Economic Data
(1998 estimates)
Total GDP (in US$): $111 billion
GDP growth: 3.5%
GDP per capita (in US$): $2,780 (1998 est.)
Inflation: 20%
Unemployment rate (urban): 14%
Major Industries: Textiles, coffee, oil, sugar cane, food processing
Exports (in US$): $12.5 billion; commodities include petroleum, coffee, coal, bananas, fresh cut flowers
Imports (in US$): $17.7 billion; commodities include industrial equipment, transportation equipment, consumer goods, chemicals, paper products
Trade Balance: -$5.2 billion
Key Trading Partners: United States
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For Daniel Perry, president of International Two Group (ITG) in East Providence, exporting to countries like Colombia is just a matter of every day business.
Unique among local companies, ITG, which manufactures tooling used in the manufacture of fasteners, relies 85 percent on exports and only 15 percent on domestic sales.
It is a tradition, Perry said, that started long before he bought the company four and a half years ago. The previous owner had established the business lines that included all South American countries, with the exceptions of Brazil and Central America.
Exports to Colombia, Perry said, represent 7 percent of the 30-year-old company’s overall business, and have been down recently because of what he said is a recession in the country.
Since its founding after World War II in South Providence as Carbide Products, Perry said, the company has relied heavily on exporting, selling to more than 60 countries. ITG also represents Reed-Rico, another Rhode Island company, selling its machines.
The uniqueness of dealing with the 25 to 30 Colombian manufacturers actually comes on the customs end in the United States, Perry said. Unlike other countries, customs officials, obviously concerned about the Colombian drug trade, inspect all products that are being shipped to Colombia at the plant in the United States.
”They take pictures, inspect every item and fill out reports,” Perry said. Customs’ officials, Perry said, are concerned that companies are “not shipping any drug related type manufacturing item.”
But once past U.S. Customs, Perry said, conducting business is not different than in most areas.
With four people on staff who speak fluent Spanish, and others that are fluent in French and Portuguese, Perry said the company deals directly with customers, rather than through an agent.
”We’re able to deal on a technical basis with the customer,” he said.
He also said ownership of these companies is changing.
“All the owners were post World War II people,” Perry said. “Now, especially in South America, siblings have taken over, 30 and 40 years old. Eighty percent went to school in the United States. The younger people are taking over and they speak fluent English and are Americanized a little bit. With today’s technology, we find it’s just dealing on a business standpoint, it’s like dealing with anybody.”
For ITG, the biggest issue might be the company’s growth. Perry hopes to expand his manufacturing in the East Providence plant where about a third of the company’s 60 employees work, a number he expects to increase along with the expansion. The remaining employees work in the company’s Orange County, California plant. That was a company that was previously called All Pins and was recently bought by Perry, who said he’s considering opening a third facility in Mexico City.
Republic of Columbia
Location: Northern South America, bordering the Caribbean Sea, between Panama and Venezuela, and bordering the North Pacific Ocean, between Ecuador and Panama.
Geographic Area: 440, 000 sq. mi. (about the size of Texas, New Mexico and Arkansas combined)
Climate: Tropical on coast and eastern plains, cooler in highlands.
Main Cities and Towns: Santefe de Bogota (capital), Medellin, Cali, Barranquilla, Cartagena.
Population: 38.6 million
Language: Spanish, and over 200 indigenous Indian dialects.
Work Week: Monday through Friday
Type of Government: Republic
President: Andres Pastrana Arango
Rebel Presence In Colombia: Since the mid 1960’s, Colombia has felt a rebel presence. Though there are many insurgent groups, the Revolutionary Army Forces of Colombia (FARC) is the oldest and most powerful. Over the last 35 years, over 30,000 Colombians have died in politically related activities, according to an Associated Press report. To reach a common ground with FARC, President Andres Pastrana has made several good faith concessions including the creation of a demilitarized zone for negotiations. These negotiations, which were scheduled for July but were postponed, are to focus on land redistribution and the promotion of legal crops to replace cocaine and heroin (Colombia is currently the world leader in their production). Although the public was quite optimistic earlier this year, public sentiment has changed over the past few months with the increased rebel violence. [LA Times, 7/18/99: www.latimes.com]
US Involvement in Colombian Drug War: This past March, the U.S. decided to expand its intelligence sharing with Colombia in an effort to quell the drug war. Furthermore, Colombia will receive $300 million in U.S. counter drug aid, making it the third largest recipient of U.S. aid, behind Israel and Egypt.
Currency: Peso
Exchange Rate: 1,831 Colombian pesos = $1 U.S. (July 1999) 1,580 Colombian pesos = $1 U.S. (October 1998)
Export Trade Information
Tariffs and Trade Regulations: During the first half of the 1990’s, Colombia began lowering and simplifying its import tariffs. Import duties are quoted ad valorem on the CIF value of shipments. Most duties have been consolidated into four tariff levels: a) 5 percent for raw materials, intermediate and capital goods not produced in Colombia; b) 10 and 15 percent for goods in the above categories but with domestic production registered in Colombia; c) 20 percent for finished consumer goods; and d) 35-40 percent for automobiles and some agricultural products which fall under a variable import duty system (price band). These tariff levels are in accordance with the Common External Tariff set by the Andean Community in 1994. Colombia also participates in a large number of integration agreements with other Latin countries, which, in some cases, creates a more complex system of tariffs.
