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  • COLOMBIA-MERCOSUR (TLC)
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  • Tuesday, May 11, 2004
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    Pilferage in customs warehouses and robberies of trucks persists, but cases have decreased dramatically. Colombian customs can detain shipments indefinitely because of improper tariff schedule classification, incorrect address, or typing errors.

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    When mistakes are made by the exporter or importer, the goods may be refused entry into Colombia and be returned at considerable expense to the exporter or importer. Colombian customs statutes provide for significant fines and penalties for light infringement of procedures and errors in freight forwarding documents by customs agencies Agencias Aduaneras.

    Most agricultural product import licenses issued by the Ministry of Commerce are issued automatically and are "free". However, there are a number of agricultural products that need pre-approval before the Ministry of Commerce will issue an import permit.

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    These pre-approvals are regulated by the Ministry of Agriculture and Rural Development MOA through the issuance of a sanitary or phytosanitary certificate for imports. For example, if the Ministry of Agriculture determines that corn imports are not needed because they may negatively affect domestic prices, it could hypothetically refuse to issue a phytosanitary certificate and thus the Ministry of Commerce will not issue the import permit.

    In the case of food products imported for human consumption, it is the Ministry of Health and Social Protection MOH that provides the pre-approval. To ensure an ample supply of basic grains, the MOA has created a quota system to allow for the import of a limited quantity of grains at zero duty.

    This ratio is calculated based upon expected local production and demand. For example, in the government allowed for the purchase of over 2. Feed millers, poultry producers and distributors submitted bids at the auction for the volume of imports desired knowing how much local corn they would need to buy.

    Before any imports could be made under the quota, the importer must show Customs that it purchased the required local production. This system sets a minimum price for local corn at the international price plus the out-of-quota-duty and freight. During periods of low domestic production farmers can distort market prices by requesting a premium knowing that importers need their product to be able to import. The out-of-quota duty is the greatest of either 5 percent or the Andean Price Band duty.

    The CTPA has eliminated the price band system and quota auctions and the overall import process for U. On April 1,Colombia implemented the common Andean Community price band variable import duty system. It covers product classifications rice, barley, yellow corn, white corn, soybeans, wheat, crude palm oil, crude soybean oil, white sugar, raw sugar, milk, chicken parts, and pork meat and additional select commodities that are considered substitutes and derivates.

    In theory, the system covers domestic producers and consumers from volatile world prices by raising import duties when import prices are low and lowering duties when prices are high. Under the Andean Community price band system, the price band duty rate, or total applied duty rate, is calculated as the basic import duty rate plus the variable duty rate. The Ministry of Trade sets the basic duty rate each December for the following year.

    The variable duty rate is calculated as the percentage difference between the price band reference price and the floor or ceiling price making up the price band. The Andean Community, using a month rolling average international price based on the period April 1 to March 31, calculates the floor and ceiling prices of the price band. The reference price is the average international price, which is updated every two weeks.

    When the reference price falls below the floor price, the variable duty or surcharge is added to the basic import duty resulting in a higher applied duty rate. Conversely, when the reference price exceeds the ceiling price, the variable duty is subtracted from the basic duty rate making for a lower applied duty rate. Once the price band duty rate is calculated, the rate is applied to the reference price to obtain a per-ton duty value.

    That duty value is then applied to the volume of product imported. The Andean Community price band system lacks transparency and can be manipulated to provide arbitrary levels of import protection.

    For example, adjustment factors for freight, insurance, and other unspecified costs are not transparent and provide latitude for manipulation of ceiling, floor, and reference prices. In many cases, it is impossible for an exporter to estimate the final import duty.

    Often, the appropriate reference price is not used to assess the import duty. For instance, the ceiling and floor prices for chicken parts are based on U. This method increases the likelihood that the reference price will fall below the floor price and the additional surcharge will be added to the import duty. For soft wheat, the floor and ceiling prices are based on hard red winter wheat, which tends to result in a higher import duty for soft wheat, since hard wheat is generally more expensive than soft wheat.

    Unfortunately, WTO binding import duties are often times higher than the applied price ban duty, making it difficult to argue against the price band system.

    The CTPA has eliminated the Andean Price Band system for the above-mentioned products and by-products and significantly reduces the bounded tariff level. There are tariff rate quotas for some sensitive commodities and a period of several years for a gradual reduction in import duties.

    Simultaneously, Decree of October 27,defines the bovine specific risk materials, such as brains, eyes, and the spinal cord. However, issues remain for bone-in beef products and import permits are not being issued contrary to aforementioned decrees.

