Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
Despite the elimination of many market barriers by the TPA, U.S. companies still face challenges when doing business in Colombia. This is particularly the case with extractive industries like oil/gas and mining, as well as professional services.
One of the main priorities of the Duque Administration is combating corruption, which creates an unlevel playing field for U.S. companies in Colombia. This is particularly prevalent in infrastructure projects, where a lack of transparency and excessive risk in contracts discourage participation by many U.S. companies.
Overly burdensome and unpredictable bureaucratic processes also pose a challenge for many firms. For example, environmental licenses must be obtained in order to execute certain projects in sectors such as mining and oil exploration, and the process is often time-consuming, unpredictable, and can take several years to complete, with many licenses never being issued. Companies in these sectors must frequently go through a process called Consulta Previa in which indigenous and other ethnic minority groups must be consulted before projects can be carried out in their communities. This process can take several years to complete and some projects are never approved. The Iniciativa Popular, or Local Referendum, is a mechanism used by some communities to oppose activities by companies in the extractive industries. The pervasiveness of informal and illegal mining and logging in Colombia, and the environmental damage that accompany them, tarnish the image of the mining industry in general and generate resistance to legitimate mining concerns that adhere to environmental standards and labor regulations.
Regulations and standards are another area of concern for U.S. businesses in Colombia. Regulations sometimes change without adequate notification given to the World Trade Organization, industry, and other relevant stakeholders. Moreover, the comment period normally required for stakeholders to voice their opinions on the proposed regulatory change can be insufficient, and comments might not be given adequate review by relevant Colombian authorities. In the area of standards, there have been proposals to adopt European standards at the exclusion of U.S. standards as well as proposals to require standards tests to be conducted by Colombian testing laboratories when no such laboratories exist in Colombia or when such tests have already been conducted at a certified lab in the United States
The government procurement process in Colombia remains a barrier for many U.S. companies. A lack of transparency and competitive bidding conditions in the public tender process have resulted in U.S. bidders being excluded from key projects such as infrastructure development and project management. The Colombian Government is making efforts to address this issue through the establishment of public procurement agencies such as Colombia Compra Eficiente (Colombia Efficient Procurement), which has implemented a transactional, online procurement platform called SECOP II that is intended to promote more transparency in the request for proposal (RFP) process in public works projects. The U.S. Government is also collaborating with Colombian counterparts on initiatives such as the Global Procurement Initiative (GPI), a U.S. Trade and Development Agency (USTDA) partnership that encourages Colombian contracting authorities to focus on long-term value and best practices in public procurement.
Colombia has also been on the United States Trade Representative (USTR) Special 301 “Watch List” every year since 1991, reflecting ongoing challenges in the enforcement of intellectual property rights (IPR). After being downgraded to the Priority Watch List in 2018, Colombia was upgraded by USTR to “Watch List” status in April 2019 due primarily to the passage by Colombia’s Congress in 2018 of several key IPR safeguard provisions, including copyright law amendments. Colombia remained at “Watch List” status in USTR’s 2021 report, with ongoing IP concerns related to pirated goods and counterfeits. USTR did recognize the country’s active cooperation with the United States on implementing notice-and-takedown and safe-harbor rules for internet service providers.
Security also remains a concern. The Duque Administration has taken a hardline stance towards the Ejército de Liberación Nacional (ELN) rebel group. In 2021, the ELN conducted various armed attacks across Colombia and was believed to be playing an active role in social unrest activities aimed at destabilizing the government. Examples of these activities include deadly attacks on police stations in April; detonation of a car bomb inside an Army base in the city of Cucuta in June; and a related attack on the President’s helicopter during a follow-on visit to the base. These incidences have created increased security concerns for U.S. companies considering initiating business in Colombia.
Logistics costs are another challenge to doing business in Colombia. Due mainly to poor road infrastructure that must wind its way through some of the world’s tallest mountain ranges, logistics costs are some of the highest in the region, and movement of products from the two main ports of Cartagena and Buenaventura to central locations like Bogota and Medellin adds considerable costs. These additional costs can be prohibitively expensive for sectors such as restaurant franchises, which must import most ingredients from abroad through the country’s two major ports. Colombia’s recently announced infrastructure investment initiatives are expected to help alleviate these costs, but the benefits will not be seen immediately as many of these projects will take years to complete.