EMBARGO: NOT FOR PUBLICATION
BEFORE 13:00 HRS GMT 26SEPTEMBER 1996
PRESS/TPRB/39
18September 1996
COLOMBIA 'SLIBERALIZATION PROCESS STIMULATES INVESTMENT AND LEADS
TOGREATER INTEGRATION INTHE WORLD ECONOMY
Colombia 'smarket-opening measures, itsimplementation oftheUruguay Round commitments
anditssix-year effort atsound macro-economic management havecreated newinvestment opportunities
andaccelerated Colombia 'sintegration intheworld economy. According toaWTO Secretariat report
onColombia 'stradepolicies andpractices, Colombia 'simplementation ofamajor tradeliberalization
programme hasresulted insignificantly lower tariffs, fewer non-tariff measures andanumber ofmarket
access commitments inprofessional andfinancial services. Offers have alsobeen made in
telecommunications andmaritime transport services.
ThenewWTO report andoneprepared bythegovernment ofColombia willserve asthebasis
fortwodaysofdiscussion on25and26September. Colombia 'strade policies werelastreviewed in
1990. Since then,Colombia 'seconomy hasgrown atanaverage annual rateofover5percent.Inflation,
curbed fromover32percentin1990 tojustunder 20percentin1995, isexpected todropto10per
centby1998.
Although traditional exports suchascoffee, oilandcoal, continue toinfluence thelevelof
foreign exchange earnings, theSecretariat report states thatinrecent years export growth haslargely
beenbased onnon-traditional exports. Although theUnited States isstillColombia 'smajor trading
partner, imports frompreferential suppliers fromtheregion, mainly Andean Group partners (Bolivia,
Ecuador, Peru andVenezuela) have greatly expanded. Integration withtheAndean Group has
advancedmore thanwithanyother group orcountry intheregion. TheGroup hasadopted acommon
external tariffandhassuppressed barriers tovirtually allintra-regional trade. Colombia isalsopursuing
theintensification ofregional trading linksthough itsmembership oftheG3withMexico andVenezuela,
andoftheAssociation ofCaribbean States. Itisexamining thepossibility ofestablishing aformal trade
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agreement withMERCOSUR andisalsoactively engaged inthenegotiations toestablish aFreeTrade
Area fortheAmericas.
Thereport notes thatpreferential access ofColombian exports totheregion 'smarkets aswell
astotheUnited States andtheEuropean Union hasimproved. Apart fromordinary Generalized System
ofPreferences (GSP) treatment, Colombian exports totheUnited States andtheEUhavebenefitted
since theearly 1990s from extended preferential schemes. Atpresent, Colombia isconcerned about
thepossible withdrawal oftrade preferences bytheUnited States because oftheillicit drugtrade.
Border protection isnowmainly intheform oftariffs, contained inthefive-tier Common
External Tariff (CET) oftheAndean Group which hasratesof0,5,10,15and20percent. Within
theCET, tariffescalation stillprovides substantially higher effective protection forprocessing industries
thanisevident fromnominal rates. Thereport notes thatwiththeexception of"tariffied" agricultural
items, WTO binding commitments cover theentire customs tariff. Ceiling levels, generally at35per
cent, contrast withtheaverage applied rateof11.5percent.
Sincethepreviousreview,appliedtariffprotectionforthemanufacturingsectorhasbeenreduced
to11.6percent,lessthanhalfofthe1989 level, andimport quotas havebeeneliminated. Atpresent
foodprocessing, textiles, clothing andfootwear havethehighest average levels oftariff protection.
Agriculture issupported byimport licensing andvariable levies; production-related measures
adopted since1993aredesigned tohelpsmall scaleproducers andstimulate private sector participation
inprocessing andmarketing.
Thereport states thatrecent andsubstantial protection isprovided fortheautomotive sector
bylocal-content andexport performance requirements fortheautomotive sector. However, theseshould
beeliminated bytheyear2000 under thetransitional arrangements oftheWTO TRIMS Agreement.
