APPENDIX B INDUSTRIAL BEST PROSPECT SECTORS FOR U.S. EXPORTERS TO COLOMBIA (US $ millions) A. Rank of sector: 1 B. Name of sector: OIL AND GAS MACHINERY EQUIPMENT C. ITA or PS&D code: OGM 1993 1994 (e) 1995 (p) D. Total Market Size 488.3 635.0 1,001.5 E. Total Local Production (e) 34.0 45.0 57.0 F. Total Exports 1.7 2.0 2.5 G. Total Imports 456.0 592.0 947.0 H. Total Imports from the U.S. 251.0 355.0 663.0 I. Exchange Rate 811.9 933.6 1,092.4 (e) estimated (p) projected Comments: The Colombian Petroleum enterprise (ECOPETROL) and its foreign partners in the major field that has been discovered in Colombia (Cusiana- Cupiagua) announced that it would be necessary to invest around $6.0 billion dollars in the next 4 to 5 years to develop the resources in the area. It has also been estimated that it would be necessary to invest some U.S. $3.5 billion dollars within the next ten years to complete the natural gas massification program which will provide this fuel to a large percentage of Colombian homes. One or two new refinaries will be constructed by private firms and some of the existing refining facilities will be expanded/modernized. Bids that would grant exploration rights in some of the most promising regions will soon be published, and this is expected to attract new firms and investments to this sector. A. Rank of sector: 2 B. Name of sector: TELECOMMUNICATIONS EQUIPMENT C. ITA or PS&D code: TEL 1993 1994 (e) 1995 (p) D. Total market size 525.0 530.0 560.0 E. Total Local Production 31.0 18.0 30.0 F. Total Exports 6.0 8.0 10.0 G. Total Imports 500.0 520.0 540.0 H. Total Imports from the U.S. 137.0 200.0 220.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: In January and March 1994, six cellular licenses were awarded to three private joint-venture and three mixed companies to provide cellular service in bands "A" and "B" within three Colombian regions: (1) Eastern (including Bogota) (2) Western (including Medellin and Cali and (3) Northern Coast (including Barranquilla and Cartagena). Cellular telephone service became operational in June 1994 and is expected to become fully functional by December 1994. Estimated number of subscribers is 200,000 in a three to four year period. Volume of imports is estimated at the level of US$ 200 million during the same period. U.S. market share in this sub-sector may be 50 to 60 percent. The emergence of cellular service in 1994 may force paging and trunking companies to lower equipment prices and rates in the market in order to have a large enough differential to compete with cellular companies. Volume of imports in 1994 is estimated at US$ 120 million with a market share for U.S. manufacturers of approximately 50 percent. A. Rank of sector: 3 B. Name of sector: AUTOMOTIVE PARTS AND SERVICE EQUIPMENT C. ITA or PS&D code: APS 1993 1994 (e) 1995 (p) D. Total market size 988.0 1,126.0 1,267.0 E. Total Local Production 459.0 514.0 576.0 F. Total Exports 115.0 128.0 160.0 G. Total Imports 644.0 740.0 851.0 H. Total Imports from the U.S. 237.0 272.0 315.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: The Colombian automotive industry continues to be one of the most solid and powerful. As a result of the opening of the economy an increased competition between domestic manufacturers and importers has translated into a wide availability of automobile models. Motor vehicles' sales figures rose at a dizzing rate (approximately 97 percent). Approximately 137,134 units were sold during 1993, reflecting an increase in the rolling stock of 6.0 percent from 1.6 million motor vehicles in 1992 to approximately 1.7 million motor vehicles in 1993. More than 38 percent of this figure is concentrated in the main cities of Colombia, especially Bogota. While sales of motor vehicles have peaked, demand for related parts and services will continue to grow. The greater number of vehicles imported during 1992-1993 period, and those that will be imported in 1994, and the enlarged free trade area wtihin the Andean region is a continued incentive for more imports of automotive parts and accessories. Imports of automotive parts and accessories increased by 61 percent from 399.6 million USD in 1992 to 643.6 million USD in 1993. Automotive aftermarket import growth will be reflected not only in the larger number of vehicles that will be locally produced and imported, but in the enlarged market of approximately 300,000 units resulting from the G-3 (Colombia, Venezuela, and Mexico) and other agreements that are being discussed with Chile and Central American countries. A. Rank of sector: 4 B. Name of sector: COMPUTER AND PERIPHERALS C. ITA or PS&D code: CPT 1993 1994 (e) 1995 (p) D. Total market size 452.0 464.0 487.0 E. Total Local Production 12.0 15.0 18.0 F. Total Exports 10.0 12.0 14.0 G. Total Imports 450.0 461.0 483.0 H. Total Imports from the U.S. 404.0 415.0 435.