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Recent tensions between the Colombian government and the Israeli government, in relation to war crimes committed in the Gaza Strip, have led to interruptions in Israeli exports to Colombia, especially in the realm of security-related products.
The Free Trade Agreement (FTA) between Israel and Colombia, which came into effect on August 11, 2020, offers a range of tariff benefits and facilities to encourage the exchange of goods and services between both nations. One of the key advantages is the elimination or reduction of most tariffs and customs duties that impact joint imports and exports, typically increasing costs for end consumers.
It is important to note that these treaties are the result of years of negotiation and verification of their elements to avoid affecting internal regulations. Therefore, it is regrettable that it cannot be fully applied, especially at a time when the Colombian economy needs stimulus.
Concerning Colombian exports to Israel, the Ministry of Commerce reports that from 2018 to the present, the focus has been on products such as thermal coal, coffee, emeralds, coal, and flowers. These exports account for 1% of Colombia's total exports thus far. These products hold significant importance in global markets, and any restrictions would affect the Colombian economy, especially in the agricultural and coal sectors. In 2019, Colombia exported $366 million in coal to Israel, and exports of medicinal cannabis to Israel have seen a significant increase since 2022, with a 29% increase in the first quarter of 2023 compared to the previous year.
Additionally, Colombia imports a variety of machinery from Israel, including telecommunications devices, electrical conductors, piston engines, and others. These products are primarily used to produce and reproduce sounds, images, and recordings, often linked to security applications. Colombia relies on these imports, as these products are not manufactured in the country. If Israel imposes restrictions on these imports, Colombia would not only have to seek new trade partners. Still, it would also have to assume a 19% value-added tax (VAT) instead of benefiting from the favorable tariffs established in the FTA, typically ranging from 0% to 10%.
In conclusion, trade tensions between Colombia and Israel could have significant consequences for the Colombian economy. Increased import costs and interruptions in key exports could directly impact strategic sectors. Moreover, the loss of opportunities for technological investment could be detrimental to long-term economic development and productivity. The continuation of these tensions presents a genuine risk to the development of diplomatic relations, potentially leading to strained cooperation in other areas.
In this context, Colombia might have to seek new trade partners to mitigate losses, which could pose additional challenges in an increasingly competitive global market. Both nations must carefully consider these tangible impacts and work to resolve issues that allow for trade between them. Despite the tensions, the stability of trade relations and economic prosperity must be cautiously weighed.
Finally, it is important to highlight that Israel represents an opportunity for improvement in the technology sector. That is why one of the purposes of the FTA is to promote the exchange of services and thus improve the agricultural industries in Colombia, where despite the immense possibilities of success, the capacity of the national production chain limits production. In that sense, these are the facts the government must consider before closing an important door to our foreign trade market.