ColombiahasinvokedtheextendedimplementationperiodsavailableintheWTOfordeveloping
countries insuchareas ascustoms valuation, export subsidies andTrade-related aspects ofIntellectual
Property Rights (TRIPS).
Following recent liberalization, financial services, transport, telecommunications, tourism and
retail trade havegrown strongly. Certain barriers orspecific requirements onforeign investors or
professionals remain inforce, forexample inaudiovisual productions andbroadcasting. Progress in
reducing Stateparticipation incertain activities, especially inportfacilities andtransportation, hasbeen
achieved through privatization orthegranting ofconcessions, asintelecommunications. InJuly1995
Colombia 'scommitments under theGeneral Agreement onTrade inServices (GATS), covering most
modesofsupplyforanumberofprofessionalservices,constructionandengineering,werecomplemented
withundertakings inthefinancial sector. Exemptions tom.f.n. treatment relate toprevious obligations
vis-à-vis Latin American andother partners. Initial offers havebeensubmitted inthenegotiations
onmaritime transport andbasic telecommunications services.
Thereport concludes thatColombia 'sautonomous process ofmarket-opening hasbeen
strengthened bytheincreased security ofaccess resulting fromitsextended commitments intheUruguay
Round. Theopening oftheeconomy hascreated newinvestment opportunities, which should also
beencouraged byimproved macroeconomic stability, solidgrowth andongoing fiscal reforms. The
expansion ofregional trade growth should continue asnewagreements areforged. Thereport notes
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thatfullimplementation ofUruguay Round commitments should further strengthen theliberalization
process andColombia 'sintegration intheworld economy.
Notes toEditors:
TheWTO Secretariat 'sreport, together withareport prepared byColombia, willbediscussed
bytheWTO Trade Policy Review Body (TPRB) on25and26September 1996. TheWTO 'sTPRB
conducts acollective evaluation ofthefullrange oftrade policies andpractices ofeachWTO member
atregular periodic intervals andmonitors significant trends anddevelopments which mayhaveanimpact
ontheglobal trading system.
Tworeports, together withareport oftheTPRB 'sdiscussion andoftheChairman 'ssumming
up,willbepublished induecourse asthecomplete Trade Policy Review ofColombia andwillbe
available fromtheWTO Secretariat, Centre William Rappard, 154ruedeLausanne, 1211Geneva 21.
Thereports cover development ofallaspects ofColombia 'stradepolicies, including domestic
lawsandregulations, theinstitutional framework, trade policies bymeasure andbysector. Since the
WTO cameintoforce, the"new areas" ofservices tradeandtrade-related aspects ofintellectual property
rights arealsocovered. Attached arethesummary observations fromtheSecretariat andgovernment
reports. Fullreports willbeavailable forjournalists from theWTO Secretariat onrequest.
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), Chile (1991), Colombia (1990), Costa Rica(1995), Côted'Ivoire (1995),
Czech Republic (1996), Dominican Republic (1996), Egypt (1992), theEuropean Communities (1991,
1993 &1995), Finland (1992), Ghana (1992), Hong Kong (1990 &1994), Hungary (1991), Iceland
(1994), India (1993), Indonesia (1991 and1994), Israel (1994), Japan (1990, 1992 and1995), 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) and
Zimbabwe (1994).
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TRADE POLICY REVIEW BODY
COLOMBIA
Report bytheSecretariat -Summary Observations
TheEconomic Environment
Since thefirstTrade Policy Review ofColombia in1990, sound macroeconomic management
hascontributed tothecontinuous growth oftheeconomy ataverage ratesofover5percent,although
thismayslowto4percentin1996. Progress hasalsobeenmade, assisted byaSocial Pact,inreducing
inflation fromover32percentin1990to19.5percentin1995, andtheNational Development Plan
envisages areduction to10percentby1998.
