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4. Debt Management
The Colombian Government continues to pursue ambitious structural economic reforms to stimulate real growth, strengthen its external sector, and enhance the country's access to new sources of credit. The debt management strategy is aimed at accessing new sources of credit in the external and domestic capital markets and on improving the debt profile of the country generally. The government used the proceeds of external bond sales in 1992, 1993 and the first nine months of 1994 to prepay approximately $1.8 billion of debt. At the end of 1993 Colombia's long term and medium term public and private debt was $17 billion, equivalent to 34 percent of GDP.
The Samper administration has announced that it will continue the orthodox management of Colombia's foreign debt pursued by the previous government. The administration's main debt-related objectives include obtaining a better rating for Colombian securities and increasing exposure with multilateral banks. The latter objective is being sought to provide priority financing for social programs and infrastructure improvements that are key elements of Samper's development program.
The government also intends to continue to reduce the burden of external debt service by keeping the growth of indebtedness below GDP growth. The government will also continue to broaden_ its access to funds in money markets in Europe, Japan, and the United States. In September 1994 the Colombian government placed $175 million in five-year “Yankee Bonds” in the United States market (at 1.6 points over Libor). That made $425 million placed in the United States during the first nine months of 1994. Colombian financial authorities will continue to seek funds under the most favorable terms in the world's largest markets. 5. Significant Barriers to U.S. Exports
Import Licenses: Colombia's prior import licensing requirement was formerly the country's most onerous import restriction. In 1991 the government abolished nearly all prior import requirements. Some 98 percent of tariff categories can now be imported freely, requiring only prior registration with the Colombian Trade Institute (Incomex). The remaining two percent of product categories still subject to prior import licensing include chemicals which could be used to manufacture cocaine, arms, and munitions. Imports by government entities, donations, and nonreimbursable imports also require prior licenses. The impact of import licensing requirements on U.S. exports is minimal.
Banking and Securities: Law 9 and Resolution 49 of 1991 opened up Colombia's financial sector to foreign investment. This legislation permits foreign investors to own up to 100 percent of financial institutions. There were two wholly-owned U.S. banking subsidiaries operating in Colombia in October 1994. A third is expected to commence operations before the end of 1994. U.S. companies in the Colombian banking and security sectors receive full national treatment.
Legal: The provision of legal services is limited to those licensed under Colombian law. Foreign law firms are not permitted a commercial presence in Colombia.
Insurance: A commercial presence (i.e., a registered place of business, a branch or an agent) is required in order to sell policies other than those for international travel or reinsurance. Colombia permits 100 percent foreign ownership of subsidi. aries, but the establishment of branch offices of foreign insurance companies is not allowed.
Accounting and Auditing: Some restrictions exist because the firms which control 80 percent of the market are subsidiaries of multinationals. Providers of these serv. ices must be licensed in Colombia. However, services offered by tax and administrative consulting firms or individuals are not restricted.
Mining and Hydrocarbons: Petroleum and mining companies have expressed concern about restrictions on the use of local versus expatriate personnel, especially during the start up phase of a project. Colombian law requires that, unless an exemotion is granted, at least 80 percent of employees be Colombian nationals.
information Processing: Commercial presence is required to provide this service.
Advertising: At least 50 percent of programmed advertising must have local content. However, this applies only to public broadcast network programming.
Audiovisual Services: Public network programming limits foreign air time to 40 percent of the total.
Standards, Labeling, and Marking Requirements: The Colombian Foreign Trade Institute (INCOMEX) does not require specific technical standards for any products. However, specifications established by the Colombian Institute of Technical Standards (ICONTEC) apply to Colombian government imports made pursuant to international bids. The Colombian Import Code states a preference, but not a requirement, that imports be described in metric system terms.
