The free trade agreement, which passed in June 2010 between Canada and Colombia, will come into effect this summer on August 15, 2011. So what does this mean for Canadian businesses?
Canada and Colombia’s History
Colombia is a dynamic and emerging market with 44 million people and an economy with high growth potential. With trade between Canada and Colombia totalling more than $1.4 million in 2010; the agreement is expected to develop the relationship between the two countries further and improve market access for Canadian businesses.
Although the agreement has been met with an outcry from human rights groups who are concerned about Colombia’s history of poor labour standards, it is hoped that Canada's increased involvement with the country will ensure that progress is made in the area of workers' rights and environmental protection.
The Definition of Free Trade
The term “free trade” refers to the tariffs applied to products as they are imported. These tariffs are often considered a barrier to international trade, for big and small businesses alike. Through the agreement businesses will benefit from the removal of these tariffs as well as the protection from any tax increases, laws or expropriate properties by the Columbian government.
What does this mean for Canadian Businesses?
The free trade agreement will provide greater market access for Canadian exporters of products such as wheat, pulses, barley, paper products, and heavy equipment. In addition, the agreement will provide greater stability and protection for Canadian businesses involved in oil and gas, mining, manufacturing, and financial services.
Prior to the agreement, Canadian exporters applied tariffs on agricultural products averaged at 16.6% with industrial goods averaging at 11.8%. The abolition of these tariffs will help enhance the competitive position of Canadian exporters in the Colombian markets, and create opportunities for Canadian exporters.