Taxation: Most imports are covered by a 16 percent value-added (VAT) tax assessed on the CIF value of the shipment plus import duties. Some exceptions apply, as in the case of imported vehicles, which are covered by a variable sales tax.
Non-Tariff Barriers: Although significant progress has been achieved in this area, the Colombian government bureaucracy still constitutes a barrier to trade for both local and foreign companies. There is an absence of clear procedure with regard to import mishaps, such as misdocumentation. Often when there is an import problem, goods are returned to the exporter at a potentially high cost.
Licenses: All imports must be registered with the Colombian Foreign Trade Institute (Instituto Colombiano de Comercio Exterior – INCOMEX) in the form of a specific application known as “Registro de Importacion”. Imports are classified into three groups; most imports are categorized with free entry status. As a free status import, the only license required is the “Registro de Importacion,” although there are certain free status imports that may need further documentation.
Import/Export Controls: Colombia has several import controls which were implemented to aid the government in controlling money laundering through international trading. One control is pre shipment inspections which can be completed through several different approved firms. INCOMEX also tracks imports by comparing declared prices with international market prices. An exporter should consult the Business Export Administration for further details.
Documentation: U.S. exporter must be aware that their importers in Colombia must follow several basic steps to carry out an ordinary import into Colombia: When required, obtain import permits from pertinent government agencies. For example: Ministry of Health (for drugs), Ministry of Agriculture (for certain food products); Civil Aviation Department (for aircraft); Buy and fill out the Import Registration form. File the Import Registration form with the Colombian Foreign Trade Institute (INCOMEX); obtain approval from INCOMEX for the Import Registration Form or Import License (in the few cases when this is required); make arrangements with its financial entity for payment of the importation.
The following are main steps to be followed: Fill out the “Andean Custom Value Declaration” (Declaracion Andina de Valor en Aduana) when the importation value is more than U.S. $5,000; fill out the “Import Declaration” (Declaracion de Importacion); go to an authorized financial entity and pay the import duties; present all documents to Customs; Customs reviews the merchandise, when they consider it necessary, and authorize withdrawal of goods.
Free Trade Zones: There are commercial free zones for free trade of goods, industrial free zones for the promotion of industrialization, technological free zones for the promotion of technological services, and tourist free zones for the promotion of tourism. Free-trade zones have special regulations regarding customs and capital investment and enjoy certain tax benefits.
Trade Financing and Credit Availability: Foreign investors experience no discrimination in access to local credit. While the Colombian Government still directs credit to some areas (notably agriculture), credit is, for the most part, allocated by the private financial market. The financial market is dominated by commercial banks which generally lend short term (two-thirds of commercial bank loans are for periods of six months or less). The Colombian Banking Superintendency and the Board of Directors of the Central Bank are charged with implementing financial sector regulatory policies. However, exchange regulations require that the following transactions be channeled through intermediaries: imports and exports of goods; External loans and related financing costs; investment of capital from abroad and remittances of profits thereon; investment of Colombian capital abroad, as well as remittances of yields.
Endorsements and guarantees in foreign countries: General trade finance is freely available and letters of credit widely used in Colombia. Methods, terms, and conditions of payment vary with the type of credit. Normal payment term is 60 days. Two important U.S.- based lenders are the Export Import Bank of the U.S. (EXIMBANK) and the Overseas Private Investment Corporation (OPIC).
Patents and Trademarks: The Andean Community decisions on the protection of patents provide a 20-year term of protection for patents and reversal of the burden of proof in cases of alleged process patent infringement. Colombia’s trademark protection requires registration and use of a trademark in Colombia. Trademark registrations have a ten-year duration and may be renewed for successive ten-year periods.
Copyrights: Colombia belongs to both the Berne(Switzerland) and the Universal Copyright Conventions. Also, Andean Community Decision 351 on the protection of copyrights has been in effect in Colombia since January 1, 1994. Colombia also has a modern copyright law: Law 44 of 1993. The law extends protection for computer software to 50 years, but does not classify it as a literary work.
Key Contacts
Rhode Island Export Assistance Center (RIEAC) and World Trade Center
Raymond W. Fogarty, Director; Edward Barr, World Trade Center Manager
Telephone: (401)232-6407 or (401) 2326408
Fax: (401) 232-6416. E-Mail: mail to:postoffice@itdn.net
postoffice@itdn.net
Website: http//www.rieacorg http:;//ww.rieac.org
Rhode Island Economic Development Corporation (RIEDC)
Maureen Mezei, International Trade Director
Telephone: 222-2601, ext. 123 E-Mail: mmezeAriedc.com
U.S. Export Assistance Center, Department of Commerce
Keith M. Yatsushashi, International Trade Specialist
Telephone: (401) 528-5104
E-Mail: mail to:kyatsuha@mail.gov.gov
kyatshua@mail.doc.gov
Colombian Embassy
2118 Leroy Place, NW, Washington, DC 20008
Telephone: 202-387-8338 Fax: 202-232-8643
Newsites:
El Tiempo (major Colombian newspaper)
http://www.eltimpo.com
www.eltimpo.com
El Espectador (major Colombian newspaper)
http://www.elespectador.com
www.elespectador.com
Regional English newsite
http://www.atamericas.com
www.atamericas.com
Country Profile
Compiled by Providence Business News,
in collaboration with Bryant College Export Assistance Center.
