POUND FOR POUND

Colombia 2018 | DIPLOMACY | GUEST SPEAKER

TBY talks to Steve Ciobo, Australian Minister for Trade and Investment, on the benefits of free trade, accelerating the modernization of Colombia's agricultural sector, and areas with room for growth.

Steve Ciobo
BIOGRAPHY
Steven Ciobo was appointed as Australia’s Minister for Trade, Tourism, and Investment in 2016. He was previously the Minister for International Development and the Pacific. He has also held the roles of Parliamentary Secretary to the Minister for Trade and Investment and Parliamentary Secretary to the Minister of Foreign Affairs. Ciobo holds a law degree and a bachelor’s of commerce from Bond University, and a master’s in law from the Queensland University of Technology.

What are some highlights of the on-going negotiations for Australia's free trade agreement (FTA) with the Pacific Alliance?

I launched negotiations with my counterparts from Chile, Colombia, Mexico, and Peru at the Pacific Alliance Summit in Cali in June 2017, and we have made good progress in the five negotiating rounds to date, the latest in Mexico in July 2018. All parties share a commitment to concluding a high-quality agreement by the end of the year.

What does an FTA with the Pacific Alliance mean for Australian businesses?

The Pacific Alliance presents a growing opportunity for Australian export businesses. Equivalent to the eighth-largest economy in the world, the Pacific Alliance countries have strong economic growth, stability, and a commitment to global integration in recent years. For starters, an FTA will ensure that Australian businesses have the opportunity to access this market on a level playing field. We see increased opportunities in agriculture, tourism, health, mining and mining equipment, technology and services. Likewise, an FTA also presents exciting opportunities for Colombian businesses to increase exports of goods and services to Australia, the 12th largest economy in the world. Colombia is already benefiting more from two-way trade with Australia, and these benefits will only grow as tariffs go down and we develop closer economic integration through the FTA process. Colombia's agriculture sector will see benefits from an FTA with Australia, including products such as cut flowers and coffee that are already being effectively exported to Australia, demonstrating that Colombia can meet Australia's strict biosecurity measures. Further benefits will be derived from Australia's agricultural services and technology exports, as they will accelerate the modernization of Colombia's agricultural sector.

Where in Colombia will Australian businesses see increasing opportunities in 2018?

There has been an increase in Australian businesses interested in investing in Colombia, boosted by improvements in security, improving macroeconomic fundamentals, and growing diplomatic relations between both nations. Since 2017, the number of Australian companies based in Colombia grew from 24 to more than 50 in areas such as mining, software, infrastructure, health, and agriculture.

What is Australia's trade strategy towards Latin America and Colombia?

In December 2017, Australia released its Foreign Policy White Paper, setting out a comprehensive framework for Australia's engagement on a global scale. As outlined in the paper, the government's trade agenda is pragmatic, given the obstacles to progress at the multilateral level. Economic reforms in Latin America offer new possibilities for trade and investment. As a result, Australia has been strengthening its economic partnerships with Latin American countries, and we aim to deepen our trade and investment dialog with the Mercosur countries of Argentina, Brazil, Paraguay, and Uruguay. In March, I signed the Trans-Pacific Partnership (TPP-11) in Santiago on behalf of Australia, which draws in 11 Asia Pacific countries, including Mexico, Chile, and Peru. In February, I signed the Peru-Australia Free Trade Agreement (PAFTA) in Canberra. Indeed, an FTA with the Pacific Alliance will complement and build on the TPP-11 and PAFTA to bring more opportunities for Australian exporters. Once implemented, these three agreements, in combination with our existing FTA with Chile, will open the gateway to Latin America for Australian businesses, and likewise to Asia for Latin American businesses. I am excited Australia is negotiating an FTA with Colombia through the ongoing Pacific Alliance FTA discussions. We see a trade deal as an important next step to deepening our relationship with Colombia and developing new links between our people, businesses, and governments. There is already a good deal of interaction between our countries, but there is vast potential to do more, which is why we are looking forward to concluding a comprehensive and ambitious agreement by the end of the year.


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Wise Words
Colombia
DIPLOMACY
Year In Review

Future Benchmarks

Despite a slow year for growth, Colombia is set to embrace a future free of security concerns and defined by the openness of its economy as 2013 rolls on and new milestones are met. On the back of 6.6% GDP growth in 2011, the economy grew by a less heated 4% in 2012 as manufacturing growth slowed and exports suffered in the face of a weak global recovery. A strong year for oil production, however, saw Colombia pass the 1 million barrels per day (bbl/d) production mark. As the fourth largest producer in the region, the country's oil producers are also reaping the benefits of improved security to push ahead exploration in previously inaccessible areas, hoping to increase the country's proven reserves, which currently stand at 2.4 billion barrels. BBVA predicts GDP growth of 4.1% in 2013, with a slow 1Q2013, a continuation of a difficult 2H2012, set to be offset by job creation efforts and reduced interest rates that will increase household spending. Export growth also slowed to 5.7% in 2012, down from 44.4% growth the year before. Imports also increased, up 8.3% in the first 11 months of 2012, resulting in a trade deficit that stood at 3.1% by end-2012. International reserves, set to increase by $12.1 billion between 2013 and 2014, will likely keep the economy buoyed despite current account deficit woes, which could see a reversal in fortunes in 2013 as manufacturing stages a recovery and the agriculture sector's continued revival enhances the export basket. Manufacturing is predicted to grow at 3% in 2013 as the external environment improves and the peso weakens, while the agriculture sector, which contributes 21% of total exports, continues to expand on the back of 2.6% growth in 2012.

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