Columbia Signs Free Trade Deals With Chile And The US

by Mike Godfrey, for LawAndTax-News.com, New York

30 November 2006

Colombia and Chile signed their free trade agreement this week during Colombian President Alvaro Uribe’s visit to Chile. Negotiations began on only 10th October. The agreement covers market access, customs procedures, rules of origin, trade barriers, trade defense practices, state procurement and investment rules.

"Signing this free trade agreement focuses our attention on the progressively more mature bilateral relationship, reflected in part by an upswing in our economic relations," said President of Chile, Michelle Bachelet during the ceremony, held in the Patio of the Camellias of La Moneda Palace.

After a private meeting between the two leaders and then a larger meeting with the Chilean and Colombian delegations, Presidents Bachelet and Uribe signed a number of accords in addition to the free trade agreement, such as a joint declaration commemorating President Uribe’s visit to Chile and a charter forming a Chile-Colombia Business Council, with the participation of the Chilean Confederation of Production and Commerce and the Colombian National Association of Business People.

There, President Bachelet emphasized the progressive increase in commercial exchange between Chile and Colombia. "Our commercial exchange increased from 430 million dollars in 2001 to 690 million dollars in 2005. Meanwhile, Chilean investment in Colombia has increased as well, to a total of 3.3 billion dollars between 1990 and 2005," she affirmed, adding that the trade accord "considers trade flows, but also investment, making it the most in-depth agreement ever to be signed between two Latin American countries."

Bachelet continued that the agreement, and the newly-formed Chile-Colombia Business Council, "put us on good footing to jointly project our products towards third markets." She added that both nations were thus sending a strong signal about their intentions to carry out an open process of integration with the world. "A free trade agreement is always an important element of any integration process, but at the same time, both the governments and the private sectors of both countries are looking at it as a point of departure for building economic and political associations to allow us to bolster our insertion in the globalized world, an area in which Latin America is clearly lagging behind other regions, like the Asia-Pacific," she said.

She reminded all present of other efforts Colombia is making on the free trade front: it is working to sign an agreement with the United States; it is currently negotiating one with the European Union, as part of the Andean Community; and it has also expressed interest in strengthening its links with the Asia-Pacific Region. She commented that "just as we have done in the case of Peru and Ecuador, Chile, will support this process, especially [by advocating for Colombia’s entry into] APEC when the moratorium [on adding new members to the organization] is over, and with the P-4 as well."

President Bachelet also highlighted similar viewpoints on foreign policy shared by Chile and Colombia, particularly in regards to regional affairs. She also pointed to the high number of matters included in the joint declaration signed by the two Presidents. "Colombia is carrying out a process similar to the Chile’s, reflecting a similar political and strategic view of how we can integrate ourselves into the world," she indicated.

Meanwhile, she said, "we have a common perspective on ways to strengthen the South American Community of Nations as a space for integration, and we have repeated our thanks to President Uribe for his work incorporating Chile as an associate member of the Andean Community."

As for Chile-Colombia bilateral relations, President Bachelet expressed the Chilean government’s support for the domestic peace process that President Uribe has carried out in Colombia, repeating that "Chile’s support for this process is part of the multilateral framework, given our cooperation with the mission of the Organization of American States."

She also voiced Chile’s willingness to work towards a double-taxation agreement, "as well as the implementation of a social security agreement that will benefit more than 3,000 Chilean men and women," she said, before expressing thanks to the Colombian government for Chile’s designation as the country of honor at the Bogotá International Book Fair, scheduled for next April.

The agreement extends the Economic Complementation Accord signed in 1994 and lifts 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."

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

Last week, Colombia and the US signed a comprehensive trade agreement which 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.

The agreement is subject to ratification by the Colombian and US legislatures.

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