26 September 1996
POLICY REVIEW BODY: REVIEW OF COLOMBIA
TPRB'S EVALUATION Back to top
The Trade Policy Review Body of the World Trade
Organization (WTO) conducted its first review of Colombia's trade policies on 25 and 26
September 1996. The text of the Chairman's concluding remarks is attached as a summary of
the salient points which emerged during the two-day discussion.
The review enables the TPRB to conduct a collective
examination of the full range of trade policies and practices of each WTO member country
at regular periodic intervals to monitor significant trends and developments which may
have an impact on the global trading system.
The review is based on two reports which are
prepared respectively by the WTO Secretariat and the government under review and which
cover all aspects of the country's trade policies, including: its domestic laws and
regulations; the institutional framework; bilateral, regional and other preferential
agreements; the wider economic needs and the external environment.
A record of the discussions and the Chairman's
summing-up, together with these two reports, will be published in due course as the
complete trade policy review of Colombia and will be available from the WTO Secretariat,
Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following reports have been
completed: Argentina (1992), Australia (1989
& 1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992), Cameroon
(1995), Canada (1990, 1992 & 1994), the Czech Republic (1996), Chile (1991), Colombia
(1990 & 1996), Costa Rica (1995), Côte d'Ivoire (1995), the Dominican Republic
(1996), Egypt (1992), the European Communities (1991, 1993 & 1995), Finland (1992),
Ghana (1992), Hong Kong (1990 & 1994), Hungary (1991), Iceland (1994), India (1993),
Indonesia (1991 and 1994), Israel (1994), Japan (1990, 1992 & 1995), Kenya (1993),
Korea, Rep. of (1992), Macau (1994), Malaysia (1993), Mauritius (1995), Mexico (1993),
Morocco (1989 & 1996), New Zealand (1990), Nigeria (1991), Norway (1991 & 1996),
Pakistan (1995), Peru (1994), the Philippines (1993), Poland (1993), Romania (1992),
Senegal (1994), Singapore (1992 & 1996), Slovak Republic (1995), South Africa (1993),
Sri Lanka (1995), Sweden (1990 & 1994), Switzerland (1991 & 1996), Thailand (1991
& 1995), Tunisia (1994), Turkey (1994), the United States (1989, 1992 & 1994),
Uganda (1995), Uruguay (1992), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).
TRADE POLICY REVIEW BODY: REVIEW OF
CONCLUDING REMARKS BY THE CHAIRPERSON Back
Over the past two days, the Trade Policy Review Body
has conducted the first review of Colombia's trade policies and practices under the
WTO framework. These remarks, intended to summarize the salient points, are made
on my own responsibility and do not substitute for the Body's collective evaluation and
appreciation. Details of the discussion will be reflected in the minutes of the meeting.
The discussion developed under four main themes: (i)
general issues concerning reforms; (ii) regional and multilateral issues;
(iii) general trade issues; and (iv) sectoral issues.
General issues concerning reforms
Members commended Colombia on the positive
macroeconomic developments since the previous review in 1990 as well as the legislative,
policy and institutional reforms, including the liberalization of the foreign trade,
exchange and investment régimes. These had been reflected in solid economic growth, a
decline in the rate of inflation, strong capital inflows and improved public finances.
Concern was expressed that recently, there appeared to have been some economic slowdown
and slight increase in inflation. Questions were posed with respect to: the frequency of
tax changes; the impact of the anti-inflationary Social Pact; possible increases in public
expenditure arising from social spending under the Development Plan; fiscal and structural
implications of the privatization programmes; the compatibility between constitutional
provisions on expropriation and new laws guaranteeing investors' rights; the possible
impact of oil revenues and oil-related investment on the economy, including the operation
of the Oil Stabilization Fund; and the social costs of the adjustment programme. Questions
were also posed on the stage of implementation of various legislative reforms.
The representative of Colombia began his response by
indicating that the trade policy changes, begun in the 1990s, had taken place in the
context of much wider changes in the Constitution and the rôle of the State, which were
still continuing. He outlined changes in the management of trade policy and in
macro-economic management, as well as the latest trends in economic indicators. He gave
details of the Colombian Government's expectations for the period ahead, with a continued
reduction in inflation and the fiscal deficit, non-traditional and petroleum exports were
expected to continue growing while the growth of imports would slow down. The
privatization programme was continuing, with electricity supply and CARBOCOL currently on
The representative went on to provide details of the
most recent changes in the investment régime, continuing the trend to greater openness;
there were few incentives for investment other than a recent tax premium provision. He
clarified that expropriation without compensation provisions contained in the 1991
Constitution had never been applied; a constitutional amendment had achieved first
approval by Congress and would continue the process in the next legislature. Further
legislative changes allowing for foreign investment in sectors such as legal and insurance
services were under consideration. Land speculation and money laundering was the main
target of restrictions on real estate purchases.
