Discussion Brief for the Export Strategy-Maker

COLOMBIA

Standardization and Conformity Assessment

The present paper presented to the Third Executive Forum on National Export Strategies reviews the situation of the Colombian system and policies regarding standardization and conformity assessment and its effect on the export sector. 

The paper outlines the scope and context of the standardization and conformity assessment in the country and the relation with the Colombian export strategy of the actual government of the country. For a better knowledge of Colombia, some basic figures are included in Annex 1. 

In today’s open economy the two recognized pillars of internationalization and competitiveness are standardization and certification of products and companies in order to help them survive in the fierce competition of the globalized world. 

With the openness of the world economy, global trade has increased faster in the last ten years than the GNP of most of the industrialized countries. The World Trade Organization (WTO) has been a major factor in the increase of global trade and international standards and conformity assessment are playing a larger role in the world, as we know it today. 

Although the WTO has not yet defined what are international standards and which are the recognized international standards organizations, ISO the International Organization for Standardization, is one of the most active players. One of the problems of ISO, as well as of other standard organizations, is the lack of participation by developing countries (DCs) in standards writing. Colombia, being a DC, is not an exception and it has to struggle for more active participation and an international recognition of its standardization and conformity assessment schemes. 

Colombia has a well established Standardization, Quality, Accreditation and Metrology system (SQAM). The system has become of primary importance for the country’s productive sector (manufacture and service) in recent years since Colombia opened its borders to the international competition as a result of the globalized economy and as a result of the signature of the WTO agreement in 1994. 

The SQAM system was very helpful for the country when there was a closed-borders economy, since standards and the conformity assessment scheme were aimed at protecting the national industry against foreign competition. Both standards and certification were two powerful trade barriers that were used widely by the national industry. There were, however, many abuses against the final consumer, with a decline in quality and an increase in prices that was not sustainable. 

When Colombia joined the WTO, one of the first tasks of the government was to revise the SQAM system and to open the economy to foreign competition. Although many people argued that the country was not prepared for the fierce competition of a globalized world, due mainly to the lack of proper infrastructure, today we have to face it as a reality and try to adjust our system and give exporters and local companies the best tools to compete in the country and to export their products and services. 

2.1 Background and history. Governmental decrees 

The first decree on quality in Colombia goes back to 1929 when a need for a metrology system was established. There were more decrees issued in the following years related to quality but the very first decree on the SQAM system was decree 2746 of 1984. Today the SQAM system is regulated by decree 2269 of 1993 and the resolutions 140 and 8728 of the Superintendencia de Industria y Comercio (SIC). There are several decrees and regulations that deal with the quality control of products and services to be marketed in order to protect Colombian consumers. 

It is safe to say that there are too many decrees and sometimes this situation presents difficulties to the local industry and to importers. There is also the possibility that one decree from a governmental department conflicts with another decree or regulation from another department. It is impossible to say whether all the dispersed legislation on standards and quality are aligned with international regulations and directives from the WTO. For that reason the present government took the decision to establish one quality law to encompass all the disperse legislation in one law. The main aim of the new law will be to help organize the standardization and quality assessment system to protect the final consumer and to help the industry and the service sector of Colombia to be more competitive in the world trade arena. 

2.2 The new SQAM law 

As stated, the Colombian legislative body is studying, for the first time, a law that embodies all the different decrees and regulations and that creates a more credible system which will follow international directives in this field. The law will benefit all sectors of the economy, i.e. producers and consumers, and will clarify some concepts that are misunderstood at the moment. 

For exporters this law is beneficial since its requirements on standardization and conformity assessment are in accordance with the directives of the WTO. The different components of the law and the government agencies involved have to monitor activities for fair and transparent competition with foreign companies that are importing goods, but at the same time they have to implement programmes to improve the competitiveness of Colombia’s productive sector in order to maintain and increase work possibilities for the population. 

2.3 How the SQAM system fits into the Colombian development and export plan 

The standards and conformity assessment system is of a primary importance to accomplish the goals set out in the Colombian development plan. The development plan entitled "Change to Build Peace" contains a chapter on the importance of increasing exports as an engine to increase development. The main strategies to achieve this growth in exports are assistance to companies to increase their competitiveness and productivity through financing, quality assurance, technological innovation and a vigorous policy on export promotion. 

