Moderator: Linda Abbruzzese

September 19, 2007

1:00 pm CT

Operator: Good afternoon and thank you for standing by. All participants will be able to listen only for the duration of the call. I would now like to turn the call over to Linda Abbruzzese, International Trade Specialist. You may begin.

Linda Abbruzzese: Thank you. Good afternoon everyone. And thank you for joining us for our Webinar on how your company can benefit from the Peru and Colombia Free Trade Agreement.

I am pleased to note that we have more than 60 people joining us for this Webinar today. I’m Linda Abbruzzese, International Trade Specialist for the marketing communications office for the US Commercial Service of the Department of Commerce.

This Webinar is being brought to you by the National Association of Manufacturers as well as the US Commercial Service of the US Department of Commerce.

The objective of today’s Webinar is to help US companies understand the business opportunities under the Peru and Colombia Free Trade Agreement. I’d like to welcome all members of the National Association of Manufacturers and US Commercial Service clients and members joining us from all across the United States.

In a moment I’ll turn the presentation over to (Margaret Hansen), US Commercial counselor for the US Embassy in Bogotá, Colombia as well as (Phyllis Uptagraff) of Polly Portables Incorporated. We will also have (Maria Cameron) who is the Peru and Venezuela Desk Officer from the Office of Market Access and Compliance.

We will have (John Simmons), senior commercial officer of the US Embassy in Lima, Peru as well as (Julie Anglen), Colombia and Bolivia desk officer from the Office of Market Access and Compliance. And (Doug Guti), National Association of the Manufacturers Trade Policy Director.

All of these speakers will be available at the end of the presentation to answer your questions on this dynamic topic and will provide their contact information at the end of the presentation as well.

I would like to give a special thanks to (Karen Weir) at the US Department of Commerce Export Development Liaison for the National Association of Manufacturers for helping promote this event as well as (Soledad Salgaro), the Senior Commercial Specialist for the US Embassy in Bogotá, Colombia and (Julio Carbo), Commercial Specialist for US Embassy in Bogotá, Colombia for helping assist with answering questions on the Peru and Colombia Free Trade Agreement.

Now for those of you who have just joined you can still logon to the Webinar by entering the URL website and passcode per instructions that were sent to you by e-mail. Now we do have a few housekeeping details so that everyone gets the most benefit from this afternoon’s Webinar.

You will be able to hear the presentation via your telephone and you can view it simultaneously via your computer. If you are not hooked up through both please take a moment to do this. Now if you are experiencing any technical difficulties please press star 0 anytime during the presentation.

Because of the large number of participants online, right now we have about 63, it will not be logistically feasible to take your voice questions. However, we do invite you to type in questions on your screen as they occur to you during the presentation.

There is a box at the bottom of your screen on which you can click and type in your questions at any time during the presentation. We will compile the questions and present as many as time allows after the presentations.

Typed questions which are not answered during the Webinar due to time constraints will receive personal answers via e-mail after the Webinar. In addition, all listeners will be provided with information for any individual follow up counseling, (unintelligible) assistance or market research you may need to pursue opportunities in these markets.

Now for those of you who just joined us and logged in you can still join in our internet conference. Now I’d like to introduce live online (Margaret Hansen), US Commercial Counselor for the US Embassy for Bogotá, Colombia. (Maggie), thanks for joining us.

(Margaret Hansen): Thank you Linda for such a nice introduction. Good afternoon everyone and welcome to the presentation on Colombia as a US Exporter’s market. Our first slide shows you the diversity of Colombia.

It’s something that people seem to forget. People are focused much of the time on the difficult history that Colombia has had in terms of violence and also drugs.

But we’re fortunate to be living in a time where we’re seeing a great deal of evaluation and I hope that by going through this presentation we’ll be able to help you to understand the changes that have been going on here in Colombia and turn them into a profitable move for your company.

The next slide shows just a few of the items that we’re going to discuss. I’m not going to go into each slide. We made them specifically detailed so that you’d be able to follow up on your own and of course you can ask us questions.

Colombia can be reached via Delta, American Airlines or Continental Airlines or any of the other major Latin American carriers. It’s about a five hour journey from the United States meaning through Washington DC. It’s a very large, diverse country.

If I had to describe Colombia in one word I would use the word decentralized. It has jungle, it has seashore, it has mountains, it has high plains and in each of these regions you find a different type of industry, a different type of business and you also find a different type of culture.

Colombians are well known for being some of the most educated people in Latin America. There is a great number of young Colombians that go onto college and many of them seek higher education in the United States. Like our system, they have a president and a bicameral legislature.

People ask why Colombia? And it’s really quite simple. They have had a longstanding trading relationship with the United States. We are their number one trading partner. And with only one exception of one year, the year 1999 Colombia has had positive GDP growth for over 70 years.

Their debt payment is very well managed. And they are also strategically located with Pacific and Atlantic coasts. And in a key position between the two continents, North America and South America.

Another reason why, other reasons why Colombia, include political stability, democratic elections process, a notable improvement in the security levels which is especially noticeable since the President Uribe took office back in 2004 and a very highly skilled labor force and stability in its foreign investment (rules).

This gives you an idea of how Colombia’s economy has trended since 1991. You’ll see a big fall in ’99. This was precipitated by the Asian crisis and other geopolitical events going on in Colombia.

But since the signing of the (Aptea) or APTH treaty with the United States in 2001 you see the economy has rocketed upwards once again mainly taking advantage of the zero tariffs that are put on our market.

(Julie Anglen) will tell you a little bit more about that in her presentation. This compared to others over the years, I wanted to show you how the GDP per capita has grown in Colombia.

What that means is that more money is trickling down into the system and you’re seeing a rising standard of living. If we were to use purchasing power parity that figure would jump to $8,000. The Colombians are beneficiaries of a very good social security system, medical care, education, other allowances that the government provides for people.

You’ll notice that again this year we’re looking for an 8% growth rate in GDP. How does Colombia compare to the rest of the (Andean) nations? With its larger population its statistics are going to fall a little bit when it comes to GDP per capita.

It is the largest of the three countries population wise and territory wise. However, we think that if you look at all of the nations put together and especially the two that are going to eventually have free trade agreements, it makes a very attractive market for US exporters.

We’ve morphed quite a bit from the past which I would say was the late ’90s into the present which was about 2004 and on. In the late ’90s or in the ’90s we saw very low investment rates and very high levels of informal business practices.