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: By 1995, computers in use in Colombia is estimated to surpass 2 million units. By year 2000, the Colombian computer sector is estimated to comprise over two percent of the GNP. Its advances are impacting and overlapping other sectors, including telecommunications. Microcomputer chips and boards are replacing electromechanical and other control systems in nearly all types of equipment ranging from microwave ovens, TVs, stereo systems, automobiles, cash registers, copiers, telephones, toys, oscilloscopes and sewing machines to military weapons. A. Rank of sector: 5 B. Name of sector: ELECTRICAL POWER SYSTEM C. ITA or PS&D code: ELP 1993 1994 (e) 1995 (p) D. Total market size 580.0 616.0 761.0 E. Total Local Production (e) 243.0 252.0 267.0 F. Total Exports 16.0 17.0 18.0 G. Total Imports 353.0 381.0 512.0 H. Total Imports from the U.S. 194.0 236.0 347.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: The electric power supply crisis that Colombia confronted during 1992 and first quarter of 1993 prompted the government to set very well defined short (1992-1994), medium (1994-1996), and long term (1996-2004) programs. The projects included in the first two phases have either been completed, initiated, or are under bidding process. The gobernment plans to inititate projects that would add, at least 2,050 MW more to the country's installed capacity, if the economy grows above the 4.0 percent annual level during the rest of the century, as expected. A complex network of lines and the correspoding electric substations has also been included in the plans. The private sector has been participating in the construction of many of the projects mainly through a Build-Operate-Transfer (BOMT) or similar scheme. More recently, private firms are participating as majority partners in some generation projects. Other private firms, British Petroleum and its partners for instance, will own their own generation plants (several of these plants are being negotiated with U.S. firms). A. Rank of sector: 6 B. Name of sector: FINANCIAL SERVICES C. ITA or PS&D code: FNS 1993 1994 (e) 1995 (p) D. Total market size 16,193.0 20,607.0 25,922.0 E. Total Local Production 14,483.0 18,269.0 23,450.0 F. Total Exports 1,710.0 2,338.0 3,500.0 G. Total Imports 9,221.0 12,196.0 20,490.0 H. Total Imports from the U.S. 120.0 130.0 120.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: The Colombian financial system is relatively large in comparison to the nation's gross domestic product (GDP). At the end of 1993, the deposits in all financial system entities were equivalent to 61 percent of the nation's GDP. The structure of the system is reasonably complete but somewhat thin and limited in financial instruments and other options as compared to more mature systems. Per capita deposits captured by the above main intermediary groups may be estimated at US$ 300. Foreign banks (including U.S. banks, Citibank, Bank of America) have been able to convert their holdings to 100 percent subsidiaries. U.S. banks receive full national treatment. Banking reforms have allowed several of the weaker banks to be affiliated with more responsible, experienced and financially stronger owners. Privatization of several of the banks nationalized by the Government during the 1980's is almost complete. A. Rank of sector: 7 B. Name of sector: PLASTIC MATERIALS AND RESINS C. ITA or PS&D code: PMR 1993 1994 (e) 1995 (p) D. Total market size 646.0 821.0 849.0 E. Total Local Production 348.0 358.0 369.0 F. Total Exports 101.0 129.0 133.0 G. Total Imports 399.0 592.0 613.0 H. Total Imports from the U.S. 230.0 342.0 355.