Small and medium-sized enterprises (SMEs) are a central part of the plan aimed at increasing the diversification and volume of the country’s exports. The government has worked to increase productivity and modernize the SMEs as a way to initiate them in international trade. One of the main strategies is to help the SME implement a quality system and to certify it according to the ISO 9000 standard. 

2.4 SQAM structure and "organizational chart" 

Annex 2 shows the structure of the new SQAM system in Colombia. 

The new Colombian system will have a central governing body in the Ministry of Economic Development that will coordinate all the efforts and policies regarding Standardization and Conformity Assessment. ICONTEC will be confirmed as the National Standards Body (NSB) and sector standards units will be established. The Superintendencia de Industria y Comercio (SIC) will be the national accreditation body and there will also be a national institution in charge of Metrology. The system will be based on a tripod of institutions that will have to coordinate their efforts to help Colombian enterprises in their competitiveness. 

The main part of the SQAM law refers to the organization of the different aspects of conformity assessment and establishes one sole source for developing standards in the country with a broad participation of the different sectors of the economy. The relationship between standards and technical regulations is thus established. Participation of governmental departments in the development of standards is urged to create a real liaison and harmony between world accepted standards and the mandatory regulations. 

The law largely follows the directives of the WTO in order to help our productive sector and export industries to compete on the same conditions the foreign companies in the country. 

Colombia’s standardization system is both well-established and recognized. The National Standards Body (NSB) maintains broad participation in the international standards world. It is very active in ISO, a member since 1967, and has recently become a member of IEC (the International Electrotechnical Commission). It is also an active participant in the Codex Alimentarius Commission and in the International Telecommunication Union (ITU). 

3.1 The national Standards Body ICONTEC 

Industrial entrepreneurs founded ICONTEC as a private non-for profit organization in 1963 with the aim of providing a strong organization to develop Colombian technical standards. ICONTEC has developed into a reputable and efficient organization, serving Colombian interests within and outside the country. The organization has now five offices in the main cities of Colombia with 150 employees. ICONTEC has published 5,000 standards and its annual budget is around US$5.5 million. 

ICONTEC is a product certification body. It also certifies quality and environmental systems and personnel. Training is a major service as well as calibration of metrology instruments. ICONTEC has an active international presence, especially in neighbouring countries and today it has an office in Ecuador and one in Peru to provide certification and training services and to help Colombian companies working in those countries. 

3.2 The Colombian system and the export sector 

Colombia joined the World Trade Organization in 1995 as a full member and adopted the WTO directives regarding standards and conformity assessment to avoid unnecessary barriers to trade and to have an open market system. ICONTEC, as the NSB, signed the Code of good practice in standardization (Annex 3 to the TBT Agreement). 

The TBT agreement calls for an open and transparent standardization system giving the same conditions to national and foreign companies. The Colombian standards are based mainly on international standards and when it is not possible to adopt an international standard, ICONTEC lists the difference between the Colombian and the international standard. This standardization policy offers the Colombian companies a good chance to compete in other countries. 

The open standardization system has helped Colombian companies to compete and to increase the volume of exports, especially of those minor industrial goods. ICONTEC provides another service for exporters: information on standards in other countries. It also can compare the national standards against those of other countries so the exporter will know how products fit their requirements. 

3.3 Technical Regulations (TRs) 

It has become a common practice for the government to adopt Colombian standards as mandatory, replacing to a certain extent, the Technical Regulations. This practice has created some problems. Sometimes there has not been a clear concept of which standards should be made mandatory, and they have become effective barriers to trade. 

In the new law, the mandatory standards will disappear and a new concept of TRs will be adopted, following the WTO directives regarding "national interest, health, safety and the environment" as the sole concepts to approve valid and internationally accepted TRs. Protection of foreign trade will be one of the main objectives of the new law and governmental institutions will have to base their TRs in International Standards to avoid unnecessary barriers to trade. 

The new law also requires that the different governmental departments that produce TRs, actively participate in the process of studying and writing Colombian standards. One of the advantages of the new law will be that the government will be eager and ready to participate in the standardization process and will request those standards needed to elaborate their TRs. 