Now in, with the turn into the new century, the 21st century we’re finding that Colombian companies are on par in many ways with US companies, having adopted many of our standards and practices in terms of how they handle employees as well as their manufacturing prowess.

But they still rely on US exports in order to be able to produce the products that they in turn export or are consumed locally. These are the strengths of the Colombian economy, in particular right now we are seeing a real, a great appreciation of the peso and also we just wanted to mention that Colombia has never defaulted on its external debt. It has one of the best debt management records in Latin America.

They’re on track for investment grade we hope later on this year. The challenges are pretty obvious. There’s been a longstanding paramilitary movement that has precipitated a great deal of violence as well as the drug trafficking.

This has inhibited Colombia to a large extent in terms of its being able to develop as quickly as other countries and poverty still remains a very significant social factor that has to be dealt with.

During the last elections President Uribe was elected to his second four year term and we’re expecting a good outcome also for the municipal mayoral elections and the regional or the governmental elections in October 2007.

This is particularly significant in the sense that when you come to Colombia you can’t just have a strategy where it’s centralized as you might in another country.

You really need to take the time to go to (Medienne) which is the industrial heart of the country or to Cartagena or to (Barankia) and Santa Marta and (Cali) just so that you can see what’s going on in those cities. Those decisions are made independently of the federal government.

They have their own budget and they’re responsible for a lot of their own infrastructure development. How has the security situation improved? The homicide rate, we were just in (Medienne) with the Secretary of Commerce and the Mayor of (Medienne) threw out a statistic that pretty much stunned the secretary and the Congressional delegation that was with him.

While no murder is good for anyone the city of (Medienne) has achieved 28 homicides per 100,000 which is nearly half of what the rate is for Washington DC which is 41 per 100,000 and for Baltimore, 39 per 100,000.

With the support of the Uribe government the police have been strengthened, the judicial system has been strengthened, sentences have been imposed and people are going to jail for committing delinquencies be they drug related or just regular type of delinquencies.

Also what you’ve seen is that the mobilization, that means the people that were in the jungle fighting have laid down their arms and are coming into the cities and joining the reintegration programs that are made available in places for example, like (Medienne).

We had the privilege of introducing the Secretary and his delegation to demobilize citizens to people that have been victims of violence. The city of (Medienne) in particular has a very comprehensive program for reintegrating these citizens and it’s comprised of psychological counseling as well as job training and access to micro (plants) or micro credits.

So if you want to be a businessperson you can start your own business. All done in a very formal way with a lot of follow up and a lot of tracking. But again I live in the city of Bogotá. I have a 15 year old and I wouldn’t be here if I didn’t feel safe.

And I do find that most of my clients including one that we’ll hear from later on who is a woman, find that they are able to move about the country in the major cities especially where their businesses are, with relative ease.

(Julie) is really going to give you more of a description of what’s going on with the US Colombia trade promotion agreement. The best thing I can say is the third bullet point on this slide, which is the growth of the Colombian economy is driving a demand for exports from the United States, especially in the area of manufactured goods and foreign products.

So it’s very, it’s a very logical step in our trading relationship. It also, it creates a framework where Colombians are going to do more business with each other and also within the region. And the commitment that President Uribe has made to economic growth is opening up this market in ways that are unimaginable.

And they’re also in the process of negotiating treaties with other countries such as Canada and members of the European Union. So basically 82% of our exports which are now subject to tariffs will immediately upon entry into courts go to zero which is a fantastic benefit for us especially in the situation where the dollar has been fluctuating.

Colombians like our products, they like doing business with Americans. By and large they speak English really well and they have been trained in the American way if you want to call it, of doing business. Also the treaty will strengthen protection for patents and trademarks and trade secrets.

And this, by the way this photograph is an actual cable car that you can go up and down and have dinner up there, a spectacular view of the city of Bogotá you see down below. What we really hope that the challenges that are addressed by this treaty include poverty reduction and keeping the peace process going and strengthening this democracy.

Again I’m trying to go quickly because I know that there are other presenters. So bottom line, if you’re a consumer you’ll have better quality and access to products both in Colombia or in the United States. A more competitive economy in both the United States and in Colombia and lower prices.

I’m going to skip over the (Aptea) because I think (Julie) is going to talk more about that. But one of the things, I want to stop on this particular slide not only because the little girl is so pretty, and this actually is a real flower festival in (Medienne), but I also want to mention that the (Aptea) treaty as well as the US Columbia Free Trade Agreement will give us more of a forum in which to discuss times when our contracts don’t go right or we have a dispute with a Colombian company.

Right now it’s a very long and tedious process that is kind of touch and go. And fortunately there haven’t been the commercial irritants in this relationship that I’ve seen in other countries in which I’ve worked. And when there have been, the Colombians have paid what they needed to pay in particular.

But these, this is one of the key reasons in my mind as, when I look at doing business in Colombia, this is something that I want exporters to have because it gives them greater protection, a forum to address their company issues.

Let’s look at our best prospects. I’ve got (Soledad) and (Julio) with me and we’ll just basically go over some of the different best prospects that are available here in Colombia.

We’ve put safety and security as number 1 because yes there is a big penchant for that here and it’s quite well done. It’s actually with the biometric software and equipment that are used in processing people in clubs or at the airport.

But you also have, the people don’t realize that US farmers benefit a great deal from the existing commercial relationship that we have with Colombia. Others include oil and gas. I think (Julio) sent me an e-mail today that said that (Amorata) Hess just signed or found, do you want to talk a little bit about that? It’s a big, exciting discovery.

(Julio Carbo): Yes. The National Hydrocarbon Agency opened the 2007 offshore Caribbean zone. And of the other 13 (blocks) nine were awarded, two of them were awarded to (unintelligible) the first time that they come to the country.

And the primary was (Petrogas) and the national oil company (unintelligible).

(Margaret Hansen): (Julio) who are the other US oil producers that are active here in the country?

(Julio Carbo): We have Chevron Texaco, we have (unintelligible) Petroleum and Exxon Mobile is moving forward to be (upstream) by developing the, by (unintelligible).

(Margaret Hansen): Colombia pays particular attention to its environment and companies are held accountable for the technologies that they use in extracting oil and gas. In telecommunications and financial services we have a small stock market here that’s done extremely well over the last two years.