These results havebeenachieved despite thepotentially destabilizing effects onmoney supply
ofstrong capital inflows. These inflows werestimulated by,interalia,theliberalization oftheforeign
exchange andinvestment régimes, increased investment opportunities related tonewoildiscoveries
andprivatization, andhighinterest rates. Theinflows alsoresulted inarealappreciation ofthecurrency
which hasraised concerns about thecompetitiveness ofColombian exports, butfalling inflation and
theapplication ofthecrawling band exchange ratesystem seems tohavereversed theappreciation
in1996. InJuly1996, certain foreign direct investment requirements were relaxed.
Since 1993, Colombia 'scurrent account andmerchandise tradebalance hasrecorded adeficit.
Faster import growth, mainly from regional trading partners, stimulated bytrade liberalization and
therealappreciation ofthecurrency, hascontributed anincreasing share oftrade inGDP. Although
traditional exports suchascoffee, oilandcoal, continue toinfluence thelevel offoreign exchange
earnings, inrecent years export growth haslargely beenbased onnon-traditional exports, which rose
from 39percentin1991 toreach some 53percentofthetotalin1995. Given thecapital account
situation, thecurrent account deficit isseenasmanageable.
Trade Policy Features andTrends
International economic integration
Theimplementation ofthemajor trade liberalization programme (Apertura), initiated atthe
timeofthefirstTrade Policy Review, hasaccelerated Colombia 'sintegration intheworld economy.
Thestructure oftariffs hasbeenrationalized andtherateslowered significantly toasimple average
of11.5percent. Thecoverage ofnon-tariff measures hasbeenfurther reduced andnowfocuses on
afewsectors subject tospecific domestic orsub-regional policy objectives; balance-of-payments
measures wereeliminated in1992. Apart fromafewanti-dumping cases, nosafeguard actions have
beentaken against imports from WTO partners.
Although theUnited States isstillColombia 'smajor trading partner, imports frompreferential
suppliers from theregion, mainly Andean Group partners, havegreatly expanded. Integration with
theAndean Group hasadvanced more thanwithanyother group orcountry intheregion; theGroup
hasadopted acommon external tariff andbarriers tovirtually allintra-regional trade have been
suppressed.Colombiaisalsopursuingtheintensificationofregionaltradinglinksthoughitsmembership
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oftheG3withMexico andVenezuela, andoftheAssociation ofCaribbean States, andisexamining
thepossibility ofestablishing aformal tradeagreement withMERCOSUR. Itisalsoactively engaged
inthenegotiations toestablish aFreeTrade Area fortheAmericas.
Preferential access ofColombian exports totheregion 'smarkets aswellastotheUnited States
andtheEuropean Union hasimproved. Apart from ordinary GSPtreatment, since theearly 1990s
Colombian exports totheUnited States andtheEUbenefit fromextended preferential schemes. The
possible withdrawal ofATPA preferences bytheUnited States, related tothedrugs issue, isofconcern
toColombia.
Trade policy developments
SincethepreviousTradePolicyReview,ColombiahasadoptedanewConstitution,implemented
itsunilateral market opening programme (Apertura) andexpanded tradecommitments bothatregional
andmultilateral level. Inmodernizing thepolitical system, greater regional decentralization was
introduced. Overall trade policy responsibilities wereentrusted toanewMinistry ofForeign Trade,
andtheCentral Bank(theBankoftheRepublic) became fullyindependent. Neworamended legislation
wasadopted inareas suchascustoms valuation, preshipment inspection, anti-dumping, safeguards
andintellectual property rights tomeet obligations undertaken inregional ormultilateral fora, but
implementing regulations remain tobeintroduced inanumber ofareas. Colombia hasinvoked the
extended implementation periods available fordeveloping countries insuchareasascustoms valuation,
export subsidies, andTRIPS.
Border protection nowrelies mainly ontariffs, contained inthefive-tier Common External
Tariff (CET) oftheAndean Group, withratesof0,5,10,15and20percent. Within theCET, tariff
escalation stillprovides substantially higher effective protection forprocessing industries thanisevident
fromnominal rates. WTO binding commitments cover theentire customs tariff, generally ataceiling
levelof35percent(against theaverage applied rateof11.5percent), except for"tariffied" agricultural
items. Provisions fortariff exemptions, forexample onimported inputs, have beenrationalized,
eliminating many general exemptions, butthevalue ofexempt imports hassignificantly increased.
