A U.S.-Colombia Trade Promotion Agreement (TPA) has the potential to increase both trade and investment between the United States and Colombia, improving on an already strong relationship. In particular, Iowa stands to gain from increased business ties, as the TPA will create jobs at home through increased export market access for both goods and services, reduced prices for manufacturers, and an improved investment environment.

Iowa’s Corn Farmers Will Benefit from CTPA

Iowa is the top U.S. exporter of corn, with total exports of $1.5 billion in 2006. Yet Iowa corn faces significant barriers in Colombia, with some tariffs as high as 195%!

CTPA will establish duty-free tariff rate quotas for yellow and white corn and animal feeds with 12-year phase-outs for all tariffs. All other corn products will receive duty-free treatment in Colombia within 10 years of implementation. These concessions alone could raise corn exports to Colombia by 21%.

Estimated Increases in U.S. Exports in Sectors Important to Iowa

• Pork Products 72.3%
• Fabricated Metal Products 56.4
• Processed Foods 36.2
• Chemicals 22.6
• Corn 21.0
• Machinery 14.9

EXPORTS

In 2006, Colombia was Iowa’s 36th largest export market for goods, with exports totaling $24.8 million.

Colombia will eliminate tariffs immediately on Iowa’s leading exports, including:

• Plastics and resins
• Certain chemicals
• Agricultural machinery

Colombia also will eliminate tariffs immediately on many farm products, such as:

• Certain corn products
• Soybean meal and flour
• Certain pork products

The CTPA will strengthen intellectual property rights protections for Iowa’s manufacturers of advanced agricultural chemicals.

Colombian Products Already Receive Broad Access to U.S. Market

In 2006, 93 percent of Colombia’s non-textile and apparel exports entered the United States duty free as the result of development programs, such as the Andean Trade Promotion Act and the Generalized System of Preferences.

The U.S.-Colombia TPA will make permanent the duty-free benefits granted to Colombia under these programs, while giving U.S. producers similar access to the Colombian market.

Iowa’s Exports to Colombia Will Benefit from Duty Savings and Increased Access to Colombia’s Market

SOURCES & NOTES

(1) U.S. Department of Commerce.
(2) U.S. International Trade Commission, U.S. Department of Commerce, and U.S. Department of Agriculture. For some categories, Colombia’s duties range as high as 20 percent.
(3) U.S. International Trade Commission. The majority of Colombia’s exports have received duty-free treatment under the Andean Trade Promotion and Drug Eradication Act (ATPDEA) since 2002. In addition, Colombia also has received duty-free benefits under the Generalized System of Preferences (GSP) program since 1976.
(4) U.S. Department of Commerce.
(5) U.S. International Trade Commission. The International Trade Commission did not publish separate estimates for chemical, plastic, and rubber products.
(6) Column 1 multiplied by Column 2.
(a) For chemical products, Colombia will eliminate duties affecting 82 percent of Iowa’s exports immediately upon implementation of the Agreement.
(b) Approximately 70 percent of Iowa’s industrial equipment exports will receive immediate duty-free treatment. The remaining 30 percent of products will be duty-free within ten years.
(c) The vast majority of Iowa’s exports of processed food products will receive immediate duty-free treatment under the U.S.-Colombia TPA.
(d) Forty-four percent of Iowa’s paper exports will receive immediate duty-free treatment under the U.S -Colombia TPA. Duties on the remaining products will be eliminated in stages over 10 years.
(e) Colombia will eliminate tariffs on 38 percent of the State’s steel products and 77 percent of non-ferrous metals immediately. The remaining tariffs will be eliminated over 10 years.

For further information, contact Brigitte Schmidt Gwyn, Director, International Trade & Fiscal Policy 202.496.3263, bgwyn@businessroundtable.org