RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/296
17 September 2001
(01-4366)
Council for Trade in Goods Original:  Spanish
COLOMBIA  - REQUEST FOR EXTENSION OF THE TRANSITION
PERIOD FOR THE ELIMINATION OF TRADE-RELATED
 INVESTMENT MEASURES
The following communication, dated 31 August 2001, has been received from the Permanent
Mission of Colombia.
_______________
The Government of Colombia, pursuant to paragraph 2 of the Decision of the Council for
Trade in Goods of 31 July 2001 (G/L/461), hereby requests a further extension of the transition period
for implementing the measure notified in document G/TRIMS/N/1/COL/2 for a period of two years as
of 1 January 2002.
I. INTRODUCTION
1. The absorption policy covering the entire agricultural and fisheries sector was implemented in
Colombia with a view to promoting the creation of modern market relations able to respond to
international competition and structured around the needs of intermediate and final consumers as wellas supply and demand factors.  Against a backdrop of structural weaknesses in the agricultural sector,
this policy endeavoured to cushion the effects of the change in the economic model, which were
exacerbated by distortions in world agricultural trade stemming from the production and export
subsidies of developed countries.
2. Upon its accession to the World Trade Organization, Colombia notified the absorption policy
as a trade-related investment measure on the un derstanding that the provisions of the TRIMS
Agreement allowed the initial transition period generally granted to developing countries to beextended.
3. Despite the fact that, from 1995 to 2000, Colombia adopted major strategies in the
agricultural sector, the particular difficulties presented by this activity and the flare-up of the armed
conflict meant that the policy could not be ended.  Furthermore, the conditions which led to it being
adopted still exist.  As a result, and in the context of the complex process which defined theparameters for extending initial transition periods, Colombia, fully aware of the importance of
reaching a solution in this matter, made great efforts to support the consensus and define a reasonable
phase-out programme.
4. For this very reason, it is essential that the extension of the transition period granted by way
of the Council for Trade in Goods' Deci sion of 31 July 2001 (G/L/461) be renewed.
5. Colombia trusts that conditions both at home and abroad and, in particular, the commitment
to launch a Development Round in Doha in November will create an atmosphere conducive to
replacing the absorption policy.G/C/W/296
Page 2
II. PARTICULAR DIFFICULTIES FACED BY COLOMBIA IN IMPLEMENTING THE
PROVISIONS OF THE TRIMS AGREEMENT
6. As stated in the original request (G/C/W/169), the difficulties faced by Colombian
agriculture, which prevent the TRIM from being eliminated without further delay, consist of structural
weaknesses in the domestic marketing of agricultural goods and the adverse effects on the agriculturalsector of the structural adjustment resulting from the change in the economic model from 1991
onwards.  Likewise, facilitating the structural changes needed to provide substitutes for illegal crops
and settle the internal armed conflict requires the absorption policy to remain in force.
1. Structural flaws in domestic marketing
7. The marketing of a number of agricultural products in Colombia is characterized by
fragmented and dispersed sources of supply, oligopsonies on the demand side and deficiencies in the
means of financing and storage for the purchase of domestic crops which put domestic production at acompetitive disadvantage in relation to imports.
8. The negative effects of these conditions on the agricultural sector were accentuated by the
macroeconomic environment in Colombia in the 1990s, which was not particularly conducive to
production, given the appreciation of the national currency and sharp upward spiral of domestic
prices, all of which resulted in relatively low prices for domestic producers.
2. Adverse effects resulting from th e change in the economic model
9. The change in the economic model resulted in a process of resource reallocation which
triggered changes in foreign trade and production structures and had adverse effects on employment
and poverty, as outlined hereunder.
(i) Changes in foreign trade structures
10. The 1990s saw the displacement of domestically produced agricultural goods from the
domestic market by the ever-increasing volume of imports at distorted prices, designed to respond to
the growth of domestic demand and exports.
11. The agricultural goods hardest hit were those from seasonal crops and raw materials which
proved poorly competitive in an international market highly distorted by subsidies.
