Mexican-Colombian trade ties will intensify as a result of formation of a “Strategic Association”
The value of Mexican goods shipped to Colombia exceed that of Mexican exports to Japan and Germany.
Mexican-Colombian trade ties got a boost in 1996, when the two Latin American nations signed a bi-lateral free trade agreement that had as its centerpiece the phasing out of tariffs between the two countries over a ten year period. In 2011, the agreement was modified, and broadened, by the incorporation of additional export products to the list of items that would benefit from free trade, as well as by making changes to some of the agreement’s rules of origin. Since the passage of the 1996 accord, Mexican-Colombian trade ties have been strengthened in that the volume of commercial interaction between the two countries has multiplied by a factor of twelve. The total value of products manufactured in Mexico and exported to Colombia in 2014 totaled approximately US $3 billion, while products that were made in Colombia and sent to Mexico were valued at US $641 million. The value of Mexican export sales to Colombia in 2014 surpassed that of Mexican merchandise consumed in Germany and Japan.
Only Brazil trades more with Mexico than Colombia in Latin America
In terms of Mexico’s trade with its Latin American neighbors, Mexican-Colombian trade ties are surpassed in dollar value only by the value of the former country’s commercial exchange with South America’s largest nation, Brazil. In the fourteen years after the signing of the Mexico-Colombia Free Trade Agreement, growth in sales of products and services between the two countries expanded at an average of almost fifteen percent annually.
Given the importance that each government ascribes to Mexican-Colombian trade ties, Mexican president, Enrique Peña Nieto, met with his Colombian counterpart, Juan Manuel dos Santos, on Friday, May 8, 2015 to affirm and expand the existing bi-lateral relationship. Through the formation of a “Strategic Association,” or, in Spanish, an “Asociacion Estrategica,” the leaders of both countries hope to further solidify economic relations between the Latin American partners, as well as deepen ties in other areas of mutual interest, especially with regard to security. Concerning this last point, the Mexican ambassador to Colombia, Jose Antonio Meade, and his Colombian colleague, Maria Angela Hoguin, announced the formation of a “high level bi-lateral advisory group,” for the purpose of exchanging information and best practices on issues related to this critical area of the Colombian-Mexican partnership.
A diversity of goods are moving in both directions
When looking examining the composition of Mexican-Colombian trade ties, recent data reveals that:
- automobiles and buses represent thirteen percent of Mexican exports to Colombia;
- twelve percent of Mexican product shipped to Colombian consumers consists of flat screen TVs that are made in Mexico;
- five percent of the value of Mexico sales to Colombia is comprised of Mexican steel;
- four percent of the value of trade between the two Latin American neighbors is in shipping and logistics services.
The remaining sixty-six percent of Mexican exports of goods and services to the Colombian marketplace is spread out of a wide variety of items.
For its part in maintaining Mexican-Colombian trade ties, the breakdown, percentage-wise, of the Andean nation’s exports to Mexico demonstrates that:
- twenty-one percent of Colombian products sent to Mexico are comprised of passenger vehicles. US automotive OEM has GM has an approximately 75 percent ownership stake in the Fabrica Colombiana de Automotores S.A., or Colmotores. The Bogota plant produces Chevrolet models such as the Aveo, Spark, the Cobalt, as well as the Optra and Vitara; solid fuel makes up nine percent of sales to Mexico;
- plastics contribute four percent of Colombian exports to its North American neighbor;
- medicines make a three percent contribution.
The remaining seventy-three percent of Colombian exports of goods and services to consumers in Mexico is spread out of a wide variety of items in a number of diverse product and service categories
Mexican-Colombian trade ties are not only limited to the exchange of goods and services between the two nations. Both Mexico and Colombia have contributed to the growth of commerce between themselves through foreign direct investment (FDI). Significant Mexican investments in Colombia have been made by companies such as:
America Movil (telecommunications)
Cemex (construction materials)
Grupo Carso (oil and gas exploration)
Grupo Femsa (bottling of soft drinks and other beverages)
During the period January – April, 2014 Colombian investors added four hundred and seventy-three million dollars to Mexico’s economy through investments in manufacturing, retail trade, services, tourism, food processing and construction. The most recent sizable investment in Mexico made with Colombian capital was the purchase of Mexico’s Sanitarios Lamosa de Mexico by Colombia’s Grupo Corona for US $35.8 million.
Colombia is among a group of more than forty nations that enjoy the bi-lateral import and export goods without the imposition of tariffs and duties due to the extensive network of Mexican free trade agreements.