Specific marks or labels are required only for pharmaceutical and food products. Labels on food products must indicate the specific name of the product, ingredients in order of content, the name and address of the manufacturer, and the total contents. No label or illustration may be inaccurate or misleading in any way. Pharmaceutical products must bear a label, in Spanish, stating "for sale under medical, dental or veterinary prescription," the generic and brand names of the product, the net weight or volume of the package, the weight or quantity of active ingredients, the product's license number, and the lot control number. Products with limited shelf life must indicate the product's expiration date.
Investment Barriers: Foreign direct investment policies in Colombia are guided by two principles: (1) equality, in the sense that foreign and national investors receive the same legal and administrative treatment; and (2) openness, meaning that few restrictions will be imposed on the value of foreign direct investment or its destination.
Law 9 of 1991, Resolutions 51, 52, and 53 of the Council of Economic and Social Policy (CONPES) and Resolution 21 of the Board of Directors of the Central Bank are the principal regulations which govern foreign direct investment. These resolutions grant national treatment for foreign direct investors and permit 100 percent foreign ownership in virtually all sectors of the Colombian economy. The few exceptions include ownership of real estate, activities related to the national security, and the disposal of hazardous waste.
Investment Screening: Investment screening has been largely eliminated, and those procedures still in place are generally routine and nondiscriminatory. Prior approval by the National Planning Department for foreign direct investment is required only if the investor is providing a public service (energy, water, communications, etc.), requesting coverage by international insurance or risk protection (i.e., OPIC) or investing more than $100 million in activities related to mining, smelting, refining, transportation, or distribution. The Ministry of Communications must approve foreign direct investment in that sector and the Ministry of Mines and Energy must approve all investment dealing with hydrocarbons. All foreign direct investment must be registered with the Central Bank's foreign exchange office within three months of start up in order to obtain permission to repatriate earnings. Fi. nally, all foreign direct investment must obtain an operating license from the Superintendent of Companies and must be registered with the local Chamber of Com
Customs Valuation: Establishing the value of imported merchandise, previously performed only by customs officials, is now done in many cases directly by the importer. The importer declares the value of the import and pays the corresponding tariff and other taxes at a commercial bank. Customs clearance, which frequently took months under the former system, can now be completed in a few hours.
Customs officers inspect merchandise on a random basis to verify that description and classification conform to the importer's declaration. A program is also being implemented for major customs brokers which provides them with a computer terminal linked to the computer network operated by the Bureau of Customs. Brokers with these terminals can complete most clearance procedures in their offices before picking up the merchandise at the port of entry. 6. Export Subsidies Policies
The Colombian Government has sharply reduced export subsidies. At present there are three types of export incentives: (1) indirect tax rebate certificates of 2.5 percent, 4 percent and 5 percent, (2) import duty exemptions on the import of capital goods and raw materials used to manufacture goods that are subsequently exported, and (3) export credits provided by the Colombian Bank of Foreign Trade. The overall effect of these programs has diminished considerably following Colombia's accession to the GATT Subsidies Code. 7. Protection of U.S. Intellectual Property
Colombia continues to improve protection of intellectual property rights through Andean Pact Decisions. Colombia remained on the Special 301 Watch List in 1994 due to continuing concerns over deficiencies in the patent regime and copyright enforcement efforts. Enforcement concerns arise not only at the police level, but also in the juridical system. Several private attorneys have commented on the lack of respect for preservation of evidence and frequent instances of perjury. Colombia is a member of the Convention establishing the World Intellectual Property Organization.
Patents: Andean Pact Decision 313 of 1991 provides patent protection for most products, including pharmaceuticals, biotechnology, and plant varieties. (Only phar. maceuticals on the World Health Organization list of "essential medicines” are ex
cluded.) In 1993 the Andean pact adopted Decision 344, which represented a signifi. cant improvement over previous standards used for the protection of industrial property. For example, it provided for a 20-year patent protection term beginning with the filing date. However, the decision still falls short of U.S. goals in several respects, and is inconsistent with several provisions of the recently concluded agreement on Trade Related Aspects of Intellectual Property (TRIPs) in the Uruguay Round and the Paris Convention for the Protection of Industrial Property. For example, the compulsory licensing authority is inconsistent with TRIPs and no pipeline protection exists. Colombia also adopted Andean Pact Decision 345, which provides protection to certain plant varieties.
