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2012: Developments in Colombian Customs and International Trade 

Published: January, 2013

Submission: January, 2013

 



In September, the National Customs and Tax Authority - DIAN - presented the third draft of the new Customs Statute, which will regulate most of Colombia’s customs law. Although scholars and business associations have presented their comments to the project, the draft seems to be definitive for the most part. The project aims to implement Colombia’s obligations in recent free trade agreements as well as to harmonize Colombian customs with international standards such as Kyoto’s Convention and the Andean Community rules. According to authorities, the new statute would come into force during 2013.


Among other issues, the draft eliminates current categories of customs’ frequent users known as Permanent Customs Users – UAP - and Highly Exporting Users - ALTEX. As a result, UAP and ALTEX users’ traditional benefits will be placed on Authorized Economic Operators (“AEO”), following international trends in the subject matter. Notwithstanding, benefits granted to ALTEX and UAP will remain in place during one year since the entry into force of the new Statute. Then, ALTEX and UAP must fulfill the requirements to become an AEO. On other notes, the use of a customs broker for undertaking foreign trade activities is no longer mandatory under the draft Statute.



  Entering into Force of Colombia – US Free Trade Agreement 

The Colombia – US FTA entered into force on May 15, materializing the commitments that were negotiated since 2003. This event marks a new era in Colombia’s relations with its major trade partner. According to the Colombian Ministry of Trade, Industry and Tourism, exports to the US, as of the entering into force of the FTA, have increased over 18%. Flowers, prepared foods, sugar and sugar products, and glassware are some of the most benefited products with the treaty. 


The FTA also promotes Colombia as an export platform among companies from countries that do not have preferential access into the US market. In doing so, foreign direct investment is being enhanced. 


The agreement, nevertheless, creates several challenges for the country such as: i) customs modernization, ii) more efficient foreign trade proceedings, and iii) improving services of sanitary and phytosanitary agencies.  


In order to implement Colombia’s commitments under the FTA, and as prerequisite for its entering into force, the Government issued several Decrees on agricultural and textile safeguards, tariff quotas on rice and chicken hind-quarters, trademarks and patents, tariff schedules, market access and rules of origin, temporary imports, transparency, and government procurement. In connection with commitments pending implementation, the Government has not yet issued rules on taxes on alcoholic beverages, electronic certification of origin, urgent shipping, agency agreements and intellectual property, among others. 


  Other Trade Agreements

The European Parliament ratified the provisional application of the trade agreement between Colombia and the European Union on December 11th. In Colombia is pending the approval by the Congress. The Agreement grants free market access to almost 100% of Colombian industrial goods as from its entry into force. The European businesses in turn will have access to a gradual liberalization for the exports of goods and services to Colombia. Besides, Colombia and Venezuela concluded a Partial Agreement that preserves some of the tariff preferences available before Venezuela’s withdrawal from the Andean Community. This agreement entered into force on October 19.


Finally, during 2012 Colombia signed a new FTA with South Korea, which is pending ratification in both countries. In addition, FTAs are being negotiated with Panama, Turkey, Costa Rica, Israel, the Pacific Alliance and, more recently, Japan.  


  Anti-dumping Investigations

On January 5, the Colombian Investigating Authority on Trade Remedies imposed anti-dumping measures against casing and tubing originating in China for a period of 5 years. The decision was taken after the Authority reviewed a final determination from August 2010, whereby it decided not to impose the measure. Besides, on June 20, the Ministry initiated a dumping investigation against radial and conventional tires originating in China. Provisional measures have already been imposed in the framework of the investigation. A final determination is expected to be issued on January 2013.


Moreover, on April 11th the Authority initiated the five-year period review of anti-dumping measures imposed against linked, polished and galvanized chains. On December 14th, the Authority decided to maintain such measures.  Furthermore, on April 24th the same review initiated for measures against socks. In addition, on October 19th the five-year period of anti-dumping measures imposed against textiles (curtains, home linen, pre-dyed and towels) ended.


  New Regime for International Trading Companies

On February, the Government issued Decree 380, which modified the applicable rules on International Trading Companies (“Sociedades de Comercialización Internacional” or “CI” in Spanish). The new Decree mainly addressed some shortcomings related to VAT refunds and in general established more strict requirements and controls.


Besides, Decree 380 introduced new regulation on public and private ports, postal traffic, urgent shipping and temporary imports in furtherance of special import-export systems.



Certain Changes on the Free Trade Zone Regime

Towards the end of December, by means of Law 1607 of 2012, Colombian Congress approved an amendment to the Colombian Tax Statute. Among other various changes, regarding free trade zones the new regime establishes that in determining the VAT taxable base over finished products produced in free trade zones, the national component value would not be discounted. 


However, this new rule does not apply neither to the free trade zones that were approved before December 31, 2012 nor to the ones that are pending approval. Also, it does not apply to the free trade zone’s users that have been already qualified. 


Additionally, the reform created an equity tax over profits, equivalent to 8%. Such tax must be paid by companies declared as free trade zones, companies which have presented a free trade zone declaration request and users of such free trade zones, as long as the declaration or qualification was filed or obtained after December 31, 2012. Free trade zones established before that date and their users will be exempted from paying this tax and will continue to pay current payroll duties. 


Finally, it is important to bear in mind that the Government is working on a draft to amend the actual free trade zone regime.


As presented, 2012 ends with significant developments and challenges for Colombia’s Customs and Trade Law. Throughout this year, Brigard & Urrutia’s Customs and International Trade Practice was on top of these developments, offering its clients high quality legal advice and helped them prepare to face the New Year’s challenges.


 
  For further information, please contact:   Carlos Fradique Méndez   [email protected]   José Francisco Mafla   [email protected]   Juan Camilo Hoyos 
  [email protected]   Marta Palacin Guarne  

[email protected]


  José Alejandro Quintero   [email protected]   Juan Pablo Caicedo   [email protected]
  Santiago Martinez Ojeda   [email protected]

 



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