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100 faqs about TLC.
What products of this sector were covered by the ATPDEA?
Under the ATPDEA, mainly products, such as shirts, socks, and jeans, were covered. Now, the opportunities will be extended to the whole chain.
Will the machinery that is required by the sector have benefits?
The FTA opens spaces for the import of machinery, which can help the industry to modernize.
Is it true that the textile & clothing sector will do outstanding with the FTA?
This activity will gain great opportunities, because long-term preferences were achieved for products, such as lingerie, textiles for the home, swimwear, and fashion in general. The permanence of the tariff benefits afforded by the FTA gives ample coverage for the industry since the preferences have been extended to 11 new lines, which will positively impact the business of the sector.
What is the outlook for domestic auto parts?
For this sector, the United States opens many opportunities. Antioquia is one of the departments that will benefit from the FTA, as it has several auto parts manufacturing companies. The idea is that foreign investors will come to settle in the country and use Colombia as an export platform to other regions of South America.
What environmental issues were agreed to?
The AAA Committee accepted the request to specify that all new vehicles (including cold balances) that are imported or assembled in Colombia comply with regulations established by the Ministry of Environment and Sustainable Development.
Will the FTA allow the entry of used cars and other used goods?
No type of used vehicle or any other used item may enter Colombia. The Andean Automotive Agreement prohibits the importation of used vehicles, and as this Agreement is already in force, the FTA with the United States does not remove or modify it.
For private vehicles, how will the dismantling of tariffs unfold?
This will be five years for car bodies and motorcycles between 500 and 800 cc, and ten years for all gasoline or diesel vehicles between 1,500 and 3,000 cc, as well as jeeps from 1,500 to 3,000 cc, tow trucks, cleaning trucks, and motorcycles and scooters from 50 to 500 cc.
What will come with immediate relief?
The items that are not produced in the country, such as tractors, trolley cars, vehicles for over 16 passengers, 4x4’s of 3,000 cc that are not campers, dump trucks, drilling trucks, sweepers, or radiological vehicles.
Many Colombians were waiting to buy a car once the FTA came into force, believing that they would find cheaper prices. Is that so?
It is true that cars will come down in price, but only gradually. In this case, we agreed to a period of 10 years from the entry into force of the FTA, so that the impact of tariff reductions will be gradually phased in.
How much of a quota did Colombia yield?
Colombia offered an import quota for seasoned fresh legs of up to 26,000 tons, with a growth rate of 4%. An important aspect to note that the administration of this import quota will be subject to an auction mechanism which allows Colombians to share in the revenues generated by the tariff-free quota (Export Trading Company). Additionally, we achieved a quantity safeguard that is applicable during the period of relief, with a trigger of 130%.
Has there been a consensus on the issue of chicken leg quarters?
For fresh chicken leg quarters will have a relief from a base rate of 164.4% and this will hold for 18 years, with 5-year grace period. For seasoned chicken leg quarters, the result of its higher economic value, it will receive a relief period of 18 years, with a grace period of 10 years, in which there will be no reduction in tariff. For this product, the tariff base is bound by the WTO at 70%.
What is the Government's support for this sector?
The Government is aware of the importance of supporting the rice sector in becoming more competitive. Therefore, within the given economic support, certain internal support has been defined per hectare of rice.
Will we be flooded by U.S. rice?
Colombia granted an import quota of 79,000 ton of U.S. white rice. If we compare this figure with the annual consumption in the country, which is estimated at 1,794,000 tons, we see that this only corresponds to 4%. Furthermore, domestic producers may participate in the revenue arising from the administration of the quota, as they agreed to use an entity that is utilized by the U.S. with Europe (Export Trading Company). This auction scheme generates important resources which will be open to Colombian rice.
How much was the base rate, and for how many years will it apply?
The base rate remained at 80%. This same fee will be followed during the first 6 years of the FTA’s entry into force and only then will it become liberalized linearly. The combination of these instruments involves a threshold of effective protection for nearly 15 years. Additionally, a special agricultural quantity safeguard was established, which is applicable throughout the period of relief.
Is it true that the rice will disappear from the market?
On the contrary, rice was the most protected product, with a relief period to allow a progressive adaptation to the increased competition. The negotiating team defended it as the most sensitive item for the country. Protection was achieved for 19 years, with a 6-year grace period, during which the tariff will remain at its initial level.
In terms of origin, what was agreed for this product?
In cigarettes, we consolidated the ATPDEA preferences and achieved a standard which during the first few years will permit the mixing of raw materials from third countries, until the domestic supply reaches the required level.
The tobacco industry is a major source of rural employment. What message would you send to producers?
This product showed great opportunities in the U.S. market, thanks to ATPDEA tariff preferences. On this point, the FTA not only strengthened access which originally was only temporary, but it also substantially broadened access for this product. Was achieved a preferential quota of zero tariff for 4,000 tons of tobacco and a relief period of 15 years.
How have we protected current coffee sales, in terms of origin?
On the issue of coffee, we have cleared the issue of origin, since it is restricted to roasted coffee concessions obtained in the region, so as to promote the sale of Colombian beans. Thus, importation of only 150 tons of non-originating coffee is permitted. Colombia was able to negotiate a reservation to guarantee the permanence of the coffee contribution.
The U.S. market has been important for fuel and oil exports. With the FTA, what are the new gains for these sectors?
For Colombia, it was important to consolidate the preferences for ethanol that were included in the ATPDEA, as well as to open access for fuels generated from palm. The FTA consolidates the market for exports of fuel oil and so forth. We were also able to negotiate a flexible rule of origin which guarantees the ability to include raw material from countries not member to the FTA.
How can we assure fruit and vegetable exporters that their sales will be invigorated?
From the experience of other countries in the region, such as Chile and Mexico, agricultural supply has been boosted, thanks to these two items. We also have a strategy to convert Colombia into a global player in this sector. We have also included vegetables and fruits in our Productive Transformation Program.