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The first decade of the trade agreement between the two countries left large revenues in exports and progress in tax relief. Here, you will find an analysis that explains the key points that make this bilateral alliance a success.
August 2021 marks the 10-year anniversary of the Free Trade Agreement (FTA) between Canada and Colombia, the first ever to enter into force with a G7 country, with a market that offers great opportunities due to the purchasing power of its inhabitants and the volume of its imports; a country that also demands quality and added value from its suppliers.
Which developments have been achieved within the framework of the FTA?
- Favorable rules of origin were established for key products of sectors such as agriculture, textiles, footwear, and steelmaking, mainly. Provisions on transparency and agility were included in the procedures for the withdrawal of goods before the payment of taxes; cooperation schemes between customs authorities; rapid clearance of low-risk merchandise, among others, in the chapter on origin procedures and trade facilitation.
- In the Chapter on Sanitary and Phytosanitary Measures, provisions (ex. mutual recognition, equivalence, risk assessment) and instances (Committee) were agreed to facilitate access to agricultural products and food.
- In Technical Barriers to Trade, provisions were agreed on standards, technical regulations and conformity assessment procedures to promote trade and avoid disguised barriers.
- In Public Procurement, rules were established on non-discrimination covering central entities in both countries.
- Regarding Electronic Commerce, a regulation was established to avoid payment of tariffs and charges when trading products by electronic means. In labor and environmental matters, it was agreed not to stimulate trade or investment by weakening or reducing the protection of national laws.
- In Cooperation, a permanent mechanism was designed to strengthen commercial capacities and to take advantage of the Agreement.
Why Colombia is a key commercial ally?
Colombia's goods are well-positioned in different markets. Our country is also currently considered as a top services’ nearshore player among the Americas. It offers political and economic stability, skilled workforce, a strong innovation ecosystem, a dynamic and growing economy and a privileged geographic location. Plus! Logistics from Colombia to Canada last 9 to 19 days arriving to Eastern Canadian ports: Halifax, NS; Montreal, QC and Toronto, ON; and 14 to 22 days arriving at Vancouver's port.
Speaking specifically of the country’s products and services offer, in the agri-food sector, Colombia stands out for products such as oils and fats, sugars and honeys, cocoa and derivatives, coffee, spices, fish fillets, fresh flowers, fresh fruits, among others.
When it comes to the 4.0 Industries, Colombia boasts immense talent in the animation sector, and it offers professional services, according to Canadian entrepreneurs such as Ken Faier, CEO and founder of Epic Story Media, a Canadian company that produces video content and animation for children. The country is also recognized for providing quality services in digital marketing, business software and video games.
In the metalworking and other industries sector, Colombia is famous for providing high quality electrical appliances, handicrafts, office supplies, household items, auto parts, agricultural machinery, building materials, as well as home and office furniture. Cosmetics and hygiene products, hospital equipment, packaging, plastic, and rubber also have increasing opportunities in international markets, including the Canadian.
And last, but not least, Colombian textiles have been setting trends for the last few years and the country has become a fashion HUB for Latin America. Footwear, clothing, sportswear, leather manufactures, and other Colombian textiles are conquering runways and stores worldwide.
A win - win agreement
Today, Colombian businessmen can export 8,255 products duty-free, which represent 98% of the total products that were negotiated in the agreement. Within these, Colombia shows competitive advantages with better tariffs compared to its competitors in 3,985 tariff items.
Only some products, such as sugar, remain, and will achieve free access to the Canadian market through linear tariff reduction in 17 years from the entry into force of the FTA. Similarly, two other sectors, dairy and poultry, are excluded in the trade agreement, but enjoy most-favored-nation treatment.
Tangible results
According to an analysis made by ProColombia, in 10 years 415 new products have been exported for amounts greater than US $ 1,000, of which 221 belong to Metalworking and Other Industries, 78 to Agro-foods, 59 to Chemicals and Life Sciences, and 57 a Fashion System. In addition, 514 new companies have reported businesses for amounts equal to or greater than US $ 10,000, of which 278 belong to Agro-foods, 112 to Fashion Systems, 94 to Metalworking and Other Industries and 30 to Chemicals and Life Sciences.
Some of the products with the highest growth in exports (compound annual growth) are: Cosmetics and cleaning products (81%); Promotional material (68%); Oils and fats (51%); Other livestock (47%); Instruments and apparatus (26%); Paper and cardboard (24%), and Bananas (17%).
Business success stories of the decade
Some of the most prominent cases that have arisen from the FTA between Colombia to Canada include Colombian companies such as: Clairos Andina, exporting in total US $ 2.1 million in batteries for the Canadian car part market; Software and IT company SunDeys, which expanded their operations to Canada. In the fashion sector, the company Croydon excelled in the development of the industrial safety footwear segment, exporting its firefighter boots to Canada. And Plásticos Rimax, which has been exporting around US $500,000 annually in plastic boxes and organizers in the last 5 years.
In the Agri business sector, one can highlight the successful case of the Canadian company Many Sales, which imported four containers of pineapple to be sold in one of the largest supermarket chains such as Metro, thanks to the sale of the Colombian company Pineapple.
Moving forward
Colombia’s excellent positioning in Canada was reflected in ProColombia's Macro Business Matchmaking Forum for Reactivation, which took place this year from April 12 to 23. Eighty-two Canadian buyers were present, making it the third largest delegation—surpassed only by the United States and Peru.
"Canada is a strategic trading partner for Colombia in North America. We are celebrating the progress we have made in the first decade of the trade agreement, and we would like to increase trade even more over the next 10 years. Now that Colombia—the most welcoming country in the world—is continuing to enhance all it has to offer, we aim to fill Canadian showcases and marketplaces with products such as oils and fats, fruits and vegetables; animation products, video games and audiovisual productions, jewelry, and handicrafts and household items, among many others," stated Flavia Santoro, president of ProColombia.