Remaining sector- orproduct-specific measures affecting imports include variable import levies,
domestic absorption contracts, differential levels ofvalue-added taxondomestic products andimports,
referenceprices,restrictiveimportlicensing(maintainedmainlyinconnectionwithhealth,environmental,
orsecurity reasons), certain import prohibitions andlocalorsub-regional content requirements. State
involvement inproduction andtrading operations isbeing reduced. Since late1993, compulsory
standards haveapplied inanon-discriminatory manner; work onmutual recognition orharmonization
ofstandards hasbeeninitiated withcertain countries intheregion. Newgovernment procurement
legislation, concluded in1993, gives equal treatment tolocalsuppliers andcompanies fromcountries
granting reciprocal treatment andeliminated a25percentsurcharge onoffers bythelatter.
Export taxes arelevied oncoffee, crude oil,gas,coalandferro-nickel. Although noexport
prohibitions areinforce, export restraints based oninternational orbilateral arrangements continue
toaffect coffee andtextiles.
Assistance tonon-traditional exports isstillprovided through thetaxreimbursement certificate
mechanism (CERT); theSIEX mechanism forduty-free access ofmachinery forexport production;
andatransport subsidy covering freight andtranshipment feesfordestinations towhich Colombia does
MOREPRESS/TPRB/39
Page7
notmaintain adirect cargo route. TheuseoftheCERT andSIEX mechanisms hasbeenreduced and,
inaccordance withWTO provisions, Colombia istoeliminate export subsidies formanufactures by
theyear2003 andprogressively cutbudgetary outlays forexports ofagricultural products. Certain
Colombian exports (cutflowers, PVC films, disposable syringes andaluminium hollow sections) have
been, orremain subject to,anti-dumping orcountervailing measures insome foreign markets.
Since 1991, finance, insurance andpromotion facilities forexports havebeenextended. The
free-trade-zone régime hasbeenrevised; theadministration ofthezones hasbeenprivatized andtheir
coverage expanded toinclude tourism-related activities.
Support todomestic production, including small andmedium-size firms, isnowlimited to
ensuring finance formodernization, training, technology transfer, development andenvironmental
projects. Research anddevelopment issupported through fiscal incentives. Trade-related regional
assistance isextended through theestablishment offreezones, special customs régimes, preferential
loans andguaranteed intervention prices foragriculture. Other agricultural assistance includes various
low-cost loanschemes anddebtrelief forsmall producers. Since 1995, thenegotiation ofsectoral
"competitiveness agreements" hasbeenencouraged; these involve thecreation ofvertically-linked
industriesandare,interalia,aimedatstrengtheningco-operationwithinsectors.Consumerpricecontrols
wereeliminated in1991, except foressential medicines andcertain public services; however, minimum
guaranteed prices existforalimited range ofagricultural products andintervention prices areseton
anadhoc,temporary basis forregional assistance.
Thelegalframework fortheprotection ofintellectual property rights hasbeensubstantially
reinforced through accession tointernational treaties andrecent Andean Group Decisions. Since 1992,
legislative andinstitutional changes havebeenintroduced intheareaofcompetition policy; anumber
ofinvestigations onmergers havebeencarried out. Colombia hasalsoincreased itsemphasis on
environmentally sustainable development.
Sectoral Policy Developments
Agriculture
Theagricultural sector enjoys protection under theConstitution anditsrevitalization, partly
forsocialreasons,formspartoftheGovernment'sdevelopmentplans.LiberalizationundertheApertura
programme hasledtothereduction ofaverage nominal tariff protection forthesector, asdefined in
terms oftheUruguay Round, toanaverage of10.7percent, lessthenonethird ofits1989 level,
aswellastherelaxing ofimport restrictions; this,combined withlowworld commodity prices in
theearly 1990s, thehighlevelofdomestic lending ratesandadverse climatic conditions, hasledto
thedecline indomestic production ofcertain import-competing crops.
