Colombia Sets Temporary Duties on Textile, Apparel Imports

The country is attempting to tame a flood of sub-valued Chinese imports into the country.

MEDELLIN, COLOMBIA — Colombia has introduced a $5 a kilo temporary duty for all textile, garment and footwear imports to tame a flood of sub-valued Chinese imports into the country, which have risen 200 percent since 2010, according to Carlos Eduardo Botero, executive president of top industry association Inexmoda.

“The measure has been signed and will come into effect next week,” Botero said in an interview on the sidelines of the Colombiatex textiles fair held here until Friday.

“We hope this will help restrain subvalued exports from Asia which have been hurting our local industry for years,” said Botero.

According to Botero, Chinese imports soared by up to 50 percent last year and have been increasing at similar rates for the past three years. Overall, the Asian country accounts for 53 percent of Colombian apparel imports with India following closely behind with a 10 percent share.

Underscoring the impact Asian imports have had on Colombia’s local market, Botero said Colombia’s export/import balance is now 1-to-1.

“Five years ago, for every $1 we imported, we exported $5,” Botero said.

The $5 tariff will last one year and apply to all countries that import to Colombia outside free trade accords. To even things out for “legal exporters,” Colombian President Juan Manuel Santos said the state will lower its fixed textile and apparel duty to 10 percent from 15 percent.

The new duty is the first of its kind Colombia has introduced in 30 years, observers said.

The industry applauded the measure, saying it was time the government responded to Asia’s “unfair” competitive practices which have triggered 50,000 job losses since 2008 as hundreds of local apparel firms have been forced to close, encouraging many companies to transform into exporters.

Juan Carlos Cadavid, president of Colombia’s beleaguered, yet largest textiles company Fabricato, welcomed the measure, saying: “It was crucial for the government to introduce a duty that would provide a more equal competitive landscape. This will be sufficient to reduce Chinese imports to more sustainable levels.”

Botero said Bogota has also agreed to fight the subvalued and contraband textiles trade by toughening up customs raids against organized and drug-related crime groups who bring in the undervalued Chinese products. Drug groups also use the industry to launder money, Botero added.

“The government has pledged to begin working on this which is key to increasing our competitiveness,” Botero noted.

Colombia’s textiles and apparel industry, worth over $10 billion, has also asked the government to lower energy prices to help slash manufacturing costs.

According to Botero, Colombian electricity prices are among the highest in the region and above some U.S. states.

“They are probably even double those of North Carolina, which is a U.S. textiles state,” he said.

The industry has also requested the state remove import taxes for imported textile machinery to make them more affordable for local producers to modernize their production chains.

Despite the Chinese, Colombia’s textiles industry’s outlook appears bright for 2013, Botero said. Local apparel sales should rise 8.8 percent and maybe more depending on the new duty’s efficiency. Meanwhile, buoyed by rising demand from the U.S. (stemming from the signing of a free trade accord last May) and rising demand from key markets in Venezuela and Ecuador, exports should leap 10 percent to $1.5 billion this year, according to Ricardo Vallejo, vice-president of export promotion agency Proexport.