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, Michigan 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.

Michigan’s Auto Makers Will Benefit from CTPA

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

CTPA will eliminate immediately almost all 5% tariffs and phase out most of the higher tariffs over 5 years. As a result of the tariff concessions, motor vehicles produced in Michigan will become more competitive in this important South American market, and it has been estimated that the new market access will raise U.S. exports of vehicles and parts by nearly 44%.

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

• Fabricated Metal Products 56.4%
• Vehicles & Auto Parts 43.8
• Processed Foods 36.2
• Fruits & Vegetables 31.6
• Chemicals 22.6
• Machinery 14.9

EXPORTS

In 2006, Colombia was Michigan’s 32nd largest export market for goods, with exports totaling $90.9 million.

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

• Caustic soda
• Electronic and telecommunications equipment
• Semiconductors

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

• Certain dairy products
• Soybean meal and flour
• Apples, cherries, and blueberries

The CTPA will strengthen intellectual property rights for Michigan’s designers and manufacturers of software, auto parts, and other hi-tech products.

IMPORTS

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

Michigan’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. International Trade Commission did not publish separate estimates for chemical, plastic, and rubber products.
(6) Column 1 multiplied by Column 2.
(a) Ninety-one percent of Michigan’s transportation equipment exports will receive immediate duty-free treatment. The remaining duties will be eliminated over ten years.
(b) For chemical products, Colombia will eliminate duties affecting 82 percent of Michigan’s exports immediately upon implementation of the Agreement.
(c) Approximately 70 percent of Michigan’s industrial equipment exports will receive immediate duty-free treatment. The remaining 30 percent of products will be duty-free within ten years.
(d) 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.
(e) The vast majority of Michigan’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