The Superintendencia de Industria y Comercio (SIC), a governmental institution that belongs to the Ministry of Economic Development, is in charge of the accreditation of the different actors of the Conformity Assessment system, i.e. certification and inspection bodies and testing labs. 

The SIC follows international recognized guides to carry out its conformity assessment activities mainly those ISO/IEC guides. Today there are some 52 test accredited laboratories, 27 metrology laboratories and six certification bodies. The Colombian governmental institutions are required to use only those certification bodies and laboratories duly accredited by SIC. This is the main reason why accreditation has developed but SIC has to make efforts to belong to international accreditation institutions to give the system more credibility worldwide. 

4.2 Certification and Laboratories Network 

Product certification is one of the tools Colombian producers use to improve the image and the acceptance of their products on the national market. ICONTEC has performed product certification for more than 25 years and its "quality mark" is well recognized in the country. Agreements have been signed with Ecuador and Venezuela to accept the product certification in order to expedite trade with those countries. The Andean Community (Venezuela, Colombia, Ecuador, Peru and Bolivia) has signed a product certification recognition agreement to avoid barriers to trade. 

System certification against the widely-recognized ISO 9000 standard began in 1991 but it grew slowly during the initial years. The government and the industrial and service sector have found that this certification is a good tool to help exports and campaigns have been launched to boost its acceptance. Today there are more than 1000 ISO 9000 certified companies in Colombia and the number is growing fast. 

One of the main barriers to world trade is the lack of recognition of the testing results and certification by countries. Colombia has been working to increase its Metrology and Testing Laboratories to cover the full range of possible export products. The laboratories have to be accredited by SIC following the internationally accepted ISO/IEC 17025 guide. 

The Andean Community is working toward the recognition and the creation of a regional laboratory network. This will be a very positive step in intra-regional trade. The list of accredited certification bodies and laboratories in the country is included for reference in annex 3. 

Colombia has one of the best metrology laboratories in Latin America. With the help and contribution of the German government through the German National Metrology Laboratory PTB (Physikalisch-Technische Bunsdesanstalt), the country has been engaged in a 20-year cooperation programme that has upgraded the metrology system. The national laboratory was built in 1998 with the advice and the guidance of the PTB as an 8000 m² construction complex that contains some 15 groups of laboratories. Annex 4 shows the list of the different laboratories at the national centre. 

PTB and NIST accredit the different secondary laboratories in the country that serve industry. In this way a network of metrology laboratories has been created of particular importance to the export industry. 

The National Enquiry Point (NEP) is a subsidiary of the Ministry of Economic Development. The task of this NEP is of great importance for the productive sector and for export-driven companies. The NEP is just starting its operations and a lot of improvement is needed to be a real support for industry and the service sector, and to convey adequate information to the export sector. 

One of the main tasks is that of the notification to other countries of technical regulations, 60 days prior to the approval in order to avoid barriers to trade with Colombia. 

What follows is a series of issues that are critical for the development of Colombian exports related to standardization and conformity assessment. 

7.1 Lack of credibility of some organizations 

Perhaps one of the most important issues in the conformity assessment world is the lack of credibility of some organizations in developing countries. There is almost a consensus that methods and procedures are not as valid as those from an industrialize country. 

The accreditation body of Colombia, SIC, not being a member of the International Accreditation Forum (IAF), is no exception. As a result, Colombian certification bodies have to look for accreditation outside the country to ensure the validity of their certification is not questioned. There is also aggressive competition from foreign companies that come into the country as "internationally recognized companies". 

SIC should joint both IAF and International Laboratory Accreditation Cooperation (ILAC) to gain respectability at a world level. Here the problem is often to get the necessary funds to joint the international organizations. 

Another problem that faces the exporter is a lack of definition of the different tasks for governmental institutions, leading to internal disputes between government officials that become a real threat and a burden to export-oriented companies. A lack of coordination among governmental activities does not help the exporters. 

