Home > European Union Agreement: The "Mega-highway" of Opportunities

European Union Agreement: The "Mega-highway" of Opportunities

PROCOLOMBIA has identified over 800 products with the potential for export to this trade bloc. The European market multiplies options to diversify and increase non-mining exports.

Approval of the trade agreement with the European Union by Congress Tuesday night blew the door wide open to the influx of Colombian products with tariff benefits and the advantage of keeping these conditions long-term. Opportunities for Colombia are quite diverse when you consider that the country has the potential to export products and services demanded and imported in great numbers by this trade bloc.

"PROCOLOMBIA identified at least 818 products with potential in the European Union. Although some of these products are already sold in that market, what they all have in common is the ability to enter with a reduced tariff or none at all. It's an excellent way for sales to continue to diversity their destinations," explained Maria Claudia Lacouture, President of PROCOLOMBIA.

Once the agreement goes into effect, 100% of the exports of Colombian industrial goods will have free access to the European market, a benefit that levels the playing field for Colombian companies with those of Chile, Mexico and Peru, who have had trade agreements with this giant for years.

After the agreements, Mexico has registered a 13% annual growth in exports to the EU since 2000, and Chile has recorded a 10% growth since 2003. For instance, Mexican sales went from USD 5,668 million to USD 22,156 million between 2001 and 2012.

For Colombia, non-mining exports to the EU represented 9.2% in 2012, and "the possibilities for growth are great, because this is a market that imports a great deal of industry and food, and has 500 million consumers," emphasized Lacouture. She explained that this agreement provides stability and clear rules for entrepreneurs to do business in the long run.

A Market for Fruit, Sugar, Palm Oil and Fish Products

There are 161 products from the agribusiness sector with opportunities. The agreement expands tariff benefits for products with export potential like specialty coffees, flowers and foliage, palm oil, aquaculture and fishery products, fresh exotic fruit and processed fruits and vegetables, as well as sugar and sweeteners.

Uniforms is an interesting niche. The designs tend to be practical, and easy to wash and iron. Hotel uniforms in particular have potential.

Colombia already exports these products to the EU, and they have the capacity to grow if you consider that this bloc is the largest agricultural product buyer in the world, with imports that surpass Australia, Japan, Canada, New Zealand and the United States combined.

For example, sugar is an important ingredient in European cuisine. It is a product with potential, as is stevia, value-added panela and honey, given the growing demand for healthier alternative sweeteners.

"The European Union market has a preference for earth-friendly products. Countries where we have identified a market for sugars and sweeteners include the United Kingdom, Portugal, France, Germany, Greece, Italy, Belgium, Sweden, the Netherlands and Poland," commented Lacouture.

Exports by CI Food Colombia, a producer of specialized and organic sugar cubes, shows the possibilities for local companies.

"Being one of the top seven sugar-producing countries in the world has piqued the international market's interest. In our case, German consumers have been buying specialized Colombian sugar cubes since last year, 100% of our production is shipped to the German market, and we hope that the market will expand even more with the agreement," insisted the company's Exports Manager, Jairo Gomez.

The aquaculture and fishery sector also has significant possibilities: The EU is the second largest consumer of fish in the world, surpassed only by China. It imports 70% of what it consumes, a favorable trend for increasing Colombian sales of shrimp, fish fillets (tilapia and trout), canned fish and processed seafood.

"These are products that currently pay a tariff between 2% and 26%. Once the agreement goes into effect, they will be duty free in markets with opportunities such as, the UK, Portugal, Spain, France, Italy, Germany, Belgium and Sweden," added Lacouture.

In the case of fruit such as, cape gooseberry, purple passion fruit, sweet passion fruit, yellow dragon fruit, tamarillo, passion fruit, baby banana and Hass avocado, we have identified niches, especially in the UK, Portugal, France, Germany, the Czech Republic, the Netherlands, Sweden, Slovenia, Finland, Belgium, Spain, Ireland, Italy, Slovakia and Austria.

Agrifrutas, a Colombian company with three years experience in exporting Santa Claus melon grown in the Caribbean coast to Spain and Portugal, has exported 1,500 tons (74 containers) in that time period.

The company has received bids from England and the Netherlands to export onions and other agricultural products such as, watermelon. "With the agreement, we hope to get a general certification with access to the whole European market. Not country by country like it is now," said Juan Manuel Becerra, Sales Manager.

