The Canada-Colombia Free Trade Agreement (CCFTA) came into force on 15 August 2011.1
Colombia is the second largest, and a growing South American destination for Canadian exports. Exports to Colombia increased by 9.6% in the first half of 2011 compared to the same period in 2010. Imports into Canada from Colombia increased by 4.7% over the same period. Such growth will likely accelerate with the CCFTA.
To date, exports to Colombia were concentrated in the agriculture and resource extraction sectors.2 The Federal Government has stated that, in particular, Canada’s agriculture, investment, heavy equipment, paper products, oil exploration, mining, printing and education sectors are poised to benefit from the CCFTA.3
The CCFTA addresses a variety of potential barriers to trade and investments.
- Trade in Goods. It eliminates duties between the two countries for most goods. The effective date for tariff elimination varies upon the category of goods. Some tariffs have already been eliminated.
- Investment. It includes protections for foreign investors and their investments. The Agreement’s investment protection chapter, which is largely based on the Canada’s Model Foreign Investment Promotion and Protection Agreement (2004),4 includes a guarantee of fair and equitable treatment and protections against discriminatory state conduct and unlawful expropriations. It also provides for arbitral dispute settlement between investors and the host-state of the foreign investment.
- Services. It provides protections and guarantees for firms involved in cross-border trade in services, including protections against discriminatory treatment on the basis of the firm’s nationality.
- Procurement. Canadian firms are given access to Colombian procurement contracts by specific state departments and agencies for goods and services valued over US$67,826 and construction services valued over 5,000,000SDR.5 Colombian companies have access to procurement contracts issued by specified Canadian Federal departments and agencies for goods and services valued over C$76,500 and construction services valued over 5,000,000SDR.
- Other. The CCFTA includes provisions to facilitate improved cross-border trade and investment with respect to telecommunications, financial services, and electronic commerce. In addition, the agreement includes provisions that address labour, business travel, competition policy and monopolies, environmental protection and transparency.
Businesses that already engage in cross-border trade or investments, or are interested in expanding into either market, should consider how the Agreement will impact their business