COLOMBIA: Legal Developments In Customs & Foreign Trade
Last year the Colombian Congress issued Law 1841, which incorporated the Free Trade Agreement (“FTA”) between Colombia and Israel into the Colombian legal system. Currently, the law approving the Treaty is under review by the Colombian Constitutional Court for its definitive entry into force. Colombia hopes that with Israel as a trade ally, trade relations with the Middle East can be strengthened, it is also expected the FTA to foster the trade of goods and services, as well as the protection of foreign investment for both economies.
In addition to this FTA, during 2017 Colombia strengthened its commercial relations with MERCOSUR through the ratification of the Economic Complementation Agreement No. 72, with Argentina, Brazil, Uruguay and Paraguay. Through this Agreement, relations with the most important economies of South America are going to be reinforced, especially for industrial products such as textiles, clothing, metalworking and vehicles.
Regarding Bilateral Investment Treaties (BIT’s), these have played a relevant role in increasing the attraction of foreign companies to the country, the vast majority of them seeking the development of activities in the Oil & Gas industry. However, the Colombian government is developing a strategy to attract investment focused on other industries with a higher value to the national economy, such as IT services and machinery manufacturing, seeking to create economies of scale, while fostering the transfer of knowledge and technology.
Additionally, and with a relevant network of more than 21 FTA’s, providing access to more than 1.5 billion consumers, the Colombian Government has initiated, after the approval of the FTA with Israel, the task of implementing existing agreements, so that they are effectively utilized in order to consolidate real market access, ultimately diversifying Colombian exports.
Trade Defense Measures.
Colombia continues to seek the protection of the national industry through trade defense measures, especially through anti-dumping investigations. During 2017, anti-dumping investigations were initiated in Colombia against imports from China, for products such as iron profiles in L and U form, Denim fabrics, stainless steel dishwashers, among others. In addition, an investigation was also initiated against Belgium, the Netherlands and Germany for frozen potato imports.
Currently, there are 10 anti-dumping investigations in progress. Additionally, there are 15 dumping duties in force, while 4 investigations are awaiting the five-year review to eliminate or maintain the anti-dumping duties imposed.
Moreover, there were investigations initiated against Colombia by other countries, four anti-dumping investigations are currently in course regarding the export of aluminum profiles and tubes, polyvinyl chloride, polypropylene woven carpet supports and tableware and other pieces of ceramics.
Customs Regime and Facilitation of Foreign Trade.
After the new Colombian customs regulation was issued in 2016 (Decree 390 of 2016), an implementation in different stages was envisaged as most of the modifications depended on the updating of the Colombian Customs and Tax Authority (DIAN) IT system. Changes focused on reducing EXIM clearance procedures and times.
However, due to the new regulation partial implementation, several problems of the reform were evidenced, and in mid-2017 both the Government and the trade unions were debating on the most appropriate way to apply the main changes of the reform without affecting real sector logistics chain flow. Apart from the above, to the date there has not been progress in the development of DIAN IT system reason why approximately 70% of Decree 390 of 2016 has not yet entered into force, it is expected by mid-2018 this percentage to be lower.
With all this in mind, the general conclusion regarding the customs regulation status was translated into a new draft Decree, currently under review, which seeks to modify the regime and postpone the date of entry into force of the provisions that still need adjustments in the IT system of DIAN that has not been developed yet.
Free Trade Zone Regime.
Regarding the free trade zones, after the modification of the regime by the end of 2016 through Decree 2147, it was sought to regulate some existing gaps, as well as to potentiate the development of economic activities through this important tool of foreign trade.
During the last ten years the number of permanent (multi-user) and permanent special (sole-user) free trade zones has increased; for the year 2017 a total of 103 free trade zones (38 permanent and 65 special permanent) were reported, which is certainly the proof of the importance of this tool for the development of added value investments in the country.