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Santos’ FTA promises prove false; Colombia’s exports to US drop 15.5%

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Colombia Reports | Feb 16, 2014

Santos’ FTA promises prove false; Colombia’s exports to US drop 15.5%

by Adriaan Alsema

A promised increase in exports to the United States as a result of a free trade agreement has failed to materialize as exports contracted 15.5%, according to Colombia’s statistics agency.

“It is calculated that with the FTA our exports will grow with at least 6%,” said President Juan Manuel Santos in October 2011 when the US Congress ratified a free trade pact between the two countries.

However, more than two years later Santos’ calculations proved very wrong, at least until 2013, statistics revealed by state statistics agency DANE show.

In 2012, the year the FTA came into force, exports began the drop that accelerated last year. At the end of 2012, exports to the US had contracted 0.7% compared to 2011. This drop accelerated to 15.5% in 2013, resulting in a accumulated 15.8% drop in exports to Colombia’s biggest trade partner since 2011 when the two countries still traded without a trade pact, but with a deal that cut US tariffs for Colombian imports.

According to the DANE, US exports to Colombia did enjoy a growth in sales after the coming into force of the trade deal; Over the past two years, US imports grew 10.9%.

While a number of variables influence the value of Colombia’s export value to the US — for example the value of the peso and the price of crude oil — monthly export figures show a coincidence between the coming into force of the FTA in May 2012 and the sliding exports.

The drop in exports to the US — in 2013 the recipient of 31.4% of Colombia’s exports — is the main force behind the South American country’s 2.2% drop in exports last year.

In total, the South American country’s export had a value of $58.1 billion in 2013 compared to $60.1 billion the year before.

Exports to neighboring countries Venezuela and Peru also dropped respectively with 11.7% and 19.4%, while Ecuador imported 3.4% more in 2013 than the previous year. The three markets combined represented 9.4% of Colombia’s total exports last year.

Exports to the European Union grew 2%, from $9.06 billion to $9.23, over 2013. This growth was primarily pushed by Germany and Belgium, Colombia’s largest export markets in Europe.

Colombia’s farmers, who violently protested over their deteriorating economic situation in August last year, have blamed the FTA with the US for the general drop in the export of agricultural products over the past years. However, according to government statistics, the export of agricultural products in fact grew slightly in 2013, expanding the agricultural sector’s share of Colombia’s total export from 4.4% to 4.5%.

The sector affected the most by the 2.2% contraction of Colombia’s industry was the manufacturing industry which saw its exports drop 6.4% mainly because of a drop in exported refined oil and metals.

- 1995 – 2013 Exports Per Sector (XLS / DANE)
- 1995 – 2013 Exports Per Country (XLS / DANE)

About The Author
Adriaan Alsema is the founder and editor-in-chief of Colombia Reports. Born and raised a Dutchman, Adriaan has been living in Colombia since 2008.

 source: Colombia Reports