Colombia’s exports to FTA countries have grown 9.9% on average each year

RIO DE JANEIRO, BRAZIL – Colombia’s exports between 2005 and 2020 to countries with which it has trade agreements in force registered an average annual growth of 9.9% in value and 17% in volume.

Meanwhile, when taking into account the world in general, the increase in these exports was 2.6% and 2.3%, respectively. These results were affected by the economic contraction in 2020, due to the effect of the pandemic. As for exports of non-mineral energy goods, growth in the same period was 1.8 %, as an annual average.

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This is what emerges from the Report on the Development, Progress and Consolidation of Trade Agreements in Force that was presented this Thursday (25) in a public hearing to trade union organizations, trade union and workers’ representatives and the general public, among others, and which last August was submitted to the Congress, as ordered by Law 1868 of 2017.

Trade agreements have also boosted the diversification of the export basket, since 55 % of the increase in non-mining exports corresponds to new products that were not exported a year before the entry into force of each agreement (Photo internet reproduction)According to the report, imports from countries with trade agreement in force for the same period grew in annual average 10.5 % in value and 11.1 % in volume. It should be noted that around 76 % of Colombian imports correspond to productive factors: raw materials and capital goods that complement the domestic supply. Trade agreements allow access to these products at competitive prices.

The analysis is made since 2005 because it is the year in which the largest number of trade agreements in the country was implemented, which today reaches 17 with 66 countries, providing preferential access to more than 1.5 billion consumers.

As explained by the Vice Minister of Foreign Trade, Andrés Cárdenas Muñoz, the results incorporate the impact on the economy, foreign trade and investment generated by the pandemic caused by Covid-19 in 2020.

Another result of the agreements, as evidenced by the report, is that trade with countries with trade agreements in force has increased. In the case of exports, it went from 22.4% annual average to 67.5%. And in the case of imports, something similar happened, from 19.3% to 64.9%.

Trade agreements have also boosted the diversification of the export basket, since 55% of the increase in non-mining exports corresponds to new products that were not exported a year before the entry into force of each agreement.

The agreements have also encouraged more companies to export; however, the number of exporting companies is directly related to the length of time the agreement has been in force. In other words, the longer the agreement has been in force, the more companies take advantage of these instruments.

Thus, for example, the list of those that have increased their firms is headed by Mexico, with a 191.5% increase in the number of exporting companies compared to the year prior to the entry into force of the agreement, which came into effect in 1995. They are followed by Paraguay with a variation of 145.5 %, Chile with 106.2 %, Brazil with 90 % and Uruguay with 74.5 %, among others.

However, there is the opposite case, in which exporting companies decreased. For example, the number to Switzerland decreased by 29%, to Israel by -16.9%, to Norway by -17% and to Costa Rica by -9%.

On the other hand, the report shows that the share of trade in goods in the gross domestic product (GDP), which measures what the economy trades, has remained relatively stable at about 28% of GDP.

Between 2005 and 2020, investment grew at an average annual rate of 3.9%, in real terms, and increased its share in GDP. Of this ratio, foreign direct investment represents 2.8% of GDP, where about 86.7% comes from countries with trade agreements.