Colombia Trade

Subchapters:

  • Business Relationships
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

From a territorial point of view, the 3 largest Colombian trading partners were the USA, the EU and China. Trade exchange with EU countries amounted to 8.2 billion EU in 2020, which was almost 30% less than in the previous year. However, the importance of the EU as a trade partner of Colombia has been growing for a long time, especially in connection with the entry into force of the multilateral trade agreement between the EU and Colombia/Peru (August 2013). Due to the import of a large amount of goods with a high added value from the EU, the balance of the trade balance has been negative for a long time from the point of view of Colombia.

  • Allcountrylist: Overview of major industries in Colombia, including mining, construction, transportation, tourism, and foreign trade.

Trade exchange with the EU (million EUR)

2018 2019 2020 2021 2022
Exports from the EU (million EUR) 5,554.4 6 152.1 4,646.6 ON ON
Imports into the EU (million EUR) 4,582.0 4,320.4 3,657.8 ON ON
Balance with the EU (million EUR) -972.5 -1,831.7 -988.8 ON ON

Source: European Commission

Trade relations with the Czech Republic

Trade with the Czech Republic reached CZK billion last year, with Colombia having a slightly positive balance after several years. The main volume of exports from the Czech Republic to Colombia is represented by machinery and electrical equipment.

Trade exchange with the Czech Republic (billion CZK)

2018 2019 2020 2021 2022
Exports from the Czech Republic (billion CZK) 1.3 1.5 1.0 ON ON
Imports to the Czech Republic (billion CZK) 1.1 1.3 1.1 ON ON
Balance with the Czech Republic (billion CZK) -0.2 -0.2 0.1 ON ON

Source: CZSO

FTAs and treaties

Treaties with the EU

EU-Colombia/Peru Multilateral Trade Agreement (2013)

Thanks to the provisional implementation of this agreement, the access of Czech exporters to the Colombian market has been significantly improved, especially in the field of textile industry, automotive, light industry, food industry, but also in the field of services. Savings on customs duties can reach up to 30%. The rate of use of preferences by Czech exporters, e.g. for machines and engineering products (the most important items of Czech exports) was only 54% in relation to Colombia in 2019. The contract also introduced quotas for the import of certain types of goods (e.g. milk, dairy products, medicines, etc.) for a transitional period. They are usually used up for years right from the start. The trade agreement foresees the gradual elimination of quotas in the future.

Contracts with the Czech Republic

  • Basic agreement on scientific and technical cooperation between the Czechoslovak Republic and the Republic of Colombia (1971)
  • Agreement on Cultural Exchange between the Government of the Czechoslovakia and the Government of the Republic of Colombia (1979)
  • Agreement on technical and scientific cooperation between the Ministry of Agriculture of the Czech Republic and the Ministry of Agriculture and Rural Development of the Republic of Colombia in the field of agriculture, cattle breeding, forestry, fisheries and rural development (2002)
  • Memorandum of Understanding between the Ministry of Foreign Affairs of the Czech Republic and the Ministry of Foreign Affairs of the Republic of Colombia for the introduction of a mechanism for political consultations on issues of common interest (2004)
  • Agreement between the Ministry of Defense of the Czech Republic and the Ministry of National Defense of the Republic of Colombia on cooperation in the field of defense material (2006)
  • Framework agreement on cooperation in the field of energy and mining between the Ministry of Industry and Trade of the Czech Republic and the Ministry of Mining and Energy of the Republic of Colombia (2008)
  • Memorandum on cooperation in the field of environmental protection between the Ministry of the Environment of the Czech Republic and the Ministry of the Environment, Housing and Territorial Development of the Republic of Colombia (2008)
  • Treaty between the Czech Republic and the Republic of Colombia on the avoidance of double taxation and prevention of tax evasion in the field of income tax (applied since 2016)

Developmental cooperation

The country is currently a recipient of foreign development aid, with international institutions, USAID and the EU, being by far the largest providers. The main instrument of European development aid is the EU Trust Fund, from which projects focused mainly on the development of the Colombian countryside are financed in the period after the end of the armed conflict in Colombia.

Currently, Colombia is not among the priority countries of the Czech Republic for the provision of development aid. From the point of view of providing development cooperation, only the implementation of so-called small local projects (MLP) and the B2B program of the Czech Republic are considered. In 2021, an MLP is being implemented, which aims to increase the dairy productivity of family farms in the Caquetá region by using Czech genetic material and know-how.

