Colombia President Juan Manuel Santos affirmed on Monday that a principle point on inter-alliance tax relief, a tariff reduction on 92% of goods, will be signed by member countries during a Pacific Alliance summit next Monday in Cartagena claimed a Colombian news group.The president will take his turn as the Pro Tempore, or rotating host of the Pacific Alliance’s other member leaders: President Enrique Neña Nieto of Mexico, Sebastian Piñera of Chile and Ollanta Humala of Peru on Monday, February 10 in the historic city of Cartagena on the Caribbean coast.
MORE: Colombia to Host February’s Pacific Alliance Summit
The measure to reduce tariffs on 92% of goods is a stepping stone to an eventual full 100% removal of tariffs between the nations of the Pacific Alliance according to President Santos.
The remaining 8% of goods that will not have tariff reductions are primarily agricultural goods.
Santos has ardently supported the Pacific Alliance since its’ inception in June of 2012.
Is the Pacific Alliance good for Colombia?
Actors within the Pacific Alliance declare that the agreement will support economic growth by allowing member countries a greater ease of access to exterior markets through utilizing economic channels already liberalized within member countries and the opportunity to create of more economic channels.
At this point, however, trade between Colombia and the other member countries is mostly overshadowed by Colombian trade to world markets outside the Pacific Alliance like the US and China. According to DANE (National Administration Department of Statistics) from January to November 2013 Colombian exports to the other Pacific Alliance countries made up less than 7% of total exports. DANE documents that during the same period last year Colombia imported less than 13% of its’ total imports from Pacific Alliance nations.
Within these relatively low total trade percentages is a large trade deficit with Mexico. Again using the government statistics Colombia exports less than 1.8% of its total exports to Mexico while importing 9.4% of total imports from Mexico. DANE statistics show this trade deficit at 4.18 billion USD. A 92% tariff reduction could inversely affect the Colombian economy in regards to Mexican imports. Colombia does, however, have small trade surpluses with Chile and Peru though these are significantly less than the deficit with Mexico.
Regional integration
Sources
- 30 Questions on the Pacific Alliance (Ministry of Commerce, Industry and Tourism)
- Pacific Alliance: Integration, Growth and Opportunities (The Pacific Alliance)
- Comercio Exterior — Exportaciones (National Administration Department of Statistics)
- Comercio Exterior — Importaciones (National Administration Department of Statistics)
- Alianza Pacifica concretara en Colombia desgravacion arencalaria del 92% (W Radio)
- MILA History (Integrated Market of Latin America)
- Peru and Colombia to Share Embassies in Vietnam, Ghana (Andina)