Food the most affected by the proposal of more tariffs – Sectors – Economy

President Gustavo Petro’s proposal to increase tariffs in the country to protect the national industry has more detractors than defenders.

(It may interest you: More tariffs proposed by Petro would increase prices for Colombians: AmCham)

The President has said that if interest rates are not lowered, there will be more tariffs on trade.

The Bank of the Republic of Colombia has raised its reference rate to 13.25 percent, seeking to curb inflation, which reaches 12.82 percent per yearAccording to the most recent data with a cutoff of April 2023.

According to Petro, “in the face of interest rate hikes, we must respond with higher tariffs to protect the industrial and agricultural sectors, and to protect national jobs,” he said.

The proposal not only draws the attention of commerce and industry, but also of Colombians.

The president of the Colombian American Chamber of Commerce (AmCham Colombia), María Claudia Lacouture, expressed her concern about the idea and said that, if tariffs are increased for certain foreign products, prices to Colombians are excluded and, on the other hand, the countries of origin have the possibility of taking proportional measures in order to level the playing field and, in turn, impose tariffs on Colombian products that are exported to those markets.

The directive was emphatic that these taxes that are charged to products that come from abroad, that are not produced in Colombia or whose local manufacturing is insufficient and are necessary for the industry, in some cases would mean a violation of some of the 15 agreements of free trade that the country has.

“If the objective is to protect the national industry and employment, the path is to strengthen the competitiveness and productivity of the national industry. As? Facilitating access to inputs that are not produced in the country, not increasing their value with more tariffs“, said.

For Lacouture, increasing the competitiveness of the local industry must include improvements in road and port infrastructure, efficiency in customs, and “stimuli to produce here the inputs that our companies import. For example, in the case of the United States, since 70 percent of what we import is not produced in Colombia”

Impact on food

For his part, Javier Díaz, president of Analdex, explained that this does not seem to be a good idea since being a tax applied to imported products will result in higher prices for goods.

“This is how consumers are punished. President Petro says that it is to help the national producer, but we must take into account that a large part of our imports are raw materials, inputs and machinery. By taxing these products, national production will be hindered, which will hit producers and cost them much more“, he claimed.

Díaz also warned that this measure could encourage smuggling, which would decrease the profitability of national producers.

“What we can have is a situation in which consumers are punished by having to pay more for products and illegal trade would see an increase in their profitability, which would cause an increase in shipments,” added the president of Analdex. .

(More: Interest rates and tariffs: the keys to President Gustavo Petro’s address)

According to Díaz, this could affect more the producers that Petro intends to help with that increase in tariffs that it has proposed.

“This could not be done with the countries with which we have free trade agreements, This is the case of the United States, Canada or Argentina, and that is where we bring, for example, a good part of agricultural products such as corn, beans, lentils or wheat.and in those cases they cannot be increased because they have already been negotiated,” he stated.

The manager stated that “the announcement seems to give domestic producers more satisfaction when they see that domestic production begins to fall, something that did not happen two years ago.”

Díaz suggests that we will have to wait for inflation to peak and begin to decline.

In this same sense, the former Minister of Agriculture Andrés Valencia stressed that this would be a bad idea at a time when the country is already facing alarming inflation in the food sector.

In addition, added to the El Niño phenomenon that is expected, it would only increase inflationary pressures and worsen the situation.

“The annual inflation of 72 percent of the food basket, with the exception of potatoes, is still very high. Lan idea from President Petro to raise tariffs on
agricultural products will affect the pockets of the poorest and most vulnerable households. With the El Niño phenomenon in sight, the increase in tariffs will bring more inflation, ”he indicated.

The former minister also emphasized the negative impact of this measure and the increase in the cost of basic consumer products.

(Also: Dian updated the manual on tariff classification: everything you need to know)

“If we consider the foods that Colombia imports in large quantities, such as corn, soybean cake, and wheat, which are inputs for the production of other foods, the attempt to increase tariffs would only make the production chains more expensive,” Valencia explained.

In the first two months of 2023, in imports of the food and beverage group, Colombia bought 1,331 million dollars, presenting a growth of 6.3 percent.

The products with the highest growth were: prepared cereals and cereals (19.1 percent), prepared sugars from sugar and honey (75.1 percent) and beverages (35.4 percent).

On the other hand, the decreases occurred in the groups of animal feed, fixed oils and fats of vegetable origin, refined or fractionated, and fish.

In the first two months of the year, the foreign purchases of the agricultural group reached 260 million dollars, presenting a fall of 5.7 percent.

When analyzing the countries of origin, the United States is in first place, with a share of 26.1 percent and purchases worth 2,768 million dollars; It is followed by China, with 2,319 million dollars, participating with 21.9 percent of the total. In third place is the European Union, with 113.5 percent of the total.

More news

More tariffs proposed by Petro would increase prices to Colombians: AmCham

“La Dian has brought more than 62,000 defaulters to the Prosecutor’s Office”