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The Free Trade Agreement Between Colombia and Europe Eight Years On

Gearóid Ó Loingsigh

19 September 2021

The European Union signed a free trade agreement with Colombia which came into force in 2013.  Now eight years later the government of Colombia believes it to be a success.  The EU, however, has made no statement on the matter.  Its last report on the agreement is from 2017.

Of course, that report takes a positive view of the agreement, it goes without saying as it is no different from the agreement signed with the US and no one doubts that the US has been the great beneficiary of all the free trade agreements it has signed with eleven Latin American countries.(1)  The EU for its part has also signed FTAs with eleven Latin American countries, as well as Canada and negotiations are underway with four more.(2)

A few weeks ago, the Minister for Commerce published a note praising the FTA with the EU and stating that it has been very positive for Colombia, that the country reduced its dependence on coal exports and at the same time diversified its exports in general.  Although the Minister waived figures about that seem to confirm her enthusiasm for the agreement, all is not as it seems to be.  She states:

In the eight years of the implementation of the provisional Commercial Agreement between the European Union and Colombia, the non-mining-energy products have increased their participation in the exports.  Whilst, one year before the agreement (2012) they accounted for 22% of total exports to that region, now they represent 62%. (3)

It is not clear whether she is talking of volume, value or the number of products.  However, if we look at the years 2010 to 2020 the figures on the value of exports are clear.

Exports of Minerals (4)
F.O.B. (5), Dollars
 
Year  All minerals including coal  Coal  Gold
2010  9,305,973,680 6,015,179,983  2,094,675,697
2011  12,279,483,995  8,396,846,670  2,774,917,603
2012  12,335,946,393  7,805,189,985  3,385,287,134
2013  9,853,202,838  6,687,834,332  2,226,458,429
2014 9,306,552,764  6,809,912,209  1,581,809,673
2015 6,338,589,232  4,559,993,578  1,090,080,976
2016 6,758,854,784  4,638,844,619  1,550,902,201
2017 9,740,491,768  7,389,990,361  1,743,263,278
2018 9,668,498,636  7,447,865,445  1,425,404,489
2019 8,211,907,992  5,668,323,822  1,756,125,405
2020  7,694,133,546  4,165,851,717  2,927,248,470

If we look at the figures, we see that the years 2011 and 2012 were exceptional in terms of the value of mining extraction in general and in the case of coal and whilst it is certain there were some ups and downs it recovered in 2017 and 2018 in terms of its value in dollars.  A different picture is to be seen when we look at the extraction of minerals per tonne.  If we take the case of coal, the main mineral in terms of its value and gold, the second mineral in terms of its participation in the value of exportations we see what is really happening.  The extraction of the main minerals is significant over the years and in the midst of the pandemic there was a fall in the extraction and consequently the exporting of coal, but the extraction of gold increased.

Extraction of minerals
 
Year  Gold (grams)  Coal (tonnes)
2012  66,222,186  89,812,004
2013  55,968,654  86,022,501
2014  57,895,497  89,411,997
2015  59,637,998  86,469,676
2016  63,157,330  91,177,596
2017  43,158,174 91,291,008
2018  35,905,345  86,326,758
2019  37,476,487  84,965,462
2020 47,635,188  49,832,710

Agricultural Exports

Then the Minister went on to talk about agricultural exports and how they had diversified and increased.  She tells us that 32% of the agricultural exports go to the EU market.  It may be so, but it doesn’t mean much.  The EU itself pointed out in 2019 that there was a low level of diversity in Colombian exports to Europe.(9)  The Minister takes us for fools.  At the same time, she says that there is a greater number of companies exporting to Europe, something which may be true, but her own data shows us the reality that little or nothing has changed in the structure of the exports.

According to the Minister

The European Union is the main purchaser of Colombian bananas.  Almost 75% of its exports go to that block, which is without doubt thanks to the access conditions generated by the agreement.
The second placed product in terms of exports, which is also a winner, is coffee.
A third product which has recovered is flowers.  Having exported $116.3 million in 2013, last year it closed at $129.8 million, an increase of 11.5%.
What she states with pride is that Colombia continues to export primary products and that the three main items in agricultural exports are still the usual ones, without any changes.  It is not surprising and in fact, something similar occurs with other countries that have signed FTAs with Europe.  In the case of bananas, it is worth pointing out that we haven’t had eight years of free trade but rather eight years of a gradual reduction in tariffs, with mechanisms to avoid imports above what was expected.(10)  In fact, bananas are the main product exported to the EU from Central American and Andean Community countries.

