Free Trade Zones must become Colombia's new regional exports engine

 

By: Martín Gustavo Ibarra Pardo, CEO at Araujo Ibarra Consultores Internacionales

 

As a result of the signature of the World Trade Organization Agreement, it was created the 'Made in the World' concept, which implies that a raw material can leap from one country to another in order to become an intermediate product and consequently in a final product.

 

These industrial complementary processes called 'Global Value Chains' imply neutral spaces, free of taxes, of formalities and procedures, with an extraordinary infrastructure, which facilitate the flow of these goods from one country to another.

 

And precisely, these neutral spaces are the Free Trade Zones which, since the Word Trade Organization was created 23 years ago, have multiplied their number by seven, passing from 500 to 3,500 wordwide.

 

In Latin America there are more than 600 Free Trade Zones in almost every country of the continent and in Colombia there are more than 130.

 

More than 20 departments in Colombia which house these important mechanisms of foreign trade and each FTZ is starting to create their own internationalization plans in order for them to be the link between their regions and the rest of the world.

 

Colombia is one of the Latin American countries with a lower per capita exports index, exporter of only 800 dollars of which only 200 are manufactures, confronted to 2,400 which is the global per capita, and it is also  one of the countries with lower share in its exports in the Global Value Chains (24% of global chaining confronted to the 50% which is the international mean, according to UNCTAD).

 

For this reason, the Free Trade Zones are called upon to lead these exporting processes that cover  the agroindustry as well as the manufacture and services sectors.

 

Colombia has agroindustrial free trade zones for products as fruit, meat, milk and biofuels.

 

There is also a great potential in the use of the Free Trade Zone Regime for exports related to                 e-commerce, which have a current share of  11% in the world trade but is growing at a rapid pace, and different sources forecast that e-commerce will reach a share of the third part of global exports in the next five years.

 

E-commerce exports can use the free trade zones in several ways: manufacturing products, but also as a  location for call-centers or support services for e-commerce exports, data centers and international logistics centers.

 

The  Cámara Colombo Americana, in Bogotá as well as nationwide, must lead the Regions Internationalization Comitee emphasizing in the bilateral relationship  with the United States, the world's number one importer and our first commercial partner, to add new companies in order for them to use our Free Trade Agreement which on May 15 has been in force for six years.

 

Within these internationalization programs the priority is to attract new 'anchor' or 'tractor' companies and their first and second level suppliers, and identifying the companies inside the regions whose products have a clear will for the use of the free trade agreements with the United States.

 

Being United States the first investor in the world's free trade zones, the creation of this Comittee is a must and without doubt will come to early fruition.

 

 

 

The opinions expressed by entrepreneurs not necessarily represent the official position of AmCham Colombia