Colombian Ministry of Commerce issues balance sheet on trade agreements in force

The government presented the balance of the country’s trade agreements, including Free Trade Agreements (FTAs). The data is presented for the period 2005-2022, the period in which most of the FTAs signed by Colombia entered into force.

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This report is presented annually, pursuant to Law 1868 of 2017, and records the results of Colombian foreign trade and investment flows with the countries with which it trades the most.

The balance includes the analysis of tourism, the actions being taken to strengthen trade and the main obstacles in trade relations.

Free Trade Agreements (FTAs) have been an integral part of Colombia’s trade strategy in recent decades, and have sought to foster international insertion to promote economic growth through the expansion of bilateral trade relations.

However, the picture that emerges from the results and statistics related to these agreements raises questions about the effectiveness and coherence of this strategy.

17 trade agreements in force

To date, there are 17 trade agreements in force in Colombia, covering a wide range of trading partners, from Latin American countries to world powers. Not all of them are Free Trade Agreements, as some are economic complementation agreements within the framework of ALADI.

According to data provided by the national government, trade agreements in Colombia contribute approximately 1.08% of the Gross Domestic Product (GDP).

In Latin America, Colombia is the fifth country with the highest number of trade agreements, behind Panama (19 agreements in force), Peru (with 21), Mexico (with 24) and Chile (31).

However, the high number of agreements has not necessarily translated into an outstanding performance in terms of exports and imports. Nor has it implied a diversification of exports or a strengthening of the productive apparatus, evident in the loss of participation of these sectors in the Gross Domestic Product.

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Trade in goods results

Between 2005 and 2022, imports of goods experienced an average annual growth of 7.8% in value and 5.3% in volume, according to the report of the Ministry of Commerce, Industry and Tourism.

On the other hand, exports of goods grew at an average annual rate of 6.0% in value and only 1.6% in terms of volume during the same period, according to the same source.

It is important to note that exports of non-mineral-energy goods had a more modest average annual growth of 3.9% between 2005 and 2022.

Another aspect that generates concern is the fact that, since 2014, Colombia has maintained a structural deficit in its trade balance with the countries with which it has FTAs. This deficit is notorious in the cases of Mexico, the United States, the European Union, Canada and the European Free Trade Association (EFTA).

Services trade performance

In 2022, services worth USD $13,518 million were exported and USD $18,013 million were imported, according to the balance carried out by the Ministry. This exchange of services left a deficit for Colombia of USD $4,495 million that year.

Despite the fact that, according to the report, exports of services showed an average annual growth of 9.4% between 2005 and 2022, Colombia has historically had a deficit in the balance of services, especially in areas such as transportation, intellectual property and telecommunications. This deficit has not changed with the trade agreements.

Among the obstacles to overcome, especially in relation to developed countries, are the difficulties in removing sanitary and phytosanitary barriers, as well as the lack of diversification of Colombia’s exportable supply, in which hydrocarbons weigh heavily.

In summary, the data reveal that the trade agreements in force in Colombia have not always had results in line with expectations.

While imports have grown at significant rates, exports have not been able to keep pace, which raises questions about the effectiveness of the strategy.

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