FOREING TRADE

General Information

Mention should be made of the fact that many things have changed in the last few years. For this reason entrepreneurs cannot overlook the fact that in a special case, he has to avail himself with specific and current information.

In comparison to the subcontinent, Colombian foreign trade is characterized by a positive development. Adequate policies advocate purposeful export promotion and import liberization. Foreign trade is conceived and realized by diverse national institutions which decide upon its organizational frameworks. This sector dynamics characterizes Colombia as a country with a relatively low foreign debt.
 

The most important factors of foreign trade liberalization are:
• Reduction of import taxes
• Free trade agreements with different important trade partners
• Liberalization of transactions in foreign currencies
• A competitive rate of exchange
• Liberalization of legislation for foreign investments

The State makes efforts to keep the balance of imports and exports. But after restrictions were abolished, a faster growth of imports in comparison with exports is apparent.

grafica trade Balance Banco de la Republica

In December 1998 exports for USD 8.654,5 millions (including oil and coffee) confronted USD 14.498 millions of imports to Colombia.

 

Colombian Imports

grafica Colombian Imports Banco de la Republica

Raw materials and half-finished products occupy the first place among imports. Then there are the capital goods, mainly in the form of investments, machines and appliances.

• Import licenses

Import restrictions, which had been kept very strictly, were relieved considerably since the beginning of 1990 within the framework of the country’s economic opening. 98% of all the customs items correspond to freely importable goods. In the case of products important for the country’s development (for example agricultural machinery) the custom tariffs were reduced drastically.

All imports to Colombia are registered in the foreign trade bureau of the Ministry of Foreign Commerce. A distinction is made between Declaración de Importación (import declaration), which has to be filled out for all imports, and Licencia de Importación (import license). The customs declaration for freely importable goods doesn’t need – in contrast to Licencia – a previous authorization by the Ministry of Foreign Commerce. It is only needed for controlling and statistical registration purposes. The License as well as the customs declaration have to be presented to the customs authorities at the moment of importing (nationalization) the merchandise. The import license has to be applied for and has to be approved before exporting the goods from the country of origin. In the case of the import register, it is sufficient to present it to the Ministry of Foreign Commerce (Ministerio de Comercio Exterior), before the merchandise is unloaded in Colombia.

At present, there exist several import license groups. As the products of one group can change into another, it is advisable to always ask for information. With pleasure The German- Colombian Chamber of Industry and Commerce is willing to help.
Declaración de Aduanas (customs declaration for freely importable goods): About 98% of all imported goods belong to this group. You have to take into consideration that donations, replacements or other non-payable products do not belong to this group, but to the one with the previous license. A copy of this declaration is sent to the Ministry of Foreign Commerce (Ministerio de Comercio Exterior) for statistical purposes.

Licencia Previa (import license): These imports have to be authorized by the national imports commission. Next to other products, which cannot be imported freely, a previous license is needed for second hand merchandise, donations or goods which are imported by national institutions.

Licencia Global (global license): It is presented in case of supplies of installations and machinery which include diverse parts or in the case of goods which are imported duty-free under the “Plan Vallejo” (see 1803).

Licencia Transitoria no Reembolsable (transit license): it authorizes the import of certain capital goods important for the country, which are nor paid immediately, but which can later be imported once certain formalities have been complied with.

Obviously, there is as well the “forbidden import list”, which also changes often and makes some previous information necessary.

Normally, import licenses are valid for 6 months, with the possibility of an additional 3 month renewal. There are no tolerances for values, the weight tolerances, up to a maximum of 5%, have to be applied for.

In case of temporary import, a clearance according to carnet A.T.A. is not possible. They do not require either licencia or registro de importación. An authorization issued by the Administrador de la Aduana (head of the customs bureau) is sufficient. But a guaranty for the same amount a normal import duty will cost has to be provided for the goods; and these have to be re-exported until a determined deadline is complied with. To these goods among others:

• Technical material and accessories, which are imported to perform some works
• Goods meant for exhibitions, fairs or others, including decorating material for the booth, advertising material, etc.
• Machinery or parts of machines which are facilitated free of charge to the importer, while his own machines are being repaired
• Stencils and molds for industrial purposes
• Samples

Grafica Colombian impots from germany

Minor imports which do nor exceed the amount of USD 1.000 do not require any documents fee. Mailed parcels are subject to the international Universal Postal Union regulations and do not need a further import permission.

• Payment Procedure

Also the payment procedure was simplified in the modernization process. Basis for all trade businesses is the respective dollar exchange rate. After concluding a contract of sale, the importer has to designate a commercial bank or a financial institution, which has to be noted down on the import license or the import register. It is the bank’s duty to oversee the correct import procedure. As soon as the merchandise is shipped, the importer can exchange the foreign currencies. For this purpose he has to fill out a Declaración de Cambio. Which has to be presented to the Central Bank. A previous deposit isn’t necessary any more.

European exports should be carried out on a credit basis. The Colombian importer is obliged to take a transport insurance. The German-Colombian Chamber of Industry and Commerce informs about all matters related to exports to Colombia.
The import duty and another connected costs can also be paid without any problem at commercial banks.

• Customs Procedures

The Colombian customs bureaus have a bad reputation. But also here, the new governmental measures have had a positive effect. For a belated dispatch a fine has to be paid, and corrupt officers (if they are caught) lose their jobs. The adjustment to electronic date processing, which is presently undertaken, is another way to make things easier.

