Automotive Sector

An Expert's View about Automobile in Colombia

Posted on: 25 May 2012

The automotive sector accounted for over $216 million in U.S. exports to Colombia over 2008-10 (average) or 2.4 percent of total U.S. industrial exports to Colombia.

The U.S.-Colombia Trade Promotion Agreement Opportunities for the U.S. Automotive Sector The U.S.-Colombia Trade Promotion Agreement would provide signicant commercial opportunities for U.S. exporters: • Colombia is the 27th largest market for U.S. automotive exports. • Estimated duties paid on exports of U.S. automotive products to Colombia were over $122 million from 2008 to 2010. Tari elimination could allow U.S. rms to reinvest in technology and production improvements. • Approximately 62 percent of U.S. automotive exports to Colombia would receive duty-free treatment within ve years of implementation of the U.S.-Colombia Trade Promotion Agreement; Colombian automotive taris currently average 17.4 percent, ranging up to 35 percent. Automotive Sector Overview U.S. Automotive Exports to • The automotive sector accounted for over $216 million in U.S. exports to Colombia over 2008-10 (average) or 2.4 percent of total Colombia Averaged $216.4 1 U.S. industrial exports to Colombia. Million • Top U.S. automotive exports to Colombia include medium and large engine motor vehicles, transport vehicles and road tractors, $250 as well as engines and other auto parts. $200 • The U.S. automotive industry accounts for over 4 percent of U.S. GDP through intricate supply chains that range from raw $150 materials to advanced technology inputs. $100 • In 2009, U.S. production of automotive products was about $206 2 $50 billion. $0 • The U.S. automotive sector employed approximately 666,400 3 workers in 2009, providing jobs in all 50 states. 2008 2009 2010 Improved Market Access for U.S. Automotive Exporters to Colombia 62% of U.S. Automotive Exports to • Colombian automotive taris currently average 17.4 percent, Colombia Would be Duty-Free Within ranging from 5 to 35 percent. 5 Years • Over 33 percent of U.S. automotive exports to Colombia would receive duty-free treatment immediately upon implementation of 4 the trade agreement. Immediate 33% • Taris on an additional 29 percent of automotive exports to 38% Colombia would be eliminated over ve years and taris on the 5 Years, Linear remaining 38 percent of automotive exports would be eliminated 10 Years in equal cuts over ten years. Selected Sub-Sectors: 29% • Motor Vehicles: Colombia would eliminate its taris on 6 percent of U.S. motor vehicle exports immediately upon implementation of the trade agreement. Taris on the remaining 94 percent of exports would be eliminated over ten years. 1 Global Trade Atlas. Calculation based on import data as reported by Colombia. The denition for autos in this report, unless otherwise cited, includes products within Harmonized System (HS) Headings 8701, 8702, 8703, 8704, and 8706. The denition for auto parts, unless otherwise cited, includes products within HS Chapters 68, 70, 83, 84, 85, 91, and 94 and HS Headings 8707, 8708, and 8716. 2 U.S. Department of Commerce, U.S. Census Bureau, within NAICS 336. Shipments used as a best available proxy for production. 3 U.S. Department of Labor, Bureau of Labor Statistics, within NAICS 336 (non-seasonally adjusted data). 4 Data based on three-year average for 2008-2010. In Millions USD • Auto Parts: Colombia would eliminate its taris on 52 percent of U.S. auto part exports immediately upon implementation of the trade agreement. Taris on the remaining 48 percent of exports EU Could Gain a Tari Advantage would be eliminated over ve years. In the Colombian Automotive Market 18 Key States Exporting to Colombia 16 • Top U.S. states exporting automotive products to Colombia 14 include: Florida, Michigan, California, Alabama, Texas, Illinois, 12 5 Pennsylvania, Ohio, South Carolina, and Indiana. 10 EU 8 US 6 MFN 4 Foreign Competition in Colombian Market 2 • Colombia signed trade agreements with both the EU and Canada 0 in November, 2008. Additionally, Colombia has FTAs in force with the rest of the Andean Community, Chile, Mexico, El Salvador, Guatemala, and Honduras. Colombia grants some preferential access to MERCOSUR, CARICOM, Costa Rica, Nicaragua, and Panama. • Upon implementation of its agreement, EU automotive exporters would enjoy a 2.7 percent average tari advantage over U.S. exports. However, if the U.S.-Colombia TPA is implemented at the same time, U.S. exports would have an 6 immediate 1.3 percent average tari advantage over the EU. Other Key Commitments by Colombia for the Automotive Sector Rules of Origin: The U.S.-Colombia Trade Promotion Agreement rules of origin allow only U.S. and Colombian originating goods to receive preferential tari treatment under the Agreement. The trade agreement rules of origin provide clear requirements for a good to be considered originating, including on goods wholly obtained or produced entirely in the territory of the United States or Colombia, as well as requirements on materials that are used in the production of the good. Remanufactured Goods: Colombia will eliminate its prohibition on the importation of remanufactured goods upon entry into force of the Agreement. Most Colombian taris on remanufactured goods will be eliminated immediately upon entry into force of the agreement, while taris on a small number of remanufactured goods will phase out over ten years. 5 U.S. Department of Commerce, U.S. Census Bureau. 6 U.S. Department of Commerce calculations based on EU-Colombia FTA and U.S.-Colombia Trade Agreement tari commitments and Colombian 2010 Tari Schedule. Average Tari April 2011 The International Trade Administration - Your Global Business Partner The International Trade Administration (ITA) – a division of the U.S. Department of Commerce – strengthens the competitiveness of U.S. industry, promotes trade and investment, and ensures fair trade through the rigorous enforcement of our trade laws and agreements. ITA also utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. For more information on exporting to Colombia, please contact: • The ITA office of the U.S. Embassy in Colombia at office.bogota@trade.gov, or 011-571-275-2519, or by visiting our website http://www.export.gov/colombia. • The U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://www.export.gov/eac. For more information on the U.S.-Colombia Trade Promotion Agreement, please visit www.export.gov/fta/colombia and www.trade.gov/fta/colombia. For more information on industry-specific issues, please visit http://trade.gov/mas/index.asp.
Posted: 25 May 2012

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