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Soto-Executive Director CEA-Consejo Empresas Americanas

Interview - August 8, 2011

We have witnessed in all international communication media that Latin America is deemed as a priority for the US government. Let us talk about this strategic approach of the Obama administration for Colombia.


We have witnessed in all international communication media that Latin America is deemed as a priority for the US government. Let us talk about this strategic approach of the Obama administration for Colombia. What are the main objectives and what benefits will both parties have?
The relation between Colombia and the United States has lasted for a lifetime. From the commercial perspective and from almost every economic point of view, the US is our main ally so it impacts exports, the number of exports, cooperation and foreign investment intended for Colombia. The United States is still Colombia’s first commercial partner. Thus, every bilateral relation with the US bears great significance for us.
From the US point of view, if we understand it from the Colombian perspective, our natural markets are always neighboring markets. US neighbors are usually Canada and Mexico since those are their land borders. However, since we are separated by the Caribbean Sea, we are also their neighbors. Colombia is two hours by plane from Miami (the same distance from Bogota to Cartagena or Washington to Atlanta). Colombia is in the vicinity of the United States.       
Moreover, Colombia has historically been considered the main ally of the US in Latin America. We have always voted in favor of the United States at several international institutions (UN, OAS) and we support them in many causes. Colombia is currently cooperating with the United States in military personnel training in Afghanistan and we are cooperating with the police on drug issues in Mexico and Central America.  
From the US perspective, Colombia should be deemed as a potential market and a country to have stronger relations with. Additionally, Colombia is gradually becoming a more popular one among other emerging countries. We are a stable country with a very old democracy. Our last dictatorship occurred in the year 1953 due to a coup d’état, which was not violent and was then considered as a coup of opinion. Despite the crises that cyclically occur in some countries, Colombia has never been in default as far as foreign debt is concerned. Consequently, it must be a very interesting country for the United States. Some of our agricultural products used to be very important. However, they are not as important anymore. Given the fact that they have not been making decisions on a Free Trade Agreement that we signed in November 2006, they have lost competitivity because the world continues spinning. Colombia has performed agreement negotiations with other markets and those with which we have implemented free trade agreements have been reducing tariffs as planned. Thus, products from those countries tend to be more competitive than products from the US.
What are the greatest strengths of Santos’ government team? What are your predictions in the medium term?
The strengths of this new Administration are many. It is a totally coherent and also very technical Administration. It is a political one as well and it is surrounded by first class people.
Perspectives for 2011 seem to be good because a series of actions have been taken, from which we are going to reap the rewards next year. I would say that the most important of these actions is the royalty issue. Colombia has gradually become a highly attractive country for hydrocarbons, coal and gold mining, and all these products generate royalties for the country, which by law today mainly belong to the region producing such minerals. The reform that the Government is filing wants those royalties to be equally distributed through the entire country and there will be control so that this money is not squandered. New resources are going to be generated in sectors where Colombia really needs them, especially concerning infrastructure.

What is your posture regarding the signing of the Free Trade Agreement and how will the possible ratification of the treaty benefit CEA companies?