(ii) Changes in production structures
12. Consequently, there has been a marked stagnation in the value of agricultural production and
a fall in its contribution to GDP.  Agro-industrial production has, however, continued to show growth
rates similar to those of the economy as a whole.
13. The period 1990 to 1997 saw agricultural land shrink by 782,000 hectares and a large
percentage being turned over to cattle raising.
(iii) Rise in rural unemployment levels
14. While the rural population has swelled by almost 1,200,000, only 45,600 net jobs have been
created in the agricultural sector since 1990 and many of those working in agriculture have moved
into non-agricultural rural activities and to urban centres, giving rise to difficulties in absorbing
unskilled migrant workers.  In addition, uneven patterns of employment within the country between
activities in expansion and those in recession have led to pockets of regional unemployment andinternal migration.G/C/W/296
Page 3
(iv) Rise in poverty levels
15. A survey by the National Planning Department1 shows that, from 1992 to 1995, the number of
poor people in rural areas increased by 600,000, widening the poverty gap, decreasing the Gini
coefficient and diminishing purchasing power.  In 1988, 62 per cent of the rural population lived in
poverty, while by 1995 this figure had risen to 68 per cent.
3. The need to facilitate the structural changes required if the internal armed conflict is to
be settled and illegal crops substituted
16. The last few years have seen a resurgence of the armed conflict in Colombia, owing to the
fact that guerrilla fighters have increased their presence in more than 600,000 of the country's
municipalities, most of which are predominantly farming communities, agricultural frontier zones and
regions of agri-business development.
17. This escalation of the conflict has had particularly adverse effects on agricultural production,
not only on the area of cultivation and harvest volume, but also on the marketing of domestic
agricultural products by generating additional security and protection expenses that have pushed up
the cost of the production and marketing of agricultural produce.
18. As part of this process, over a million people from the most deprived social groups have had
to move to urban centres, bringing the burden of their economic, social and cultural displacement.Those most affected are juveniles and women, who make up 75 per cent of those displaced.
19. With regard to the eradication of illegal crops and as part of the strategy of joint
responsibility, Colombia has entered into a comm itment the cost of which, in economic and social
terms and in human lives, has been enormous.  In this context, the country has made great efforts to
redirect the people involved in this activity towards substitute production activities.
20. The eradication of illegal crops also very often involves having to relocate people to areas
close to centres of distribution and consumption, helping to preserve the environment and avoid the
devastating effects of extending the agricultural frontier.
21. Insofar as the internal conflict besetting Colombia, like the production of illegal crops, is
mainly concentrated in the countryside, solutions lie in the introduction of production and marketingmethods which guarantee the economic viability of substitute agricultural activities.
III. MEASURES ADOPTED BY COLOMBIA TO ELIMINATE THE TRIM
22. Given that the macroeconomic setting in force in the 1990s was unfavourable to production,
the Colombian Government set itself the task of balancing public finances in order to create an
economic environment which would stimulate an upturn  in productive activity, in particular in the
agricultural and fisheries sectors.  As a result, the Colombian economy nowadays boasts controlled
inflation and a balanced exchange rate.
23. As far as agricultural policy is concerned, the Colombian Government has promoted the
strategy of developing production chains at national and regional level.  This is the background to the
Agricultural Supply Programme (PROAGRO)
2 which incorporates agricultural policy instruments and
focuses them on developing promising production chains with a view to sparking off a recovery in
sectoral production.
                                                     
1 National Planning Department, Poverty, Bulletin No. 16, 1998.
2 CONPES document No. 3076/2000 of 30 May 2000.G/C/W/296
Page 4
24. Working on the basis of a process of coordination and dialogue between the public and
private sectors involved in each chain, PROAGRO aims to boost agricultural production levels,
improve the competitiveness of chains which are in a position to win new markets either at home or
abroad, and dramatically improve sector performance.
25. The absorption policy is a State instrument providing guidance on the development of this
programme which has not in any way hindered the nor mal flow of imports, the latter continuing to
mirror the level of economic activity.
