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Tennessee 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, Tennessee 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.

Tennessee’s Auto Parts Manufacturers 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 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 make the State’s parts producers – already its largest manufacturing employer – even more competitive in this important South American market.

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

  • Fabricated Metal Products 56.4%
  • Motor Vehicles & Parts 43.8
  • Processed Foods 36.2
  • Chemicals 22.6
  • Machinery 14.9
  • Computers & Electronics 8.0

EXPORTS

In 2006, Colombia was Tennessee’s 33rd largest export market for goods, with exports totaling $100 million.

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

  • Certain processed foods
  • Yarns & textiles
  • Construction machinery

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

  • Prime & Choice cuts of beef
  • Soybean meal & flour
  • Certain poultry products

The CTPA will liberalize Colombia’s market for express delivery services, which are in high demand. Trade facilitation measures will also help these companies provide better services to their customers.

IMPORTS

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

Tennessee’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) 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.
(b) Upon implementation of the Agreement, U.S. exporters of agricultural products will receive duty-free treatment on products accounting for nearly 52 percent of current trade and will see all tariffs phased out for the remaining products.
(c) For chemical products, Colombia will eliminate duties affecting 82 percent of Tennessee’s exports immediately upon implementation of the Agreement.
(d) More than 80 percent of Tennessee’s industrial exports will receive immediate duty-free treatment under the Agreement.
(e) Approximately 70 percent of Tennessee’s industrial machinery exports will receive immediate duty-free treatment. The remaining 30 percent of products will be duty-free within ten years.

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

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