Embassy of the United States

Colombia is already a strong trading partner and has the potential to be an even greater place to do business. Trade with Colombia offers expanded economic opportunities for U.S. manufacturers, workers, and farmers.

Economic and Trade Overview

Security Improvements

On August 7, 2010, Juan Manuel Santos was inaugurated as President of Colombia.  His administration has laid out an ambitious National Development Plan and has used a legislative majority to pass significant legislation. The Santos administration has also maintained positive trends in security consolidation.

In February 2012, the FARC announced it would return hostages and cease its policy of kidnapping hostages for ransom.  Since 2002, more than 54,000 paramilitaries and guerrillas have demobilized, while kidnappings have fallen 91%, homicides 45%, terrorist attacks 91%, and attacks against oil pipelines 71%.

Democratic Prosperity

Building on the “democratic security” agenda of the previous administration, President Santos campaigned on “democratic prosperity,” focusing on economic development (jobs), security, and poverty reduction. The Santos administration passed an employment and formalization law, which seeks to create 2.5 million jobs, formalize 500,000 informal jobs, and reduce annual unemployment to single digits, all by 2014. His legislation to reduce the deficit through fiscal discipline measures was passed in late 2011.

The Santos administration has been promoting economic growth through additional economic reforms and by pursuing free trade agreements with other South American and Asian countries, as well as with the European Union, the United States, and Canada.  The average unemployment rate in 2011 (Jan.-Nov.) was around 10.9%, down from 12% in 2009.

Economic Growth

Colombia's economic growth in the last decade can be attributed to an increase in security, resulting in greater foreign investment; economic reforms in the oil and gas sectors; prudent monetary policy; and export growth fueled in part by the Andean Trade Promotion and Drug Eradication Act (ATPDEA) of 2002.  Investments as a percentage of GDP were around 28% in mid-2011, which was higher than both Brazil and Chile.

Economists projected growth of up to 6% for 2011, and Colombia’s third-quarter 2011 GDP growth was 7.7%. It is estimated that the economy will grow between 4% and 5% in 2012. Per capita GDP has doubled since 2002, while unemployment fell from 15.7% in 2002 to 9.2% in November 2011.

Colombia has concluded or is pursuing free trade agreements (FTAs) with the EU, Turkey, Panama, South Korea, Japan, Switzerland (July 2011), Canada (August 2011) and the United States (ratified in October 2011 with entry into force expected in 2012).  It also has trade agreements with Mexico, Chile, Central America, the Andean Community of Nations, and Mercosur.

Trade

Colombia is the United States' fourth-largest export market in Latin America behind Mexico, Brazil, and Chile.  U.S. exports to Colombia from January through November 2011 were $13.1 billion, up 20% from the previous year.  U.S. imports from Colombia from January through November 2011 were $20.9 billion, up 47% from 2010 due to high crude oil prices and the weak dollar. Colombia's major exports are petroleum, coal, coffee, nickel, cut flowers, and bananas.

The United States is Colombia's largest trading partner, representing about 42% of Colombia's exports and 26% of its imports as of November 2011.  Colombia is the United States’ seventh-largest supplier of crude oil (2011).

Industry and Agriculture

As the most industrially diverse member of the Andean Community, Colombia has five major industrial centers--Bogota, Medellin, Cali, Barranquilla, and Bucaramanga--each located in a distinct geographical region. Colombia's industries include mining (coal, gold, and emeralds), oil, textiles and clothing, agribusiness (cut flowers, bananas, sugarcane, and coffee), beverages, chemicals and petrochemicals, cement, construction, iron and steel products, and metalworking.

There is also a burgeoning service economy comprised of tourism and information technology exports (call centers, software development, and animation).

Colombia's diverse climate and topography permit the cultivation of a wide variety of crops. In addition, all regions yield forest products, ranging from tropical hardwoods in the lowlands, to pine and eucalyptus in the colder areas. Cacao, sugarcane, coconuts, bananas, plantains, rice, cotton, tobacco, cassava, and most of the nation's beef cattle are produced in the hot regions from sea level to 1,000 meters elevation.

The temperate regions--between 1,000 and 2,000 meters--are better suited for coffee, flowers, corn and other vegetables, pears, pineapples, and tomatoes.  The cooler elevations--between 2,000 and 3,000 meters--produce wheat, barley, potatoes, cold-climate vegetables, flowers, dairy cattle, and poultry.

Mining and Energy

Colombia is a fast-growing market with a good investment climate and is increasingly seen as a regional leader in trade and security.  Colombia has considerable mineral and energy resources, especially coal and natural gas reserves. Mining and energy-related investments have grown because of higher oil prices, increased demand, improved output, and pro-business reforms, along with improved security conditions.

Improved security has allowed for greater economic and social development and helped attract higher levels of foreign direct investment, particularly in extractive industries (crude oil, natural gas, and coal). These reforms have significantly liberalized Colombia’s petroleum sector, leading to an increase in exploration and production contracts from both large and small hydrocarbon industries. Ecopetrol was the first Colombian company to earn a spot in the Fortune 500.

• Natural Gas. In 2011, natural gas reserves totaled 5.4 trillion cubic feet. Natural gas production totaled 1.031 million cubic feet per day on average during 2011 (Jan.-Nov.).
• Crude Oil. Crude oil production has nearly doubled since 2007, reaching 941,000 barrels per day (bbl/d) in January 2012.  Colombia has over 2 billion barrels of proven crude oil reserves (2010), the fifth-largest in South America.
• Refining Capacity. The country's current oil-refining capacity is 325,000 bbl/d, but is expected to grow to 415,000 in 2016 according to the Ministry of Mines and Energy after renovations to its two largest refineries in Cartagena and Barrancabermeja.
• Coal. As of 2010, Colombia was the tenth-largest coal producing country and the fifth-largest coal exporting country in the world. It is the largest coal producer in Latin America (74.3 million tons in 2010).  Colombia also is the largest exporter of coal to the United States.
• Gems. Colombia historically has been the world's leading producer of emeralds and after a short lull in production it has returned to being a leader in this field. Emerald production rose to 5.23 million carats in 2010, up from 2.12 million carats in 2008.
• Precious Metals. Colombia is also a significant producer of gold (53.6 tons in 2010), silver (15.3 tons in 2010), and platinum (1 ton in 2010).

Foreign Investment

Foreign direct investment (FDI) inflows totaled $6.76 billion in 2010, with most investment concentrated in extractive industries. FDI was reaching historic levels as of third-quarter 2011; it was U.S. $10.8 billion, equaling its record year in 2008. The Colombian Ministry of Finance predicted that total 2011 FDI might reach U.S. $13 billion.  According to Central Bank data, this would represent the largest inflow of FDI in Colombia’s history.

On average, the United States has been the largest source of new FDI in Colombia, particularly in mining and hydrocarbon projects. The bulk of total new investment in Colombia is in the manufacturing, mining, and energy sectors. The only activities closed to foreign direct investment are defense, national security, and disposal of hazardous wastes.