By Laurie MacNamara

Following a 4.2 percent rise in gross domestic product in 1990, the Colombian economy registered the effects of moderate recession with a projected 1991 growth rate of 2.2 percent. Monetary policies, which succeeded in bringing down 1990's record high 32.4 percent inflation rate to 26.8 percent in 1991, were the chief causes of the recession. The Colombian economy should post higher growth, in the 3-4 percent range, as the recession runs its course this year. Inflation should remain at about the 1991 level or decline slightly.

U.S. exports 1991--$1.9 billion U.S. imports 1991--$2.7 billion

Preparing for new challenges in the 1990s, Colombia has initiated trade and investment measures that put it at the forefront of reform. Colombia's five-year trade liberalization process, known as the "Apertura," seeks to internationalize the economy by exposing domestic industry to foreign competition and streamlining government regulations in the export and foreign investment sectors. The Colombian government estimates that growth rates could rise to 5-6 percent annually with full Apertura implementation. Under the Apertura program, Colombia has virtually eliminated import licensing requirements and reduced tariff rates and dispersion. Current duties range from 0-15 percent, with 40 percent of tariff-line items entering duty-free. The import surcharge has also been reduced, from 13 percent in 1990 to 5 percent. Other major reforms include elimination of advance deposit requirements and cargo reserve restrictions, and privatization of foreign exchange transactions.

Colombia's exports totaled $7.6 billion in 1991, an 8 percent increase over 1990's $7.1 billion. U.S. imports of Colombian products declined an estimated 16 percent in 1991, reflecting the dampening effects of the U.S. recession. Major U.S. imports of Colombian products include crude oil, coffee, cut flowers, bananas, and women's apparel. The United States remains Colombia's largest customer, with a 43 percent market share.

Colombian imports declined by 12 percent in 1991, to $4.5 billion from 1990's $5.1 billion. Colombia's own recession nullified the trade benefits provided by the Apertura reforms. U.S. exports to Colombia declined by just 5 percent, demonstrating the continued strong preference for U.S. goods. Major U.S. exports include civil engineering equipment, computer hardware, wheat, auto parts, and telecommunications equipment. The U.S. share of Colombia's import market remains at 36 percent.

In January 1991, Colombia enacted Resolution 49, granting national treatment to foreign investors in all matters except remittances abroad. This effort anticipated the same measures adopted by the Andean Pact under Decision 291 by several months. Resolution 51 of November 1991 went even further by removing the remittances limitation. Other important benefits of these resolutions include the elimination of government screening requirements and the removal of investment restrictions in most areas (exceptions are public services, energy generation, public health, and communications). Colombia offers excellent export opportunities for U.S. companies. Best prospects for 1992 include telecommunications equipment/services (especially cellular telephones/value-added services), oil and mining equipment, automotive parts and accessories, computer hardware and software, construction products, medical equipment, railroad equipment, pollution control equipment, agricultural machinery, printing and graphic arts equipment, textile machinery, consumer electronics, and toys and games.

Colombia's premier trade event, the Bogota International Trade Fair, will be held July 15-26. The U.S. Pavilion, organized by the U.S. Embassy's Commercial Section, will feature the latest developments in manufactured housing technology and urban development. This represents an extraordinary opportunity for U.S. companies in construction and satellite industries to reach a burgeoning market. For more information on the U.S. Pavilion, contact the Commercial Section, Unit No. 5120, APO AA 34038.

For further information on doing business in Colombia, contact the U.S. Commerce Department's Colombia Desk Officer at (202) 482-1659.

Source: International Trade Administration, Business America Magazine