This means that $722.9 million USD were exported to Argentina, Bolivia, Brazil, Chile, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, México, Panamá, Paraguay, Perú, Dominican Republic, Uruguay and Venezuela. In volume, 289,791.7 tons were sold to these countries, an increase of 3.1%.

Compared to the same month in 2021, this meant an increase of 11%, and in relation to September 2019, the growth was 27.8%.

Of the total goods sold by the country to this region in September, with which the government of President Gustavo Petro seeks to strengthen economic and trade integration, almost half (44.5%) were non-mining energy goods.

Plastics, vehicles for passenger transportation, palm oil, medicines, candies and sweets, soaps, soluble coffee, beauty preparations, paper and cardboard, among others, are the main products exported to this part of the world.

“We advocate for a joint agenda in economic and commercial matters, but above all in productive complementation, border integration and so many other things in the region. It is necessary to return to having common objectives within a framework of internationalization with a human face and to continue strengthening the CAN and mechanisms such as the Pacific Alliance,” said the Minister of Trade, Industry and Tourism, Germán Umaña Mendoza.

In the first nine months of this year, the 16 countries mentioned above received $6,225.6 million USD in non-mining and energy goods from Colombia, which translates into an increase of 19.7% compared to the same period in 2021 ($5,202.9 million USD) and 29% compared to January-September 2019 ($4,823.1 million USD).

Between January-September, Colombia exported $6.2 billion USD in non-mining goods to 16 Latin American countries. In the first 9 months of the year, global foreign sales of non-mining energy goods totaled $16.5 billion USD.

In volume, this represented 2.5 million tons for a 3% growth compared to a year ago.

Venezuela

It should be noted that Venezuela has been increasing its share receiving Colombia’s non-mining energy exports. From representing 1.6% of this type of sales a year ago and occupying 17th place in this ranking, today it represents 2.7% of these exports and occupies 7th place.

Between January and September of this year, exports of non-mining goods to Venezuela reached $438 million USD for a growth of 108.4% compared to the same period of 2021, when it represented “only” $210,4 million USD.

Among the goods most exported to Venezuela are sweets, plastics, fertilizers, palm and soybean oils, margarines, laminated products, bakery products, compresses and electric accumulators.

Non-mining energy goods

As for non-mining energy goods exports to the world, in September alone, Colombia sold $1.831 billion USD in this type of product, which is their highest value exported in a September. It represents a growth of 19% compared to the same month of 2021 and 48.9% compared to the ninth month of 2019, a year before the covid-19 pandemic.

Exports in September were driven by industrial products, Ministry of Commerce classification, which accounted for 62.6% of the non-mining market basket in September and grew 13.5% compared to the same month of 2021.

In this group, some products stand out for their growth such as doors, windows and their frames (266.6%); vehicles for passenger transportation (116.8%); coffee extracts and concentrates (73.5%); cane or beet sugar (32.4%); other hair preparations (16.1%) and chocolates, confectionery and candies (15.3%), among others.

In this same month, exports of primary products to the world, according to the classification of the Trade portfolio, represented 37.3% of non-mining exports and grew 30% when compared to the same period of 2021.

Among these products, we can highlight the growth of unroasted coffee, whose exports grew 26.3%. In addition, bananas and plantains increased 47.9%; flowers (28.6%); frozen beef (14.4%); Hass avocado (53.6%); tilapia fillets (147.9%) and Tahiti lime (61.3%), among others.

“In the government of President Gustavo Petro we work to strengthen the domestic market, exports, to replace imports and to generate income that allows the reduction of inequality. In this purpose, it is essential to promote the creation of small and medium-sized companies to create more exportable supply and integrate them into international value chains,” said the Minister of Commerce, Industry and Tourism, Germán Umaña Mendoza.

The main destination for exports of non-mining energy goods in September was the United States, which accounted for 29.8% of these sales. Exports to that market totaled $545.3 million USD, an increase of 35% compared to the same month last year. The second most important market for these exports was Ecuador, which accounted for 8.4%. They totaled $153.1 million USD, an increase of 1% compared to September 2021. The third most important destination was Brazil, which accounted for 6.1% of these exports. In September they reached $111.2 million USD, an increase of 28%.

Between January and September of this year, Colombia’s exports of non-mining and energy goods reached $16.48 billion USD and represented 37.6% of total domestic sales abroad.  This is the highest amount exported for this period in history. They increased 26.2% compared to the same period in 2021 and 43.3% compared to January-September 2019, the year prior to the pandemic generated by covid.