26. Production chains with which PROAGRO has made considerable headway include the
following:
1. Yellow Maize - Sorghum - Manioc - Soya Beans - Poultry Farming - Pig Breeding;
2. Cotton - Textiles and Clothing;
3. Fruit and Vegetables;
4. Milk and Dairy Products;
5. Potatoes;
6. Timber, Pulp, Paper and Board, Veneers, Plywood, Furniture;
7. Cocoa - Chocolate;
8. Oil-seeds and Oleaginous Fruits - Oils and Fats;  and
9. Cultured Shrimps.
27. Once the key problems are identified and commitments made to solve them, sectoral
competitiveness agreements will be undertaken with other production chains. The bovine meat,
fisheries and aquaculture chains are entering into commitments with a view to joining the Programme.Other products which could also become part of PROAGRO if they guarantee their market in
competitive conditions within the framework of co mpetitiveness agreements are rice, beans, tobacco
and brown sugar (panela).
28. The implementation of PROAGRO, which, as far as most production chai ns are concerned, is
closely tied to the absorption policy, has initiate d a new culture of negotiation between the growers,
processors and consumers of raw materials and agricultural goods which has given rise to alliances,
agreements and other forms of private cooperation.  Supply and demand have been brought together
in the home markets, encouraging a shift towards more developed forms of transaction, such as
negotiations through the National Agricultural Exchange, forward purchasing contracts, crop
financing and seed associations between industrialists and farmers.
29. Since these are ongoing cultural processes, they still need to be closely monitored and
supported by the Government, by way of the absorption policy, in order to bring about a balance inthe bargaining power of farmers and agro-industrialists and create communication channels that will
help to establish and consolidate modern market relations.
30. Although Colombian agriculture is beginning to show clear signs of recovery in cultivated
areas, production, employment and, above all, producers' renewed confidence and belief in the
possibility of reinvesting in agricultural land, the areas which have lain fallow for the last decade havestill not fully recovered, neither have the jobs displaced away from the agricultural sector been
recreated.  Likewise, although the productivity levels and competitivity of the chains linked to
PROAGRO are improving, their objectives have had to be adjusted.
31. Despite the fact that in the year 2000 the agricultural sector grew by 5.2 per cent and achieved
a share of total GDP of over 14 per cent, making it one of the sectors with the greatest influence ondomestic growth (2.8 per cent), the performance of the sector as a whole has suffered a downturn in
recent months, basically attributable to the coffee crisis.G/C/W/296
Page 5
32. Agriculture declined 0.34 per cent overall in the second quarter of 2001, which can basically
be explained by the 12.7 per cent fall in the value of coffee production.
33. Particular emphasis should be laid on the fact that it is of the utmost importance to Colombia
for the Development Round to rectify the imbala nce resulting from the Uruguay Round which, in
practice, has meant that advanced countries are at an advantage as regards ensuring that their domesticsupport and export subsidies, all of which distort international trade in agricultural goods, see as little
reduction as possible.  For this reason, in the absence of such distortive elements, developing
countries would not, in all likelihood, need to reso rt to mechanisms other than those linked to the
creation of competitive advantages to promote their domestic production.
IV. PHASE-OUT PROGRAMME
34. As stated in notification G/TRIMS/N/1/COL/2, the absorption policy covers all agricultural
and fisheries sector products.
35. The proposed, and moreover very reasonable, phase-out programme includes action to be
taken in the immediate term as policy coverage is considerably reduced.  The programme has three
stages, referred to by their implementation dates - 31/12/01, 31/12/02 and 31/12/03, during which the
Colombian Government will adopt measures designed to eliminate the absorption policy.
36. In the first stage, scheduled for completion by 31 December 2001, the measure will cease to
apply to certain products (listed hereunder) and the potential coverage of the absorption policy will be
restricted to the products listed for stages two and three.
