Colombia’s ‘value-added’ economy

New Free Trade Agreement with the United States has Colombia hoping for the best

Crystal Colombia 2

Maybe it’s the mountains, maybe it’s the fruit that tastes like it’s from the Garden of Eden, or maybe it’s the fact that a local confided in me that every time she talks about the drug trade she gets a headache — but whatever the reason, it only takes a few hours in Colombia to feel the same desire for change that the locals do.

I’m told that in the past 10 years, the violence in the country related to cocaine and guerrilla groups has radically declined, and the country is finally transforming from “a country in transition” to a viable world economy.

I’m here in the the capital city of Bogotá in the midst of a week-long press tour, and the experience thus far has been incredible. The city is situated in the middle of lush green mountains and the weather is a perfect 80 degrees during the day — something I’m told is a year-round phenomenon because as the locals say  “they don’t have seasons.”

New construction and renovation projects line the streets, including a new airport and a new transit system for buses. The country is hoping to host the world, and they want to be ready.

I’m here with Proexport Colombia, a government-owned entity set up to encourage trade, tourism and financial investments.

The group is hosting a matchmaking forum this week, and all the participants are especially excited about the event because it is the first such forum since Colombia and the United States signed a Free Trade Agreement on May 15.  

Although Colombia previously was able to export many raw goods to the U.S. without taxes, the new agreement will allow Colombia to export “value-added” goods.  

So, for Jorge Alonso Castano O., that means he can now export the fried plantains he makes under his Big Chips brand without tax. Before, only his raw plantains could be exported without tax.

Speaking through a translator, he told me that before the agreement, his plantain chips had a 30% tax, so now that means huge savings for his company. It also means huge savings for the customers buying the products at the store.

He explained that his goal is not to compete with the major players, but just to diversify his own company. They’re already in the Miami market, but he’s hoping the new agreement will help him enter the New York and Los Angeles market as well.

Meanwhile, Sergio Ivan Morales P., with el Paraguitas, a confectionery company, also speaking through a translator, says he hopes the new agreement will help him infiltrate the U.S. market even more than he already has.

His company has been exporting candy to the U.S. for 12 years, but the new agreement could help them conquer new territory. Specifically, he’s looking to export a type of fruit energy bar that provides natural calories year-round.

In 2011, Colombia exported $815 million worth of bananas, $602.6 million worth of sugar and honey, and $315.5 million worth of confectionery goods.

Here’s hoping those numbers will only continue to increase as a result of the new Free Trade Agreement — shifting the focus of Colombian exports away from illegal drugs and toward some much sweeter products.

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