The representative emphasized that the Colombian
Government was conscious of the need to maintain the stability of the real exchange rate
and had taken steps to avoid any disruptive effects of large capital inflows. Measures had
been taken to generate sufficient savings to ensure BOP stability and maintain a high rate
of public and private investment. The new petroleum sources were expected to bring in new
earnings for 10-20 years: the Petroleum Savings and Stabilization Fund, which was to
invest abroad, was intended to promote prudent use of these earnings and avoid
inflationary and other macroeconomic pressures. The "war tax" was intended to
support anti-guerilla activity; it had been eliminated for investments made after 1995 and
would be completely eliminated in 2001.
Regional and multilateral issues
Members took note of the importance attached by
Colombia to increased participation in regional trade agreements, including those with the
Andean Group, the Group of Three and Chile, as well as its active involvement in the plans
for the establishment of a Free Trade Area of the Americas. Colombia's interest in
strengthening economic links with the Asia-Pacific region countries through PECC and APEC
was also noted. Members sought Colombia's views on the prospects for open,
outward-oriented and trade-creating regionalism as well as on the further development of
relations with MERCOSUR in trade and investment. Some participants recalled that Colombia
had yet to meet fully its WTO notification obligations relating to regional
Members welcomed the expansion of Colombia's
multilateral commitments, particularly with respect to tariff bindings, and noted the
erosion of preferential treatment as a result of the Uruguay Round. They asked
for up-to-date information on Colombia's implementation of the WTO Agreements,
particularly those with longer periods for implementation by developing countries. Some
participants inquired about the prospects for Colombia's becoming a member of certain
The representative of Colombia indicated that
economic integration was a pillar of Colombia's model of outward-oriented economic
development; it was seen as strongly complementary to unilateral liberalization. Closer
relations with other Latin American countries - including the recent Andean-Mercosur
framework agreement and an agreement with Chile, were seen by Colombia as steps on the way
to the Free-Trade Area of the Americas and to further multilateral liberalization; in this
context, he recalled that the Uruguay Round commitments were part of the overall framework
that all countries now applied. The Cartagena Agreement had been notified to GATT under
the provisions of the Enabling Clause; the agreement with Chile had similar status. The
common external tariff (CET) applied since January 1995 was consistent with more open
regionalism, obliging industry to become more competitive. While intra-regional growth had
been strong, this was not at the expense of other trading partners. National exceptions to
the Andean CET were being progressively eliminated and should disappear by the year 2000.
The exclusion of agricultural products in the G3 Agreement was related to the sensitivity
of these products, but the coverage was very low; this Agreement was concluded within the
LAIA framework and had been notified to the WTO Committee on Trade and Development.
General trade issues
Members expressed their appreciation for Colombia's
trade liberalization through tariff reductions and the elimination of virtually all
quantitative or licensing measures. Information was sought on the current list of
Colombia's exceptions to the Andean Group's Common External Tariff. Members sought
clarification on many aspects of the pre-shipment inspection régime and procedures, the
consistency of the customs valuation system with the WTO Agreement, standards, the
differential rates of VAT and the consumption tax applicable to domestically produced and
imported goods, safeguard and anti-dumping/countervailing measures, government procurement
and SPS procedures.
Members noted that non-traditional exports had
grown, partly because of support from export assistance schemes such as CERT and SIEX and
inquired about any plans for their phase-out by 2003 in respect of manufactured items.
Several members appreciated the introduction of new
and improved legislation on intellectual property; they also asked for details on its
The representative of Colombia took note of the
recognition by members of the progress Colombia had made in its unilateral trade reforms.
He gave details of the operation of the PSI system, which was designed to facilitate trade
and essentially targeted at goods most susceptible to under-invoicing; a new decree
rectifying some procedures would be notified. Customs valuation was now consistent with
WTO procedures, under Andean Group legislation. The Government was studying how to
eliminate the differential VAT on small, imported vehicles. Details were given on the
operation of the consumption tax on spirits and beer. Information was also given on
conditions for acceptance of certificates of origin; the operation of the anti-dumping
mechanism on spare parts and equipment; restrictions on the importation of second-hand
goods, including vehicles and parts which, the representative said, had no commercial
significance and were based on the relevant Andean Group Resolution. He noted that other
restrictions were founded on Article XX of GATT 1994 and that the new, national
information system on standards was based on international rules including those of the
WTO. Gaps in Colombia's safeguards legislation had already been filled under the new Law
170. the representative provided details on new rules on government procurement; open
tendering with national treatment on a reciprocal basis, was the general rule. Mining and
telecommunications were also covered by the reciprocity principle, which applied to the
treatment given by trading partners. Colombia was an observer in the Agreement on
Government Procurement; however, no decision had yet been taken on its possible future
The representative also provided further information
on Colombia's export régime, including export-linked tax exemptions on imported materials
and concessions on capital goods available to all enterprises under the Plan Vallejo,
which had been duly notified to the WTO Committee on Subsidies. Colombia was working to
bring its CERT rates into line with WTO provisions. There were no export licences except
under CITES and goods subject to import restrictions in overseas markets.
