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Colombia to renew ban on certain imports from the Colon Free Zone

by Eric Jackson, mainly from other media

The Colombian government, alleging tax evasion and money laundering, has announced that beginning on March 1 it will renew its ban on the importation of shoes and textiles that pass through the Colon Free Zone. Most of these products are from China, a competitor of Colombia's in these manufacturing sectors whose prices are substantially lower.

Bogota authorities, however, deny that it's about industrial protectionism. They say that importers, with the connivance of Free Zone merchants, have habitually falsified the paperwork for transactions in order to cheat the Colombian governement out of import duties.

To Panamanians, whose daily newspapers like to dwell on the exploits of drug traffickers and other criminal elements from Colombia, the suggestion that Panama may be helping to corrupt Colombia might seem ridiculous. It is a matter of public record, however, that transactions in the Colon Free Zone have been used to create false records for the purposes of money laundering or tax evasion at Colombia's expense.

Panama and Colombia have already had this argument, which was headed toward a trial before a World Trade Organization panel when late last year Colombia lifted the restrictions and it appeared that an out of court settlement had been reached. When that settlement was reached Panama and Colombia were preparing for the pretrial arbitration phase of the WTO litigation process.

Not only the Panamanian government and Free Zone merchants have protested the latest move, but also the Colombian-Panamanian Chamber of Commerce has registered its public objections. The ultimate target of Colombia's action, however, would be China.

Colombia's insistence that its measures are not protectionist is undercut by its limiting of restrictions to items that it produces and are endangered by cheap Asian imports.

The industry association for Colon Free Zone merchants, the Colon Free Zone Users Association, has called upon the Torrijos administration to reopen the case before the WTO. "We won't accept more excuses or arbitrary actions on the part of Colombian authorities," the group said in a press release. The Users Association added that March is traditionally the biggest month for exports from the Free Zone to Colombia, so the timing of these particular measures is particularly harmful to its member businesses.

For its part the Torrijos administration told La Prensa that an already scheduled technical meeting on customs issues between Panama's and Colombia's commerce ministers, Alejandro Ferrer and Luis Plata respectively would be an occasion for the two countries to talk about this and other bilateral trade problems.