“Let us start by saying essentially that in the past, Colombia's relationship with the U.S. has focused mainly on security and defense issues, as well as on trade issues, because we worked over six years on the free trade agreement (FTA) with the U.S., first negotiating it and after a long process of approval from NAFTA (North American FTA) and Congress, which has put the agreement in place,” says Carlos Urrutia, Ambassador of Colombia to the USA since August 2012. “Today we are in a different state. It's a very fluid partnership, and a true partnership relationship, as the Americans say. The reality is that there are very close relations on many fronts, not only on the trade front in security and defense issues, but also on cultural, governance or energetic issues.
”Since the signing of the FTA with the U.S., trade between the two markets has increased exponentially. Up to 80% of interchangeable products now – or will in the future – enjoy major tariff cuts, indirectly facilitating Colombia’s economic diversification. The start of the FTA with the U.S. has been very successful. Between May and December [of 2012], exports from Colombia to the U.S. market grew by about 10%. Exports of North American products to the Colombian market grew 12%,” says the Ambassador.
Some on the U.S. side argued that the FTA with Colombia would end up taking away jobs from American workers, but reality has proved otherwise. U.S. exports to Colombia grew 12% in an economy that was growing just 1.5% or 2% in the best of cases in 2012.
Last year saw both nations sign the Colombia-U.S. Action Plan on Regional Security Cooperation, designed to heighten both nations’ focus on security matters. “We must recognize that Colombia still works very actively to fight against narcotics trafficking and there is a very close bilateral relation in the areas of security and combating drug trafficking,” says Mr. Urrutia “Colombia's military forces, particularly the police force, work very closely with the U.S. military in combating the drug trade in Central America.”
There are vibrant cultural exchanges and proactive human rights programs in place between both countries. In early February, the Governor of Massachusetts was in the Colombian capital, Bogota, where he met with President Juan Manuel Santos and signed a Memorandum of Understanding (MoU) on issues of innovation and technology. “It all happened because of the fact that the State of Massachusetts, and particularly the city of Boston, are true clusters of high-level education,” comments Mr. Urrutia. “This MoU dealing with the issue of science is an example of cooperation in the area of education, technology and entrepreneurship.”
In April, President Santos joined with tens of thousands of people in Colombia to take part in marches in support of continuing the peace talks between Marxist-led Farc rebels and government negotiators. The first face-to-face negotiations in a decade between the government and the rebels started last October in the Norwegian capital of Oslo, and moved to Cuba the following month. The ultimate aim of Colombia’s government is for the Farc rebels to abandon their armed struggle and join the legal political process legally.
“I think the prospects of reaching a peace agreement with the Farc are very good. Colombians are very optimistic. The government is cautious but optimistic,” Mr. Urrutia adds.
The culmination of the peace process would certainly be a boost for the country's international image, and strengthen its reputation today. In other areas, Colombia is committed to deepening its relations with Latin America, with a particular focus on developing the Pacific Alliance, along with the other three founding members Mexico, Peru and Chile.
Formally launched on June 6, 2012, the Pacific Alliance is a Latin American trade bloc that represents 36% of Latin America's gross domestic product (GDP) and has already been hailed a great success. The four member governments of Mexico, Chile, Peru and Colombia have found that they have a common commitment to free trade issues and economic integration. On May 23, 2013, Costa Rica became the fifth full member of the bloc. Guatemalan President Otto Perez has said his country already has free-trade deals with Mexico, Colombia, and Chile, but hopes to have one finalized with Peru before the end of this year.
Also in May, the Pacific Alliance approved the accession of seven new countries as ‘observer nations’, namely Ecuador, El Salvador, France, Honduras, Paraguay, Portugal and the Dominican Republic.
“I think it is also important to note that the success of the alliance that many countries – not only those in the region – have shown interest linked to the alliance in a way,” says Mr. Urrutia, who was schooled in the USA, studied at John Hopkins University and the Universidad de los Andes before enjoying a career in Brigard & Urrutia, which led him to become one of the most recognized lawyers in Colombia.
Colombia has a very ambitious program in the field of construction and infrastructure, as it plays a key role in boosting foreign trade not just through the FTA with the U.S., but also the different trade agreements that have been inked with other countries, such as South Korea and the EU. Increased trade requires that Colombia has the appropriate infrastructure to enable the transport of products to and from its ports for example.
“Today we are in a situation that inhibits the development of foreign trade, because the cost of transporting goods to ports in many cases is higher than the cost of transporting these products from our ports to target markets,” says the Ambassador. “The problem is that the cost of internal transportation is higher than the cost of transporting products to markets abroad. This problem must be solved quickly.”
Colombia has a very dynamic energy and power generation industry that is of great interest to U.S. investors. Over the course of just six years, Colombia has gone from being a medium-sized producer of about 530,000 barrels of oil per day (bpd) to its current output of just over 1 million bpd, and has the prospect of being able to produce about 1.5 million bpd in the next five years. “That makes Colombia an important country in terms of oil production not only in the region but in the world,” says Mr. Urrutia.
Colombia is a major coal producer, but uses hardly any domestically; instead its power plants and thermal plants generate natural gas, which is precisely the transformation that is emerging in the U.S., thanks to increased gas production. “Last year, we exported about 90 million tons of coal,” the Ambassador adds. “Almost all of our thermal coal production is exported. The truth is that coal and oil have become of great importance for Colombia's trade balance.”