Asaresponse tothiscritical situation, under anewframework lawof1993, arange ofmeasures
hasbeenadopted orstrengthened, mainly tosupport small producers. Production-related measures
currentlyincludesubsidizedloansandlandsales,debtrecoveryorsupport,pricesupportandstabilization
mechanisms, marketing arrangements andmodernization subsidies. Policy guidelines arefocused on
ways tostimulate theparticipation oftheprivate sector inprocessing andmarketing operations, as
wellasthenegotiation ofintra-sectoral competitiveness agreements.
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Asystem ofvariable import levies wasintroduced in1991 and,subsequently, applied at
sub-regional levelunder theAndean Price BandSystem; however, theauthorities provided information
totheSecretariat toshow thatthelevies didnotbreach Uruguay Round binding commitments in1995.
Priorimport licensing, conditioned byself-sufficiency principles anddomestic absorption requirements,
hasnotyetbeen"tariffied". Aprocedure fortheallocation ofquotas foritems subject totariffquotas
under theUruguay Round Agreement onAgriculture hasyettobeimplemented.
Agricultural exports absorb alargepartoftheCERT outlays. Incompliance withcommitments
inthecontext oftheAssociation ofCoffee Producing Countries, exports ofcoffee havebeenvoluntarily
restrained ontwooccasions. Prior authorization isrequired forexports ofriceandsugar. Since 1994,
banana exports totheEUhavebeensubject totariff quotas; thebasisforallocation ofthisquota was
modified in1996.
Manufacturing
Sincethepreviousreview,appliedtariffprotectionforthemanufacturingsectorhasbeenreduced
to11.6percent,lessthanhalfofthe1989 level, andimport quotas havebeeneliminated. Atpresent
foodprocessing, textiles, clothing andfootwear havethehighest average levels oftariff protection.
Subsidy components oftheCERT andSIEX schemes which havebeennotified totheWTO, assist
exports. Therecent riseininterest ratesandappreciation oftheexchange rateaswellassmuggling of
clothing, household appliances andcigarettes haveimpeded themodernization andgrowth ofthese
manufacturing sectors.
Recent policies fortheautomotive sector, allowing forsome deregulation andflexibility, have
contributedtoimprovingtradeandassemblyperformance.Nevertheless,substantialprotectionmeasures
remain inforce; theseinclude apeaktariffof35percentforcompletely-built-up (CBU) motor vehicles,
differential VAT rates, import prohibitions onused parts andvehicles, andexport performance
requirements. Thecombination ofthehighrateonCBU vehicles andconcessional entry at3percent
onpartsandcomponents forassemblers meeting local-content requirements implies substantial effective
protection fordomestic value added. However, bothlocal-content andexport-performance requirements
should beeliminated bytheyear2000 under thetransitional arrangements oftheWTO TRIMS
Agreement. Since 1995, exports totheUnited States ofunderwear andwool suitsforwomen and
girlshavebeensubject to"special access" restraint agreements, duetoexpire bytheendof1997.
Mining andEnergy
Direct Stateinvolvement remains intheproduction ofmining andenergy products; however,
privatizationisunderwayandjoint-ventureorassociationagreementswithprivateinvestorsarefavoured.
Domestic prices forfuelsandpropane arebased onworld prices, andother fuelsaretobeprogressively
priced onthisbasis. Inthemeantime, theprice ofmotor fuels remains substantially lower than
international prices, anddespite increases, energy prices areamong thelowest inLatin America.
Colombia isnotanOPEC member.
Services
Following recent liberalization, financial services, transport, telecommunications, tourism and
retail trade havegrown strongly. Certain barriers orspecific requirements onforeign investors or
professionals remain inforce, forexample inaudiovisual productions andbroadcasting. Progress in
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reducing State participation incertain activities hasbeenachieved through privatization (e.g., ports
andtransportation) orthegranting ofconcessions, asintelecommunications.