Colombia has not joined the major international conventions on patent protection. However, the government has stated its intention to sign the Paris Convention for the Protection of Industrial Property, the Patent Cooperation Treaty and the UPOV Convention. In April 1994, the UPOV determined that Colombia met the requirements for admission to the UPOV Convention, and authorized it to deposit accession documents.
Copyrights: In 1994, Colombia adopted Andean Pact Decision 351, which harmonizes, integrates and modernizes the laws of the five Andean countries. It also expressly protects software. In general, however, Decision 351 does not significantly alter copyright protection in Colombia.
Colombia's copyright law is based on Law 23 of 1982 and Law 44 of 1993, which increase criminal penalties. Colombian law provides copyright protection for the life of the author plus 80 years. If the holder of the rights to the work is a legal entity, the term of protection drops to 30 years from the date of first publication. Computer software was protected under Law 44. Colombian copyright law is unclear as to whether it must honor foreign satellite signals.
Although Colombia has a modern copyright law, weak enforcement remains a se. rious problem. Video cassette and satellite signal piracy continue to be widespread. Amendments to the copyright law made in 1993 have significantly increased pen. alties for infringement. The police administrative agencies now can seize pirated material and close an establishment, and either suspend or cancel the operating li. cense of any establishment open to the public where copyright infringement has occurred. Nevertheless, enforcement efforts have been sporadic.
Colombia belongs to the Berne (1987) and Universal (1976) Copyright Conven. tions, the Buenos Aires and Washington Conventions, the Rome Convention on Copyrights (1976) and the Geneva convention for Phonograms (1994). It is not a member of the Brussels Convention on Satellite Signals.
Trademarks: Colombia's trademark protection requires registration and use of a trademark in Colombia. Trademark registrations have a ten-year duration and may be renewed for successive ten-year periods. Priority rights are granted to the first application for trademark_in another Andean Pact country or in any country which grants reciprocal rights. Trademark owners do not have a cause of action against importation of products from other Andean Pact countries that bear their trademarks without authorization, though certain labeling requirements concerning country-of-origin apply. Colombia is a member of the Interamerican Convention for Trademark and Commercial Protection. Enforcement of trademark legislation in Colombia is weak.
Trade Secrets: Andean Pact Decision 344 protects industrial secrets. Protected property includes that which is secret (not generally known or easily accessible to those who usually handle such information) or has an effective commercial value or a potential commercial value as a secret, when the person possessing the secret has taken reasonable steps to ensure secrecy.
Semiconductors: Semiconductor design layouts are not protected under Colombian law. However, the Colombian Copyright Office has expressed its willingness to discuss the issue. 8. Worker Rights
ht of Association. The right of workers to organize unions, engage in collective bargaining and strike is recognized by the Constitution and the law. The Colombian labor code was completely revised in December 1990 by Law 50, which authorizes automatic legal recognition of unions which have obtained internally 25 signatures from a work place. It also strengthens penalties for interfering with workers' freedom of association. The new Labor Law also authorizes the independence of labor organizations in determining internal rules and electing officers. In addition, the law forbids the dissolution of trade unions by administrative decree. Colombian workers are organized into 2,265 unions, 101 federations and three confederations. Unions may establish international affiliations without governmental restrictions. The Constitution extends the right to strike to nonessential public em
ployees, but the definition of "essential" has yet to be determined by law. Before carrying out a legal strike, unions must negotiate directly with management and, in the absence of an agreement, engage in conciliation procedures. By law, public employees must go to binding arbitration is conciliation talks fail. In practice, public service unions decide by membership vote whether or not to seek arbitration.
