The rapprochement of diplomatic and commercial relations seen between Australia and Latin America in recent years has been nothing short of astounding. Long distances and lack of opportunity are no longer valid or relevant excuses: The truth is that Latin America is arguably the most exciting developing region on the planet and technology has made the world a much smaller place. There are few countries that better represent this marked shift in opportunities than Colombia. The South American powerhouse has successfully cleaned up its reputation following the violent civil war that plagued the country for decades and is currently enjoying a very successful and buoyant period in its history. Over the last 15 years USD$150 billion of FDI has been committed to Colombia; indicative evidence of the realization of Colombia’s enormous potential. The country has a remarkably hardworking workforce, an improving infrastructure and an abundance of natural resources.
Surprising Figures: Much Room for Improvement
Given the fact that it is one of the most diverse countries in the world, boasting some of the most impressive wildlife and plant life in the entire world, it is not surprising that Colombia has a very strong export network. Colombian exports total at approx. USD$30 billion a year and are as wide as they are plentiful. From crude petroleum valued at a bit less than USD$8 billion to the huge cut flowers industry valued at $1.3 billion, Colombia exports a lot more than the coffee it is most famous for (not that this isn’t significant – coffee exports are valued at roughly USD$2.5 billion a year). In terms of opportunities for Australian companies to crack the market, there are some very interesting quirks that should be considered.
- ⅓ (roughly USD$10 billion) of trade goes to the United States. Given the tariffs introduced by Trump on exports from many countries, Australia should see this as an opportunity.
- Colombia, as mentioned, is a country blessed with natural resources to rival every other nation on earth. The services industry is blossoming as a new startup scene is establishing itself at a rapid rate. Colombia should, in theory, be exporting more and more… In spite of this, there is still a negative trade balance of over USD$12 billion. Australian companies, and indeed the world, should see this as a big opportunity to negotiate new trade deals.
An Australian commercial presence in Latin America is undoubtedly growing. However, in terms of pure trade, it is perhaps surprisingly low. We can learn a lot about the trajectory of this relationship by Analysing data from 2006-2016. Currently, Australia imports about $2 billion from Latin America, with roughly 27% of trade being channeled through Brazil and Argentina (roughly $520 million). Only $52 million is imported to Australia from Colombia.
Perhaps unsurprisingly, given Australia’s famous love affair with coffee, in particular, ‘the flat white’, $31 million (59%) of this trade is coffee. Australia also imports $6 million a year in cut flowers. These numbers may appear a little underwhelming, however, when we look at the figures from a decade earlier, we can see how positively and quickly the relationship is growing. In 2006, all Latin trade with Australia was valued at just $920 million and a measly $18 million with Colombia. It means that in this timeframe, total Latin trade has doubled and Colombian trade has nearly tripled.
How do I import into Australia?
As with most countries, Australia has implemented a rather complex and detailed set of restrictions and rules for the importation of goods. It is incredibly important to properly prepare all of your documents and ensure you are well clued up on the process. Below is an introduction to how to successfully import goods into Australia.
What are the restrictions on your product?
For many products, importation is a relatively simple process of registering duly packaging and registering your shipment with the Australian naval authorities. This process will include organizing the necessary lodging and storage as well as liaising with a local agent to manage the customs clearance process.
However, Australia has a large list of products that are subject to stricter scrutiny and have a wide range of variable requisites dependent on the good. From antibiotics to laser pointers, there are many objects that are either restricted or prohibited. It is necessary to clarify that there are no restrictions on your product.
Another consideration for the importation of certain goods into Australia is that certain items need to be quarantined. This includes the transportation of minerals, a good which Colombia has in excess.
Understand the taxes and tariffs
Understanding the taxation of the product you wish to import into Australia can be slightly complicated. You need to properly value your products or you may be charged, you need to get to grips with the complex GST requirements (normally 10%) and apply for the correct tariff classification.
Finally, if you are looking to take advantage of the huge natural reserves or the Colombian alcohol of preference ‘aguardiente’ you will need to pay an additional tax known as excise duty. This is a tax applied to the importation of all alcohol, tobacco or fuel based products that would be subject to taxation in Australia.
It is worth remembering that Australia provides certain concessions to some importers as a way of attempting to encourage and boost a free and fluid market and to improve relations with Australia and foreign investment. These concession schemes are a great way to trim your tax bill and make importation more accessible.
It is also worth remembering that Colombia and Australia recently engaged in a new Free Trade Agreement in the shape of the Pacific Alliance. Along with Mexico, Chile and Peru, Colombia will have access to special and highly competitive tariff rates on certain products. It is important that you verify how this new FTA will affect you.
How do I get involved?
It is obvious that the import opportunities from Latin America, especially Colombia, are rife for Australian companies. If you want to make the first steps into a trade venture from Australia into the Latin market, Biz Latin Hub is the perfect partner to assist you in your adventure. We are a one-stop shop for all the back office services that you will need to launch your operation.
Reach out to our CEO, Craig Dempsey, at [email protected] personalized support.
Have a look at this video for a bit more information on doing business in Latin America.