Colombia plans to impose tariffs on clothing and apparel accessories with WTO most-favored-nation status

Colombian media reported that the Colombian government plans to impose restrictions on Chapter 61 knitted or crocheted clothing and apparel accessories and Chapter 62 non-knitted or non-crocheted products produced under WTO Most Favored Nation (MFN) status. Imported products of knitted clothing and apparel accessories are subject to a 40% ad valorem tariff to replace the currently applicable minimum import tariff rate of 15%.

According to the resolution of the Colombian Customs, Tariff and Foreign Trade Affairs Committee meeting on October 26, 2022, in order to promote the balance of international trade, create added value, competitiveness and increase employment, Therefore, administrative measures were taken to increase tariffs. Colombian President Gustavo Petro said that the tariff measures will help drive the vigorous development of the textile and garment industry.

Camilo Rodríguez, president of the Colombian Garment and Supplies Chamber of Commerce, expressed optimism that the new government plans to adopt an increase in the proportion of formal employment in Colombia’s manufacturing industry because the garment industry accounts for 29%. Tariffs are used to defend industries and increase employment; however, garment manufacturers hope that the government will use World Trade Organization anti-dumping measures to defend commercial rights, not just for the purpose of industrial protectionism. In the first half of 2022, textile and garment imports were US$1.417 billion, exports were US$439 million, and the trade deficit was US$978 million. Increasing tariffs will help increase domestic production opportunities. In addition, the restart of border trade between Colombia and Venezuela will provide Colombia with The garment industry creates approximately 200,000 jobs.

Javier Díaz, president of the Colombian Exporters Association, said that the Colombian peso has depreciated by about 31% so far this year. If the 40% import tariff on textiles and clothing is increased in the future, it will lead to The possibility of smuggling of similar commodities has increased significantly. According to Colombian customs statistics, textile raw material imports from January to October 2022 were 91.579 billion pesos, an annual increase of 7.8%. The main importing countries of Colombian garments are China and Panama. Since both of them have no bilateral free trade agreement with Colombia, the impact will be greater in the future.

The Colombian National Association of Businessmen (FENALCO) stated that increasing tariffs will lead to a 30% increase in consumer purchase costs, increase inflationary pressure, and will not help improve the textile and garment industry. In addition to international competitiveness and strategic position, we must also consider the potential risks of retaliation from trading partners and the transfer of orders to other countries for production due to rising costs from international buyers. If the bill is passed by Congress, it will take effect on the 15th day after it is published in the government gazette. It is recommended that after implementation, it should be reviewed year by year.

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