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Cablegate: Is Asia Colombia's Next Economic Frontier?

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FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 0826
INFO ASIAN PACIFIC ECONOMIC COOPERATION
RHEHNSC/WHITE HOUSE NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
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UNCLAS SECTION 01 OF 02 BOGOTA 003359

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ETRD EINV ECON PREL ECIN APECO CO
SUBJECT: IS ASIA COLOMBIA'S NEXT ECONOMIC FRONTIER?

REF: BOGOTA 3309

1. (SBU) SUMMARY. Colombia is making a concerted effort to
increase exports to, and investment from, Asia. The GOC is
actively negotiating and implementing bilateral economic agreements
with several Asian countries. Likewise, Colombia is seeking
membership in the Asia-Pacific Economic Cooperation (APEC) and the
Trans-Pacific Strategic Economic Partnership Agreement (TPP), in
part to help raise its profile in Asia. GOC officials recognize
that bilateral and multilateral agreements alone are not enough to
diversify Colombia's exports and have in place an aggressive
program of trade missions and credit incentives to encourage
Colombian businesses to explore Asian markets. While the strategy
is laudable, it will likely be many years before Asia plays the
same role in Colombia's economy that it does in Chile's or Peru's.
END SUMMARY.

ASIA: A LOGICAL NEXT STEP FOR BILATERAL AGREEMENTS

--------------------------------------------- -----

2. (U) Reftel reported on Colombia's goal of nine FTAs in place
with 45 countries in the Western Hemisphere and Europe by 2010.
With five of those agreements already in force and only one left to
finish negotiating (with the EU), Colombia is looking to Asia for
expanded export markets and greater sources of foreign direct
investment. The GOC has a number of free trade agreements (FTAs),
bilateral investment treaties (BITs) and double taxation treaties
(DTTs) with Asian countries in various stages of negotiation and
implementation. Colombia's BIT with China, signed in November
2008, is still pending before the Colombian Congress. Trade
Minister Plata signed a BIT with India on November 10 of this year.
Colombia and South Korea closed negotiations on a BIT in October of
this year and plan to start FTA negotiations at the beginning of
2010. According to the GOC, Japan has insisted on negotiating a
BIT (fourth negotiation round is in late November), followed by a
DTT, before it will begin FTA negotiations with Colombia.

3. (SBU) Colombian Trade Ministry's Coordinator for Relations with
Asia Rosana Prieto told us the potential for increased foreign
direct investment (FDI) from Asia was enormous, given the size of
the Asian economies in question and their relatively miniscule
levels of investment currently. Prieto noted that China's FDI in
Colombia amounted to a paltry $8 million between 2002 and 2008
(NOTE: This figure does not include investment in the petroleum
sector, which the GOC does not disaggregate by country of origin.
END NOTE.) Japan's FDI, the most of any Asian country in Colombia,
amounted to only $71 million over the same period.

CHILE AND PERU CAUSE TRADE ENVY

-------------------------------

4. (SBU) Similarly, Colombia's exports to Asia are a small
percentage of total exports, especially compared to Chile and Peru.
In 2008, only five percent of Colombia's exports went to the 16
APEC members located outside of the Western Hemisphere. By
comparison, 36 percent of Chile's exports and 23 percent of Peru's
exports went to these countries. Colombian government and business
leaders are acutely aware of how far they lag behind Chile and Peru
when it comes to trade with Asia and raise the issue in virtually
every conversation about Asia. In fact, two-thirds of a recent
MFA-sponsored conference on Colombia's relations with Asia was
devoted to the experiences of Chile and Peru. Luis Carlos
Villegas, President of the National Association of Entrepreneurs
(ANDI) noted that, given the internal security problems that
plagued Colombia in the recent past, it was understandable that
Colombia lags behind its neighbors vis-C -vis Asia, but pointed to

BOGOTA 00003359 002 OF 002


growing interest in Asia by Colombian businesses as a positive
sign.

GOC SEEKING APEC AND TPP MEMBERSHIP

-----------------------------------

5. (SBU) The GOC seeks to join APEC if and when the membership
moratorium is lifted in 2010 and has asked for USG support in this
regard. While not currently an APEC member, Colombia participates
in the Investment Experts' Group and the Energy Working Group. In
2008, APEC host Peru helped secure an invitation for President
Uribe to address the APEC Business Advisory Council (ABAC). While
Uribe was not invited to the APEC Summit in 2009, Foreign Minister
Jaime Bermudez will be in Singapore during the Summit, for the
purpose of raising Colombia's profile with regard to APEC
membership.

6. (SBU) Colombia is also interested in joining the TPP (formerly
P-4). Prieto noted that in 2008 Chile invited Colombia to become a
member, but that the GOC has little clarity at this point on how
the process for membership would work.

RAISING COLOMBIAN BUSINESS AWARENESS OF ASIA

--------------------------------------------

7. (SBU) Recognizing that government agreements alone will not
diversify Colombia's export markets to the desired degree, the GOC
has in place an ambitious agenda of trade delegations, including to
Asian countries, coupled with credit incentives for small
businesses looking to expand to new markets, such as Asia.
According to Javier Diaz, President of the National Association of
Exporters (ANALDEX), Colombian small and medium businesses tend to
be conservative and focused on "easy" export markets, such as
Venezuela and Ecuador, where customers speak the same language. He
said recent trade difficulties with Venezuela will force Colombian
exporters to search for other markets, including Asia, but
acknowledged that it will take a long time for Colombia to realize
its full economic potential with Asia.
BROWNFIELD

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