The substantial growth was due in large part to the success of Decree 074, a tariff measure implemented March 1, 2013, which many say has revived the country’s apparel industry.
Under the decree, a uniform tariff of $5 per kg was imposed on overall textiles and apparel coming into the country and the tax on imports was reduced to 10 percent from 15 percent.
MarÃa Claudia Lacouture, president of Proexport Colombia, the country’s trade advocating body, said, “The goal is to protect Colombian businesses against unfair competition, under-invoicing and the scourge of contraband without affecting those that act under the law.” The tariff doesn’t impact those who import at real prices but does harm those who import at artificially low prices or through smuggling.
So far, the decree has helped increase demand for goods from Colombia and allowed the country to be more competitive in the world market. The success of the measure has been so positive for the industry that the government announced last month it would extend the import tariff measures applied through Decree 074 for two years.
Colombia’s Deputy Minister of Industry, MarÃa del Mar Palau said, before the decree, “garments were charged very high duties on items not produced in Colombia, so this made them less competitive in the market. But this measure will allow imports of products that remain at the formal trade tariff levels of the World Trade Organization (WTO) which is not to exceed 40% of the effective tariff.”
Lacouture said, “The industry has really undergone a transformation process. Only 25 years ago international buyers regarded Colombia as an assembly destination, but now the country is perceived as the ideal supplier for full package services in every category, brand and new business model.”
According to figures from Colombia’s National Administrative Department of Statistics (DANE), a total of 543,000 new jobs were created in 2013 meaning the apparel sector was responsible for 37 percent of employment generation last year. DANE also estimates that because of the measure, the garment sector’s output increased by 21.2% nationwide.
Lacouture said the outlook for Colombia’s future as an apparel producer is positive. “Colombia has 13 free trade agreements, which allows preferential access to over 1.5 billion consumers,” she said.
Currently, that free trade access includes agreements with: the European Union; United States; Canada; the European Free Trade Association (EFTA), including Switzerland and Liechtenstein; Cuba; Chile; the Andean Community (CAN) which includes Ecuador, Bolivia and Peru; Venezuela; MÃ©xico; Nicaragua; Caricom (Caribbean islands); the North Triangle which includes El Salvador, Guatemala and Honduras; and Mercosur which includes partnerships with Brazil, Argentina, Uruguay and Paraguay.
And there are additional advantages that can be leveraged under these free trade agreements, Lacouture said. “We have identified at least 26 potential markets for Colombian textiles.”
The twenty-six markets so far designated as successful locales for Colombian product include Germany, Netherlands Antilles, Costa Rica, Spain, France, India, Panama, Puerto Rico, Dominican Republic, Russia, Switzerland, Turkey, and, of course, those with whom the country already has FTAs.
Colombia is working to capitalize on all opportunities for growth in the global market and Lacouture said, for example, “The United States is going through a transitional period between Asia and Latin America and requires suppliers that can guarantee the best quality and delivery times. Colombia is one of them.”
Lacouture said, “The steady commitment with the entire thread-textile-apparel chain to generate value-added products has been essential to stay ahead of the trend and the international consumer needs. She added, “While the country does not compete in the mass and volume market, it is known for its competitive lead times to develop products and its flexible production which is shaping the future of the Colombian industry.”