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Kentucky and Colombia – A Growing Partnership

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, Kentucky 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.

Kentucky’s Auto Parts Manufacturers Will Benefit from CTPA

The United States is the leading supplier of auto parts to the Colombian market, despite Colombian tariffs of 5-15% on most parts (motor vehicles face higher tariffs of up to 35%).

The CTPA will eliminate immediately almost all 5% tariffs and phase out most of the higher tariffs over 5 years. The concessions will allow Kentucky’s parts producers –the State’s largest manufacturing employer – to be even more competitive in this important South American

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

  • Fabricated Metal Products 56.4%
  • Beef 46.2
  • Primary Metal Products 44.3
  • Motor Vehicles and Parts 43.8
  • Processed Foods 36.2
  • Chemicals 22.6

EXPORTS

In 2006, Colombia was Kentucky’s 30th largest export market for goods, with exports totaling $44.3 million.

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

  • Certain auto parts
  • Machine tools
  • Certain chemicals

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

  • Choice and prime beef cuts
  • Certain poultry products
  • Tobacco

Upon full implementation of the CTPA, Colombia will eliminate the 20% tariff it applies to Kentucky’s bourbon exports. Additionally, Colombia will eliminate its discriminatory state alcohol monopolies and excise taxes.

IMPORTS

The U.S.-Colombia TPA will make permanent the duty-free benefits that 93 percent of Kentucky’s non-textile and apparel imports from Colombia already enjoy.

Kentucky’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) programsince 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 Kentucky’s exports immediately upon implementation of the Agreement.
(b) Approximately 68 percent of the State’s electronic products will receive immediate duty-free treatment. For information technology product exports 100 percent will receive immediate duty-free treatment.
(c) Approximately 70 percent of Kentucky’s industrial equipment exports will receive immediate duty-free treatment. The remaining 30 percent of products will be duty-free within ten years.
(d) Overall, more than 80 percent of U.S. industrial exports will receive immediate duty-free treatment, including many glass, concrete, and other non-metallic mineral products.
(e) The vast majority of Kentucky’s exports of processed food products will receive immediate duty-free treatment under the U.S.-Colombia TPA.

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

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