The competitiveness of Colombian exports has increased while internally fewer imported goods are being consumed.
Between September 2014 and March 2015 alone the Colombian peso devalued by 32% against the dollar, directly impacting on the competitiveness of exports, which had been affected by the fall in commodity prices and lower demand from the United States, China and Europe.
Presidents Varela and Santos have instructed their Ministers of Finance to find points of convergence in light of the impasse reached between the two countries, after Colombia included Panama in its list of tax havens.
From a statement issued by the Ministry of Finance of Panama:
The Minister of Economy and Finance of Panama, Dulcidio De La Guardia, and Colombia's finance minister, Mauricio Cardenas, met today in Washington at the annual Board of Governors of the International Monetary Fund and the World Bank and will be looking for a solution to the problem before the end of this year.
Following the decision by the Colombian authorities, the costs of financial and tax transactions between the two countries will increase.
The absence of Panama's signing of an agreement to exchange tax information with Colombia has led authorities of that country to include Panama in the list of uncooperative countries. The main objective of Colombia "... is to close the doors for people hiding money in other countries."
The meeting of the Presidents Santos and Varela made it clear that there will be no immediate solution to the problem of the tariffs Colombia is imposing on imports of footwear and textiles from the Colon Free Zone.
Companies operating in the Free Zone of Colon have seen their sales to Colombia decrease dramatically since the government of that country imposed a protective tariff on all imports of footwear and textiles from countries with which the country does not have a free trade agreement in place. The measure already has been implemented now for nearly two years, removing competitiveness of exports by traders from the CFZ.
An announcement has been made that in October procedures and studies will be started in order for work to begin a year later.
The meeting attended by the presidents of Colombia and Panama, Juan Manuel Santos and Juan Carlos Varela, respectively, confirmed the revival of the project for energy interconnection between the two countries, whose construction could begin in 2016 for completion in 2018.
The Andean country has officially eased taxes on shoes and textiles imported from the Colon Free Zone.
On February 28, the Colombian president, Juan Manuel Santos, made official the amendment to the tariff on footwear and textiles from the Colon Free Zone (CFZ). Modifications to protectionist tax will take effect 30 days after the official announcement.
Colombia, Peru, Chile and Mexico approved the inclusion of Costa Rica to the Partnership Framework Agreement, the first step towards total integration into the block.
From a press release issued by the Presidency of Costa Rica:
Under the VIII Summit of Heads of State of the Pacific Alliance, the President of the Republic, Laura Chinchilla Miranda, along with her counterparts in Colombia, Juan Manuel Santos Calderón, Chile, Sebastián Piñera Echenique, Mexico, Enrique Peña Nieto and Peru, Ollanta Humala Tasso signed a Declaration on the Accession of Costa Rica to the Pacific Alliance.
The group of countries that Costa Rica, Panama and others in the region want to join, will next week sign in the immediate elimination of tariffs on 92% of trade goods.
The protocol on tax relief for 92% of goods traded between the countries of the Pacific Alliance will be signed next week at a summit to be held at Cartagena de Indias, confirmed the Colombian president, Juan Manuel Santos.
In 2013 the Colon Free Zone traded $2.7 billion less than in the previous year.
During the past year the commercial movement in the Colon Free Zone (CFZ) closed at $27.9 billion, whereas in 2012 it recorded $30.8 billion, equivalent to a reduction of 9.4%.
According to the Superintendency of Banks of Panama (SBP), the decrease is due to the situation occurring with the two main trading partners of the businesses in the CFZ, Colombia and Venezuela.
The imposition of tariffs on imports of shoes and clothing from the Colon Free Zone has been extended until March 2016.
The Colombian government announced that it will extend, for two more years, the measure which partially amended the Customs Tariff duties on imports of apparel and footwear, a ruling which affects the activities of re-exports from the Colon Free Zone (CFZ), according to customers of the free zone area.
Authorities from both countries will meet to find a solution to the conflict caused by the tariffs imposed on textiles and footwear from the CFZ.
"... The government of that country and Colombia will meet in the next few days in order to try to reach an agreement and resolve the situation over tariffs, which has caused losses to the Colon Free Zone (CFZ) in the Central American nation" , reported Portafolio.co.
On September 20 the trade agreement will be signed in Panama City after it has been ratified by the respective legislatures.
"We have everything finalized for the signing of the treaty with Colombia on Friday September 20," said Ricardo Quijano, Panama's Minister of Commerce and Industry.
He added that Panama has negotiated a good FTA, which will increase its presence in the South American country "with Panamanian products and even with products that will go from the Colon Free Zone, which bear some elaboration and yes they will carry a Panamanian certificate of origin".
Once the trade agreement is signed between the two countries tariffs that the South American nation excises on textiles and leather from the CFZ will be removed.
The information was confirmed by President Ricardo Martinelli, after a meeting with his Colombian counterpart. The president said that the trade agreement will be signed next week.
According to Martinelli, the tariff is applied only to countries that do not have an FTA with Colombia.
President Santos said the Hague ruling is "not applicable" and has decreed a Comprehensive Contiguous Zone, where they "will exercise complete jurisdiction and control".
A statement from the presidency of Colombia reads:
Colombia presents its Comprehensive Strategy Against Hague Ruling
1. We have decided that the decision is not applicable without a treaty.
The map on the internet which offered oil concessions in geographical areas who's sovereignty is disputed has been removed.
For its part, and after an exchange of notes between both governments, Colombia has acknowledged that the concessions given so far by Nicaragua are from areas where
Nicaraguan sovereignty has not been disputed.
"I want to be very clear and emphatic on this: the concessions granted by the government of Nicaragua in July this year are concessions that are west of the 82nd meridian," said Foreign Minister Maria Angela Holguin.
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