In terms of telecommunications if there is one place where the treaty will help us it’s going to be in providing greater market access for the US, for US exporters to this market.

Right now it’s still pretty confused and the service isn’t what it could be, isn’t what it should be and the operating costs are high. So this is one way where we will help the Colombians improve their service offering by using our high tech products.

Again, call centers, we’re beginning to see spring up in Colombia, eCommerce and lots of advertising services that are done offshore here, construction and engineering services, US companies have a good penetration in this market, especially in the area of oil and gas and we expect it to continue to grow – road building, bridge building as well.

Distribution in terms of wholesale and retail, you come to Colombia, you go to one of our favorite spots in the (Gonarossa), it’s called (unintelligible), the 93rd Street Park and you’ll find beautiful restaurants, you’ll find everything that ranges from McDonald’s and Kentucky Fried and Subway and TGIF to local brands, crepes and waffles and other different sorts of services and pretty good sushi.

Tips for success in Colombia – please start your journey here with a phone call or an e-mail or a fax to us, however you want to communicate. We try to get back to you in 48 hours. There is such a thing called the Clinton list which is the list of companies that you should not do business with here in Colombia.

And we also keep up to date records with the Treasury Department. Be informed. We publish a lot of market research. We also encourage you to talk to the people in the Colombian Embassy. We work with them very closely and they’re very good and have a very well managed trade office.

We do offer background checks through our ICP and I feel here with regard to security, the way I feel in New York or Washington. You just need to be aware. It’s like any big city. This is just Bogotá.

What’s next? Here is what Colombia’s doing in other FTA negotiations. They’ve signed with Central America. They’ve started negotiations with Peru with the European Free Trade Association and they’ve signed Chile in November 2006.

Compared to other countries in Latin America they’ve gotten off to a late start but they’re trying to make up ground fairly quickly. These are just some of the different shows for the fall that we’re trying to take delegations to.

And this is our website. And the guy in the picture there that’s actually Juan Valdez, the famous coffee promoter. He’s been very successful over the years and you can tell that people are pretty satisfied because the cafes here are quite full.

Here’s a list of useful links to different organizations. And here, this is how you are able to contact me or (Tanya Call), the commercial attaché here in Bogotá. The pictures on the bottom are Cartagena. It’s a very beautiful resort area of Colombia.

I don’t know if (Phyllis) called in. (Phyllis Uptagraff) are you there? She didn’t make. Sorry about that. But I hope that this has answered more or less your questions. And we’re, I’ll turn this back over to I guess Linda to introduce our next presenter.

Linda Abbruzzese: Thank you (Maggie) for that presentation. And now we’re going to go to (Maria) and she will talk about her expertise in the Free Trade Agreements and we’ll get her PowerPoint presentation slides up here shortly. Okay. One moment here.

(Maria Cameron): I’m trying to tell you (Doug) should go next.

Linda Abbruzzese: Okay. Then (Doug) are you…

(Maria Cameron): No.

Linda Abbruzzese: …next?

(Maria Cameron): No. I was kidding Linda. I’m sorry.

Linda Abbruzzese: I’m like okay, we’re trying to get the PowerPoint presentations.

(Doug Guti): I can go next if you like. I’m happy to.

Linda Abbruzzese: No. That’s okay. We got it in order here. Let me, okay (Maria), can you find your slides? There are some leads in I think…

(Maria Cameron): There it is.

Linda Abbruzzese: There we go. Okay.

(Maria Cameron): Good afternoon. My name is (Maria Cameron) and I am the desk officer of commerce for Peru and Venezuela. (Maggie’s) always a hard act to follow but I will try and keep this brief to talk to you for a few minutes about why Peru is such a good place to do business.

Why Peru beyond Machu Pichu? Peru is a great market and it’s a growing market. Peru like Colombia has a lot of diversity. It has a growing population. It’s a little bit smaller than Alaska.

It has macro regions like a lot of the Andean countries. It has the coastal region, the mountain region and the jungle. They have a very high literacy rate and operate mostly in the Spanish language but also in the highlands it does well to try and work in some of the local languages.

Peru is an economic miracle for the region. It has shown a great deal of economic growth. Over the past two democratically elected administrations they’ve had pro-trade and investment policies, they have growing major projects and they have well educated, highly motivated and low cost labor.

This chart shows like in Colombia the economic miracle that’s Peru, they’ve had consistent GDP growth and they’re on track to show very similar growth this year. Their exports and their imports continue to grow and their per capita GDP is growing which is important because poverty continues to be an issue.

But it does show that the economic miracle is trickling down. This is an overview of the United States trade with Peru. US trade with Peru continues to grow. Our imports from Peru have grown significantly a great deal in part due to a lot of unilateral preference programs, specifically the Andean Trade Preferences Act that (Maggie) referred to and the generalized system of preferences.

But our exports to Peru are also a real success story. They have, we exported $2.9 billion in merchandise to Peru last year. That’s close to double since 2002. And that’s well over the global export increase of 50%.

US manufactured goods make up 91% of US merchandise exports to Peru in 2006. The largest percentage of that was agricultural and construction machinery and then petroleum and coal products are next.

But it can get better. The US Peru Trade Promotion Agreement was signed last year and we expect that the US Congress to vote on it in early October. We, there, what are the benefits of a trade promotion agreement with Peru? And I’d like to back up for a minute.

There are two interchangeable terms. We have free trade agreement and trade promotion agreement. They essentially, they’re the same thing. They’re just shifts in terminology that are not intended to confuse people but often do.

What does the US Peru Trade Promotion Agreement do? First and foremost it eliminates tariffs and improved market access. But secondly, and what’s less talked about but really is just as important is that it codifies rules for US exporters.

It, the tariff section of a trade promotion agreement or a free trade agreement is really just one part of a much bigger, broader agreement. It requires transparency and predictability in a market.

There is a large section on intellectual property protection. There is a large section on protecting US investors and investments in Peru and offering US investors the same protections as Peruvian investors in the country.

It also insures their competition for government procurement and facilitates trade by improving transparency and efficiency in customs procedures. And then finally, the trade agreement and the act of the trade agreement enhances regional stability.

Peru is one of our strongest allies in the region and in an area suffering from a great deal of political instability it’s really important that we cement this relationship and demonstrate our commitment to the region. Presently the United States allows 98% of Peru’s imports into the United States, exports to the United States, to enter duty free.

