The planned free trade agreement between Colombia and the United States will come into force on May 15 this year. It is a further boon to a country that has seen a dramatic reversal in fortune in recent years.
Under president Juan Manuel Santos and his predecessor Alvaro Uribe, Colombia has dismantled its infamous drug-trafficking cartels. Foreign direct investment has risen almost tenfold since 2003, to 13.2 billion US dollars in 2011. The economy grew at six percent last year and is closing in on Argentina as South America’s second largest.
Colombia hosted the Summit of the Americas in the Caribbean port city of Cartagena on April 14 and 15, welcoming US President Barack Obama and 31 other western-hemisphere heads of state. During the event, President Juan Manuel Santos told Time magazine that Colombia was ‘not just a recovered nation, but the new economic and diplomatic player on the Latin American calle, or street’.
In the US, the Retail Industry Leaders Association – whose members include more than 200 retailers, product manufacturers and service suppliers, which together account for more than one and a half trillion US dollars in annual sales – was quick to praise the implementation of the free trade agreement. Stephanie Lester, vice president of international trade for the association, said the move ‘will benefit retailers by bringing certainty and stability to the trade relationship between the United States and Colombia’.
L&L recently visited a number of companies in the Colombian cities of Bogota and Medellin, and found both industry suppliers and label converters excited by the opportunities presented by the trade deal.
The label converters varied in size and market focus, but the message was almost universal: it will be cheaper to get raw materials into the country, while the vast consumer giant that is the United States becomes a viable target for export. Added to a growing local economy and increasing internal consumption, the label converters interviewed by L&L were full of optimism for their businesses.
The industry supplier perspective was similarly positive. Arclad, a labelstock manufacturer, already has a strong presence throughout Latin America and last year the company invested in a new plant located in Cartagena, the port with the shortest distance to the US. Nearly doubling the company’s production capacity, the new facility aims to target the US market.
With increased stability and solid economic growth, Colombia is one of the region’s current success stories and the outlook for the label and packaging sectors is positive. You can read a series of articles about the Colombian market in the next two issues of L&L.
James Quirk, Latin America editor, L&L