US - Colombia Free Trade Agreement

The US-Colombia Free Trade Agreement is set to take effect May 15. The agreement will remove duties on more than 80% of US industrial and commercial exports and about half of the duties on agriculture exports.

This will bode well for US exports particularly as Colombia has made great strides in infrastructure improvements.

The El Dorado International Airport in Bogota, is Colombia's primary international gateway, accounting for 49% of the total air traffic in the country and is considered one of the largest in South America. It has invested in adding additional terminals and cargo facilities. Tonnage increased 10% in 2011 to 648m tonnes.

2011 total US exports by air value were $3.8bn, an almost 15% increase over 2010 and a CAGR (2007-2011) of 7.12%.

The 2011 top US exports (harmonized code) by air value were:

1. Nuclear Reactors, Boilers, Machinery Etc. and Parts valued at $3.8bn, a 14.8% increase over 2010 and a CAGR (2007-2011) of 7.12%.
2. Electric Machine Etc.; Sound Equipment; TV Equipment and Parts valued at $818m, a 21.1% increase over 2010 and a CAGR (2007-2011) of 8.17%.
3. Optic, Photo Etc; Medic or Surgical Instruments Etc. valued at $558m, a 10.1% increase over 2010 and a CAGR (2007-2011) of 9.6%.

US ocean containerized exports by value increased at a greater rate than that of air - perhaps this is due to high oil prices. Still, 2011 containerized exports by value was $3.3bn an increase of 27.5% over 2010 and a CAGR (2007-2011) of almost 10%.

The 2011 top US exports (harmonized code) by ocean containerized value were:

1. Nuclear Reactors, Boilers, Machinery Etc. and Parts valued at $553m an 18.2% increase over 2010 and a CAGR (2007-2011) of 7.41%.
2. Plastics and Articles valued at $537m, a 10.1% increase over 2010 and a CAGR (2007-2011) of 5.3%.
3. Organic Chemicals valued at $301m, a 68.1% increase over 2010 and a CAGR (2007-2011) of almost 13%.

Like its airport, Colombia's ports have also seen major investments. Port of Buenaventura is the largest and closest port closest to cities of Bogota, Medellin and Cali. 65% of imports, mostly bulk/agriculture arrive at this port. The Port of Cartagena is Colombia's primary container port. It specializes in transshipments and in response to the Panama Canal expansion is undergoing expansion and dredging.

Infrastructure plans continue in Colombia as the road and rail network continues to improve, linking to other South American countries thus encouraging the expansion of intra-South American trade. For US exporters, Colombia could possibly serve  as an entry point into South America if moving goods throughout the region.