Columbia Government Intends To Increase Tariffs On Imported Garments

The Columbia government issued the executive order No. 1419th in August 6th (2019). It announced that it would increase tariffs on garment products from customs duties No. sixty-first and 62 in November 3rd this year, and impose a 37.9% duty on the declared price (FOB) of clothing products per kilogram equal to or less than 20 US dollars. The price of products at that price is 10%, plus the duty of 3 dollars.

At present, 15% of the tariffs on garments are made by Komo. Another 40% duty is imposed on the imported declared price (FOB) per garment, which is equal to or less than 10 dollars per kilogram, according to the administrative order No. 1786 of 2017 (valid until November 2, 2019).

This tariff measure requires the executive branch to implement it after the adoption of the Congress. However, some public associations and even the Ministry of finance have different opinions on this. Therefore, whether the executive order can be implemented on schedule is variable.

Costa Rica Garment Manufacturers Association (Cccya) said that Costa Rica garment industry is facing the threat of illegal pipeline smuggling into China and Africa's cheap clothing products. It believes that the executive order should take effect immediately to protect the garment industry with a population of 600 thousand people.

The National Association of entrepreneurs (ANDI) and the national Exporters Association (Analdex) all considered that the act was unconstitutional. The Minister of finance Alberto Carrasquilla also agreed with the views of the 2 associations that the duty of the Customs Department was not the legislative power but the executive power, which should be implemented by the executive authorities without the passage of Parliament.

Before the order was released, Jos Manuel Restrepo, Minister of Commerce and tourism of the Republic of Costa Rica, also held reservations about the tax increase. After the increase in taxes, the price of domestic clothing will increase by 25%, affecting nearly 50 million people in the country.

The Fenalco also opposed the measures to increase the tariffs on garments. It believed that this would help to promote the import and export of cheap Chinese made garments, which is rather serious at present. In any case, the increased tax smugglers still need not pay any tariffs, but the price difference between smuggled goods and legitimate imports will be greater, which may contribute to the adverse effect of smuggling.