37. In the second and third stages, scheduled for completion by 31 December 2002 and 2003
respectively, the measure will also cease to apply to those products (listed hereunder).G/C/W/296
Page 6
TRADE-RELATED INVESTMENT MEASURE PHASE-OUT PROGRAMME
FOR THE AGRICULTURAL SECTOR
Colombia undertakes not to apply the absorption policy to the unrelated
agricultural, livestock and fisheries products listed in this Annex
PRODUCTS WHICH CEASE TO BE COVERED BY THE ABSORPTION POLICY AS OF 31 DECEMBER 2001
NANDINA DESCRIPTION
0207320000 MEAT AND EDIBLE OFFAL OF DUCKS, GEESE AND GUINEA FOWLS, NOT CUT IN PIECES
0207330000 MEAT AND EDIBLE OFFAL OF DUCKS, GEESE AND GUINEA FOWLS, NOT CUT IN PIECES,
FRESH OR CHILLED
1502001100 RAW TALLOW AND OTHER RAW FATS, DENATURED
1502001900 OTHER RAW TALLOW AND FATS
1502009000 OTHER FATS OF BOVINE ANIMALS OR GOATS, RAW
1503000000 LARD STEARIN, LARD OIL, OLEOSTEARIN, OLEO-OIL AND TALLOW OIL, NOT EMULSIFIED
OR MIXED OR OTHERWISE PREPARED
1506000020 NEAT'S-FOOT OIL, WHETHER OR NOT REFINED, BUT NOT CHEMICALLY MODIFIED
1506009000 OTHER ANIMAL FATS AND OILS AND THEIR FRACTIONS, WHETHER OR NOT REFINED, BUT
NOT CHEMICALLY MODIFIED
1512110000 CRUDE SUNFLOWER-SEED OR SAFFLOWER OIL AND FRACTIONS THEREOF
1512190000 REFINED SUNFLOWER-SEED OR SAFFLOWER OIL AND FRACTIONS THEREOF, NOT
CHEMICALLY MODIFIED
1512210000 CRUDE COTTON-SEED OIL AND ITS FRACTIONS, WHETHER OR NOT GOSSYPOL HAS BEEN
REMOVED
1512290000 OTHER COTTON-SEED OIL AND ITS FRACTIONS, NOT CHEMICALLY MODIFIED
1513110000 CRUDE COCONUT OIL AND ITS FRACTIONS
1513190000 OTHER COCONUT OIL AND ITS FRACTIONS, NOT CHEMICALLY MODIFIED
1514100000 CRUDE RAPE, COLZA OR MUSTARD OIL AND FRACTIONS THEREOF
1514900000 OTHER RAPE, COLZA OR MUSTARD OIL, NOT CHEMICALLY MODIFIED
1515210000 CRUDE MAIZE (CORN) OIL AND ITS FRACTIONS, NOT CHEMICALLY MODIFIED
1515290000 MAIZE (CORN) OIL AND ITS FRACTIONS, REFINED, BUT NOT CHEMICALLY MODIFIED
1515500000 SESAME OIL AND ITS FRACTIONS
PRODUCTS WHICH CEASE TO BE COVERED BY THE ABSORPTION POLICY AS OF 31 DECEMBER 2002
1507100000 CRUDE SOYA-BEAN OIL, WHETHER OR NOT DEGUMMED
1507900010 OTHER (WITH ADDED DENATURING SUBSTANCES IN A PROPORTION OF NOT MORE THAN
1 PER CENT)
1507900090 OTHER
1511100000 CRUDE PALM OIL AND ITS FRACTIONS
1511900000 OTHER REFINED PALM OIL AND ITS FRACTIONS, NOT CHEMICALLY MODIFIED
1513211000 CRUDE PALM KERNEL OIL AND ITS FRACTIONS
1513291000 OTHER PALM KERNEL OIL
1515900000 OTHER VEGETABLE FATS AND OILS, WHETHER OR NOT REFINED, BUT NOT CHEMICALLY
MODIFIED