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: The plastics sector is one of the most dynamic of the Colombian economy, its performance in 1993 was outstanding when compared with other industries. It was able to grow from 7.0 percent in 1992 to 11.0 percent in 1993, while industrial production grew by only 4.2 percent. Local plastic producers have adopted new technologies and attractive designs making their products more competitive than those of glass, paper and metal. The outlook for the plastics sector is promising, it should maintain a steady growth of 4.0 percent in real terms as the economy and local demand for plastics products grow. Approximately 35 percent of the plastic finished products and 85 percent of Colombia's rubber products receive duty free access to the United States. The recent free trade agreements with the G-3 (Colombia, Venezuela, Mexico) and the potential international trade negotiations with other Central and Latin American countries should enhance imports of plastic materials and resins and improve country's plastics finished products production and exports. A. Rank of sector: 8 B. Name of sector: AIRCRAFT AND PARTS C. ITA or PS&D code: AIR 1993 1994 (e) 1995 (p) D. Total market size 259.5 276.5 303.8 E. Total Local Production (e) 2.0 2.5 3.0 F. Total Exports 1.5 1.0 1.2 G. Total Imports 259.0 275.0 302.0 H. Total Imports from the U.S. 152.0 165.0 196.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: The major Colombian airlines have been modernizing their fleet due to the competition presented by the Government of Colombia's open skies policy and the growth of flights (national and international) brought about by increased economic growth and trade. The competition is becoming harder even for smaller companies that are being forced to modernize equipment. The Colombian Air Force continues to acquire equipment (mainly helicopters) to reinforce its efforts against guerrilla and narcotics producer/dealer groups. Since a large percentage of the airplanes in Colombia are old, there is an increasing need for parts and components. The privatization is expected to reach this sector, and several airports will be turned- over to regional organizations for its operation and maintenance. The boom that the oil sector is experiencing is also contributing to a larger demand for air services (passenger and cargo). A. Rank of sector: 9 B. Name of sector: CONSTRUCTION EQUIPMENT C. ITA or PS&D code: CON 1993 1994 (e) 1995 (p) D. Total market size 108.0 119.0 134.0 E. Total Local Production 0 0 0 F. Total Exports 0 0 0 G. Total Imports 108.0 119.0 134.0 H. Total Imports from the U.S. 58.0 64.0 72.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: The Ministry of Transportation and its National Highway Institute (Instituto Nacional de V as -INV) are initiating a large infrastructure development program through concessions, especially highways where the GOC plans to privatize around 40 percent of the national highway system (estimated cost USD 1.2 billion). More investments are planned for construction of bridges, roads, rehabilitation of existing roads and pavement of the more than 24,000 Km that the INV maintains. Other entities within the state and city level will inherit important parts of the highways network. The most promising subsectors continue to be road construction/maintenance and earth-moving machinery. A. Rank of sector: 10 B. Name of sector: COMPUTER SOFTWARE C. ITA or PS&D code: CSF 1993 1994 (e) 1995 (p) D. Total market size 63.0 75.0 98.0 E. Total Local Production 35.0 40.0 45.0 F. Total Exports 10.0 15.0 20.0 G. Total Imports 38.0 50.0 73.0 H. Total Imports from the U.S. 32.0 45.0 65.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: Many types of both vertical and horizontal software are used in Colombia. Horizontal software is used by a wide variety of people, most word processing programs are horizontal and are used across industries and job functions. Vertical software is used by narrow segments of customers; for instance, a word processing program aimed toward scientists is a vertical program. Operating environment software has become an increasingly important category in the domestic software market as well as software development tools that help to construct new programs and maintain old ones. The domestic software development industry, consisting of more than 100 small and medium companies, is significant in the areas of accounting and inventory management. They are successfully exporting to the U.S. and some Latin American countries. Multimedia software is becoming popular in Colombia. This multimedia software requires computer hardware that can store, process and handle input and output functions for multimedia. A. Rank of sector: 11 B. Name of sector: PUMPS, VALVES AND COMPRESSORS C. ITA or PS&D code: PVC 1993 1994 (e) 1995 (p) D. Total market size 158.0 172.3 204.6 E. Total Local Production (e) 20.0 21.6 23.3 F. Total Exports 6.0 6.3 6.7 G. Total Imports 144.0 157.0 188.0 H. Total Imports from the U.S. 97.0 105.0 126.