7.2 Standards vs. Technical Governmental Regulations 

The Ministry of Economic Development has initiated an important effort to collect all the Technical Regulations (TRs) in the country. This is a difficult task, however, and the probability is that there are some TRs that have not been collected. There is also a view in certain offices of the government that they should write the TRs according to their expertise and not base them on international standards. 

The different governmental Ministries and agencies that write TRs should be more involved in the writing of Technical Standards to help the productive sector to be more active, especially in the export market. In the Andean Community there is an urgent need to harmonize the TRs of the different countries to avoid barriers to trade. The participation of our government in the talks to create the Free Trade Area of the Americas (FTAA) will be of huge importance for Colombian industry since export efforts will depend largely on the negotiation of that trade agreement. The Colombian government should negotiate standardization and conformity assessment according to the directives of the WTO. 

7.3 Weak quality culture within the country 

One of the problems is that we lived in a ‘closed-door’ economy for many years. Successive governments, due to lack of foreign currency and to protect the national industry, closed the borders to imports. The idea was to protect jobs. One of the most powerful tools was the use of national standards imposed to avoid competition from outside. 

The Colombian consumer no longer had a real choice and there was no protection against abuse of industry policies. On the other side, national industry grew with government protection, free of foreign competition and guaranteed a captive market that did not have an alternative. Colombian industry did not make any efforts to export its products. As a result we had a productive sector which was not competitive, and no exporting culture. 

Governments in the past have not invested enough money and resources into quality and quality programmes to improve the Colombian export sector. Coffee and petroleum were in the past two reliable sources of foreign income that disguised the need to broaden the export base of the country, especially in industrial goods. 

Colombia established a National Quality Award to reward companies that clearly distinguished themselves as quality- and customer-oriented companies. The award lacked credibility for many years until conditions were re-written about 1994 following the principles of the Malcolm Baldrige and European awards. Today the Colombian Quality Award is helping to establish and increase a much-needed quality culture within the country. 

Colombia has been facing one of its longest periods of economic recession since the end of 1997. The current President has based much of his economic policy on giving a big push to exports, mainly of manufactured goods. Annex 4 shows the export results of previous years. Although we have been primarily an exporter of raw materials and agricultural products, manufactured goods are becoming more important for our export economy. 

8.1 Product improvement and Competitiveness 

One of the main means to improve the export opportunities of Colombian industry has been to improve the acceptability of final products. One of the main tools has been the adoption of internationally recognized standards. With this important tool, producers have the advantage of producing goods for a world market, rather than selling only in the country. 

One of the good things about producing with internationally recognized standards is that the competitiveness of the Colombian industry and service sector has been increased. Today there is a better recognition of this fact by companies and they are increasing their participation in both the production of national standards and in international standardization organizations. 

8.2 The ISO 9000 strategy for SMEs 

One strategy that has been successful is the use of the quality assurance certification against the ISO 9000 standard as a tool for competitiveness. The Ministry of External Commerce and the Colombian agency PROEXPORT launched a "Quality Programme" in which they supported and subsidized SMEs to implement a quality system in their companies and to obtain certification. Soon after that programme started, another governmental agency called SENA started a similar programme subsidizing up to 50% of the cost of implementing the system. A third programme was also created by the Chambers of Commerce with help and funding from the Inter-American Development Bank (IDB). Today ICONTEC has also started a subsidized programme, funded by IDB, for 400 SMEs to implement the ISO 9000 standard. 

Colombia is the country in Latin America where the ISO 9000 certification is growing fastest. The quality system has given SMEs confidence to export, and opportunities have arisen due to the fact that SMEs have been able to prove their reliability with foreign buyers. Annex 6 shows statistics ISO 9000 certificated companies in Colombia. 

A recent study made by an agency called FEDESARROLLO shows the effect of the certification with ISO 9000 in the country. More than 90% of the companies that have implemented ISO 9000 say that the cost/benefit of doing so was beneficial for them and more than 64 % say that they increased their exports. Annex 7 shows the influence of certification in the increase of productivity. 

8.3 Information system for exporters 

The Ministry of External Commerce has initiated a good information programme for exporters and has created a virtual network with the organizations that deal with quality, export regulations and tariff authorities. 