Under the unilateral preferences program such as the Andean Trade Preferences and Drug Eradication Act or ATPA and the generalized system of preferences.

On the other hand, our exporters base tariffs that range from 4% to 12% with some as high as 20%. So the US Trade Promotion Agreement will grant our exporters what the Peruvian business community has already has and that’s equal access to the Peruvian market.

The phrase that we use almost too much here is that this agreement levels the playing field. Upon implementation of the US Peru Trade Promotion Agreement 80% of US manufactured exports to Peru will be duty free immediately.

Again it levels the playing field, geopolitical benefits that we’ve already discussed. Some industries that I’d like to highlight that will benefit greatly from the US Peru TPA are remanufactured goods and IT products. The Peru TPA opens the market for remanufactured goods.

Peru presently has in place an import ban on remanufactured goods. This is, will be a brand new market for US producers or remanufactured goods. And that covers a wide range of products from engines to medical equipment to big equipment.

It’s a great market that we’ll be able to get into. And information technology products as well. The, Peru has agreed to sign the World Trade Organization Information Technology Agreement which will require them to eliminate tariffs on information technology products as well as comply with a lot of policy issues that will make it easier for US technology companies to trade in Peru.

Finally, the US Peru TPA will offer a better business climate for US companies, improved intellectual property protection, better security and it’s especially beneficial to small and medium sized enterprises.

Now I’d like to turn this over to (John Simmons) who is our senior commercial officer in Peru who can talk to you about some of the opportunities unique to Peru.

(John Simmons): Thanks (Maria). Again this is (John Simmons) at the US Embassy in Lima. And I think the key message really about the market in Peru is that it’s a dynamic one. (Maria) referenced strong economic growth in Peru.

It’s been averaging about 5% in the last half dozen years, achieved near 8% last year. So what we’re seeing is basically that the size of the economy will essentially double during this decade and this is certainly driving strong demand for US exports.

(Maria) mentioned they’ve almost doubled since 2002. Export growth just last year was about 25% and US exports are up 30% in the first seven months of this year. So where exports from the US to Peru are about $3 billion last year, they’ll probably hit close to $4 billion this year.

One other interesting thing that’s happening here is that traditionally the mining sector has been preeminent in both economic activity and also the sector that purchases American equipment and services and that’s still the case.

Just last week there was a major mining industry trade show in the southern city of (Atacapa) and we had I believe 48 American firms exhibiting. So that’s still a very strong sector for our firms.

But we’re also seeing diversification. There’s quite a bit of activity in a lot of the infrastructure sectors. There’s a major $1.5 billion investment in an L&G terminal, there is increased activity in the oil and gas sector, there are some interesting things happening in telecomm and high tech in general.

The construction sector is very strong, grew by about 25% last year. So what we’re seeing is a broadening of the activity and hopefully a broadening of the opportunities for American firms in Peru. One other interesting thing that seems to be happening which we’re seeing in a lot of markets is the rise of activity of China.

Chinese firms are very interested in purchasing Peruvian minerals for their own economy but the Chinese and the Peruvians are also talking about trying to negotiate a free trade agreement or some type of trade accord this year.

The target is to conclude that agreement by the time of the leaders’ summit of the Asia-Pacific economic cooperation meeting which will take place in November and that’s when 20 some world leaders including President Bush will travel to Peru for the annual meeting.

So for those of you who compete with Chinese firms elsewhere you may see that they’re showing up here more and more. I think the last thing to mention is in reference to (Maria’s) comments about the FTA. We are hoping to see the FTA pass sometime in October.

I know the Senate Finance Committee is taking up the issue tomorrow, the House Ways and Means Committee which is the key committee on the Congressional side is supposed to look at it next week.

And the indications are we’ll get a vote fairly soon. And (Margaret) (unintelligible) mentioned that the Secretary of Commerce was in the region last week. He went to Colombia panel on also Peru and on all three stops it was really a focus on trying to get the various trade accords past and I think Peru is probably the one that we’ll see pass first.

In this (Maria’s) indicated there are a lot of opportunities that we think will come out of that. So let me stop there and I believe (Julie Anglen), my colleague from Washington, has got some comments about implementation issues related to the FDA.

(Julie Anglen): Hi. I’m (Julie Anglen). I am the head officer for Colombia and Bolivia here at the Department of Commerce. I’m a colleague of (Maria Cameron’s). You just heard about the Peru and Colombia trade agreements and hopefully you’re excited to learn more how to take advantage of them.

First I’d like to note while we expect a vote on the Peru agreement fairly soon, the Colombian will, we don’t believe we will get a vote as quickly. It maybe this fall, it maybe next spring. But certainly we await US Congressional approval of both of these agreements before we can really get into the nuts and bolts of entry into force for your benefit.

Woman: Unlock it.

(Julie Anglen): Okay. To start with the US Congress must approve these agreements which have already been approved by the legislatures of Peru and Colombia. And once the Congress approves this begins a process of what we call implementation.

We must allow some time for these governments to get their laws and regulations into compliance with the agreement. And once our government can confirm that they have done this then we can if you will, flip the switch and the agreement takes effect.

And this process can take a few months or more. Now Peru and Colombia have had the benefit of witnessing what their neighbors have gone through with (CAPSA) and with Chile so it is our hope that those governments will have a head’s up and will understand what’s expected of them and can get their houses in order fairly quickly.

The steps that our (unintelligible) will need to look at as you have for other trade agreements will be tariff elimination schedules and rules of origin. As you know, each trade agreement that we negotiate has a unique tariff elimination schedule that came out of the negotiation.

These tariff schedules are published on export.gov website. Actually at the moment, because the Peru and Colombia agreements are still awaiting Congressional approval they are not, the tariff schedules for those agreements are not on the website just yet.

But by the time exporters are looking to actually take advantage of the agreement they will be on there along with a lot of other useful information to help you get started.

So you will need to determine whether your product qualified for the preferential duty treatment under the Peru and Colombia FTA. The rules of origin are public (unintelligible) these days in a global economy. That’s why the Commerce Department has set aside the experts at the Trade Information Center to answer your questions, your technical questions about determining origination and whether your products qualify for the preferential duty treatment.

And that contact information for what we affectionately call the TIC, the Trade Information Center is 1 (800) USA-TRADE. And you can find them as well on our export.gov website.