InJuly1995 Colombia 'scommitments under theGeneral Agreement onTrade inServices,
covering mostmodes ofsupply foranumber ofprofessional services, construction andengineering,
werecomplemented withundertakings inthefinancial sector; exemptions tom.f.n. treatment relate
toprevious obligations vis-à-vis Latin American andother partners. Initial offers havebeensubmitted
inthenegotiations onmaritime transport andbasic telecommunications services.
Trade Policies andForeign Trading Partners
Theautonomous process ofmarket-opening which hascontinued since thelastreview, has
beenstrengthened bytheincreased security ofaccess resulting fromColombia 'sextended commitments
intheUruguay Round. Theopening oftheeconomy hascreated newinvestment opportunities, which
should alsobeencouraged byimproved macroeconomic stability, solid growth andongoing fiscal
reforms.Theexpansionofregionaltradegrowthshouldcontinueasnewagreementsareforged,although
Colombia isalsolooking fortrade opportunities beyond theregion. Fullimplementation ofUruguay
Round commitments should further strengthen theliberalization process andColombia 'sintegration
intheworld economy.
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TRADE POLICY REVIEW BODY
COLOMBIA
Report bytheGovernment -Summary Extracts
Institutional Development
Since itstradepolicy waslastreviewed in1990, Colombia hasundergone radical changes both
atthepolitical andeconomic levels.
Themajor transformation tookplace in1991withtheadoption ofanewPolitical Constitution,
which, withsomerevisions, hadbeeninforcesince1886. Indeveloping thesenewinstitutions, Congress
adoptedLaw7of1991,whichprovidedfortheinstitutionalreorganizationoftheexternalsector,through
thecreation oftheMinistry ofForeign Trade andtheestablishment oftheSuperior Council ofForeign
Trade, thesupreme inter-ministerial bodyofthesector which ispresided bythePresident ofColombia.
Far-reaching reforms were adopted inthefinancial sector. These reforms were undertaken
withtheaimofestablishing amore competitive environment andreducing State participation inthe
assignment ofcredit andinvestment byfinancial institutions. Theprivatization process offinancial
institutions wasinitiated, andrestrictions onforeign capital were eliminated.
Inthelabour sector, restrictions onlabour mobility, which contributed toincreased frictional
unemployment, wereabolished. Likewise, thescope ofrights andobligations ofemployers andworkers
wasclearly defined, particularly withregard tolabour liabilities.
TheConstitution of1991 gavetheCentral Bank independence inconducting thecountry 's
monetary, exchange andcredit policies, andassigned ittheprimary taskofmaintaining currency
purchasing power.
Anexchange reform wasundertaken which eliminated theCentral Bank monopoly onthe
purchase andsaleofforeign currency andthestrict exchange control prevalent since 1967. Aflexible
andfreeexchange system wasthuscreated, withautonomy inthemanagement ofinternational payments.
Asfortheexchange ratemechanism, anadministered regime gavewaytooneofamanaged exchange
ratebandwithanintervention capacity.
There havealsobeenfar-reaching reforms inthepublic sector, bothasregards itsfunctioning
anditsorientation. These include fiscal decentralization, privatization andconcession programs in
infrastructure works andpublic services, andsocial security reform. Thebasis fordecentralization
isagradual augmentation inthetransfer ofresources andresponsibilities tothedepartments and
municipalities -entities intowhich thenational territory isdivided -soastomeet thepopulation 's
basic needs more efficiently andpromptly.
Thepurpose ofprivatizing public sector assets istofreeGovernment resources tiedupin
activities thatcould becarried outmore efficiently bytheprivate sector andtotransfer themtosectors
where Government intervention isessential, forexample, education, health, justice andsecurity.
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Intheareaofsocial security, theState'smonopoly onthesupply ofhealth services andpensions
hasbeenabolished, leaving thewayopenfortheworker tofreely choose anyinstitution supplying
these services.