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: A principal reason for an expected increase in the demand for pumps, valves, and compressors during the next two years is the development of important projects in the oil and gas, electric power, water supply and purification, and industrial sectors. The large oil and gass deposits discovered at the beginning of this decade have started to be develop, which will require the construction of additional pipelines. Furthermore, Colombia has neglected its water resources and most towns (even important State capital cities) lack an adequate supply of potable water. A significant effort has to be made to save this basic resource from pollution and erosion. Several important hydroelectric and thermolectric projects are being and will be constructed during the rest of this century to avoid a new electric power crisis. A. Rank of sector: 12 B. Name of sector: AGRICULTURAL CHEMICALS C. ITA or PS&D code: AGC 1993 1994 (e) 1995 (p) D. Total market size 209.0 219.0 230.0 E. Total Local Production 150.0 155.0 160.0 F. Total Exports 103.0 107.0 111.0 G. Total Imports 162.0 171.0 181.0 H. Total Imports from the U.S. 91.0 96.0 101.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: Colombia consists of approximately 114 millions of hectares, of which 18 million hectares are cultivated and 27 million are occupied by livestock. (Note: A hectare consists of 2.471 acres). The domestic pesticide industry, established in 1963, was initially devoted to mix imported ingredients. Prior to that time, ready-to- use pesticides were imported. Currently about 95 percent of all ingredients (agricultural chemicals) used in pesticides are imported. The imports reached a level of US$ 162 million in 1993 (5700 metric tons) with a U.S. market share of 56 percent. Fungicides account for 60 percent of total imports followed by insecticides (25 percent) and herbicides (10 percent). Pesticides are imported mostly for its use in banana, flower, and tobacco crops. The main pesticide supplier is the United States with 50 percent of total imports. Prospects indicate an average increase of 7 percent during the next 2-3 years. There are 45 pesticide manufacturers in Colombia, including 18 subsidiaries of foreign companies, of which ten are American firms. In 1993, production was estimated to consist of: fungicides (38 percent), herbicides (37 percent), and insecticides (21 percent). Pesticide consumption (from both domestic production and imports) reached the volume of 28,000 metric tons in 1993, 1 percent higher than the 1992 level. The same trend is expected in 1994. A. Rank of sector: 13 B. Name of sector: PLASTIC PRODUCTION MACHINERY C. ITA or PS&D code: PME 1993 1994 (e) 1995 (p) D. Total market size 118.0 123.9 130.1 E. Total Local Production 0 0 0 F. Total Exports 0 0 0 G. Total Imports 118.0 123.9 130.1 H. Total Imports from the U.S. 23.6 24.7 26.8 I. Exchange Rate 811.9 933.6 1,092.4 Comments: The plastics industry is an active element of the Colombian GDP. Several new projects have produced positive results. The demand for modern technology to be competitive in local and international markets should maintain a steady growth at an average of 5.0 percent over the next two years. Colombia's emerging status as major producer of oil stimulates investments in this sector. The new discoveries of oil and plans to expand local industrial production of oil byproducts are some of the most positive factors influencing the importation of plastics machinery for production of plastics finished products because of larger local production and potential availability of more imported plastic raw materials. The dynamism of this industry is reflected by the growing demand of plastics products from the largest end-users - the food