It is also interesting to note that Colombia’s total exports to the United States were $11.4 billion USD in the first nine months of the year, compared to $901.82 million USD for Canada, $5.7 billion USD for the European Union and $481.26 million USD for the United Kingdom.

Above photo: Port of Cartagena (photo © Loren Moss)

The Summit has become relevant for the venture capital ecosystem in the country, since it generates trending content, demo days and roundtables, among general partners and investment vehicles and startups.

This year’s speakers include CFO of Colfondos Andrés Herrera Jimenez, Director of the Financial Regulatory Unit of Colombia Felipe Lega Gutiérrez, and President of ProColombia Flavia Santoro.

With a new executive director, Colcapital, Colombia’s private equity industry association, continues to grow, as evidenced by the expansion of their annual event from the Colombian Private Equity Congress to the Private Equity Congress of The Pacific Alliance.

Colcapital Executive Director Paula Delgadillo Sanz de Santamaria

After investment roles with Colombian insurance concern Seguros Bolivar and Bancolombia, Paula Delgadillo Sanz de Santamaria took over the reins of Colcapital from Isabella Muñoz, who moved back into a business role with an investment firm.  The “gremio” or trade association continues to grow along with Colombia’s nascent private equity sector.

This year’s event saw speakers from small boutique firms as well as partners and executives from Blackrock, the International Finance Corporation, Bancoldex, Baker McKenzie, Skandia, Bancolombia, Cushman & Wakefield, and dozens of others. Conference topics ranged from real estate finance to impact investing.  Technical topics were covered, such as secondary transactions and infrastructure financing, but also ESG topics such as gender equity in capital markets.

3rd Annual Private Equity Congress of The Pacific Alliance was

Photo: Carlos Holmes, foreign affairs minister of Colombia, announces the nation’s decision to withdraw from UNASUR. (Credit: Presidencia de la República)

The move came as part of a larger governmental announcement about Colombia’s international relations focus that included the intention to “implement a new border policy,” which new Foreign Affairs Minister Carlos Holmes Trujillo called a “fundamental part of the country’s foreign policy.”

In making the decision, Duque became the first head of state to fully withdraw his nation from the South American union, which was founded in 2008 and entered into force as a treaty in 2011 to better align cross-border collaboration in key areas such as trade, defense, energy, healthcare, education, and combatting the drug trade.

In April, Colombia, Brazil, Argentina, Chile, Peru, and Paraguay all suspended their membership in an organization that faced ongoing disagreements over both leadership structure and how to handle relations with Venezuela.

At the time, an unnamed Peruvian diplomat told Reuters that the differences between UNASUR “members’ political and economic views are so great it can no longer operate.”

Holmes said Colombia will continue to push for democratic solutions to the ongoing crisis in Venezuela that will allow the nation’s citizens to choose their own future in “free, transparent processes with full guarantees that they government should have.”

Rather than continue with UNASUR, Holmes said that Colombia will focus on participating “proactively — not passively or reactively — in multilateral scenarios.”

This will come to pass, he said, through an increased push to elevate relations with countries in Asia, Africa, and Oceana, as well as strengthen deep ties with the United States and European Union.

Holmes added that Colombia will prepose a “relaunch” of the Organization of American States (OAS), the hemisphere-wide body that includes members from Canada to Argentina and had been criticized by certain left-leaning leaders in South America in the lead up to the creation of UNASUR for having too much influence from the United States.

Colombia will also work to strengthen to Pacific Alliance, which in recent years has grown into one of the strongest trade blocs in Latin America. Colombia is joined by Mexico, Chile, and Peru in the alliance, with Canada, Australia, New Zealand, and Singapore recently becoming formal observer states in an expansion plan that will broaden its global reach.

Other foreign relations priorities under Duque, said Holmes, will include an effort to negotiate an end to the double taxation burden with more countries, combat corruption more systematically on the international level, improve support services in Colombian embassies abroad, and promote creative industries across borders.

To emphasize the final point, Colombia plans to organize the First World Congress of Orange Economy, a term now popularly used to describe a collection of creative fields that includes everything from software and video game development to filmmaking, fashion, and graphic design.

The agreement intends to give Colombian companies the same access conditions as local firms to the markets of Brazil, Argentina, Uruguay, and Paraguay, the four member nations of Mercosur.

