Colombian import tariffs have been significantly reduced and simplified. There are four tariff levels: 5% for raw materials, and intermediate and capital goods not produced in Columbia; 10% and 15% for goods in the first category but with domestic production in Columbia; 20% for finished consumer goods; and 35% for automobiles, and other luxury items. The average tariff lies between 11% and 13.5%. The four-tariff system also acts as the common external tariff for the Andean Community, which became effective for Columbia in 1995. The value-added tax is 16%, but automobiles sales taxes range from 16% to 60%. Legislation was being planned in 1999 to reduce the sales tax to 12%.
Non-tariff barriers to trade include restrictions on poultry parts, powdered milk, wheat, and other agricultural products. Tariff rates for some of these selected basic commodities ranged up to 119% in 1999. Import and export licenses are required for most items.
Colombia maintains free trade agreements with Venezuela, Ecuador, Bolivia, and Mexico. There are also international agreements for preferential duty rates with the Caribbean Common Market and the Central American Common Market, and Colombia has requested consideration for NAFTA accession and entry into the future Free Trade Area of the Americas (FTAA). Several free trade zones are in operation.