Now (Maria) and I are both with the market (unintelligible) compliance division. And while we work on negotiating these agreements our main day to day goals is to insure that our trading partners live up to their commitments in these trade agreements.

We hope companies like you encounter, when you encounter trade barriers we are here to help coordinate a US government strategy to help you navigate this problem and hopefully smooth the process of doing business with these countries.

Why to we monitor and enforce trade agreements? Simply put, the trade agreements increase market access for US exporters. There’s a lot at stake here. We have spent a lot of time and energy on market (unintelligible) agreements and it only makes sense to enforce them.

It is important to all stakeholders that the licensing agreements are being enforced. And enforcing them properly creates confidence and support for future trade agreements. What are some of the barriers that US firms face?

Here in (MAC) we hear a broad array of complaints and concerns everyday on, from companies trying to sell their goods overseas. We have tariff and customs barriers. We hear complaints about rules of origin or problems with import licensing, standards.

One of the largest categories of problems we receive is the lack of intellectual property rights protection. And as previous presenters have indicated, intellectual property rights protection is a key component of the free trade agreement and it is our intention and our hope that with these FTAs properly implemented, that US companies will face fewer and fewer barriers to their intellectual property overseas.

And then we also hear a lot of complaints about government procurement contracts. Our FTAs do include long chapters, detailed chapters addressing the government procurement process. How do we work here on compliance issues?

First of all we hear from you and we identify the unfair treatment that you are facing in these markets and we work with our colleagues in other agencies and in this building to put together a team of experts to analyze the situation and claim a strategy.

And this can include applying a free trade agreement but if there is no FTA in place we would look at the WTO agreements that the countries are parties to and any other bilateral or multilateral agreement that they have committed to. And then we craft an action plan.

The US compliance team assembled for your case would be dedicated to resolving the issue. We combine expertise in regulatory issues and country expertise. We work very closely with (Maggie) and (John) at our embassies abroad.

They are a part of the commerce department as well. We’re all a part of the same team and we work together to address these issues. Mainly we go to the foreign government and we tell them that there’s a problem. And the foreign, the countries come into compliance voluntarily because most of the time a foreign government doesn’t want any problems pursuing them.

They want a clean slate with the United States which is typically their most important trading partner. And dealing with our team helps you avoid the time and effort involved in a formal (fee) settlement.

Here are some useful links to follow up on the information provided. I mentioned the export.gov website repeatedly. Here it is. We have a site called Export Basics that goes over a lot of the nuts and bolts.

Like I said, when the agreements are closer to being entered into force, once they’ve passed US Congress you will see this website will be updated with any kind of documentation, tariff schedules, other nuts and bolts that you will need to take advantage of the agreement.

Secondly, if you are looking for trade specifics by state we have an excellent website that is connected to export.gov called Trade (Stats) Express. And that is a place where you can look and see how your state is trading with a given market and how that trade has changed over the years.

Thirdly, you have the United States Trade Representative which currently has a lot of material on each of the Peru and Colombia agreements. You can read the actual texts of the agreement I believe in both English and Spanish and read related announcements and press releases about those agreements.

And then fourth, we have the market access and compliance website which is a place you can go and you can fill out an online form if you have a trade complaint or if you would just like to read more about the services offered to you by the commerce department.

And finally, referring back to intellectual property rights as a category that we often hear about, the US government has developed a website called (Stop Stakes) which is we like to think one stop shopping to help US companies with their intellectual property problems abroad.

And I’d just like to wrap up by offering contact information for myself and for (Maria). We are here in Washington DC and these are our direct phone numbers and e-mail addresses. And we look forward to answering questions that you have about policy with Peru and Colombia.

Thank you and I will turn it over now to (Doug).

(Doug Guti): Thank you. Gosh, I don’t know if I’m going to be able to say anything you know new and unique here. Some very good presentations that both highlighted the issues we’re facing and certainly the great economic benefits that will come as a result of these trade agreements.

So let me touch real quick, I had put in, I don’t want those, sorry. One of the things we face here at the NAM is of course trying to explain to people that exports are good for American manufacturing, small, medium, large, it doesn’t matter.

In fact the overwhelming majority, about 80% to 85% of exports to Peru, Colombia and Panama are coming from small and medium manufacturers - 80%, 85%, even 90% in some cases. I think for Peru the figure that we had come up with is bout $175,000 per manufacturer in exports to Peru.

So this is a lot of money to a small manufacturer and the opportunities are great. What I do of course is, in large part is try and get these agreements through Congress which can be difficult. It can be very difficult and over the last five or six years we’ve seen some very close votes of people who are not yet understanding how important it is that we have these agreements.

We see from this first slide here that trade agreements really, the countries we have trade agreements with are a fraction of our overall trade deficit. I think it’s only 4% and it’s going down each year.

In fact with (NASA) our trade deficit has increased greatly but none of it has been in manufactured goods. It’s all been in oil and gas. So as we go forth to Congress on both sides, it’s not just the democrats who in the past have been a little less supportive of trade, there are republicans as well who don’t trust trade anymore.

These are the kinds of arguments we’re making. And I think it’s very important that people who really will benefit or even possibly benefit from these agreements make sure that they can advocate to their members of Congress and their senators that these agreements mean economic growth.

Another example is (CAFTA), everyone has heard that (CAFTA) is a job killer, that (CAFTA) has taken away jobs, it’s hurt the US economy. (CAFTA) has swung from a trade deficit to a trade surplus in the two years since we signed and implemented the agreements with four of the five (CAFTA) nations.

And when Costa Rica finally finishes its implementation I assume that we’ll continue to see even greater trade. And part of the reason of this is simply as I’ve said we have signed 16 trade agreements, but our competitors, particularly our industrialized manufacturing competitors, the European Union, Japan, Korea, Canada and as was noted earlier, increasingly China are extremely ambitious and robust in going out and signing trade agreements.

And if we do not continue to open new markets they will be there first and we will lose any opportunities we might have to have a real you know foothold up in the market. So it’s another reason why we really need to continue to push these.

As this slide makes the point, we are (unintelligible), for example Canada has gone down to Peru and Colombia already and said hey, we’re happy to sign a free trade agreement with you and we’ll get it through our parliament very quickly.

And of course since they’ve already done a trade agreement they can just simply take their existing text, they’ve had a dry run with the United States essentially and we can find ourselves up against Canadian manufacturers who are getting 10%, 15%, 20% benefits on their agreements.

