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Last Published: 8/16/2018

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The Republic of Colombia is the fourth largest economy in Latin America, after Brazil, Mexico, and Argentina, and has the third largest population with approximately 49 million inhabitants.  Aided by major security improvements and steady economic growth in recent years, Colombia continues to increase its commercial and investment ties to the United States, Europe, Asia, and the rest of Latin America.
Since the implementation of the U.S.-Colombia Trade Promotion Agreement (TPA) in May 2012, U.S. exports to Colombia initially increased substantially but then declined due to a combination of factors, with the main contributor being a depreciation of the Colombian currency that resulted from lower global oil prices (the county’s principal export). A drought and a national strike in 2016 by transportation workers caused a spike in inflation and put further downward pressure on the Colombian peso. Compounding these events was a tax reform package in 2017 that was viewed by many investors and credit rating agencies as insufficient to shore up government revenue. Nonetheless, certain U.S. exports to Colombia continue to see strong growth, especially agricultural products like pork, chicken, seafood, soy products, dairy, and beans. Colombia’s ranking as an export market for U.S. agricultural products jumped from 24th place in 2011 to 11th place in 2017. Agriculture exports to Colombia from the United States were valued at USD 2.47 billion in 2017, more than double their 2011 value. Grains, especially corn and soybeans that are used in animal feed, continue to see significant gains in the Colombian market.
Other U.S. exports to Colombia that have enjoyed significant growth since the implementation of the TPA include aircraft and aircraft parts, which benefited from the elimination of a five percent tariff. These exports surged to an average of nearly USD 670 million per year over the period 2012-2017, up from USD 334 million in 2011. Exports of pharmaceutical products, which amounted to USD 200 million in 2011, have averaged almost USD 275 million per year under the TPA.
Political stability, a growing middle class, the signing of the peace accord between the government and the Revolutionary Armed Forces of Colombia (FARC) guerrillas, and a vastly improved safety and security environment have supported a generally optimistic outlook and moderate economic growth in recent years in Colombia. Nevertheless, the effects of low global commodity prices, adverse weather conditions (el niño), and labor strikes in 2016 put a damper on economic output in 2017. Moreover, the tax reform package implemented in 2017 raised the national consumption tax (VAT) from 16 percent to 19 percent and consequently weakened consumer confidence. Gross Domestic Product (GDP) growth slowed to 1.8 percent in 2017 but foreign direct investment (FDI) is estimated to have increased slightly to USD 14.5 billion. Over half of Colombia’s global exports are petroleum products, and higher oil prices are expected to generate moderately stronger growth in 2018, with GDP projected at 2.8% and FDI expected to increase to USD 14.7 billion. 
Colombia’s inflation rate fell steadily throughout 2017 to just over four percent at the end of the year, within the government’s target range of two-to-four percent. This prompted Colombia’s Central Bank to lower its benchmark interest rate repeatedly to 4.75% by the end of 2017. Inflationary pressures have eased since spiking in 2016 after a draught and national strike by truckers pushed inflation to almost nine percent. The Banco de la Republica’s short term benchmark interest rate is projected to remain steady in 2018 and finish the year at approximately 4.25%. Inflation is also expected to remain within the government’s target range of two-to-four percent and fall to 3.3% by end of 2018.     
The United States is Colombia’s largest trading partner, and Colombia was the 22nd largest market for U.S. exports in 2017. U.S. exports to Colombia in 2017 were valued at USD 13.3 billion, an increase of two percent compared to the prior year. Due to Colombia’s close ties to the United States and Colombians’ appreciation for the quality and reliability of U.S products, consumers in Colombia often favor U.S. products and services over those of our foreign competitors. However, Colombia is a price-sensitive market and price often dictates purchasing decisions. Consequently, Chinese products are increasingly capturing market share and China is now Colombia’s second largest source of imports after the United States. In terms of Foreign Direct Investment, China has not made inroads in Colombia as it has elsewhere in Latin America. China’s 2017 FDI flows to Colombia were estimated at USD 32 million, compared to USD 2.2 billion for the United States. As is the case with many countries in Latin America, China mainly buys commodities from Colombia such as petroleum and was Colombia’s third largest destination for exports in 2018, with exports valued at USD 2 billion.   
Extractive industries such as coal mining and oil and gas exploration and production are the principal areas of U.S. foreign direct investment in Colombia, followed by consumer goods, information technology, franchising, and tourism. Over the next decade there will be greater investment in infrastructure projects ranging from roads, airport modernization, port construction and expansion, and major hotel developments. A sample of the major U.S. companies in Colombia includes: Drummond, Chicago Bridge and Iron, General Electric, General Motors, Occidental Petroleum, Chevron, ExxonMobil, ConocoPhillips, Microsoft, Unisys, Kimberly Clark, Johnson and Johnson, Goodyear, Kraft, 3M, Pfizer, Baxter, Corning, Marriott, and Sonesta Collection Hotels.
The Colombian Government has implemented bilateral or multilateral trade agreements with most countries in the Western Hemisphere, including the United States and Canada. Colombia also has trade agreements with the European Union, the Pacific Alliance (Colombia, Chile, Mexico and Peru), and South Korea. An agreement with Panama is pending ratification, and negotiations with Japan and Turkey are ongoing.
The U.S.-Colombia Trade Promotion Agreement entered into force in May 2012 and immediately eliminated import tariffs on 80% of U.S. exports of consumer and industrial products to Colombia, with remaining tariffs to be phased out over 10 years. Other provisions include stronger protection for U.S. investors (legal stability), expanded access to service markets, greater intellectual property rights protection, market access for remanufactured goods, increased transparency, and improved dispute settlement mechanisms (arbitration).
Colombia has five commercial hubs in the country: Bogota, Medellin, Cali, Barranquilla, and Cartagena. In contrast to most Latin American countries that have one or two major cities, Colombia offers U.S exporters access through multiple commercial hubs, each of which has its own American Chamber of Commerce. While these cities and many other secondary cities offer unique market opportunities, they are close enough via air routes that it is common to have one partner (agent, distributer, or representative) cover the entire country.

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Colombia Trade Development and Promotion