Colombia's National Development Plan imposes tariffs on imported textiles.

Release time:

2019-04-03

The National Development Plan is the ruling program of every Colombian government and the basic act of national economic and social development in Colombia. Recently, Colombia's "Times" and other major media reported on the addition of tariffs on imported textiles in the "National Letter Plan (Draft)" (hereinafter referred to as the "Plan") that is being reviewed by the Congress.

On March 22, the Colombian Congress concluded the first round of discussions on the Plan. Some of the items that have been approved include the imposition of a 10% tariff on imported textiles with a price of more than US $20/kg (customs code chapters 61 and 62). Subsequently, the Colombian Textile Association proposed to raise the tariff rate on imported textiles below US $20/kg from the current 15 per cent to 37.9 per cent (except for countries that have signed free trade agreements with Colombia). The proposal was endorsed by several members of Congress and will be sent to the second round of Congress for discussion.

The above two "planning" items have aroused extensive discussion from all walks of life in Colombia. Supporters said that labor prices and product prices in Asia, Africa and other places are too low, and a large number of them have entered the Colombian market. Colombia's textile exports to the above-mentioned countries are only 1% of its exports to Colombia; Colombia's textile industry accounts for 8.2 of Colombia's industrial GDP. The number of jobs provided accounted for 21% of industrial employment and 19% of manufacturing exports. In 2018, the output value was 4.5 billion US dollars and the sales reached 5 billion US dollars, it is an important part of Colombia's national economy. At present, Colombia's textile industry provides 1.5 million jobs, but the loss of jobs caused by the impact of imported products has reached 600000. Relevant institutions in Colombia should revitalize employment in the textile industry. Opposition came from the National Association of Entrepreneurs and the National Association of Foreign Trade in Colombia. They pointed out that there are four main adverse effects of adding tariff increases to the Plan at the legislative level: first, the political constitution of Colombia stipulates that tariff rulings are administrative powers, which are now intervened by the legislature and are suspected of being unconstitutional; second, it violates the bilateral trade agreements signed by Colombia, which is disadvantageous to the international image of Colombia, in particular, it is not conducive to maintaining relations with major trading partners and neighbouring countries (e. g. Panama); third, it increases the marginal profits of smuggling and indirectly encourages smuggling; and fourth, the exemption of tax increases from FTA countries will lead to the flow of goods into Colombia in the form of re-export trade, which will not achieve the policy objective of protecting domestic industries.

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