processing, packaging, pharmaceutical, cosmetics, beauty products, automotive, and construction industries. Local production of plastics production machinery is virtually non- existent. The apparent demand of plastics materials and resins of approximately 388,030 tons per year is determined by the main processes used by the different plastic processes - extrusion 61.63 percent, injection 17.42 percent, blowing 10.73 percent, calendering and thermoforming demand the lowest percentage of 10.22 percent. A. Rank of sector: 14 B. Name of sector: MACHINE TOOLS AND METALWORKING EQUIPMENT C. ITA or PS&D code: MTL 1993 1994 (e) 1995 (p) D. Total Market Size 48.7 51.8 55.8 E. Total Local Production 1.0 1.2 1.3 F. Total Exports 0.3 0.4 0.5 G. Total Imports 48.0 51.0 55.0 H. Total Imports from U.S. 14.4 13.3 16.5 I. Exchage Rate 811.9 933.6 1092.4 Comments: During 1993, the production of the metallurgic and metalworking sectors accounted for an estimated 19 percent of the the total manufacturing industry's output, higher than the 16.8 participation it achieved during 1991. The automobile industry has particularly boomed, reflecting a huge increase in consumer demand. National sales went from 50,000 units in 1991 to 75,000 units in 1992, and approximately 130,000 units sold in 1993; local car makers have captured most of the growth, by increasing the variety of models produced in-country, while taking advantage of the free trade agreements with Venezuela and Ecuador to rationalize production. The Colombian government is providing financing from funds obtained from international lending institutions to invest in new machinery and technologies under reconversion programs. Despite a modest participation in the Colombian economy with 1% of total national production, the capital goods sector represents 18% of the metalworking production and 5% of all industry with an annual demand of 2,500 million U.S. dollars. Most promising subsectors are hydraulic presses; lathes; drilling, grinding and sharpening machines. A. Rank of sector: 15 B. Name of sector: POLLUTION CONTROL EQUIPMENT C. ITA or PS&D code: POL 1993 1994 (e) 1995 (p) D. Total market size 37.0 43.0 80.0 E. Total Local Production 2.0 2.1 2.5 F. Total Exports 0 0 0 G. Total Imports 35.0 40.9 77.5 H. Total Imports from the U.S. 22.0 26.0 49.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: U.S. manufacturers of pollution control equipment continue to have a very large share of the Colombian market. A Ministry of the Environment was recently created. The Regional Autonomous Corporations (CARs) enforce policies and laws to control environmental damage, basically in two main areas: water and air pollution. Municipal solid waste management is another leading concern (especially in Bogot ), the service is privatized in some cities but much remains to be done. The environmental structure is maturing and the current needs involve consulting and technology exchange (especially for responsible government entities). A decision is expected regarding installation of catalytic converters in new vehicles (which may be applied beginning in 1995-1996), control equipment for fixed industrial air pollution emitters and the plans to clean several of the most polluted rivers in the world (Bogot and Medell n rivers), which would account for a large increase of the market between 1995-2000. EPA standards are being followed countrywide and this helps U.S. producers. The CARs lack trained personnel, instrumentation and control equipment. There is increasing concern for dwindling water resources and pollution from industrial sources, since the crackdown is evident in recent cases of factories being closed. A) Rank of sector: 16 B) Name of sector: MINING INDUSTRY EQUIPMENT C) ITA or PS&D code: MIN 1993 1994 (e) 1995 (p) D. Total market size 84.0 92.0 106.0 E. Total Local Production 0 0 0 F. Total Exports 0 0 0 G. Total Imports 84.0 92.0 106.0 H. Total Imports from the U.S. 44.0 48.0 56.