So this is, these are some of the arguments that we take to Congress and alongside, in their advocacy efforts, to the great folks at commerce and other places, US (unintelligible) and state, I mean everyone knows as you’ve heard today exactly why these things are so important. The hard part is getting them to the stage where we can actually implement them and that requires some votes in Congress.

The statistics, a lot of these have already been said so I won’t belabor them or go over them again. Bu the one point I will make of course is that the small and medium manufacturers, the small and medium companies are the ones who overwhelmingly will benefit from these agreements.

And they may not export directly. They may make a part that goes into a larger part. There may be a tier two or tier three supplier down the chain. But all of this comes back to the smaller guys who are really integral in the whole supply chain and they may not even know that the parts they are making are going into something that’s exported to Peru or Colombia or Panama or something else of the sort.

I’ll put this up. Peru is up first. As was noted, the Senate Finance Committee will be holding a mark up tomorrow on the agreement and the House Ways and Means Committee presumably next Wednesday. Following that there is very little left that needs to be done before the agreement can go to a vote on the floor.

Essentially it will have to come back up for another pass through the committees very quickly. It goes to the rules committee. And because these agreements were signed under trade promotion authority they’re on a fast track.

Once they get to the floor they’re not amendable. The rule is very simple and it would simply be a few hours of debate and then a vote up or down. From what we’re hearing we have some pretty strong support for Peru.

In fact we could have triple digit support from the democrats which would be really unheard of in recent years on trade agreements where we’ve gotten used to having votes of one or two or three as the margin of victory.

Part of the reason of this is and this is important to note in passing, is on May 10th there was essentially a bipartisan trade policy agreement signed between the leadership of Congress democratic and republican and the Bush administration that included labor standards, environmental standards, intellectual property protection for drugs and other things that really sort of assuaged the concerns that a lot of the democrats have had on past trade agreements.

They codified labor standards, enforceable labor standards in the trade agreements for the first time. It had been done in Jordan but they were not enforceable. These are now enforceable. And part of the delay in acting on some of these trade agreements this summer was that Chairman (Rangle) and Chairman (Levin) and others wanted to make sure that the countries were ready to do this.

And Peru and Colombia and Panama have all responded very admirably to making sure that these changes were included and have taken the requisite actions in their national assemblies and with presidential decrees and whatnot.

So really they were asked to do something no other country has ever been asked to do in terms of a trade agreement and they have responded both quickly and forthrightly. And we just have to give them great congratulations on that.

The, I’ll give you sort of a picture here and this is again, when I go up to Congress and say their goods come to the United States tariff free already, both Peru and Colombia. But if you look we’re facing tariffs of 10%, 12%, 15%, 20% right now on our goods that as long as we don’t pass this agreement it will stay that way.

And we need, if we pass the agreement we get 10 cents off on every dollar that we send there and we buy ourselves an expanded market. The same thing is true for the Colombia agreement and I’ll touch briefly on the troubles and travails of Colombia.

Peru as I said is going to pass very, very easily with perhaps 100 or even more democrats, perhaps half the democratic caucus. We’re not worried about this one. We’re not worried about Panama either. Panama is, does have a slight wrinkle in that they have elected someone as Speaker of their national assembly who was wanted for murder by the United States.

And this has of course inflamed a lot of people on both sides of the aisle but this is hopefully something that will be dealt with and in any case we’re looking at Peru and Colombia.

Colombia is basically opposed by every democrat in Congress and a number of republicans for a couple of reasons. The primary one is labor union activists and labor union leaders are facing some threats of violence and actual violence.

Now as noted earlier, the rate of violence, the rate of murder, killings, that sort of thing has dropped precipitously over the years, particularly under President Uribe’s administration. And he is to be congratulated and applauded for that. It’s not enough however for the leadership in Congress.

They would like to see some I’m not sure exactly what they’d like to say, they’ve never elucidated it, but some magical solution so that there is no violence and I hardly applaud such an end goal but I don’t think we’re going to get there.

And so the real question is how does this deal with trade? This is an economic agreement. It’s a, if you wish, a national security agreement in that Colombia is a very strong ally who has a very nasty next door neighbor in terms of anti-Americanism and that sort of thing.

We think Colombia would be much better inside the fold of strong American allies with a good economic relationship rather than outside being tempted by Venezuela and some of the others.

But in any case, we have not been able to find a solution or a way to address the concerns of the democrats at least in the business community to move forward and make them understand that Peru is a great agreement, Colombia is a great agreement times 10 in terms of the economic potential it offers, in terms of the amount of trade and export opportunities.

About 50% or so of our imports from Colombia are oil and mineral fuels, definitely would be another strategic energy partner, it would be a safe partner. This is things we need. Again their imports are coming into the United States largely duty free.

Ours are going there facing an average of 12% to 15% tariffs. I can show you this again. So we’re not quite certain what’s going to happen. The administration right now has indicated they’re going to proceed as tradition has dictated, that is the order of signing of the agreements which is Peru, Colombia, Panama, Korea.

In that case we look at Colombia, maybe if there’s a magical, miracle breakthrough, Colombia coming up sometime at the end of the year. But most likely into next year. And next year is a full year.

I understand there is some kind of election next year that has already begun and trade is never the kind of thing you want to have a vote on in the middle of electoral politics particularly as the democrats are moving to a more anti-trade stance to try and gain some of their delegates.

So I have to offer some gloomy projections that Colombia is going to be tough. If however we move Panama before Colombia we also run the risk that the leadership could simply say well, you’ve had two trade agreements this year and that’s enough for this year.

And next year we’ll just have to see. And then we may lose out on Colombia and Korea. So it’s an interesting scenario. It has yet to have an end game play out and we’ll continue to watch it.

So this is really I guess why I’m here. I think you had the experts from market access and compliance and international trade administration, the commercial service officers. They’ve given you phenomenal and excellent detail on how beneficial these are.

I’m here to make a plea that advocacy is desperately needed to try and convince Congress that these agreements are really just among the best things we can do for the American economy.

Export growth drives job creation. Job creation drives thriving communities and increased tax base which allow for new baseball fields and happy people. This is the kind of thing that everyone likes and if you don’t like it I suppose that’s okay.

