Posted: March 10th, 2013

TRADE AGREEMENT COLOMBIA / USA

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Approval of the U.S.–Colombia Trade Promotion Agreement (TPA) will support more American jobs, increase U.S. exports, and enhance U.S. competitiveness:

Colombia’s economy is the third largest in Central and South America. This comprehensive trade agreement will eliminate tariffs and other barriers to U.S. exports, expand trade between our two countries and promote economic growth for both.

The International Trade Commission (ITC) has estimated that the tariff reductions in the Agreement will expand exports of U.S. goods alone by more than $1.1 billion, supporting thousands of additional American jobs. The ITC also projected that the Agreement will increase U.S. GDP by $2.5 billion.

The Agreement will provide significant new access to Colombia’s $166 billion services market, supporting increased opportunities for U.S. service providers.

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U.S. goods exports to Colombia in 2010 were $12.0 billion. Our economies are largely complementary in terms of the goods we ship each other. For example, Colombia is a large importer of grains from the United States while it exports a number of tropical fruits to our country. In addition, U.S. cotton, yarn and fabric exports to Colombia are used in many apparel items that Colombia exports to the United States.

The Agreement will remove significant barriers to U.S. goods from entering Colombia’s market:

Over 80 percent of U.S. exports of consumer and industrial products to Colombia will become duty free immediately, with remaining tariffs phased out over 10 years. With average tariffs on U.S. industrial exports ranging from 7.4 to 14.6 percent, this will substantially increase U.S. exports.

Key U.S. exports will gain immediate duty-free access to Colombia, including almost all products in these sectors: agriculture and construction equipment, aircraft and parts, auto parts, fertilizers and agro-chemicals, information technology equipment, medical and scientific equipment, and wood.

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Many agricultural commodities also will benefit from the Agreement, as more than half of current U.S. farm exports to Colombia will become duty-free immediately, and virtually all remaining tariffs will be eliminated within 15 years. Colombia will immediately eliminate duties on wheat, barley, soybeans, soybean meal and flour, high-quality beef, bacon, almost all fruit and vegetable products, wheat, peanuts, whey, cotton, and the vast majority of processed products. The Agreement also provides duty free tariff rate quotas (TRQ) on standard beef, chicken leg quarters, dairy products, corn, sorghum, animal feeds, rice, and soybean oil.

The Agreement is crucial to maintaining the U.S. share of this important market:

Colombia implemented a trade accord with Mercosur (Brazil, Argentina, Paraguay, and Uruguay) in 2009 and with Canada in August 2011. It will soon implement one with the European Union. Colombia expects to concude a free trade agreement with South Korea by the end of 2011 and to begin steps toward negotiating an economic partnership agreement with Japan.

If Colombia’s trade accords with other countries are implemented before the U.S.-Colombia TPA comes into effect, U.S. exporters would face an average tariff of over 9 percent while many products from these other countries will enter Colombia duty free. This would leave U.S. products at a competitive disadvantage in relation to products of many of Colombia’s other trading partners.

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