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: The mining industry in Colombia expects a production boom in the next few years. New mining developments will come on-stream by 1995 and will require equipment and machinery investments, although worldwide prices are causing severe financing problems which might force mine operators to postpone purchasing decisions. The majority of Colombia's mining developments are open-pit, although there are some minor underground coal mines. The largest Colombian mining developments involve U.S. participation: Cerrej n (15 million tons/year), La Loma (capable 10 million tons/year), Calenturitas (3 million tons/year) among others. If the current tendency of price recovery is maintained, then the Cerrej n operation would expand its production to about 20 million tons/year. U.S. machinery producers dominate the market, especially in earth-moving equipment. The GOC expects to diversify the mining products offer by promoting new minerals and precious stones projects to international investors. A. Rank of sector: 17 B. Name of sector: SECURITY AND SAFETY C. ITA or PS&D code: SEC 1993 1994 (e) 1995 (p) D. Total market size 177.0 185.0 200.0 E. Total Local Production 80.0 85.0 90.0 F. Total Exports 23.0 25.0 27.0 G. Total Imports 120.0 125.0 137.0 H. Total Imports from the U.S. 60.0 63.0 68.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: Security for the 33.5 million people in Colombia is the responsibility of the National Police, the Army, the Air Force and the Navy. Colombia has not escaped the criminal and guerilla plagues as yet. Subversive activity, which includes an estimated force of 15,000, has a significant impact on the lives of businessmen. Colombia, as any other country, also experiences random criminal and political violence. Individuals, farmers and business executives alike have learned to live with security problems, but security precautions have revolutionized the way in which business is conducted in Colombia and have induced the demand for security and safety equipment and services. Damage from outsiders or insiders is always a concern. A. Rank of sector: 18 B. Name of sector: BUSINESS EQUIPMENT AND SUPPLIES C. ITA or PS&D code: BUS 1993 1994 (e) 1995 (p) D. Total market size 83.0 91.0 100.0 E. Total Local Production 60.0 65.0 70.0 F. Total Exports 17.0 20.0 23.0 G. Total Imports 40.0 46.0 53.0 H. Total Imports from the U.S. 20.0 24.0 28.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: The rapid advance of technology is causing major changes in the basic nature of the products used, in the ways they are used, and in the physical layout and staff organization of the office. Electronic-based equipment has replaced electromechanical or straight mechanical equipment or human labor in cases. The proportion of machines to personnel has changed radically in the machine's favor since one person utilizing appropriate equipment can now carry out the tasks that formerly required several staff members. The recent entry of some major U.S. distributors in the Colombian market indicates that U.S. manufacturers and distributors of office products are well aware of the opportunities for their products in this market. A. Rank of sector: 19 B. Name of sector: MEDICAL EQUIPMENT C. ITA or PS&D code: MED 1993 1994 (e) 1995 (p) D. Total market size 357.0 188.0 194.0 E. Total Local Production 60.0 78.0 82.0 F. Total Exports 17.0 20.0 24.0 G. Total Imports 314.0 130.0 136.0 H. Total Imports from the U.S. 247.0 58.0 61.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: There are sharp contrasts in the basic standards of health coverage offered by governmental and private entities in the various regions of the country. Up to now, health services coverage for the Colombian population has been provided to only 60 percent of the inhabitants. The remaining 40 percent of the population has no access to medical services. A controversial statute (Law 100 of 1993) will rework Colombia's social security system, including both health care and pensions. Health care will be reformed gradually beginning in 1995 and will induce modernization and enlargement of the private health care system. The estimated Colombian market for the medical sector, including dental, ophthalmological and medical equipment showed in 1993 the exaggerated amount of US$ 357 million; this figure was influenced by a non-regular import of US$ 200 million in contact lens and glasses carried out in August of 1993. A. Rank of sector: 20 B. Name of sector: FOOD PROCESSING AND PACKAGING C. ITA or PS&D code: FPP 1993 1994 (e) 1995 (p) D. Total market size 95.0 100.0 105.0 E. Total Local Production (e) 15.0 16.0 17.0 F. Total Exports 10.0 12.0 14.0 G. Total Imports 90.0 96.0 