At the moment of importing the goods, a so-called Declaración de Aduanas (shipping declaration) has to be presented to the Colombian customs, together with the following documents:

• According to the kind of goods, the original registro or the licencia de importación,
• The certificate of origin, if this is required for the import of the merchandise,
• The commercial invoice or the proforma invoice, with the usual price in DM or USD fob, export harbor,
• The original transport documents (bill of lading, airway bill, consignment note),
• Sanitary certificate, if it is necessary,
• Packing list.

Customs and consulate invoices are no longer required.

In the case of temporary storage in the custom warehouses, the conditions, quantity and probable storage time of the goods has to be noted on the Declaración de Despacho, if the supplier or importer wants it so.

All parcels have to be labeled according to regulations: sender’s and consignee’s name and address, order number, destination, country of origin, weight, numbering (if there are several parcels) and indications about how to handle the merchandise (international symbols).

At the latest, two days after their arrival, the imported goods have to be handed over to customs, each additional day cost a fine of 0.5% of the fob value.
 

Export from Colombia

Grafica Colombian exports by products

Colombia’s main export goods are coffee, oil, coal, bananas, cut flowers, textiles and leader goods. To get more independent from the coffee price fluctuations, for several years the diversification of exports has been brought forwards. These efforts can already show rather good success in different sectors.

All goods produced in Colombia can be exported freely. But for statistical reason a customs declaration (shortly called DEX) has to be filled out. The former usual abundance of bureaucratic procedures is nowadays reduced to a minimum.
Only few products have an export interdiction, for example archeological or cultural objects, wild living birds and animals, their skins or furs, and wild plants.

Other products (agrarian products, fertilizers, medicines, precious metals or stones, explosives, arms) need an additional authorization issued by the respective national entity.

The main buyer of Colombian exports products is, besides the USA and Venezuela, the European Community. The October 1990 EC decree, which, for ten years, allowed Colombia the duty-free import of numerous products into the EC, contributed to a higher competitiveness of Colombian products in the EC.

The government supports the exports of the so-called “non-traditional products” (coffee, coal, oil, ferronickel, emeralds and gold) through the Banco de Comercio Exterior de Colombia S.A. – BANCOLDEX.

Parallel to BANCOLDEX 8being the main shareholder) FIDUCOLDEX S.A. us operating. It is a trust company, which undertakes through the connected PROEXPORT the promotion job, for example the introduction of Colombian products abroad and the consulting of domestic importers about the selection of products and fair participation. Other shareholders are the national Chambers of Commerce and diverse associations.

Another export incentive is the so-called PLAN VALLEJO, which allows the duty-free imports raw materials, half-finished or other products, if they in any form contribute to the elaboration of export merchandises. These imports have to be applied for at the Ministry of Foreign Commerce (Ministerio de Comercio Exterior) and need an import license.
Graficaws Colombian exporyts by destinations & exports to germany
Compensation businesses.

In principle, the Colombian State no longer permits compensation businesses on a private level. They can only be undertaken when a national agreement within the framework of mutual credit assents exist.

 

The Black Market in Colombia

Illegal imports harm the Colombian economy considerably. In a country as large and impassable as Colombia it is nearly impossible to control the borders. Agrarian products from the neighbor countries by land; textiles, electronic appliances, whisky, cigarettes, by boat or plane, and only a small share of it is caught and confiscate by customs authorities. But illegal imports slowed down with the abolishment of import restrictions.

The retail trade suffers above all from the so-called “San Andresito” (something like free Caribbean isle), which in the bigger cities can practically operate without complaints and even are taxed, which – next to goods officially acquired in customs auctions – offer as well a large part of goods, which came illegally into the country. In the “San Andresitos”, you can find everything, from the last creation of a Korean Yves Saint Laurent – Imitator sun-glasses to all imaginable electric appliances.

Orders are possible, and sometimes the dealers even give guaranties on the merchandise sold. Even checks or credit cards are accepted by most of the stand owners.
 

Industrial and Free Trade Zones

The government administration of industrial and free trade zones in Colombia turned out to be a mistake. Now, for this reason, a transfer into private ownership is looked for. Already the free trade zones of Cartagena and Cali are in private hands. First successes show off.

Advantages of free trade zones are:
• They are tax free (no income, transfer or community taxes)
• They are duty-free
• No limitations for foreign investments
• Simplified customs procedures for import and export products

Disadvantages:
• Insufficient infrastructure
• Insecurity

Colombia has a several industrial and free trade zones, and they are in Cali, Cúcuta, Barranquilla, Santa Marta, Buenaventura, Cartagena, Rionegro, Leticia and San Andrés; further ones shall be authorized shortly.

As a free trade zone the Caribbean isle of San Andrés is the most important. It lies in front of Nicaragua coast, but belongs to Colombian national territory.

The isle combines tourism and duty-free businesses successfully. Chiefly, the merchandise comes from Panama and Miami and is bought by Colombian tourist and transported to the mainland. The Colombians have the possibility to take merchandise with them twice a year, if they do nor surpass a certain sum of purchase and additionally have stayed at least two days on the island. Mostly, there are entertainment electronics, household goods, perfumes and spirits. Besides this purchase tourism, merchandise for the mainland is imported over San Andrés – legally and illegally.