What is the status of the negotiation of the Trade Agreement between Colombia and Japan?

August 15, 2023

We found out how the negotiation of the Trade Agreement between Colombia and Japan is progressing, after Colombia celebrated the resumption of chicken meat exports to Japan.

Acuerdo comercial entre Colombia y Japón

Many are wondering about the progress of the Trade Agreement between Colombia and Japan, in view of the decision taken by the Japanese health authority to lift the suspension of Colombian exports of chicken meat, a measure adopted since October 2022, due to the presence of 49 outbreaks of avian influenza in our country.

Join us in this tour of the current trade scenario between Colombia and Japan, and learn about the progress and challenges in trade negotiations that will mark the future of this promising trade relationship.

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Trade between Colombia and Japan

According to figures from the Embassy of Colombia in Japan, the main products exported to Japan in 2022 were Coffee (46.2%), Coal (19.8%), Fresh and preserved flowers (11%), Coffee extracts and freeze-dried coffee (6.8%), Ferronickel (5.5%), Copper waste and scrap (2.3%), Insecticides (2.2%) and Emeralds (1.5%).

In terms of agricultural sales, after flowers, which account for 97%, the country sends bananas, avocados and tropical fruits. The livestock, hunting and fishing products that recorded shipments in the last two years were live reptiles and insects.

In the poultry industry, exports had been concentrated in glands and substances of animal origin used for the preparation of pharmaceutical products, although these had practically disappeared before the suspension of trade by the Japanese health authority. Indeed, these went from 1.34 million dollars, in 2013, to less than 63 thousand dollars in 2022.

On the other hand, Colombia is totally dependent on Asian manufactures. 99.5% of imports from Japan are high value-added industrial products. According to DANE figures, in the last decade 31% of Colombian purchases from Japan were automotive industry products, 21% of metallurgical inputs for industry and 20% of machinery and equipment.

In addition, Japan leads as the main issuer of Foreign Investment from Asia-Pacific to Colombia. Between 2010 and 2021, accumulated investment flows from Japan reached USD $562.7 million, which represented 32.9% of the Asia-Pacific region’s Foreign Direct Investment (FDI) in Colombia.

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Japan was followed by China and Australia, with 21.2% and 14.6%, respectively. It is worth mentioning that this figure does not include investment flows generated by Japanese companies in third countries, as is the case of the Japanese Softbank Group, which in 2019 invested USD $1 billion in the Colombian unicorn Rappi.

The negotiation of a Trade Agreement between Colombia and Japan is stalled

In September 2011, both countries established a study group to define the negotiation of an Economic Partnership Agreement (EPA). Subsequently, 14 rounds of negotiations were held, between December 2012 and April 2016, with the purpose of achieving the Colombia-Japan Trade Agreement.

Currently, the negotiation process with Japan remains suspended. In May 2021, the Colombian Minister of Trade presented a report to the private sector on the status of the negotiations of the Colombia-Japan Trade Agreement. In that report, it was mentioned that among the pending chapters were rules of origin and market access.

Colombia was hoping for an agreement that would cover its requests in the agricultural and agro-industrial sectors. For its part, Japan proposed a two-stage trade agreement: a first phase with limited access for sensitive products, which Colombia would balance with limitations on access to industrial products of interest to Japan; and a second five-year phase, in which the agreement would be reviewed to deepen trade liberalization.

However, during the negotiation process, challenges and concerns arose. There was a strong reaction from industrial sector unions and an important agricultural sector in the negotiation did not give full support. In addition, the lack of reciprocity on the part of Japan was discussed, since this country requested benefits for its products, while maintaining barriers for products of Colombian origin.

Faced with this situation, the Minister of Trade, Germán Umaña, stated to Bloomberg that the country already has a network of trade agreements, but that there is a lack of supply of goods. Umaña emphasized that the priority is to promote the creation of a competitive productive offer, both for exports and for the domestic market.

In addition, he did not close the possibility of new agreements, but clarified that the possibility of advancing an agreement, even a partial one, will only be evaluated if there is a strategic alliance that contributes to the development of that productive offer.

However, with countries such as Japan, which have strict sanitary regulations, Colombian exports have many difficulties due to Colombia’s insufficient investment in this area, which is still a pending task.