Colombia And Chile On Track For Free Trade Deal

by Mike Godfrey, for LawAndTax-News.com, Washington

26 October 2006

Colombia and Chile are expected to clinch their proposed free trade agreement shortly, said Colombia's deputy foreign minister Eduardo Munoz after a second round of talks began on Monday, covering market access, customs procedures, rules of origin, trade barriers, trade defense practices, state procurement and investment rules.

Negotiations began on 10th October, and signing of the agreement is expected during Colombian President Alvaro Uribe’s visit to Chile, planned for late November.

The agreement is intended to extend the Economic Complementation Accord signed in 1994 and lift tariffs on 95% of the products produced by the two countries until 2011. Chile exports copper, fruit, wine, medicines to Colombia and has invested almost $1.6 billion in the country since 1990.

Carlos Furche, director general of the international economic relations department of the Chilean Foreign Ministry, who leads Chile’s negotiating team said when the talks began: "Today we will launch a unique effort. The bilateral free trade agreement with Colombia will be the broadest and deepest in the region."

Colombia’s Vice Minister of Foreign Trade, Industry and Tourism, Eduardo Munoz, who leads Colombia's team, said that both teams were committed to intense and speedy work needed to complete the talks on time.

Chilean exports to Colombia in 2005 totaled US$347.5m, while Colombia exported goods worth US$318.3m to Chile.

Last March, United States Trade Representative Rob Portman announced that a comprehensive trade agreement between the US and Colombia will eliminate tariffs and other barriers to goods and services, and expand trade between the United States and Colombia.

"The United States and Colombia agreed on terms for a comprehensive trade opening agreement that will enhance economic growth and prosperity between the US and Colombia," Portman stated.

"The free trade agreement with Colombia will generate export opportunities for US agriculture, industry, and service providers, and help create jobs in the United States," he added.

Portman went on describe the agreement as an "essential component" of America's regional strategy to advance free trade within its hemisphere. He also said that the FTA will provide a "secure, predictable legal framework for US investors operating in Colombia" whilst protecting intellectual property rights, and providing an effective system to settle disputes.

In 2005, Colombia and the United States had $14.3 billion in two-way trade, and Colombia is currently the second largest agricultural market for the United States in Latin America.

In August, Colombia's President Alvaro Uribe, just sworn in for an unprecedented second term, vowed to continue pursuing the government's policy of pro-business economic reforms, including cuts in corporate tax and the conclusion of the free trade deal with the United States.

"Our economic agenda is consistent with investors' trust, economic growth and financing social goals," the President stated in his inauguration speech.

A central plank of Uribe's economic policy is a cut in corporate tax by 6.5% to 32% by 2009. The official corporate tax rate in Columbia is currently about 38.4%, but temporary exemptions on corporate taxes for firms that reinvest their profits have lowered the actual rate to 28.5%, a move which has led to rising levels of investment.

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