1516100000 ANIMAL FATS AND OILS AND THEIR FRACTIONS, PARTLY OR WHOLLY HYDROGENATED
1516200000 VEGETABLE FATS AND OILS AND THEIR FRACTIONS, PARTLY OR WHOLLY
HYDROGENATED
2309100000 DOG OR CAT FOOD, PUT UP FOR RETAIL SALE
3823110000 STEARIC ACID
3823120000 OLEIC ACIDG/C/W/296
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PRODUCTS WHICH CEASE TO BE COVERED BY THE ABSORPTION POLICY AS OF 31 DECEMBER 2003
NANDINA DESCRIPTION
0207110000 MEAT AND EDIBLE OFFAL OF FOWLS OF THE SPECIES GALLUS DOMESTICUS , NOT CUT IN
PIECES, FRESH OR CHILLED
0207120000 MEAT AND EDIBLE OFFAL OF FOWLS OF THE SPECIES GALLUS DOMESTICUS , NOT CUT IN
PIECES, FROZEN
0207240000 MEAT AND EDIBLE OFFAL OF TURKEYS, NOT CUT IN PIECES, FRESH OR CHILLED
0207250000 MEAT AND EDIBLE OFFAL OF TURKEYS, NOT CUT IN PIECES, FROZEN
0713319000 OTHER BEANS OF THE SPECIES VIGNA MUNGO  (L.) HEPPER OR VIGNA RADIATA  (L.) WILCZEK
0713329000 OTHER SMALL RED (ADZUKI) BEANS ( PHASEOLUS  OR VIGNA ANGULARIS )
0713339000 OTHER KIDNEY BEANS, INCLUDING WHITE PEA BEANS ( PHASEOLUS VULGARIS )
0713399000 OTHER BEANS
1001109000 OTHER DURUM WHEAT
1001902010 WHEAT FOR FORRAGE
1001902090 OTHER WHEAT EXCLUDING DURUM WHEAT
1001903000 MESLIN
1003009000 OTHER BARLEY
1005901100 HARD YELLOW MAIZE (CORN)
1005901200 HARD WHITE MAIZE (CORN)
1005909010 OTHER WHITE MAIZE (CORN)
1005909090 OTHER MAIZE (CORN)
1006109000 OTHER RICE IN THE HUSK
1006200000 HUSKED (BROWN) RICE
1006300000 SEMI-MILLED OR WHOLLY MILLED RICE, WHETHER OR NOT POLISHED OR GLAZED
1006400000 BROKEN RICE
1007009000 OTHER GRAIN SORGHUM
1101000000 WHEAT OR MESLIN FLOUR
1102200000 MAIZE (CORN) FLOUR
1103110000 GROATS AND MEAL OF WHEAT
1103210000 PELLETS OF WHEAT
1107100000 MALT MADE FROM BARLEY IN GRAIN FORM WHETHER OR NOT MALTING BARLEY, NOT
ROASTED
1107200000 MALT MADE FROM BARLEY IN GRAIN FORM WHETHER OR NOT MALTING BARLEY,
ROASTED
1108110000 WHEAT STARCH
1108120000 MAIZE (CORN) STARCH
1108190000 OTHER STARCHES
1109000000 WHEAT GLUTEN, WHETHER OR NOT DRIED
1201009000 OTHER SOYA BEANS (FOR OTHER USES), WHETHER OR NOT BROKEN
1205009000 OTHER RAPE OR COLZA SEEDS, WHETHER OR NOT BROKEN
1206009000 OTHER SUNFLOWER SEEDS, WHETHER OR NOT BROKEN
1207999000 OTHER OIL-SEEDS AND OLEAGINOUS FRUITS, WHETHER OR NOT BROKEN
1208900000 OTHER FLOURS AND MEALS OF OIL-SEEDS AND OLEAGINOUS FRUITS, OTHER THAN THOSE
OF MUSTARD
2309901000 SWEETENED FORRAGE
2309902000 PRE-MIXES USED IN ANIMAL FEEDING
9093909000 OTHER PREPARATIONS OF A KIND USED IN ANIMAL FEEDING
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