But so the NAM has taken a lead role. There’s a coalition, the Latin America Trade Coalition. We are working individually with our small, medium and large companies in targeted districts.

I stand ready to help any company on the line that needs to get a hole of their member of Congress or needs information. We set up a trade toolkit. The website is here on the screen as well as just sort of things you can do.

Some additional forms of advocacy – pick up the typewriter and send a letter to your local paper. Congressmen read their local paper. They get delivered to their offices everyday or every two days or whenever it comes out.

They really note this kind of stuff and it’s an easy way to let them know that their district is talking about how important trade is. So I’ll sum that up and if anyone has questions or whatnot on that end I’m happy to answer them.

Linda Abbruzzese: Okay. Well thank you (Doug) for that great overview. This is (Doug’s) contact information if you need to get a hold of him. We also wanted to do a quick poll here to find out if any of you are currently exporting to Peru and/or Colombia.

If you could just take a moment to press either yes or no so we have an idea if you’re already involved in these markets. Okay, I’m going to close the polls here. It looks like 56% of our audience is currently exporting to Peru and/or Colombia and it’s pretty close. And obviously there are still others who haven’t but it’s very, very close.

The next question that I have is if you are, what kind of company are you? Are you a pharmaceutical, are you dealing more with finance, consumer goods, automotive, investor, medical or some other type of industry? I’ll give you a moment to also answer that.

I’m going to close the poll here. It looks like the majority are other and I’m very curious to know. And if you want to ask a question in our queue that would be good. If you would like to tell us what industry you are currently in, involved in exporting. And it looks like our second highest is industrial with medical then third, consumer goods is fourth and then pharmaceuticals is fifth.

Thank you very much. Now I just would like to go to the questions that have been submitted by you all. And we will then answer and go through each question. If we have left, if we have not been able to answer your question during this presentation you can expect an e-mail from one of our speakers indicating how we can help you with your situation.

I’ll go to the first question, oh another issue here is that if all of the PowerPoint slides in this presentation as well as a transcript and the archives version of this Webinar will be posted on our website at www.export.gov under a heading called view Webinars.

So for those of you who do want to get a copy of the PowerPoint presentation slides you will be able to view those on our website. I’ll go to the first question. It’s from (George First). He wants to know about taxation rates on labor.

And I think this was during the presentation on the Peru Free Trade Agreement. But for those of you, for our speakers maybe we would also want to touch upon that for also the Colombia Free Trade Agreement. I guess he wants to know are there taxation rates on labor under this agreement.

Woman: I don’t know that hat means.

Woman: Yeah. I’m not sure I understand what that means.

Woman: Oh wait. Go ahead (Julie).

(Maggie Hansen): Linda this is (Maggie) in Bogotá. Maybe it would be helpful if we explained how you would pay a worker in Colombia for example. And (Soledad) can do that. You get your basic salary and then on top of that social security, employer contributions for healthcare. Do you want to tell…

(Soledad Salgaro): Okay. (Unintelligible) the payment for any worker will be the basic salary (unintelligible) very low worker. I mean you could be like, you could be in construction, just (unintelligible) worker. You could be like a maid or you could be working in a warehouse.

But depending on the education and the training for the job that you will have the salary would be higher. And, but it’s still the company or the person that hires this worker will be (unintelligible) every single fringe benefits including the health and the retirement and the (unintelligible) benefits that the Colombia law has approved for all Colombia workers.

Linda Abbruzzese: Okay.

(Soledad Salgaro): So it’s very detailed but it’s mandatory.

Linda Abbruzzese: Okay. Well thank you. I guess (George First) if you could please resend your question and maybe if we didn’t elaborate on it, or if you still have some questions after our answer please send me another question so that we can help you as best as we can.

I have a question here from (Bryan Corrington). He would like to know how and where do you find out what specific product will benefit from the reductions in both the Colombian and Peru Free Trade Agreements.

(Maria Cameron): Yeah. We have, the Commerce Department has launched a new website called TradeAgreements.gov. And if you go to that website under pending FTAs you can click on for instance Peru and there are industry (sectoral) reports for example, and I’m just, I’m scrolling through and I’m going to agricultural equipment.

And it talks about what the US Peru TPA does for equipment. So these (sectoral) reports will talk about each sector and which ones have, within sector which specific subcategories will have tariffs eliminated immediately and which ones will be phased out over five or seven or 10 years.

For specific line by line tariff rates that will come out after the agreement goes into effect.

Linda Abbruzzese: Okay, thank you (Maria). I have another question here from (unintelligible). He wants to know how strong is the enforcement on the environmental legislation in Peru.

Woman: And having just come from Peru (Maggie) can also speak to this, the will is there but it’s a resource issue. They are working very hard and it has improved greatly. But it is, they have resource issues but it’s probably, the enforcement is probably not as strong as we would like.

(Maggie) and (John) what do you think?

(John Simmons): Yeah. It’s not just an environmental, the other big topic with the FTA is on labor issues. And when our delegation of the Secretary and certain Congress members were in town last week they met with about a half a dozen labor leaders and that was the same message.

The government’s resources to monitor labor laws and enforce labor laws was an issue they felt that really hindered the environment for the workers. So it is an issue in a lot of areas of government.

Woman: But that’s also (unintelligible). Go ahead (Maggie).

(Maggie Hansen): Yeah. I think that besides resources it’s coordination, making sure that the people at (Erena) are in touch with the people in police and they are empowered to be able to arrest people and put them in jail when they’re cutting down trees in the wrong areas.

I think Peru is a member of the (Sities) Convention.

Woman: Yes.

(Maggie Hansen): And most of the environmental issues are really to deal with the forests although we wish there was more focus on getting natural gas vehicles up and running. They’ve started doing that but really the big polluters are the buses and this is a huge area of opportunity.

There’s definitely a will there and there’s money just as they are here in Colombia to purchase that kind of equipment.

Linda Abbruzzese: Great. Thank you (Maggie). Thank you (Maria). I have a good question here from (Mike Cohen). He wants to know are the rules of origin for Colombia and Peru different from (NAFTA)?

(Maria Cameron): We would have to refer you to the trade information center. Rules of origin is a really complicated issue and we have experts within the TIC. If you e-mail us that question we can get you an answer.

Linda Abbruzzese: Okay, great. Thank you. I have a question here from it looks like (Humphrey Mark). He wants to know, he understands that the Peru FTA may see some action by next spring in 2008 and he says that he doesn’t, I don’t know how he wants to word this.

