The US-Colombia Free Trade Agreement (FTA) was implemented on May 15, 2012, with the aim of strengthening the commercial relationship between the two countries. The agreement opens up new opportunities for businesses and creates a level playing field for US products and services in Colombia. Additionally, it provides a framework for resolving trade disputes and promotes transparency in trade-related activities.
One important aspect of the FTA is the preference criterion. This criterion determines whether a product is eligible for preferential treatment, which means that the product can be imported into Colombia at a lower or zero tariff rate. The preference criterion is based on several factors, such as the country of origin, the value of the product, and the degree of regional content.
Firstly, to be eligible for preferential treatment, the product must meet the rules of origin. This means that the product must be either wholly produced or contain sufficient regional content to qualify as a product of the US or Colombia. Products that do not meet the rules of origin will not be eligible for preferential treatment.
Secondly, the value of the product must be below a certain threshold. For products that are wholly produced in the US or Colombia, the value must not exceed 35% of the customs value. For products that contain regional content, the value must not exceed 50% of the customs value. Products that exceed these thresholds will not be eligible for preferential treatment.
Finally, the degree of regional content also plays a role in determining whether a product is eligible for preferential treatment. The FTA requires that a certain percentage of the value of the product must be derived from the US or Colombia. The percentage varies depending on the product, and some products have specific rules for determining regional content.
It is important for businesses to be aware of the preference criterion when exporting to Colombia. Failure to meet the requirements could result in higher tariffs, making the product less competitive in the Colombian market. Businesses should consult with an experienced trade lawyer or customs broker to ensure that their products meet the rules of origin and other requirements of the FTA.
In conclusion, the preference criterion is an important aspect of the US-Colombia Free Trade Agreement. It determines whether a product is eligible for preferential treatment, which can significantly reduce the tariff rate and increase competitiveness in the Colombian market. Businesses should be aware of the rules of origin, value thresholds, and regional content requirements to ensure compliance with the FTA.