    ICA is responsible for the issuance of sanitary import permits for animal products, vegetables, fruits, and grains. All processed retail food items, including products imported in bulk for repackaging for retail use without further processing, must be registered and approved by INVIMA.

    Food products that are sold to restaurants, institutions, or to processors do not need to be registered with INVIMA, but according to the interpretation given by INVIMA of Decree of December 30,the importers of such products have to fulfill some bureaucratic administrative requirements.

    According to Decree ofproduct registration is not required for: Products that are not subject to any processing, such as grains, fruits, fresh vegetable, honey, etc. Products of animal origin that are not subject to any processing however each shipment of meat and meat products must be approved by ICA in order to be imported Products used as raw materials by the food industry or Hotels, Restaurants and Institutions sector in food preparation.

    Thursday, May 13, 2004

    A processed product is defined by the government as having been subjected to processing that resulted in a change in its internal structure. This certificate needs to be issued by a U. Although not strictly required, INVIMA registration is facilitated if a description of the manufacturing process and a list of the ingredients is submitted, including any additives, preservatives, and dyes. A translator approved by the Ministry of Foreign Affairs must translate these documents into Spanish.

    INVIMA registration generally takes three working days to complete although this can be much longer in some cases. Some importers complain that this procedure may result in additional requirements that become non-tariff barriers to trade. Registration is valid for ten years but only for the applicant exporter or importer and the manufacturer specified in it.

    Afterwards, the exporter may change his importer s whenever he deems it advisable. If another presentation of the same product is to be imported, the registering company needs to inform INVIMA in writing of the new product.

    Products used as raw materials by the food industry sector in food preparation do not need an INVIMA registration, but they do need a sanitary permit from ICA and comply with Colombian labeling regulations. ICA is responsible for the issuance of import sanitary permits for animal products, vegetables, fruits, grains, pet food, dairy products, and agricultural inputs, including seeds. The Colombian importer must first obtain the import permit from ICA, before requesting an import license from the Ministry of Commerce, Industry and Tourism.

    For ICA approval, the product must: Colombian importers must provide a sanitary import permit to the U.

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    No shipments should be loaded or transported without the submission of the sanitary permit. Additional Sanitary Registration Requirements: The registration with INVIMA must be obtained before exporting the products to Colombia and the procedure takes between three to six months. Colombia requires sanitary registration for both locally manufactured and imported products.

    For more information contact: Inthe Colombian Government eliminated requirements for the prior inspection and certification of imported food products at loading ports as part of an effort to ease import procedures. Import Requirements and Documentation Return to top U.

    When required, obtain import permits from pertinent government agencies. Ministry of Social Protection for medicinesMinistry of Agriculture for certain food productsand Civil Aviation Department for aircraft. Buy and fill out the Import Registration form.

    The form requires a complete product description and tariff classification. Make arrangements with a financial entity to pay for the imported goods.

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    Ask the exporter to ship goods to a Colombian port. Request the Cargo Manifest from the transportation firm. Make arrangements with a Customs Agency to receive the merchandise and get it out of customs.

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    The following are the main steps to be followed: When the import value is equal or more than USD 1, Customs Agencies should do all the paperwork and get the shipment out of Customs. Go to an authorized financial entity and pay the import duties, VAT, surcharges, and other fees. Present all documents to customs. Customs inspects the merchandise, when they consider it necessary, and then authorizes withdrawal of goods.

    The importer must keep import documents for a period of not less than five years. The importer must submit an import declaration to the DIAN. This declaration includes the same information contained on the import registration form and other information such as the duty and sales tax paid, and the bank where these payments were made.

    This declaration may be presented up to 15 days prior to the arrival of the merchandise to Colombia or up to two months after the shipment's arrival.

    Once the import declaration is presented and import duties are paid, customs will authorize the delivery of the merchandise. Customs officials are responsible for inspecting merchandise to verify that the description and classification are consistent with the importer's declaration.

    A customs inspection group often performs after-clearance random investigations to detect fraud, foreign exchange irregularities, and tax evasion. Major customhouse brokers have a customs office in their own bonded warehouses where most clearance procedures are completed before the merchandise is delivered to the customers.

    To carry out an export, the exporter must: Products that require special documentation include: Export Controls Return to top U. Government may prohibit the export of certain products to Colombia or require export licenses. Licenses are required for certain high technology items or technology transfers and items with dual use potential commercial items which could have military applications.

    In recent years, there have been increasing restrictions on the export of precursor chemicals to Colombia, due to concerns they may be utilized by narcotics traffickers to produce drugs. For more information on U. The merchandise must be re-exported immediately after the pre-authorized period, without any alteration or modification, except for the normal deterioration caused by use.

    There are two categories for temporary imports.

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