Prospective fields of study (MOP)

The government’s Compromiso por Colombia plan to respond to the economic slump caused by the pandemic is to focus on clean energy projects, healthcare and support for rural areas. In the budget for 2021, an increase in investment expenditure by 23.1% is expected. At the same time, the government presented 25 key infrastructure projects, the preparation and construction of which it wants to speed up as part of the reactivation of the economy.

Projects include the construction of the Bogotá metro, which began in October 2020, the construction of new airports in Cartagena, on the island of San Andrés, and the airport serving the so-called coffee zone – el Aerocafé. Another major infrastructure project is the Dique Canal and the navigation of the Magdalena River connecting the center of the country to the Caribbean Sea.

Energy industry

Installed capacity in Colombia exceeds 14,524 MW (of which 65% is hydropower, the rest thermal, gas and cogeneration). Short-term hydropower outages are becoming more frequent due to climate change, and Colombia is trying to cover them with increased production from thermal plants and electricity imports from Ecuador. Although electricity consumption stagnated in 2020, it is expected to increase in the future. Therefore, the government plans to increase the installed capacity by 4000 MW in the next 5 years.

In the medium term, thermal power plants will have their irreplaceable place in Colombia’s energy mix, especially as backup sources of hydropower and emerging solar and wind power plants. Currently, 10 coal-fired and 15 steam-gas power plant projects are in the advanced project preparation or construction phase.

In addition, Colombia has abundant coal reserves and potentially huge natural gas reserves (depending on the country’s decision on fracking). RES have significant potential due to local climatic conditions. The government had already committed before the crisis to increase the share of energy from solar and wind sources from the current 50 MW to 2,500 MW in 2022.

ICT

In the field of fintech, consumer payment habits (pre-crisis overwhelmingly cash) have changed rapidly in the last year, with a 40% increase in first-time users of online banking, bank cards and mobile phone payments. The e-commerce sector grew by 40% after the introduction of anti-pandemic measures, and a further growth of 16% is expected in 2021.

Colombia also has ambitious plans in the field of digitalization of state administration, and the pandemic has only confirmed the correctness of this direction. The main strategic goals of the digitization of state administration are the creation of a system for services to citizens (digital authentication, digital citizen component, interoperability), a system for access to state institutions and a system for managing the privacy and information protection of individual platforms.

Water management and waste industry

Although Colombia has the fifth largest supply of drinking water in the world, a significant part of its water resources is heavily polluted. According to a survey by the Ministry for Regional Development, 92.9% of the urban population has access to drinking water, but only 71.5% of the population in rural areas, a significant part of which is also at risk of drought.

The government is therefore preparing for 300 projects in 24 departments with a total value of USD 800 million. Colombia also plans to increase the share of recycling from 8.7% of all waste to 17.9% in 2030. The market potential of the circular economy in Colombia to 1 billion USD per year.

Healthcare and pharmaceutical industry

Colombia represents the third largest market for medical supplies in Latin America. The medical device market is expected to continue growing at an average of 5.3% per year over the next four years. 97.4% of Colombians have health insurance and can use the services of health facilities to a much greater extent.

On the one hand there are big cities and highly developed areas with a strong private sector willing to invest and on the other hand there are very poor communities in underdeveloped parts of the country where people do not have access to quality healthcare. Therefore, Colombia is a market both for new innovative solutions and for the development of projects where basic equipment plays a vital role.

Agricultural and food industry

Although Colombia is a predominantly agricultural country, it imports a third of its food. In order to achieve food self-sufficiency in the post-pandemic period, support for increasing production and adding value to agricultural products can be expected in the future. The agricultural and food sector was one of the few growing in the otherwise economically bleak 2020.

The size of the domestic agro-industrial market is estimated at USD 180 million. Local production is still small (less than USD 45 million) and, moreover, it is primarily focused on exports to neighboring countries (Peru, Ecuador, Venezuela, Panama – USD 29 million). Specifically, Czech suppliers are offered the possibility of supplying agricultural machinery, dairy technologies, equipment and machinery for bakeries, for the production of confectionery and chocolate, for the production of sugar, as well as for breweries, for the processing of meat and poultry, fruit and vegetables.

Colombia Trade