102.0 H. Total Imports from the U.S. 24.0 26.0 28.0 I. Exchange Rate 811.9 933.6 1,092.4 Comments: Approximately 23 percent of the food processing companies are concentrated near Bogot , while 42 percent are located in the other four main metropolitan areas. The remaining 35 percent operate in medium-size urban centers or in rural areas. The subsectoral composition of the food processing sector compiles 15 major subsectors. Traditionally, West Germany and Italy have been the major U.S. competitors in supplying food processing equipment to Colombia. During 1993 imports from the United States reached US$ 90 million, a 27 percent market share. The Colombian agricultural sector has not reached the technical level desired by the food industry, and there are some subsectors with cyclical growth patterns trend. AGRICULTURAL BEST PROSPECT PRODUCTS FOR U.S. EXPORTERS TO COLOMBIA (US $ millions) A. Rank of sector: 1 B. Name of sector: WHEAT C. ITA or PS&D code: 0410000 1993 1994 (e) 1995 (p) D. Total market size 147.0 148.0 151.0 E. Total local production 30.0 30.0 31.0 F. Total exports 0.0 0.0 0.0 G. Total imports 117.0 118.0 120.0 H. Total imports from the U.S. 47.0 47.0 48.0 I. Exchange rate 811.9 933.6 1,092.4 (e) estimated (p) projected Comments: Wheat imports can be expected to increase in next 3 to 5 years as Colombian wheat production remains stable and domestic consumption of bread and other wheat products grows. United States wheat import market share has been around 40 percent in recent years, a reduction from 100 percent in the early 1980s. The market reduction for hard wheat has been mainly due to the aggressive pricing of Canadian wheat as well as sporadic exports by other subsidizing suppliers (e.g., Germany and Saudi Arabia). The Colombian government has considerable discretion in determing wheat import duties under a "price band" mechanism with effective duty rates generally between 10 and 20 percent. Other trade barriers include the prior import approval of the Ministry of Agriculture as well as a minimum import price requirement. A. Rank of sector: 2 B. Name of sector: PROCESSED FOOD C. ITA or PS&D code: 1993 1994 (e) 1995 (p) D. Total market size 705.0 760.0 815.0 E. Total local production 715.0 770.0 825.0 F. Total exports 75.0 80.0 85.0 G. Total imports 65.0 70.0 75.0 H. Total imports from the U.S. 20.0 22.0 24.0 I. Exchange rate 811.9 933.6 1,092.4 Comments: The demand for processed food and other high valued food products have increased steadily in the last five years (1990-94). Specific products showing an upward increase in sales during this period were fresh/frozen whole chicken and turkey; poultry and beef offals; fresh/frozen pork, ham and lamb; powdered milk; cheese; hatching and table eggs; dry onions and garlic; dry fruit; raisins; fresh apples, pears, peaches, and nectarines; breakfast cereals; snack foods; wine; beer; and nursery products. Historically, Chile is the principal supplier of imported fresh fruits to Colombia. The Netherlands and Israel are the United States principal foreign competitors in nursery products. Domestically produced processed food and other high valued food products are expanding and continue to supply most of the Colombian market for these food items. The Colombian market for processed food and the other high valued food products is growing as the urbanization process continues and as individual purchasing power increases modestly. The United States is the main foreign supplier of consumer-oriented products to Colombia. Foreign competition in good quality wine primarily comes form Chile, Argentina and Peru, who receive an import duty reduction as member countries of ALADI or the Andean Pact. Colombian wine is less expensive and of lower quality than imported wine. A. Rank of sector: 3 B. Name of sector: COTTON C. ITA or PS&D code: 2631000 1993 1994 (e) 1995 (p) D. Total market size 138.0 143.0 169.0 E. Total local production 97.0 82.0 108.0 F. Total exports 20.0 20.0 20.0 G. Total imports 42.0 62.0 62.0 H. Total imports from the U.S. 23.0 31.0 31.0 I. Exchange rate 811.9 933.6 1,092.4 Comments: Domestic cotton production is limited by the availability of suitable land in Colombia for cotton planting. Thus, as domestic demand for cotton increases (Colombian textile industry has been growing about six percent per year and this rate