b. The Right to Organize and Bargain Collectively. ---Colombian unions have been moderately successful in organizing larger firms and public services, but their members comprise less than eight percent of Colombia's economically active population. Weak union organizations have limited workers' bargaining power in the private sector. Antiunion discrimination or the obstruction of union association is illegal and is enforced by administrative labor inspections. The use of strikebreakers is prohibited by the labor code. Colombian labor law is applied in the country's free trade zones (FTZs). There is no restriction against union organization or collective bar. gaining agreements in the FT28.
c. Forced or Compulsory Labor.-Forced or compulsory labor is prohibited by the Constitution, which specifically forbids slavery or any treatment of human beings in servitude. This prohibition is respected in practice.
d. Minimum Employment Age.The Constitution prohibits the employment of youngsters in most jobs under the age of 14. The labor code prohibits those under age 18 from receiving government work permits. While this provision is generally respected by larger private companies, the extensive informal economy as well as specific areas such as cut flowers, coal mining, and leather tanning are effectively outside governmental control.
e. Acceptable Conditions of Work.—The Colombian Government annually sets a national minimum wage which serves as an important benchmark for wage negotiations. However, an estimated one-quarter of the labor force, mainly in the informal sector, earns less than the minimum wage. The labor code also establishes a standard work day of eight hours and a forty-eight hour work week. Enforcement of these laws is the responsibility of the Ministry of Labor and the court system.
f. Rights in Sectors with U.S. Investment.-All foreign investors are subject to Colombian laws protecting worker rights. U.S. investment is found principally in the petroleum, coal mining, chemicals, and manufacturing industries. Worker rights conditions in those sectors in practice are superior to those prevailing elsewhere in the economy due to the large size and high degree of organization of the enterprises. Examples include shorter than average working hours, payment of the highest wages and salaries in Colombia and maintenance of occupational health and safety standards well above the national average.
Extent of U.S. Investment in Selected Industries.-U.S. Direct
Investment Position Abroad on an Historical Cost Basis--1993
Food & Kindred Products
1 Suppressed to avoid disclosing data of individual companies
Income, Production and Employment:
6,737.3 7,563.1 8,325.1 Growth Rate (pct.) (1966 colones)
4.0 Transportation/Communications ....
4,302 4,464 4,590 Current U.S. Dollars
2,292 2,317 2,543 Labor Force (000s)
1,087 1,109 1,131 Unemployment (pct.)
4.1 Money and Prices: Money Supply (Mi, daily avg.) (millions current col.)
126,714 Interest Rate (lending pct.)
38 Interest Rate (deposit pct.)
27 Gross Domestic Investment (pct. of GDP)
23.4 25.9 26.0 Consumer Price Index (pct. change Dec to Dec)
19 Colon to USD Rate (avg. balance of payments). 134.3 142.4 155.0 Colon to USD Exchange Rate (December, parallel market)
152 168 Balance of Payments and Trade: Total Exports (FOB)
2,300.0 Exports to U.S. (FOB)
915.0 Total Imports (CIF)
2,455.8 2,900.7 3,400.0 Imports from U.S. (CIF)
1,148.5 1,300.0 1,470.0 Assistance from U.S. ..........
117.4 20.5 3.317 Assistance from Other Countries
NA Foreign Public Debt .......
3,192.8 Annual Debt Service Paid
181.5 Gold Reserves
13 Net International Reserves
900.0 IMF Methodology
277.5 Current Account Balance
- 357 -470
-600 1 Included ESF obligated but never disbursed.
Source: Central Bank of Costa Rica, for table and text 1. General Policy Framework
The Government of Costa Rica continues trade and economic policies in favor of open markets, international competition and freer trade. These policies are sup: ported
through active IMF and World Bank programs. Significant setbacks to this general policy have resulted from European Community restrictions on banana ex; ports, domestic pressure to restrict foreign competition, constitutional protection of state-owned monopoly enterprises, disagreements with major trade partners within the GATT framework, and domestic political pressures resulting from uneven economic growth. Many reforms are lacking permanent legal backing or are still too new
to gauge their efficacy, and some recent reforms have become political issues.