• The NDP estimates further increase of 0.06% in GDP, thanks to Agreement
• Colombia will increase consumption of Canadian wheat and barley
• Major job creators to benefit: textiles and clothing, biofuels, sugar and flowers, etc.
Colombia is about to experience a milestone in international trade relations and investment, thanks to the entry into force of the Free Trade Agreement (FTA) with Canada. This is the first of such Agreements with a developed country, where consumers can get goods and services from domestic producers at preferential conditions.
The Minister of Trade, Industry, and Tourism, Sergio Diaz-Granados, said this is an unprecedented event and highlighted the effect it will have on the country's economic growth and on job creation. Indeed, Canada generates 2.6 percent of world GDP, and Colombia now offers it a market of 33 million more inhabitants.
"Our new partner has high purchasing power. Each year, Canadian residents receive an average of $38,614, which is five times the average income of a Colombian citizen. This, obviously, opens the door to great possibilities for our exporters," the Minister said.
Having passed internal legal procedures, the last of which required the declaration of the constitutionality of the “Agreement on annual reports on the impact of trade on human rights” by the Constitutional Court, what remains is only the notification of the Foreign Ministry in order to initiate procedures for the exchange of notes.
"The ball is now in the court of Colombian businesses, which will be responsible for taking advantage of the benefits offered by this Agreement, in order to reach their goals," said the senior official.
The possibilities provided by the Agreement, in terms of exports, will positively impact products, such as sugar, processed rice, cereals, oils and fats, and textiles and clothing, among others.
For the sugar sector, for example, we have produced results better than any other negotiation to date.
As for producers of biofuels, flowers, textiles and garments, all of which are major job creators, the doors will now open to the Canadian market, so this means that these exports will enter duty-free once the FTA enters into force.
These products account for 98 percent of Colombian exports that will immediately enter, duty free, into the Canadian market. Of this grand total, 99.8 percent of trade in industrial goods and 97.6 percent of agricultural goods will receive the preferential treatment mentioned above.
AGRO, GREAT PLAYER
The agricultural sector played an important role in the negotiation. And while Colombia will be able to sell products, such as beans, coffee, white sugar, flowers, fruit and vegetables, confectionery, cocoa and its derivatives, food products and preparations of fruits and vegetables, tobacco products, ethanol and spirits, among others; domestic consumers and businesses, too, will benefit from the entry of products which Colombia already has to import.
"This is the case of wheat, where our traditional suppliers have been the U.S., Canada, and Argentina, but with this FTA, the entry of Canada as a player will increase competition and, as a result, enhance the competitiveness of domestic producers that use this input," said the Minister.
Colombian wheat purchases in 2008 were worth $382 million dollars from the U.S., $95 million dollars from Canada, and $53 million dollars from Argentina. In 2009, there was an increase in purchases from Canada, reaching $112 million, and this occurred prior to the entry into force of the Colombia-Canada FTA.
It is expected that, along with wheat, Colombian imports will grow for vegetables, fruits and nuts, barley, cattle and meat products, paper, and various minerals, all of which will benefit consumers.
The FTA, however, does provide a special agricultural safeguard to regulate imports of some sensitive products in Colombia’s agricultural sector, such as beef and beans.
OTHER ACCOMPLISHMENTS
As for the issue of investment, it is now possible to set new Canadian investment in strategic sectors with high added value, especially in telecommunications, financial services, and mining.
In financial services, the biggest beneficiaries will be pension funds. Such market access was obtained from nine Canadian provinces, which account for about 700 billion dollars a year. "This achievement surpassed even what was conferred by Canada under NAFTA," said Minister Diaz-Granados.
And as for procurement, the available market exceeds 17 billion dollars, an amount where acquisitions are calculated each year by state enterprises in that country.
PROCOLOMBIA identified specific opportunities, both in public procurement and in the export of products of high potential, such as consulting services, telemedicine, call centers, online translation service, data processing, computer services and related software services, telecommunications, and design, among others.
As projected by the National Planning Department, Colombia stands to further increase its GDP by 0.06 percent; this figure does calculate the increase in the remuneration of skilled and unskilled labor.
PROTECTIONS
Finally, the Minister explained that in these negotiations included strict rules to ensure adequate protection for workers’ rights and the obligation to maintain high levels of environmental protection.
The Minister concluded by saying that, "This important commitment was achieved through the negotiation of two parallel Agreements that established these rules and obligations, which will serve as strong cooperative mechanisms to help strengthen our institutions and programs in these areas."
(Information of Ministry of Trade, Industry and Tourism)
