Brazil-Colombia bilateral trade to remain consistently growing, says ApexBrasil

Nov, 21, 2022 Posted by Gabriel Malheiros

Week 202247

Brazil is Colombia’s fourth most important trading partner, behind only the United States, China, and Mexico, with a market share of 5.7% in its neighbor’s market, with enough potential to further expand sales, as indicated by Brazil’s Export and Investment Promotion Agency (ApexBrasil). Traditionally, roughly 90% of the Brazil-Colombia trade is industrialized products, mostly motor vehicles, auto parts, plastic products, steelmaking products, and organic chemicals, reveals the study.

With a population of more than 53 million inhabitants, the second largest South America, and the proud proprietor of a US$ 314 billion GDP (2021 data), Colombia is the second-largest South American country with more opportunities for Brazil to close deals with.

According to data from Brazil’s foreign trade department Secex, from January to October this year, Brazilian exports to Colombia grew 54.8%, compared to the same period in 2021 and totaled US$ 4.179 billion. Conversely, Colombian sales to Brazil reached US$ 2.072 billion (up 32.2%).

The trade flow (exports+imports) reached up to US$ 6.250 billion, up 46.5% from the first ten months of last year. With these numbers, the bilateral exchange between the two countries gave Brazil a gain of US$ 2.107 billion.

See below the track record of exports in containers from Brazil to Colombia compared to imports coming from the neighboring country between Jan 2019 and September 2022. The data is from the DataLiner data service by Datamar.

Brazil-Colombia trade | Jan 2019 – Sep 2022 | TEUs

Source: DataLiner (click here to request a demo)

According to the study, Brazilian exports to Colombia have been steadily increasing since 2016 but experienced a drop in 2020 compared to the previous year due to the impact of the Covid-19 pandemic. The plunge of 2020 was reversed in 2021, with an increase in participation and a record export value of US$ 3.347 billion.

Automobiles led Brazil’s exports to Colombia from January to October this year, totaling US$ 626 million (up 58.8%) and accounting for 15% of the total volume exported to the neighboring country. Aside from vehicles, maize (US$ 519 million), unroasted coffee (US$ 229 million), other manufacturing products (US$ 164 million), and auto parts and accessories (140 million dollars) accounted for a significant portion of shipments to Colombia.

Colombian exports to Brazil include a significant share of industrialized products, though sales are led by coal, which accounts for 31% of total exports and generates approximately US$ 637 million in revenue. In addition, Colombians earned $351 million from cokes and semi-cokes, $281 million from vinyl chloride polymers, 169 million from insecticides, rodenticides, and fungicides, and 140 million from vegetable fats and oils.

ApexBrasil’s study indicates that 62% of Colombia’s imports come from agreements, including the ACE-12 deal with Mercosur. Implemented in 2017, it establishes annual import quotas with a preference margin of 100% for passenger and cargo vehicles.

Tariff preferences for the automotive industry are subject to annual quotas of 50,000 vehicles for each country. Following the implementation of this agreement, Brazilian exports to Colombia increased at a 7.2% annual rate between 2017 and 2021.

Among the highlights, exports of automobiles, which have been growing significantly in recent years and up to the last month of October, saw an increase of 58.8%. Despite this, the ApexBrasil study warns that Brazilian exporters need to pay special attention to new regulatory proposals that may impact the automotive sector.

Brazil is competing for market space in Colombia with serious opponents, including the United States and China. According to official data for 2021, Americans are the leading exporters to Colombia, accounting for 23.6% of the local market, compared to 23.1% for China and 5.7% for Brazil.

With regard to passenger vehicles, Brazil and Mexico are practically tied, with a share of 22.4% and 22.3%, respectively, with Japan having a share of 12.1%.

In terms of corn, the second-most important item in the Brazilian export basket to Colombia, the US supplied 68.8% of the total imported this year, followed by Argentina (18.0%) and Brazil (12%).

Despite strong Chinese-American and Mexican competition, ApexBrasil identified 1,496 business opportunities for Brazilian companies in the Colombian market, in sectors in which the neighboring country made, according to 2020 data, imports close to US$ 24 billion and in which Brazil has relatively meaningful participation and sees growth prospects.

These are machines and transport equipment (imports of US$ 7.3 billion and Brazilian participation of 12.3%); chemicals and related products ($5.8 billion and 7.5% share); manufactured goods, categorized mainly by material (US$ 4.1 billion in total imports and 12.9% of Brazilian share); food products and live animals (total imports of US$ 2.9 billion and Brazilian participation of 11.6%); and others (imports of US$ 3.9 billion, with a Brazilian share of 4.9%).

Source: Comex do Brasil

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