The agreement was signed during a meeting of the Pacific Alliance — the other major trade bloc in the region, which includes Colombia, Mexico, Chile, and Peru — that featured Colombian President Juan Manuel Santos as well as Brazilian President Michel Temer and Uruguayan President Tabaré Vázquez.

The development came amid a larger push by the two trade blocs to strengthen ties, a goal that has been in discussions for years and may now be moving closer to reality. The meeting produced a “roadmap” plan to work more formally to align the two commercial alliances, which combined include nearly four-fifths of the region’s population and 85% of its gross domestic product, according to the Ministry of Commerce.

While the roadmap didn’t make concrete advancements, it outlines the next steps to take to further advance the work needed to align on issues including the elimination of non-tariff barriers and regulatory cooperation as well as generally facilitating more trade in goods, services, and tourism.

María Lorena Gutiérrez, Colombian minister of commerce, industry, and tourism, signed the bill between Colombia and Mercosur and said that these markets are particularly appealing to Colombian firms in the software, consulting, and professional services spaces.

“For Colombia, it is very important to establish clear conditions of access to markets so that our companies can compete on equal terms with the service industries of the Mercosur countries,” said Gutiérrez. “This agreement generates legal certainty for entrepreneurs.”

Photo: Colombian Commerce Minister María Lorena Gutiérrez signs the agreement to deepen ties between Colombia and Mercosur. (Credit: Ministry of Commerce)

Santos, who is currently serving in the rotating leadership role of president protempore of the Latin American trade alliance, made the announcement earlier this month following a meeting at the Summit of the Americas that included the four heads of state of the association’s member nations — Colombia, Mexico, Chile, and Peru — as well as Canadian Prime Minister Justin Trudeau.

Photo: Heads of state met in Lima to discuss the final steps for Canada and others to become full associate members of the Pacific Alliance, including (left to right) Martín Vizcarra of Peru, Juan Manuel Santos of Colombia, Sebastián Piñera of Chile, Enrique Peña Nieto of Mexico, and Justin Trudeau of Canada. (Photo credit: Presidencia de la República)

Following the meeting with Trudeau, Santos stressed that the remaining technical hurdles should be cleared before the upcoming Pacific Alliance meeting in July that could mark the final step. “The associated countries, headed by Canada, would at that moment begin their incorporation into the Pacific Alliance,” said Santos.

Canada is one of several countries that has been working through the negotiating process to become an associate member, a goal shared by Australia, Singapore, and New Zealand. All four participated in a third round of negotiations in March in Chile, discussing various elements of trade such as technical barriers, rules of origin, regulations, labor concerns, and environmental issues, according to a statement from the office of the Pacific Alliance.

Combined, Colombia totaled $516 million USD in exports to these four countries in 2016, according to the Pacific Alliance. In the same year, Mexico, which is already part of the North American Free-Trade Agreement (NAFTA) with Canada, had by far the largest volume with $12.2 billion USD. Chile and Peru realized $1.4 billion USD and $2.0 billion USD, respectively.

South Korea has also expressed interest in becoming an associate member, something that would facilitate more inter-regional trade with Asia and further expand “Pacific” definition of the seven-year-old trade bloc. Santos noted that the group’s leadership has already decided to incorporate South Korea, which he said has “strongly requested” to join the group, into future negotiations that would lead to an associate membership.

In addition to Santos and Trudeau, the group leadership that met in Lima during the Summit of the Americas included President Enrique Peña Nieto of Mexico, President Sebastián Piñera of Chile, and President Martín Vizcarra of Peru.

“The Pacific Alliance is a good free trade agreement that has had tremendous success and that represents great opportunities for the four countries,” said Trudeau. “Trade is advancing and expanding.”

Steven Ciobo, the minister of trade, tourism, and investment for Australia, reflected a similar sentiment in March after the last round of negotiations and stressed the potential that drafting a free-trade agreement (FTA) with the Pacific Alliance presents for his country, as reported by the International Centre for Trade and Sustainable Development.

“The Pacific Alliance trading bloc remains an under-explored market for Australian exporters,” said Ciobo, “and Australia’s competitive access to the economies in this bloc has been limited by high tariffs and barriers … A comprehensive and high-quality FTA will open the door to new and rapidly growing markets for Australian businesses, putting exporters on the same footing with the United States, the European Union, and Canada, who all have FTAs that give them preferential access.”