can be expected to continue into the next few years), and with little or no import barriers (currently, cotton imports are duty free), Colombia should continue its recent trend as a significant importer of U.S. cotton. The quality of U.S. cotton is well liked in Colombia. The United States has been the dominant supplier of cotton to Colombia and this situation should continue if U.S. prices are competitive with other potential suppliers, like Turkey. U.S. loans to purchase U.S. cotton can be guaranteed under the USDA's GSM-102 credit guarantee program. A. Rank of sector: 4 B. Name of sector: CORN C. ITA or PS&D code: 0440000 1993 1994 (e) 1995 (p) D. Total market size 280.0 294.0 300.0 E. Total local production 242.0 252.0 260.0 F. Total exports 0.0 0.0 0.0 G. Total imports 38.0 42.0 40.0 H. Total imports from the U.S. 38.0 42.0 40.0 I. Exchange rate 811.9 933.6 1,092.4 Comments: U.S. corn exports should benefit from the rapidly expanding demand for poultry and dairy feed. During 1993, Colombian poultry meat and cow milk production both increased by 44 percent and this growth can be expected to continue into the next few years. The increasing demand for feed corn can only be realistically satisfied by imports since most of the domestically produced corn is used for human consumption and the domestic feed manufacturing industry has not traditionally used domestic corn and prefers to use U.S. corn because of its availability and consistent quality. The United States is the principal supplier of imported corn, minimal quantities originated from Argentina in 1993. The Colombian government has considerable discretion in determining corn import duties under a "price band" mechanism with effective duty rates generally between 10 and 20 percent. A. Rank of sector: 5 B. Name of sector: SOYMEAL C. ITA or PS&D code: 0813100 1993 1994 (e) 1995 (p) D. Total market size 71.0 74.0 76.0 E. Total local production 40.0 42.0 43.0 F. Total exports 0.0 0.0 0.0 G. Total imports 31.0 32.0 33.0 H. Total imports from the U.S. 24.0 24.0 25.0 I. Exchange rate 811.9 933.6 1,092.4 Comments: Colombian import demand for soybean meal can be expected to continue to grow for at least the next 5 years because over the same time period domestic production of soybeans and other oilseeds should remain relatively constant and the demand for protein feed ingredients can be expected to increase as the Colombian poultry, dairy and swine sectors expand. The U.S. share of the Colombian import market for soybean meal has been about 75 percent in recent years. Major third country competitors have been Bolivia, Uruguay, Argentina and Venezuela. Venezuelan soybean meal is mainly produced with U.S. soybeans. Both Venezuelan and Bolivian soybean meal receives duty free treatment under the Andean Pact Agreement. Currently the import tariff rate for soybeans and soybean meal is the same which should create an incentive to import soybean meal over soybeans. The Colombian government has considerable discretion in determining soybean/soybean meal import duties under a "price band" mechanism with effective duty rates generally between 10 and 20 percent. A. Rank of sector: 6 B. Name of sector: TALLOW C. ITA or PS&D code: 4113200 1993 1994 (e) 1995 (p) D. Total market size 28.0 29.0 30.0 E. Total local production 6.0 6.0 6.0 F. Total exports 0.0 0.0 0.0 G. Total imports 22.0 23.0 24.0 H. Total imports from the U.S. 22.0 23.0 24.0 I. Exchange rate 811.9 933.6 1,092.4 Comments: Colombia is the third largest world market for U.S. tallow. About 90 percent of the tallow consumed in Colombia is used in the production of soap, the remaining 10 percent is split evenly between human and animal consumption. Most of Colombia's imported tallow is inedible. The United States has been the traditional supplier with little or no third country competition. U.S. imported tallow is more expensive than locally produced tallow but its higher quality is preferred. The average annual growth in the import market for tallow can be expected to be about 2 percent. This growth rate in the future could be larger if the use of tallow in animal feed starts to take off as domestic dairy, beef and poultry production increases. U.S. imported tallow faces a 15 percent duty. Tallow imports from the U.S. have been an active user of the GSM-102 Credit Guarantee Program.