Since 1991, newrulestomodernize thelegalframework forforeign investment inColombia
havebeenadopted. Theprinciples underlying thesechanges areequal treatment fordomestic andforeign
investors resulting intheelimination ofprior authorization forinvestment inColombia; universality
under which foreign investment isallowed inpractically allsectors oftheeconomy; andstability of
theexchange regime atthetimetheinvestment ismade, which continues ineffect forthatparticular
investment evenifchanges aremade tothesystem inthefuture. Specific authorization requirements
must bemetforinvestments inthefinancial sector andmining andoilventures.
Foreign Trade Policy
Asregardsthetradeenvironment,between1990and1991theforeigntraderegimewasreformed
inorder toopenuptheColombian economy toforeign competition andprepare ittoachieve higher
levels ofcompetitiveness andinternational interaction.
Thisprocess implied suchradical changes astheunilateral reduction oftariffs, fromanaverage
figure of44percenttoaround 11percenttoday, simplification ofthetariff structure byreducing
the14levels toonlyfive,theabolition ofalmost allquantitative restrictions, moving away from the
situation in1990 when over60percentoftariff headings required import licenses, tothecurrent
situation where only2percentneedlicenses fornational security orenvironmental reasons. Inaddition,
import andexport formalities havebeensimplified.
Another relevant element ofColombia 'sforeign trade policy inthepresent decade isthe
strengthening oftheintegration agreement withcountries intheAndean region, creating theAndean
Community, which includes acommon external tariffandtheharmonization oflegislation which goes
beyond thatofthecommercial arena.
Justasimportant istheestablishment ofcommercial agreements withother countries inLatin
America, withChile ontheonehandandMexico andVenezuela ontheother (Group ofThree, G-3),
andtheeventual formation offreetrade areas.
Thecreation ofmore favourable conditions forthedevelopment oftrade andinvestment with
Central America, thecommercial opening towards theCaricom countries, thewilltoachieve afree
tradeagreement withtheMercosur countries andthewidening ofcommercial relations intheAmerican
continent through thenegotiation ofaFreeTrade Area oftheAmericas (FTAA), arealsoelements
worth noting.
Relationship withtheMultilateral Trading System
Inthemultilateral trade front, Colombia played adynamic roleintheUruguay Round
negotiations, becoming afounding member oftheWorld Trade Organization. Itlikewise tookontariff
commitments withregard tothetotality ofitsgoods tariff, andspecific market access commitments
inawiderange oftheservices sector.
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Withregard toitsparticipation intheDispute Settlement System, itisworth noting thatsince
itsaccession totheGATT, Colombia hasnever beentheobject ofanyclaim.
Itsparticipation inDispute Settlement Proceedings hasbeenlimited toitsroleasaclaimant
in1992 and1993, incontroversies concerning theEuropean Communities banana import regime. At
present, Colombia isparticipating asathird party inthethirdpanel relating tobananas. In1993 it
wasoneoftheclaimants inaprocedure against theUnited States formeasures which affected theimport
oftobacco. Finally, in1992, Colombia participated asathirdinterested party inthepanel brought
against theUnited States withregard torestrictions ontunaimports.
Barely twoyears aftertheestablishment oftheWorld Trade Organization, wehaveperceived
thebenefits which mayderive fromarulebased system andmore precise disciplines, aswellasfrom
astrengthened dispute settlement mechanism which canguarantee theeffective functioning ofthe
multilateral trading system.
ColombiasharesandsupportsthemultilateraldisciplinesestablishedintheMarrakeshAgreement
andconsequently hasamended itsdomestic legislation where necessary, making useoftheperiods
granted todeveloping countries forthispurpose, therefore limiting itsdiscretionary authority in
formulating sectoral policies appropriate toitseconomy 'slevel ofdevelopment. Nevertheless, itis
confident thatthebenefits ofthesystem willbeshared, andthatthiscanbeachieved ifthesupply
ofexports from developing countries suchasColombia istreated inthesame wayasproducts and
services from developed countries.
END