.  The incentives granted under its programmes for frequent exporters and for special economic export zones are 
associated with minimum export requirements. 
17. Colombia maintains special charges 
on the exportation of certain products (including coffee, emeralds and some fuels) to finance development funds.  During the period 
under review, Colombia applied temporary 
export prohibitions on raw hides and skins and on ferrous waste and scrap to ensure domestic supply. 
(6) O
THER MEASURES AFFECTING 
TRADE  
18. Recent reforms have streamlined the 
process and reduced the cost of establishing businesses in Colombia.  Although Colombia 
has a relatively well developed competition policy framework, it would benefit from redefining the responsibilities of the entities 
responsible for implementing that framework.  
In practice, prices are not subject to official controls, with a few exceptions. 
19. Colombia notified the WTO that its 
domestic production absorption policy and the 
complementarity agreement it maintained with 
Ecuador and Venezuela for the automotive sector (see below) contained trade related investment measures.  
20. Colombia has notified the WTO that 
14 state trading enterprises maintain 
monopolies on the production, importation, 
exportation, distribution and sale of liquors.  Colombia has implemented an ambitious privatization programme but state participation in the economy continues to be 
important, especially in the electricity and 
petroleum sectors. 
21. Colombia maintains a variety of 
government support programmes for businesses.  These programmes provide, for example, financing or market access support, 
and may be sector-specific or of a horizontal 
nature.  The National Council for Economic and Social Policy (CONPES) has noted that the large variety of programmes in existence has resulted in a lack of unity in the criteria 
used to apply, assign and evaluate support 
instruments.  A reassessment of the nature and number of such programmes with a view to their possible rationalization could, thus, contribute to a more efficient use of support 
instruments and fiscal resources. 
22. Colombia is not a Party, but maintains 
observer status, to the WTO Plurilateral Agreement on Government Procurement.  Colombia's public pr ocurement regime does 
not differentiate between domestic and foreign 
firms.  However, certain provisions require a 
more favourable evaluation of offers that contain Colombian goods or services, and of offers of foreign goods or services that WT/TPR/S/172 Trade Policy Review 
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incorporate Colombian value added.  It is an 
open question whether the benefits derived from such preferences o ffset their cost to 
taxpayers. 
23. In 2001, the WTO TRIPS Council 
reviewed Colombia's intellectual property legislation.  Colombia's intellectual property rights regime is made up of national laws and regulations and Andean Community statutes.  
Colombia allows the parallel importation of 
patented products.  
(7) S
ECTORAL POLICIES  
24. The agricultural sector is of key 
importance to the Colombian economy due to its contribution to GDP, employment and 
exports.  The principal activities are the 
production of animals and their products, coffee, tropical fruits and flowers.  The agriculture and fishing sector (ISIC definition), received an average tariff 
protection (11.9%) marginally lower than the 
manufacturing sector (12.1%).  For products subject to tariff quotas, import quotas are allocated through public  auctions to importers 
offering to acquire the largest volumes of domestic production for a given quota.  
Colombia maintains non-automatic import 
licences for cuts and edible offal of poultry.  The agricultural sector also benefits from specific support programmes such as tax exemptions and preferential credit.  During 
the period under review, minimum prices were 
used for certain products (particularly grains).  
Starting on 1 January 2004, Colombia eliminated the domestic production absorption policy, which applied non-automatic import 
licenses to control the importation of some 
agricultural products. 
25. The petroleum and mining sectors 
(particularly crude pe troleum and coal) play 
an important export role .  Both sectors are 
open to private investment and foreign 
investors receive national treatment.  In 
practice, the state company has a dominant position in the extraction, refining, importation, distribution and transport of crude petroleum and its products.  Fuel subsidies, amounting to some US$2 billion in 
2005, remain a significant fiscal burden and source of distortions in resource allocation. 26. The electricity sector is also open to 
private investment although state-owned 
enterprises continue to play a strong role.  The sector has been affected by a high degree of market concentration and regulatory problems but steps have been taken to improve 
institutional coordination and supervision.  
27. In the context of a complementarity 
agreement with Ecuador and Venezuela, Colombia supports the automotive industry through measures that include a tariff regime that provides for rates of up to 35% on 
assembled vehicles but grants duty-free 
treatment to unassembled vehicles.  Furthermore, the importation of used vehicles is prohibited and, as noted, the value added tax discriminates against certain imported 
vehicles.  During the period under review, 
Colombia eliminated the minimum regional content requirements of the complementary agreement.   
28. Colombia has made commitments in 5 
of the 12 sectors under the GATS.  Colombia 
signed the Fourth Protocol on Basic 
Telecommunications, accepted the Reference Paper on regulatory principles in telecommunications, and signed the Fifth Protocol on Financial Services.  Although 
these commitments have enhanced the 
predictability of Colo mbia's services regime, 
further improvements could be made through additional multilateral engagements in excluded sectors, and a reduction of the gap 
between GATS commitments and the existing 
legal framework, which has been extensively liberalized in recent years. 
29. Colombia has continued to reform its 
telecommunications sector with a view to enhancing competition.  The long-distance 
monopoly was abolished in 1998 and the 
mobile duopoly in 2003.  The reform process has been accompanied by an increase in private investment and a reduction of state participation in the sector.  It would be 
important to pursue additional reforms, Colombia WT/TPR/S/172 
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 including to address the artificial distinction 
between different types of services which hinders technological development and the convergence of services and networks. 
30. The number of financial services 
providers has diminished sharply since Colombia's last Review, reflecting the closure of several banks during the financial crisis of 1998-99, and the merger of entities during and 
following the crisis.  The State's participation 
in the sector has decreased significantly.  There are no statutory restrictions on foreign ownership of commercial  banks or insurance 
companies.  Insurance service providers must 
be established in Colombia to offer their 
services, unless they receive special 
authorization. 
31. Colombia has reformed the 
institutional framework governing the transport sector, but institutional capacity 
problems persist.  Maritime transport is  
 essential for Colombia's foreign trade.  
Cabotage is limited to entities established in Colombia but these can be foreign owned.  Port reform has led to improvement in port 
productivity and to a reduction in tariffs.  
Domestic air service is reserved to aircraft operated by entities established in Colombia but such entities may be domestic or foreign owned.  The number of operators and 
frequencies in domestic routes are regulated.  
The administration of various airports has been given in concession to private operators. 
32. There are some 60 regulated 
professions.  In general, the statutes that govern each profession establish specific 
bodies in charge of supervision.  In principle, 
professionals with diplomas issued by foreign institutions must validate them before being allowed to practice in Colombia.  However, architects and engineers can offer their 
services temporarily without satisfying this 
requirement.