Colombia’s Economic Performance

Colombia’s economic performance during the past six years has been an economic miracle. Between 1998 and 2002, the El Nino phenomenon and the Asian financial crisis affected the Colombian economy severely causing the downgrade in sovereign debt below investment grade. Four years later, the Uribe Administration’s recovery and security program brought a complete turnaround. By the end of 2006, GDP growth was 5.6% and by the end of 2008, the IMF Economic indicators project GDP to reach $156.7 billion.

Colombia’s economic transformation, relatively open and competitive market policies, makes it an attractive environment for U.S. exports and investment. The economy continues to improve thanks to austere government budgets, focused efforts to reduce public debt levels, an export-oriented growth strategy, high commodity prices, and an improved security situation in the country. The Ministry of Commerce is actively pursuing free trade agreements with the Canada and the European Union. There is great interest as well in being accepted into the APEC community. The Uribe Administration’s economic policy and democratic security strategy have engendered a growing sense of confidence in the economy, particularly within the business sector.

Sources: TradeStats; World Trade Atlas Colombian
Ministry of Commerce; La Economica, Central Bank

Colombia ranks solidly within the group of progressive, industrializing countries worldwide that have well-diversified agriculture, resources, and productive capacities. Colombia-U.S. bilateral trade has more than doubled over the past decade, from $5 billion a year in the early 1990s to approximately $16 billion in two-way trade in 2006, due in large part to the Andean Trade Preferences and Drug Eradication Act (ATPDEA). In 2006, Colombia was the 29th largest export market for U.S. goods globally and the United States' fifth largest export market in Latin America, behind Mexico, Brazil, Venezuela and Chile. The United States is Colombia’s leading trade partner, accounting for 39.5 percent of Colombia’s exports and supplying 26 percent of the country’s imports in 2006. After Canada and Mexico, Colombia is the largest market for U.S. farm products in the hemisphere.

On November 22, 2006, the United States and Colombia signed a bilateral trade agreement, the U.S.-Colombia Trade Promotion Agreement (CTPA). The U.S. Congress has yet to ratify the agreement. The Colombian legislature approved the CTPA in June 2007 and is in the final stages of debating the amendment to the CTPA recommended by the U.S. Congress. The prospect of free trade has been a factor in the renewed US business interest in Colombia. The agreement will shift the current unilateral access to the U.S. market by providing equal access to the Colombian market through lower tariffs, facilitated customs processing, Intellectual Property Rights protection, standards and a dispute resolution mechanism.. A U.S. International Trade Commission study estimates that U.S. exports to Colombia will be $1.1 billion higher once the CPTA is fully implemented. This more level playing field will serve as a prime business climate for new-to-market and small U.S. companies (SMEs).

Never has there been a better time for U.S. commercial interests to conduct business in Colombia. Positive growth and increased international trade in the coming years will help Colombia shed the stigma of its politically violent and drug trafficking past. U.S. exporters can expect unparalleled opportunities for their products and services in the foreseeable future.

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