Though various factors — named upcoming elections across the region, including congressional and presidential votes in the first half of 2018 in Colombia — leave a looming “sense of uncertainty,” the organization says that the key economies in Latin America are “set for growth.”

As usual, commodity prices will continue to have an outsized effect on how well individual economies fare this year. Brazil and Peru, in particular, will be subject to the whim of the commodities market.

Another factor that will continue to shape the longer-term future of the Latin American economy are the trade blocs that will continue to mature over the coming year. Colombia is one of four members of the Pacific Alliance, which has begun to emerge as a standout model for collaboration and is continuing to look for other nations to become associate members.

“One of the key issues for 2018 could be the relationship between regional powers,” wrote Jaime Perez-Seoane de Zunzuneguit of the Oxford Business Group in the analysis. “There is continued consolidation of trade blocs with the Pacific Alliance and Mercosur advancing, a dynamism that should be followed by others.”

Looking at Colombia specifically, election outcomes will have a significant impact on how the final six months, and years to come, play out. But the economy has withstood what most analysts expect to be the bottom of the commodities downturn and appears poised for recovery in 2018.

“Having finishing the famous process of negotiation with the FARC, Colombia is set to focus on economic growth, but its revenue still depends largely on commodities and therefore the market remains volatile,” stated the Oxford Business Group.

The situation in Venezuela also remains another risk to both the region and its Colombian neighbor. Nevertheless, the group says that 2018 will be “a year that will likely prove decisive for the region” and “could bring uncertainty in the region to an end.”

(Photo credit: jill111 / Pixabay)

The Pacific Alliance has become one of the most successful economic marriages in the hemisphere, and the Canadian government sees increased economic integration as a great step to grow its trade in the region.

Today’s sit down is the culmination of an invitation extended this summer by the Pacific Alliance to Australia, New Zealand, Singapore, and Canada, which has been an observer nation to the alliance since 2012.

For Canada, Colombia represents the smallest partner of the four nations at just $1.2 billion USD in bilateral trade last year.

The negotiations begin at a time when economic relations with Canada’s primary trading partners in the hemisphere, through the North American Free Trade Agreement (NAFTA), face their greatest uncertainly since the nations entered their historic alliance in the early 1990s.

Though the rhetoric coming out of the White House is not as hostile toward NAFTA as it was in the early days of the President Donald Trump administration, the three nations are involved in renegotiation talks that could lead to some significant changes to an agreement that the U.S. head of state threatened to abandon altogether in the initial months of 2017.

For Canadian Prime Minister Justin Trudeau and the government in Ottawa, looking to other economic partners serves as both insurance in the event that NAFTA provisions worsen its position in North America and as a part of its ongoing mission to increase exports. In particular, its desire to become an “associated state” of the Pacific Alliance would give the country another arrangement with Mexico, by far its largest trade partner among the four Latin American nations.

François-Philippe Champagne, Canada’s minister of international trade, has previously taken trips to Colombia, as well as Chile and Mexico, in the lead up to the talks and says that he is “very excited by the untapped potential for trade” with the Latin American bloc. Specifically, he cited the “growing middle classes and open, market-driven economies” as sources of optimism for increased interaction.

“We share a goal of greater regional economic integration and freer, more progressive trade that can help create more middle-class jobs and opportunities,” said Champagne. “This new step represents a strategic opportunity for Canada to advance its ambitious progressive and diversified trade agenda with important and like-minded emerging markets.”

In a a statement, the government of Canada also said that “a free-trade agreement with the Pacific Alliance offers the prospect to modernize and streamline our existing bilateral agreements with all four Pacific Alliance countries, expand key aspects of these agreements, as well as include progressive trade elements, such as gender, labour, environment and SMEs.”

In all, Canada’s trade with the four countries within the Pacific Alliance last year amounted to $36.2 billion USD, according to the government in Ottawa. This represented more than three-fourths of the nation’s total trade with Latin America. The bulk comes from the $30.8 billion USD in bilateral trade with Mexico.

For Canada, Colombia represents the smallest partner of the four nations at just $1.2 billion USD in bilateral trade last year. Due to the lower price of oil in recent years, this is actually down from the $1.7 billion USD in trade in 2014, and it marks about half of the $2.4 billion USD in trade Canada did with Peru in 2016. (Chile was right in the middle at $1.8 billion USD.)

