Domestic and Foreign Market Access

Overview: Trade Policy and Business Environment

The Republic of Colombia is classified as an upper middle income country. According to the World Economic Forum (WEF) Enabling Trade Index (2012), which measures institutions, policies and services to facilitate trade in countries, the country was ranked 89th out of 132. The liberalization of foreign trade has been the cornerstone of its economic reforms that began in 1990. Tariffs were drastically reduced and imports were liberalized to a large extent. Even now, Colombia has continued steering its trade policy towards greater openness, setting its sights on closer integration with Latin America and the Caribbean, as well as with the rest of the world, through the negotiation of preferential agreements to increase external trade and foreign investment flows. However, loose regulations, uncertainty about market access, among others, and the inadequacy of infrastructure hinder the country from developing foreign trade and transiting from a traditional trade pattern of exporting value-added goods and importing raw materials and commodities.

WEF, 2012, Global Enabling Trade Report
WTO, 2012, Trade Policy Review (Colombia)
Bertelsmann Stiftung, 2012, Country Report (Colombia)

INDICATOR, UNITS RANK/132 SCORE
Domestic Market Access The pillar assesses the level and complexity of a country’s tariff protection as a result of its trade policy. This component includes the effective trade-weighted average tariff applied by a country, the share of goods imported duty free and the complexity of the tariff regime, measured through tariff variance, the prevalence of tariff peaks and specific tariffs, and the number of distinct tariffs. 36 5.08
Foreign Market Access The pillar assesses tariff barriers faced by a country’s exporters in destination markets. It includes the average tariffs faced by the country as well as the margin of preference in destination markets negotiated through bilateral or regional trade agreements or granted in the form of trade preferences. 18 3.85
Tariff rate (%) This indicator is calculated as a trade-weighted average of all the applied tariff rates, including preferential rates that a country applies to the rest of the world. The weights are the trade patterns of the importing country’s reference group (2012 data). An applied tariff is a customs duty that is levied on imports of merchandise goods. 79 6.57
Complexity of tariffs , index 1-7 (best) This indicator is calculated as the average of the following indicators: Tariff dispersion, Specific tariffs and Number of distinct tariffs. See description of each individual indicator for more details. Prior to averaging, values for each indicator were transformed to a 1–7 score, using the min-max method. 36 6.52
Tariffs dispersion (standard deviation) This indicator reflects differences in tariffs across product categories in a country’s tariff structure. The variance is calculated across all the tariffs on imported merchandise goods, at the 6-digit level of the Harmonized Schedule. 52 8.25
Tariffs peaks (%) This indicator is the ratio of the number of tariff lines exceeding three times the average domestic tariff (across all products) to the MFN (most-favoured nation) tariff schedule. The tariff schedule is equal to the total number of tariff lines for each country. These tariffs are revised on a yearly basis. 56 1.21
Specific tariffs (%) This indicator is the ratio of the number of Harmonized System (HS) tariff lines, with at least one specific tariff, to the total number of HS tariff lines. A specific tariff is a tariff rate charged on fixed amount per quantity (as opposed to ad valorem) 1 0.00
Number of distinct tariffs This indicator reflects the number of distinct tariff rates applied by a country to its imports across all sectors. 43 13.00
Share of duty-free imports (%) Share of trade, excluding petroleum, that is imported free of tariff duties, taking into account MFN tariffs and preferential agreements. Tariff data is from 2013 or most recent year available and imports data is from 2012 77 56.03
Tariffs faced (%) This indicator is calculated as the trade-weighted average of the applied tariff rates, including preferential rates that the rest of the world applies to each country. The weights are the trade patterns of the importing country’s reference group (2012 data). A tariff is a customs duty that is levied by the destination country on imports of merchandise goods 15 4.85
Index of margin of preference in destination markets, 0-100 (best) This indicator measures the percentage by which particular imports from one country are subject to lower tariffs than the MFN rate. It is calculated as the average of two components: 1) the trade-weighted average difference between the MFN tariff and the most advantageous preferential duty (advantage score), and 2) the ratio of the advantage score to the trade-weighted average MFN tariff level. This allows capturing both the absolute and the relative margin of preference. 36 48.43
Source : WEF, 2014, Global Enabling Trade Report

Trade Policy and Market Access

Colombia has been a member of WTO since 1995, and in 2012 it applied a simple average MFN tariff of 8.8 per cent. The agricultural sector is relatively protected through differentiated tariffs. Together with Bolivia, Ecuador and Peru, Colombia was a founding member of the Andean Community (CAN). Colombia’s tariff policy is therefore defined according to the CAN framework and guidelines, and is aligned with the CAN Common External Tariff, with certain exceptions. In the framework of the Latin American Integration Association (LAIA), Colombia has signed agreements with Costa Rica, Chile, Cuba, Mexico, Nicaragua and Panama and the Bolivarian Republic of Venezuela, as well as with the member countries of the Caribbean Community, the Northern Triangle of Central America, and MERCOSUR. Colombia grants preferential treatment for all imports from Bolivia, Ecuador and Peru, provided they fulfil the CAN's origin requirements, and imports from countries with which it has signed agreements in the LAIA framework.

WTO, 2012, Tariff profile (Colombia)

WTO, 2012, Trade Policy Review (Colombia)

Standard Compliance and Other Relevant Import/Export Restrictions

The Colombian Technical Standards Institute is designated as the main standards development organization and the Superintendent of Industry and Commerce as the national accreditation organization. Colombia’s National Accreditation Organization serves for international recognition of the country’s conformity assessment certificates. Colombia also applies the Andean regional sanitary and phytosanitary (SPS) regulations, which are in line with the sub-regional integration process and – by incorporating the principles of the WTO’s SPS Agreement – international agricultural health requirements. Colombia also has participated with the other CAN countries in efforts to harmonize SPS regulations and SPS procedures in Andean intraregional and third country trade.

U.S. Department of State, 2013, Investment Climate Statement (Colombia)

WTO, 2012, Trade Policy Review (Colombia)