The representative of Colombia said that his
Government applied Andean Group decisions on intellectual property rights, on an m.f.n.
basis. Administrative and penal provisions existed to enforce these rules. Colombia was
availing itself of the transitional provisions of the TRIPS Agreement to bring
its legislation and practices fully into line.
Questions were raised on the compatibility with the
Uruguay Round Agreement on Agriculture of measures currently in force in the agricultural
sector, including marketing arrangements, reference prices, import licensing under the
domestic absorption régime. Members also questioned whether the variable levies under the
Andean Price Band System were legitimate, or could lead to violation of tariff bindings.
Colombia was also asked when a procedure for implementation of tariff quotas would be
implemented. More information was sought on the rôle of the Sectoral Competitiveness
Agreements in agriculture.
Members asked questions about several aspects of
Colombia's automotive policy, including local content and export performance requirements
and restrictions on imports of used motor vehicles. It was recognized that the removal of
past restrictions had led to substantial growth in trade in vehicles. Questions were
raised on plans relating to the phase-out of existing measures under the provisions of the
Clarification was requested on the régime affecting
long-distance telecommunication services, including the area reserved for nationals, and
for Colombia's active participation to the negotiation on basic telecoms was encouraged.
Similar inquiries were made about recent deregulation in the financial sector and
restrictions applied in professional, insurance and audiovisual.
The representative of Colombia gave extensive
details of his country's agricultural policies: domestic absorption policies were designed
to guarantee the acquisition of local production, not for self-sufficiency goals. These
were less restrictive than increasing tariffs to ceiling bindings. Colombia believed that
these measures were permitted under provisions of the TRIMS Agreement, including
exceptions for developing countries, and that the procedures applied were compatible with
the Agreements on Agriculture and on Import Licensing Procedures.
The representative stated that Colombia had fully
met its market access commitments. Applied tariffs were normally below bound levels,
including in quota levels. Of those products referred to by one Member, only butter and
beans were subject to minimum access commitments but these were not covered by domestic
absorption or import licensing provisions. For other products, domestic absorption
requirements were not the reason for the lack of growth of imports, but also depended on
supply and demand for particular products. In some cases imports substantially exceeded
Colombia's access commitments. Both m.f.n. and preferential imports were counted against
The representative gave details on the operation of
the Andean Price Band System, which was designed to stabilize import costs despite
fluctuations in international prices. In Colombia's view, the system was compatible with
the WTO Agreement on Agriculture; it had resulted in applied tariff rates well below bound
levels. The minimum reference prices for customs valuation purposes were covered by
Colombia's reservation under Article 20 and Annex III of the Customs Valuation
Agreement. The price band mechanism had helped to maintain incomes in poor sectors.
The representative of Colombia explained that SPS
provisions were based on international standards and only applied after due notification
to the WTO. Restrictions on imports of pork and ham from a European country related to the
incidence of African Swine Pest in the exporting country; on evidence of the elimination
of the disease, these had been lifted for all Andean countries.
Sectoral Competitiveness Agreements were designed to
increase efficiency and competitiveness. These were being modified within the time-frame
envisaged by the WTO Agreements. The Government had decided to reduce the rôle of the
state agency, IDEMA, in purchases and stock management, leading to a greater rôle for the
private sector in internal marketing.
On services, the representative stated that, while
basic telecommunications was reserved to the State, the market for national long distance
and international services was to be opened to two new operators from 1997: mobile
telephony had also been opened up. Thus, the national monopoly for long-distance services
had disappeared because of deliberate Government decision, not because of unauthorized
call-back services. There were no limits on foreign participation in the establishing of
companies to provide financial services; however, they were subject to the same prudential
conditions as national companies. Colombia's offers in the area of financial services were
linked to the offers of its major trade partners.
Overall Back to top
Members welcomed the important steps taken in recent
years by Colombia towards a more open and liberal economy, through constitutional,
legislative and administrative reform, tariff simplification and reduction, and
privatization programmes in a number of sectors. Concerns about certain sectors emerged
clearly in the discussion, including agriculture, textiles, automobiles and some services.
It was also emphasized that regional arrangements should be fully consistent with
multilateral liberalization and rules under the WTO. Overall, however, the thrust of the
discussion was supportive of the underlying direction of Colombia's economic and trade
policies during a period of sharp transition. There was strong encouragement for the
Colombian authorities to consolidate and build on the achievements of the past few years.
We look forward to receiving the written replies
promised by Colombia in due time.