“We share a goal of greater regional economic integration and freer, more progressive trade.” – François-Philippe Champagne, Canada’s minister of international trade

But for Colombia and Canada, aligning formally through the Pacific Alliance would build on an integration that deepened when the two nations signed a bilateral free-trade agreement in November 2008, a culmination of roughly six years of discussions that was overseen by then-leaders Colombian President Álvaro Uribe and Canadian Prime Minister Stephen Harper.

This free-trade agreement, which at the time was Canada’s sixth with a nation in the Americas, came into force in August 2011 to reduce or eliminate tariffs on “nearly all of Canada’s current exports to Colombia,” per the government in Ottawa.

While various areas of trade have increased since then, the economic relationship has centered on oil exploration and mining exploration activity. In several instances, the actions of Canadian extraction companies operating in Colombia have come under scrutiny, largely for environmental concerns in rural areas, but the countries have been working to improve both the realtiy and image of these issues.

In June, Champagne visited the country and signed a “Declaration of a Memorandum of Understanding” with Colombian Vice Minister of Mines Carlos Cante Puentes. According to the Canadian government, this aimed to “ensure a more transparent and effective governance of the extractive sector so that the economic opportunities and benefits produced by the sector may be better shared among all segments of society.”

Photo credit: Jared Grove (Phobophile)

According to the IDB, the proposed reforms will aim to solidify macroeconomic stability, boost development, encourage public/private partnership financing, strengthen regulation of the financial system, promote financial inclusion, and heighten the country’s ability to monitor progress in these areas. The loan has a 20-year term — with a 5.5-year grace period — as well as a LIBOR-based interest rate

“Among other things, the program will seek to ease the access of micro-, small-, and mid-sized enterprises to financing through the use of secured transactions and electronic invoices as financial collateral,” said the Washington-based bank in a statement. “It will also deepen the structuring of productive infrastructure projects through the Financiera de Desarrollo Nacional (FDN).”

Another goal of the $450 million USD in funding will be to help raise transparency within the financial system and hasten the development of Colombia’s capital markets. Both of these initiatives are seen as key steps as the Andean nation continues down the path of trying to join the Organization for Economic Cooperation and Development (OECD). Such progress will also help in terms of establishing deeper financial integration within the Pacific Alliance framework, according to the IDB.

“Furthermore, issuance of the Financial Inclusion Act’s implementing regulations and implementation of financial education initiatives will provide enhanced access of unbanked persons to financial services,” stated the bank. “This operation is being carried out under the Programmatic Policy-Based Loan modality, designed to provide financial support to priority reforms in member countries.”

The minister says that this change, which eliminates a previously existing 14% tariff, effectively offers Mexican pension account managers the same tax conditions in the country that a Colombian firm would be subject to.

Photo: Mexico is the latest Pacific Alliance country to agree to tax agreement that Colombian Finance Minister Mauricio Cárdenas believes will encourage more pension funds to invest in the Andean nation. (Credit: Alejandro Islas Photograph AC)

As a result, approved companies in Mexico, known as Retirement Funds Administrators (AFORES) and regulated by the National Commission of the Retirement Savings System (CONSAR), are now being encouraged to invest portions of the $150 billion USD they manage in assets into Colombian interests. Mexico has at least 11 AFORES and they are permitted to invest up to 20% of their funds overseas.

“It is one of the most important bets on the development of the local capital market, which will allow the number of participants to increase and attract new resources to finance companies and projects in the country,” said Cárdenas.

Colombia’s finance minister added that both he and Mexican Finance Secretary José Antonio Meade are hopeful that Colombia will see Mexican pension funds beginning to invest in securities, the nation’s Bolsa de Valores stock market, and projects within the country’s massive highway modernization strategy, known as the Fourth Generation, or 4G, plan.

“This agreement is fundamental for the stock exchange, for deed issuers, for 4G routes,” said Cárdenas. “It’s all about investment that will come into Colombia because of the good opportunities in the national economy, and because without income tax, it’s much more attractive for Mexican institutional investors to take part in the development of the Colombian capital market.”

The agreement with Mexico is much like those Colombia has already forged with Chile and Peru, two other members of the Pacific Alliance. As with those relationships, the new pact with Mexico will also help facilitate the exchange of information between stakeholders in both countries.

“It is part of the financial integration of the Pacific Alliance, so that there will be fewer barriers between our countries and integration — not just commercial but also financial integration,” said Cárdenas. “This is a key agreement in the integration of the alliance … More actors allow for more competition, improve the liquidity of the market, and positively impact financing conditions.”