The Minister gives us as an example of diversity in products and an increase in exports of Hass avocado and Tahití limes.  Both are cash crops and do not represent a diversity in products but rather a new example of the old scheme of seeking the magic crop that would resolve economic problems in the country and alleviate poverty in the countryside through a gamble on certain products and, in so far as possible, largescale production in the hands of large companies or with peasants associated with these companies through so called Strategic Alliances.  According to her, Colombia exports more products and more of each product.  It is not true.  Her own figures give lie to her statement.

According to the Ministry of Trade the number of products exported has shown a relative stability.  In 2002, 1,081 different products were exported (according to tariff heading) and in 2020, 1083 products.  The highest point was 2006 when they managed to export 1,110 products and the lowest point was in 2019, under the Duque government, when it fell to 1,065.(11)  The picture doesn’t change much when we exclude mining-energy products, 1,030 in 2002, 1,026 in 2020 and 2019 continues to be the low point with 1,008 products.(12)  If we just take the EU, we see that non-mining-energy products increased in 2002 from 519 to 603 in 2004 and varied between that figure and 543 products to end in 2019 and 2020 with 591 and 581 different products respectively.(13)  Once again the Minister lies.

The trade balance with Europe in non-mining-energy products is negative and always has been and the FTA did not change that one bit.  In fact, in the first years, it got worse and neither has it improved in recent times.  According to the Minister:

In 2020 there was a negative non-mining-energy trade balance of $3,323 million, whilst the previous year there was a negative balance of $5,091 million.  Up to June 2021, the non-mining-energy imports exceeded the exports by $2,126 million.(14)

The supposed diversity of exports is not real, nor the increase in non-mining-energy products, not in terms of real value nor volume.  The structure of Colombian exports remains unchanged.  The FTA with Europe, and in passing all the other TLCs signed, have not contributed to a real change in the economy.  The FTA with Europe deepened the nature of Colombia’s relationship as an exporter of both mining-energy and agricultural raw materials / commodities.

The government lied when it passed the FTA with Europe.  Many NGOs also lied when they said the FTA with Europe would be different to the one signed with the USA, the Europeans were better and now they keep quiet, faced with the crude reality.  European imperialism is no different from US imperialism, not even in its FTAs.

Notes

(1) The US has signed FTAs with 11 countries: Mexico,  CAFTA – DR (República Dominicana, Nicaragua, Costa Rica, El Salvador, Guatemala y Honduras), Chile, Peru, Colombia y Panama.

(2) Mexico, Chile, Colombia, Ecuador, Peru, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua y Panama.

(3) Ministerio de Comercio (17/09/2021) Sector agropecuario, ganador en el TLC con la Unión Europea https://www.mincit.gov.co/prensa/noticias/comercio/sector-agropecuario-en-tlc-con-la-union-europea

(4) All figures on mining extraction are taken from Unidad de Planeación Minero-Energético. http://www1.upme.gov.co/simco/Cifras-Sectoriales/Paginas/informacion-estadistica-minera.aspx

(5) F.O.B (Free on Board) a term which means the value is net and does not include costs of freight, insurance etc.

(6) Calculated using  https://www.usinflationcalculator.com

(7) Data taken from Banco de la República https://www.banrep.gov.co

(8) Calculated using  https://www.dineroeneltiempo.com/peso-colombiano

(9) Grieger, G. (2019) EU trade with Latin America and the Caribbean: Overview and figures. Brussels. EPRS. P.6 https://www.europarl.europa.eu/RegData/etudes/IDAN/2019/644219/EPRS_IDA(2019)644219_EN.pdf

(10) Ibíd.,  p.5

(11) Ministerio de Comercio (2021) Comercio exterior colombiano: seguimiento a los acuerdos comerciales p.5 https://www.mincit.gov.co/CMSPages/GetFile.aspx?guid=8c968447-f866-453c-8be5-0480df7e624f

(12) Ibíd., p.6

(13) Ibíd., p.201

(14) Ibíd., p. 198


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