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Colombia: in the international spotlight

Article - April 8, 2014
The Latin American nation’s next chapter of success is to build on free trade with the U.S. and the development of the Pacific Alliance
COLOMBIA
Colombia’s imminent accession to OECD membership is a significant marker of international recognition of the country’s economic success story. However, the success extends much further as the interlinked policy initiatives and strategies of the Juan Manuel Santos administration over the last three-and-a-half years also start to bear fruit in areas such as national and regional social development, poverty reduction, the persecution of drugs-linked criminality and, of course, the process to bring an end to decades of internal unrest. 
 
This comprehensive success story is now propelling a very confident Colombia into a new era, one of welcoming the challenges of competing in the wider arena of free trade with the U.S. and of building a community of like-minded, economically ambitious regional nations into the wide-ranging Pacific Alliance.
 
Colombia now represents one of Latin America’s most attractive investment opportunities. The groundwork for sustained progress is being laid through structural reform aimed at tackling and resolving long-standing economic, regional and social issues and thus providing a firm basis for internal stability, for citizens and for business alike. IMF figures show growth in the period 2012-2014 averaging 4% per annum – substantially higher than the rates being achieved by countries such as Brazil and Mexico.
 
The United States-Colombia Trade Promotion Agreement (CTPA), in effect since May 2012, has already been very significant for North American businesses and investors in Colombia, bringing a common framework for bilateral trade and investment, as well as the protection of intellectual property, labor rights and the environment. Colombia already had an excellent record on investor protection; in the World Bank rankings it comes in at number one in Latin America and fifth in the world.

And while U.S. agricultural exports have benefited greatly from the CTPA, Colombia still had in 2013 a favorable trade balance with the U.S. of over US$3 billion.
 
The trade agreement has further strengthened the close liaison between the two countries, forged over decades of fighting together illegal drug cartels and money laundering. Colombia’s Vice-President Angelino Garzón acknowledges this relationship, stating that “both the U.S. government and the U.S. people are two great allies of Colombia”, while Aurelio Iragorri, Minister of the Interior, adds that “we have had an extraordinary relationship with the American authorities”.
 
Entry into the OECD enables Colombia, in the words of Mr. Garzón, “to belong to the club of countries with good governance practices [and] with new levels of economic and social development.” Meanwhile, for Gabriel Vallejo, Director of the Department for Social Prosperity, it “denotes recognition by the major economic powers of the world”. These comments are echoed by Ricardo Triana Soto, Executive Director of the Council of American Enterprises, who says that “the OECD is a very good club of countries and obviously Colombia wants to be there, continuing with good practices and learning from those countries in order to improve more.” 
 
Besides the FTA with the U.S. and entry into the OECD, Colombia now has a third trump card to strengthen its credentials as a regional ally and as a key gateway country to Latin America. This is its membership of the Pacific Alliance, a regional integration initiative with Mexico, Chile and Peru. The union seeks to act in common on trade and investment matters, and the Inter-American Development Bank considers the Pacific Alliance as “the most ambitious integration proposal in decades”, covering trade matters but also technology transfer, educational and academic exchanges and free movement of capital and people. 
 
The alliance’s economic strength is undeniable; already it ranks as the world’s eighth largest economy and seventh largest exporter, and reaps in more FDI than Mercosur.
 
Colombia is resolving with determination issues that had held it back for decades, carrying out structural and social reforms to ease the way ahead. The country is set on securing internal peace and security, positioning itself strategically as a key gateway to Latin America. It is building on growth and bursting with self-confidence, as well as setting up trade structures with major trading partners – the principal of these being the U.S. A new chapter of success is already being written.

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