Its transition from a highly regulated economy has been underway for more than a decade. In the early 1990s, Colombia unilaterally initiated economic liberalization or "apertura" which has included tariff reductions, financial deregulation, privatisation of state-owned enterprises and the adoption of a more liberal foreign exchange regime. Almost all economic sectors have been opened to foreign investment. Colombia has been a signatory of the GATT since 1981 and a member of the World Trade Organization (WTO) since that institution's creation in 1994. Under the framework of this organization, the country has implemented a series of reforms in the areas of trade remedies, subsidies, exchange rate controls, foreign investment, intellectual property, and customs valuation, among others.
Unlike many countries in Latin America, Colombia has never suffered any dramatic economic collapses or periods of hyperinflation. Indeed, the Colombian economy produced uninterrupted positive growth since the early 1930's to the late 1990's. The country has a long history of sound macro-economic management, which continues today. The administration of President Uribe has sought to maintain prudent fiscal and monetary policies. The administration is investing heavily in improving security and law and order throughout the country, but is also investing in the country's economic infrastructure to ensure sustainable growth.
In addition to domestic goals of keeping inflation and interest rates low and maintaining a stable currency (Colombian peso), the Uribe administration has put a heavy emphasis on developing international trade. The administration's strong fiscal management helped it to obtain new development loans from the Inter-American Development and World Bank that will address poverty and underdevelopment. Colombia's reputation for always honouring its international financial obligations has enabled it to maintain access to global capital markets to finance its public debt.
The United States is Colombia's largest trading partner. In 2007, the U.S. received 35 percent of Colombia's exports and provided 26 percent of its imports. The EU, Japan, and the Andean Community countries also are important trading partners. Colombia's strategic location at the crossroads of the Western Hemisphere makes it an ideal export platform. The United States accounts for 30 percent of Colombia's total trade with the world. Colombia is the United States' fourth largest trading partner in Latin America, behind Mexico, Brazil and Venezuela.
While the opportunities for Australian companies are many and varied, particularly promising niches at present can be found in:
Despite the country's problems, Colombia's economy is diverse and relatively advanced. With duty-free access to the other Andean nations, and negotiations for free trade with the US almost complete, Colombia is ideally placed to take maximum advantage of regional developments.
Latin America is shaping up to be the next big destination for Australian exporters and investment. With a young educated population and great wealth of natural resources, this region is finally beginning to realise its potential. Ai Group is strengthening its ties with the region with Australian responsibility for the Australia Colombia Business Group and a third trade mission planned for 2011. To assist members in understanding both the opportunities and barriers to trading with Latin America, we have produced a range of fact sheets on Colombia, focusing on the Mining, Infrastructure, Health and Education industries.