Destination Colombia: Where Sourcing Meets Substance and Style

It is true that the re-shoring and near-shoring wave in the US is still far from reaching a crest. But whatever little has worked so far has been to the advantage of countries southwards of the US, with Colombia being one such land.

Colombia today is not a power-house of garment-manufacturing, as countries in South and Southeast Asia are. However, one of its biggest plus points is that it comes to the competition with a lighter burden to shoulder—its overall economy does not ride piggyback on apparel exports. And given its textiles-apparel backdrop, Colombia today stands at a point from where it can simply springboard to success.

As with all other countries, Colombia's plans too were upset with the COVID-19 pandemic and all the production and trade related problems that came tagging along. So, how does Colombia position itself as an apparel-making hub.

That answer comes from Carmen Caballero, president of ProColombia, the official entity which promotes international tourism, foreign investment and non-traditional exports in Colombia. Says Caballero, "First, our country has a well-established fashion industry with more than 100 years of experience and a consolidated production chain. In addition, our textiles and apparel sector is one of the most dynamic in the Colombian economy since it represents around 7.7% of the industrial GDP.

Furthermore, Colombia's strategic position makes it an attractive export platform for companies wishing to expand their operations in Latin America. Our diversified product offer is recognised in the United States (and worldwide) for its high quality, favoured by the increased availability of trained human talent." [The full-length interview with Carmen Caballero will be carried on Tuesday.]

Colombia has been able to tide over the COVID-19 depression. According to ProColombia and the Ministry of Commerce, Industry and Tourism, between January and November 2022, the sector recorded exports worth $962.6 million--an increase of 6.5% over the same period last year. The main buyers were the United States, Ecuador, Mexico, Peru, Costa Rica, Chile, Guatemala, Brazil, Panama, and Venezuela. Foreign textile sales jumped by 14.2%, according to DANE figures analysed by ProColombia.

The bulk of Colombia's market reach remains the Americas. The European Union (EU), the most attractive market for Asian countries apart from the US, is yet to be explored to the hilt. The the Centre for the Promotion of Imports from Developing Countries (CBI) of Netherlands did run a project titled Garments Colombia between 2014 and 2018, but so far the flow to Europe has been only a trickle. 

Much of Colombia's recent industry can be traced to the first half of the first decade of the millennium, when the Agreement on Textiles and Clothing (ATC) came to an end, and China's entry into the World Trade Organization (WTO). Both had a bearing, and thc country was hit on two fronts. First, there had been a laid-back attitude from the quota days, having benefitted much from it, and second low-cost apparel from China and South Asian countries wreaked havoc in Colombia's local market. Moreover, the wages in those countries were relatively lower to most Latin American countries, including Colombia.

Things began to look better with the US-Colombia Trade Promotion Agreement (CTPA), which was signed on 22 November  2006. The CTPA, however, entered into force only on 15 May 2012. By this time, the contours of global apparel trade had changed considerably, the US was already trying to forge the Trans-Pacifc Partnership (TPP). Colombia was slightly late to the FTA party. Currently, it has 17 FTAs in place.

Most of these FTAs are confined to the Americas, and some overlap. It has separate trade treaties with Mexico, Chile, Cana, the US, Venezuela, Cuba, Costa Rica, Nicaragua; a joint treaty with El Salvador, Guatemala and Honduras; one each with the Andean Community (CAN) [comprising Bolivia, Colombia, Ecuador, and Peru], the Caribbean Community (CARICOM), MERCOSUR (where it is an associate partner to Argentina, Brazil, Paraguay, and Uruguay), the Pacific Alliance (comprising Chile, Colombia, Mexico and Peru). The overlaps are obvious.

Colombia also has a treaty with the EFTA States (Iceland, Liechtenstein, Norway and Switzerland), and the European Union.  It also has agreements with South Korea (effective since June 2016) and Israel (effective since August 2020).

It is, therefore, no surprise that most of Colombia's trade is confined to the Americas. It is also here that the prospects of the future lie.

But the futuristic strategy is positioned elsewhere. In 2019, Colombia became the first country in Latin America to adopt a National Circular Economy Strategy, having its roots in the National Policy of Sustainable Production and Consumption of 2010.

Says Caballero: "Sustainability policies are currently not a plus in the Colombian fashion industry; they are a must. We are happy to say that according to the Environmental Performance Index, Colombia ranks first in Latin America in applying ethical practices and sustainable development, second in Social Responsibility, and second Latin American country in the Environmental Performance Index. We have an industry that is already renowned for the use of ecological, recycled, natural, and degradable materials, as well as eco-friendly product development, the promotion of responsible purchasing criteria, the decrease in the use of chemicals in the manufacturing process, and respect for the human and labor rights of workers."

But still, Colombia would need to trade heavily. Keeping an eye on how things in Colombia work for trade is Bogotá-based Biz Latin Hub. The firms Chief Executive, Craig Dempsey, explains: "Several factors make it difficult for Colombia to export to different continents [The full-length interview with Craig Dempsey will be carried on Wednesday]:

1. Infrastructure: Colombia's infrastructure, particularly its transportation network, needs to be better developed, which makes it challenging to transport goods to other countries.
2. Logistics: The country's complex import/export regulations and bureaucratic procedures can make exporting goods difficult.
3. Market access: Colombia faces trade barriers in many markets, particularly in developed countries, which limits its ability to export products to those markets." 

Dempsey speaks about Colombia's potential and plus points, and adds: "The success of these efforts will depend on multiple factors, including the state of the global economy, trade agreements, and political stability. To become a more potent exporter, Colombia must continue improving its infrastructure, logistics, and trade regulations while addressing corruption and security issues."