The Republic of Colombia is the fourth largest economy in Latin America, after Brazil, Mexico, and Argentina, and has the third largest population with approximately 48 million inhabitants. It is the only country in South America with two coasts (Pacific and Caribbean), which provides tactical shipping advantages in today’s global economy. Aided by major security improvements, steady economic growth, and moderate inflation, Colombia has become a free market economy with major commercial and investment ties to the United States, Europe, Asia and the rest of Latin America. Since the implementation of the U.S.-Colombia Free Trade Agreement (FTA) on May 15, 2012, U.S. exports to Colombia have increased thirty percent.
Strong political stability, a growing middle class (35.3 percent of the population), and a vastly improved safety and security situation have created an economic boom in Colombia. Key economic indicators demonstrating the positive long-term effect of Colombia’s political and economic policies include: GDP growth of 4.7 percent per annum over the past decade; and foreign direct investment of US$ 15.8 billion in 2014. Approximately 55 percent of Colombia’s exports worldwide are petroleum and with the drop in global oil prices Colombia’s economy is expected to slow in 2015, with GDP growth projected to be about 3.5% and investment expected to decrease as well.
Due to Colombia’s close ties to the United States and Colombians’ appreciation for the quality and reliability of U.S products, consumers in Colombia often favor U.S. products and services over those of our foreign competitors. The United States is Colombia’s largest trading partner and Colombia was the 19th largest market for U.S. exports in 2014. U.S. exports to Colombia in 2014 surpassed US$ 20 billion for the first time ever, an increase of more than ten percent over 2013.
Colombia is unique in that there are five bona fide commercial hubs in the country: Bogota, Medellin, Barranquilla, Cali, and Cartagena. As opposed to the majority of Latin American countries that have one or two major cities, Colombia offers U.S exporters access through multiple commercial hubs, each of which has its own American Chamber of Commerce. While these cities, and many other secondary cities, offer unique market opportunities, they are close enough via air routes that it is common to have one partner (agent, distributer, or representative) to cover the whole country.
Coal mining and oil and gas exploration/production are the principal areas of U.S. foreign direct investment (though the amount of investment in these sectors is expected to drop significantly in 2015 due to the drop in global oil prices), followed by consumer goods, high tech and tourism/franchising sectors. A sample of the major U.S. companies in Colombia include: Drummond, Chicago Bridge and Iron, General Electric, General Motors, Occidental Petroleum, ChevronTexaco, ExxonMobil, Microsoft, Unisys, Kimberly Clark, Johnson and Johnson, Goodyear, Kraft, 3M, Pfizer, Baxter, Corning, Marriott, and Sonesta Collection Hotels.
The next couple of years will bring greater investment in infrastructure projects ranging from roads (US$ 26 billion allocated over the next four years), airport modernizations, port construction, and railway projects. New FDI will begin to be reflected in major hotel and infrastructure (highway, mass transportation, ports and airport) projects.
The Colombian government has implemented bilateral or multilateral trade agreements with most countries in North, Central, and South America, including the United States and Canada. The European Union ratified a Free Trade Agreement with Colombia in December 2012, which entered into force in August 2013. FTAs with South Korea, Costa Rica, Panama, and Israel have been signed but have not entered into force. Colombia has also initiated FTA negotiations with Japan and Turkey.
The U.S.-Colombia FTA entered into force on May 15, 2012, which immediately eliminated import tariffs on 80 percent of U.S. exports of consumer and industrial products to Colombia, with remaining tariffs to be phased out over one to ten years. Other provisions include strong protection for U.S. investors (legal stability), expanded access to service markets, greater intellectual property rights protection, market access for remanufactured goods, increased transparency and improved dispute settlement mechanisms (arbitration).
For assistance in identifying specific areas of opportunity, and to receive tailored business counseling services, please contact the Commercial Service at the U.S. Embassy in Bogota: Tel: (571) 275-2519; e-mail firstname.lastname@example.org.