The web site of the Ministry is: www.mincomex.gov.co. Another important site is www.proexport.com.co. Both provide useful information for the Colombian exporters and for companies that would like to explore the possibilities of exporting goods and services abroad. There is information on marketing intelligence, tips on how to export and on opportunities for exporters. 

The current government will finish its term in 2002. The new election campaign has started. One of the main problems is that every new government would like to start its own programmes but the export drive that has already been started must continue and any new administration has to back the effort and help increase exports if we would like to compete in the globalized economy. 

The new law on quality that sets up the standardization and conformity assessment principles has to be implemented, and coordination among the different actors will have to be established. 

The National Enquiry Point has to improve and provide satisfactory information for the export sector of the economy. A special effort has to be made to bring together all the Technical Regulations that are now in effect and those due to be published by the different governmental institutions. 

The government should create real incentives for export companies that increase their exports by a given percentage and also for those that increase the labour used for exports. 

Colombia has started in the right direction. As a result of the policies of the present government, exports are increasing at a satisfactory pace. Colombia is learning the lesson that the only way to be competitive in today’s globalized economy is to compete internationally and to generate foreign currency through exports. 

The export drive initiated has to be maintained and helped by the policies and the objectives of the next government. Exporting has to be maintained as a State policy and not simply as a government policy that changes with the Presidency. 

Standards and conformity assessment are considered important factors in the export efforts of the Colombian productive sector. The new quality law has to be properly implemented and be used as a way to increase the competitiveness of Colombian producers. 

Governments in the years to come need to keep pushing industries towards embracing certification to ISO 9000:2000 standards as a way to increase the productivity and the competitiveness of the Colombian productive sector. There also has to be an stimulus to companies to use Colombian National Standards based on International Standards as a way to improve the worldwide acceptability of their products. 

Public purchasing policies have to be revised to stimulate the use of Colombian Standards as the basis for their bids and also require independent third-party certification for the acceptance of their purchases. 

There is a need for a quality campaign on a continuous basis in which both government and the private sector join forces to expand the quality culture and especially to encourage consumers to buy quality products and services. The local Chambers of Commerce and Trade Associations must be used to disseminate this quality culture. 

Colombian exports have primarily been agricultural products and raw materials. There has been a recent push, however, to increase export of industrial goods, especially to the United States and neighbouring countries of the Andean Community (Peru, Venezuela, Ecuador and Bolivia). Some figures: 

Population (2000) 39.5 million 

GDP per capita US $ 1.970 

Exports as percent of GDP 19.5 

Value of exports (1999) US$ 12.5 million 

Value of imports (1999) US$ 11.3 million 

Major export markets 

United States 45% 

Venezuela 12% 

Ecuador   5% 

Germany   4% 

United Kingdom   3% 

Other Countries 31% 

Major export products 

Petroleum US$ 4,570 million 

Coal US$    861 million 

Coffee US$    970 million 

Cut flowers US$     581 million 

Bananas US$     480 million 

Minor industrial goods US$ 4,940 million 

Number of exporting enterprises 12,000 

Ministry of External Commerce 

Colombian Promotion Export Organization (PROEXPORT) 

Colombian Exporters Association (ANALDEX) 

ANNEX 4 

NATIONAL METROLOGY LABORATORY 

LIST OF THE LABORATORIES 

Force – Torque 

Mass and weight 

Glass volumetry 

Continuous electric current 

Geographical measures and lengths 

Thermometers 

Meter transformers 

Density 

Electrical measurements 

Legal metrology 

Industrial measurements 

Hygrometry 

Time and frequency 

Manometers 

Large volumes 

ANNEX 5 

COLOMBIA IMPORTS AND EXPORTS  (Million of USD dollars) 

Year Exports Imports Balance of trade 

1996 10587 12793 - 2206 

1997 11522 14408 - 2886 

1998 10852 13726 - 2874 

1999 11576   9990   1586 

2000 13040 10783   2257 

ANNEX 6 

ISO 9000 CERTIFICATES IN COLOMBIA 

(Up to June 2001) 

ANNEX 7 

Productivity (A) for enterprises with ISO 9000 and without ISO 9000 

(Index 1981 = 100, average for 2419 enterprises) 

Top of page