Manufacturing: 538 Items with Opportunities

This sector has the highest number of opportunities identified by PROCOLOMBIA. The array of options is wide for products like cosmetics, plastics, hotel supplies, office and home supplies, and auto parts, instruments and apparatus, metalworking, construction material, furniture and lumber, chemical products and others.

According to statistics provided by the European Cosmetics Association, over five million personal hygiene products and cosmetics are sold annually in the European continent. Germany, France and the UK top the list of largest buyers and are markets with potential for Colombian goods, in addition to Spain, Sweden, Hungary, Italy and Ireland, where exports are duty free.

"In our analyses we found that the EU bought USD 6,292 million in perfumes and body sprays. Of that, Colombia sold them USD 1.9 million, which means that for this product alone there are niches to explore," insisted PROCOLOMBIA's President.

Ceramic products such as, sinks, basins and bathtubs; suspension shock-absorbers for cars and upholstered chairs and seats are other manufactured products that Colombia exported in 2012, but did not sell to the European Union, a market which last year alone bought these items for USD 1,207 million, USD 4,543 million and USD 1,432 million, respectively.

Other niches have been identified, including hotel supplies, office and home supplies and furniture: all these products will no longer have to pay tariffs of up to 11% once the agreement goes into effect.

Invermec, a company that manufactures machetes and professional scissors, sells those products to Spain, Italy and Portugal duty-free, a benefit it will maintain with the agreement. Those products are re-exported from Europe to African countries that import a great deal of agricultural products. "For us, this market effect has been unfolding over the last 10 years, and it has helped our exports. In Portugal alone, 2012 represented almost USD 216,000" said Daniel Restrepo, Invermec Sales Manager.

Swimsuits, Underwear, Footwear, Costume Jewelry and 112 Other Products

There are 116 textile, apparel and leather goods products with potential for export to the European Union. "We have noticed a growing interest by European entrepreneurs in acquiring these Colombian-made products for several reasons: Quality and creativity in design, competitive prices and flexible production in our companies," explained PROCOLOMBIA's President.

Europe has started to cut down on its local underwear manufacturing, a trend that benefits Colombia's industry. Moreover, the levels of obesity among their population are growing alongside the demand for body-shaping garments that help improve appearance, which will also be duty-free if they meet the rules of origin.

Domestic exports of swimsuits to the European Union reached 8.8% even though they pay tariffs of 8% to 12%. This is one of the sectors that will benefit from the agreement because they enter markets like Germany, Belgium, Spain, France, Portugal, the UK, Italy, the Netherlands, the Czech Republic and Cyprus duty-free. PROCOLOMBIA has identified niches in those countries.

Colombian jeans will no longer pay tariffs; this is a great advantage for new business deals in a market that concentrates 48% of imports of these garments in the world. Spain, the Netherlands, Italy, France, Belgium, Germany, Sweden, Denmark, the Czech Republic and Portugal are markets with opportunities.

Overall, the agreement will expand the options for the apparel industry in the area of children's clothing, which has an interesting demand, even as the European population is getting older and the birthrate is dropping.

Juliana Ortiz, Sales Manager at Confecciones Bebita, hopes that the agreement with this trade bloc will bring more legal stability to improve export negotiations. Right now, the company sells onesies for babies ages 0 to 2 years to the UK. "For us, sales to the British market grew by 15% last year. We expect to continue improving our service now with the help of the agreement," she indicated.

Opportunities for Services

Services with the best growth options due to the agreement with the European Union are graphics and editing, healthcare tourism, services outsourcing (BPO), software, digital animation, video games, mobile applications and audiovisual.

The agreement gives these domestic companies the possibility of reaching public companies, which represents 1 quadrillion per year.

Colombia has advantages that can help it become a service provider in graphics and editing as it is the fourth largest Latin American book exporter to the European Union. In the area of BPO, Colombia was included for the second year in a row in Gartner's list of "Top 30 countries for Offshore Services" which emphasized the sector's strength in the country.

In the area of healthcare tourism, the country has 16 hospitals included in the list of the best 45 hospitals in Latin America (2012). In software, digital animation and applications, Colombia has an abundance of personnel qualified in the areas of engineering, graphic design, industrial design, visual arts, multi-media engineering, audiovisual and multi-media communication, publicity, and marketing, etc.