for some American companies and those that are already here in Colombia, the benefit is quite clear. First, game rules are completely clear and defined through the ratification of the Free Trade Agreement, including intellectual property issues. A great difference between developed and developing countries is Intellectual Property. Developed countries have always tended to invest great amounts of money in research and development because the business culture has always worked to innovate, bring new products and have patents to make products that benefit the world, which will return all the money invested in them. In developing countries this aspect is often misunderstood as something that generates hatred. Companies from these countries that invest much less money, if any, want to produce the same products imported from abroad, but without the invention element, therefore, many difficulties have risen. That chapter in the Free Trade Agreement was very complicated concerning medicines, software, movies, music, etc. in which there is a high Intellectual Property concern.
Everything was well defined in the Free Trade Agreement and if these rules are enforced, if the Agreement is approved, they will become a law for both countries, then, from that perspective, American companies will be additionally protected.
On the other hand, there is a tax-exemption process on every tariff tax. There are several processes, some are in Basket A, which are products that immediately enter with zero tariff, and others are in Basket B, in which tax-exemption lasts from 0 to 5 years and some others in basket C, which lasts from 0 to 10 years. Subsequently, there are some other products from different baskets in which tax-exemption is wider. In this situation asymmetries of economies are always observed, that is why this type of basket is established. If they were two countries with similar economies, there would be no need for these basket types, but in negotiations between asymmetric economies these arrangements are common. Independently from the foregoing, American products are going to gain when this tax-exemption process starts. They are going to profit and become much more competitive in this market where products from other countries are already coming without tariffs, such as, Andean Community products, products from Mexico by the G2, Mercosur and Canada products, this will happen once the Agreement is enforced in 2011. This means that if the United States does not progress with the Free Trade Agreement, American companies will be at a disadvantage compared to other countries with which Colombia has already signed Free Trade Agreements.
How has Colombia won US investors’ confidence and what is left to do?
Americans are the most fearful investors that I know. For many investors coming to Colombia is a definite risk and the Colombian campaign performed during the last 8 years to try and change that image has been huge. For instance, the design of a country brand has been launched (“Colombia is passion”) and the United States was the first foreign country where this campaign was launched, it took place in two cities, first in Washington and two weeks later in New York.
President Uribe worked in the security issue, something he called “Democratic Security”. As a result people started to trust the country once more, both Colombians and people who come to Colombia. This created an impressive environment abroad because the mouth-to-mouth message is extremely efficient to spread the news. Those who, unfortunately, have not helped us are the communication media, because every time there is bad news in Colombia, this is highly covered, which makes us go back in our image efforts. I have always heard that bad news must be counterbalanced with twenty good pieces of news and that is an immense proportion.
How does CEA report on those 20 pieces of good news to the US population in order to attract more investors?
Good news is transmitted through our affiliates here in Colombia, who have received a format which they can retransmit to their parent companies. So we are contributing to deliver the message to all those companies quite appropriately. At that point it gets very complicated for us and then the Colombian Government appears and its institutions are permanently promoting the image of Colombia. We support the government as much as we can by traveling and performing talks in the US or for foreigners in Colombia, we show them the advantages of Colombia and educate them on current Colombian reality. Because there is a gap between Colombian reality and how Colombia is perceived, there is still a lot of work left to bring closer both perspectives.
The CEA Foundation works to carry out activities that contribute to improve living conditions, security and social development of the most vulnerable population in Colombia. What are the milestones in this social project and what have been so far your greatest achievements?
The CEA Foundation was created some years ago in order to complete what American companies were already doing in Colombia. I would say that most American companies, if not all, have a Department of Corporate Social Responsibility. The biggest have their own foundations or work through American foundations that work locally in Colombia.
The CEA foundation was created to complement their work. During the few years of existence, it has focused on two specific projects. One is lower extremity prosthetics for children or adults so that they reintegrate into society. Extremity loss in Colombia is huge due to the violent situation we have suffered during 40 years. In order to protect against Colombian authorities, criminals have mined drug fields so that poppy or cocaine plants are not manually eradicated. This produces serious consequences for the eradication efforts. The population, generally police officers or local farmers, and also for children, who innocently cannot foresee danger and walk through those fields as any kid would do, that is where they lose their extremities. We treat only a few who have lost their members due to diseases or other types of accidents. The foundation has dedicated to this purpose and other important issues of social responsibility.
We would like to finish with a final message for everybody, potential tourists and investors, who may read this interview in USA Today.
I would tell them to come to Colombia because that is the only way to actually demonstrate what Colombia is today. The only manner is to come and see it. One can read passages about people in the Bible, such as, Saint Thomas who said “seeing is believing”. This has led people to come a lot more, since those who come to Colombia for the first time are so surprised that they become themselves Colombian ambassadors in the world, they start to spread the message mouth-to-mouth among friends to visit Colombia. That is the reason for the slogan used in Colombian tourism promotion, which reads “the only risk is wanting to stay”. I would invite everybody to take the risk and come to Colombia to see a country that will pleasantly surprise them.