He wants to understand does that mean that the US Colombia FTA is now in effect today? If not, when do you expect that agreement to be completed?

(Julie Anglen): This is (Julie). I’ll handle this. I, the Colombia agreement is not in effect currently. We did sign the agreement in November 2006 and Colombia’s legislature approved it in June of 2007 but we are waiting on the US Congress to approve the agreement.

That could happen this fall or it could happen next spring. And then it would take effect and a number of months later depending upon Colombia’s ability to implement the regulation in a timely fashion.

Woman: What remains in effect is the (Aptea) agreement through the end of 2007 through December. And at some point in time the Congress is going to have to make a decision about extending it which they said they wouldn’t do because if a country had already approved an FTA with the United States they would, they basically had done what they needed to do.

So it really is going to be an interesting situation come December to see what the Congress does. But the benefits that you currently have, the Colombians currently have under (Aptea) will continue through the end of 2007.

Linda Abbruzzese: Great. Thank you. (Abril Lucio) has a question. This person would like to know how is the opportunity in the plastic industry for both the Peru and Colombia Free Trade Agreement?

(Soledad Salgaro): For the plastics merchants it will be very important because most of the (unintelligible) that are used for the Colombian plastic industries are imported from the United States. So the market share for the United States is very large.

It’s approximately 75% so it would mean that (unintelligible) that are not manufactured in Colombia will have a much lower or no (unintelligible) coming from the United States. So it will be a great opportunity. On the plastics (itinerary) there are not too many manufacturers (unintelligible) plastics material in the United States as you already know.

Most of the material comes from Europe and from China, from Japan. But still for (unintelligible) the most are manufacturing in Europe. And there are some tools and from scientific or (unintelligible) instruments that are used in the plastics industries that will be also benefited from the production of import (unintelligible).

(Maria Cameron): I’d just like to add, oh I’m sorry (John).

(John Simmons): Go ahead (Maria).

(Maria Cameron): On our, the (sectoral) reports that I referred to on the webpage plastics are covered under chemicals. And for example, Peru will eliminate tariffs on 67% of resins and manufactured plastics exports immediately upon implementation of the agreement and phase out the other s over a five to 10 year staging process.

But you can also find that information under Colombia but you need to look under chemical.

(John Simmons): And even before the tariff benefits kick in for the FTA with Peru, US companies are already doing pretty well in the plastics area. In fact, US exports of plastics to Peru are up 135% just this year alone.

So halfway through the year US companies have sold in excess of $200 million worth of plastics to Peru.

Linda Abbruzzese: Great. Thank you (John) and (Maria). Another question here from (Luis Gutierrez) would like to know what type of resources can we find in Colombia and Peru for bio diesel production?

Woman: Bio diesel production? And you’re talking resources in terms of financial?

Linda Abbruzzese: I guess I would say maybe natural or financial.

Woman: Okay. Go ahead (Julio).

(Julio Carbo): Okay. Well as you know the country is already producing a bio ethanol since 2002 and the (unintelligible) expects to produce bio diesel in a blend of 5% bio diesel and the remaining, the traditional diesel fuel. The government intends to expand the level of the blend in both ethanol and diesel in fuel.

The government is also looking forward to an expanded production base in the field to expand (crops) and eventually export the bio fuels.

Linda Abbruzzese: Okay, great. Thank you. (Lorenzo Gomez) has a question. He says we mentioned about preferences about remanufactured products in Peru including information technology products. What about Colombia? How is Colombia doing on this field?

(Soledad Salgaro): For example they will manufacture and rebuild out to (unintelligible) and accessories are very good and not being authorized to, for import into Colombia.

The only product that could be imported (unintelligible) could be so important, (unintelligible) material that is being used for road construction, for some specific projects where that material is needed and probably the cost of importing it will be very high.

So when the trade agreement is signed they are looking at that and slowly they reveal (unintelligible) manufacturer and accessories of cars will have a like a 10 year to 20 year period to be imported. And that would be, will have to be worked out within the local manufacturers importers of new equipment.

And (unintelligible) this is a big issue that they’ve been you know working very hard with (unintelligible) applications and the labor (unintelligible).

Linda Abbruzzese: Okay, great. Thank you. And just once again I just would like to repeat that all of the PowerPoint presentation slides, this Webinar as well as a transcript of this Webinar will be posted on our website at www.export.gov under the view Webinars link on the right hand side.

And you will all have an opportunity to view this information. We’re going to end this in a couple of minutes but I’d like to ask a couple more questions before we end. I have a question here from it looks like (Michael Ekelar). Excuse me for not pronouncing the last name correctly.

He says that currently he is going through some serious red tape to register his medical community products with a company in Colombia. And he says under this agreement will they recognize FDA approvals? In other words, if products are approved in the US will they be allowed to be imported without local approval?

(Soledad Salgaro): I don’t think so. I think the Colombian government will continue to oversee that under the (unintelligible) because they have several issues about you know food processing and about medical equipment. So I don’t think they will change.

Maybe they will make some exceptions where they work out things but I don’t think from what I have learned lately, I don’t think so. I think all of the products will have to come with the approval.

(Certainly) it would be easier if the trade agreement is signed because they will probably do it faster but I don’t think it will be voided.

Linda Abbruzzese: Okay, great. And this is our last question for today. (Pete Haan) has a question. He says how can the US commercial service provide assistance identifying business partners and distributors of US construction products in Colombia and Peru?

((Crosstalk))

(Julio Carbo): We can help the new companies with the regular services that we provide, basically the international partner (unintelligible) gold key services. So if you have any specific product that you want to check (unintelligible) market potential in Colombia please contact us.

Linda Abbruzzese: Okay, great. Well thank you. Everyone I’m afraid that is all the time that we have for today’s Webinar. And remember for those of you whose questions we were not able to answer you can expect a reply via e-mail from one of our offices.

For questions that occur to you after this Webinar please do make note of some of the contact information that we have on our slides. You can contact any one of the speakers at any time. So please do take a moment to take down their contact information.

Also please do check out our website, the US Commercial Service website at www.export.gov for US Commercial Service for more information on international trade and other market research and assistance available around the world.

And thanks to our speakers and to everyone for joining us. Please check your e-mail boxes for information on upcoming Webinars. Thank you.

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