Emergency measures adopted in Colombia related to trade, industry and investment
Updated: Apr 16, 2020
COVID-19 crisis: Emergency measures adopted in Colombia
Updated April 3rd
Decree 462 of 2020: Export restriction amidst the COVID-19 crisis
Decree 462 of 2020 was issued by President Duque under the umbrella of national emergency powers. This means that this decree has the force and effect of law, which gives ample powers to the President to navigate the crisis. The decree has two main effects. One, to restrict the export of products deemed essential to fend off the crisis. Two, to impose a prioritization hierarchy for the sale of such products in the local market. Among some of the most relevant products covered by the decree are:
alcohol, facemasks, medicine, toilet paper, paper towel, wipes, soaps, disinfectant products, protective gloves, surgery and medical attire, diagnostic medical devices such as x-rays and electrocardiographs, compressed oxygen, respirators and medical furniture.
The objective of Decree 462 is to ensure that these essential goods remain within the domestic market to guarantee that no shortage will hinder the efforts to combat the pandemic. In addition, that those goods will be procured by the institutions that need them the most, such as hospitals and mass transportation companies.
• Publication requirements and self-executing nature:
In accordance with Colombia’s transparency principle, as enshrined in article 209 of our Constitution, our Constitutional Court has stressed in profuse case law that the validity of the law begins only the day after the publication in the official gazette. The Decree will be in force for a period of 6 months beginning the day after its publication.
Decrees in Colombia are often self-executing. Often times regulation is needed to articulate the mandates of decrees and law, but the definitive mandates of the law are in effect from the day they enter into force. The export prohibition is an example of such a mandate.
• Local surplus authorization:
Decree 462 also incorporates a monthly review, to be conducted by the Ministry of Commerce, Industry and Tourism, whereby the export of certain products comprised in the list can be authorized if there is a domestic surplus. There is no specific methodology or requirement that the Ministry must follow to this end, other than review on a monthly basis. Nonetheless, it is foreseeable that the Ministry will take into consideration any comments that might aid in this determination.
• Regulation to date:
The Ministry of Commerce’s Resolution 445 of 2020 is the regulation that partially complements Decree 462. It has already been published in the official gazette and, hence, entered into force. The resolution clarifies 4 scenarios in which the export prohibitions do not apply:
1. Whenever the export arises from Colombia’s special import-export regime: this covers those companies that have been granted a special status within the “Plan Vallejo” export system.
2. Whenever the goods were already deposited for export, in a port, airport or authorized warehouse, by the date Decree 462 entered into force.
3. Whenever the goods were in transit for export by the date Decree 462 entered into force.
4. Whenever the goods for export derive from a “Consolidated Legal Situation”. Generally, a transaction that predates the entry into force of Decree 462 would be exempted from the restriction. In that case, the exporter must evince such circumstance by submitting contracts, invoices and evidence before Colombia’s Customs and Tax Authority (DIAN).
• Consolidated Legal Situation as an exception to the prohibition:
Consolidated Legal Situations (CLS) are a concept that has not been expressly legislated under Colombian Law. It is a judicial construction that is derived from article 17 of the Colombian Civil Code. CLS are antithetical to "mere expectations".
In general, it is understood that a situation has been “legally consolidated” when the legal effects of the laws and regulations in force at the time of the transaction have been fully effectuated. As opposed to “mere expectations”, which are generally understood as the simple possibility of consolidating a legal right. Therefore, “mere expectations” are nothing more than an intention or hope of obtaining a specific legal result. A rule of thumb is: if the benefits of the transaction have already accrued to the party’s capital, it is very likely that it is a consolidated legal situation. In practice, this means that contracts concluded before the decree's effective date are generally exempt from the restriction and can complete the export. Negotiations, conversations or pre-contractual promises hardly fall into the category of consolidated legal situations.
On March 17, a state of economic and social emergency was declared in Colombia to face the COVID-19 crisis. It has given way to the issuance of decrees with measures that affect the trade sector. The most important are summarized as follows:
Measures related to cargo and transit.
• Border closure: including maritime, land and river crossings with Panama, Ecuador, Peru, Brazil and Venezuela from March 17 to May 20, but excluding air traffic, cargo transportation and force majeure transportation.
• Authorization for teleworking for Free Trade Zones: allows employees of free zones and qualified or authorized users to perform their work outside of the area declared as an FTZ without losing tax benefits.
• Authorization for the uninterrupted national cargo transportation services: despite quarantine measures, departmental and municipal governments were prohibited from taking measures that restrict cargo transportation .
• Adoption of immigration and transportation control protocols by agencies: The protocols establish control processes in seaports, rivers and land, for entry and exit of foreign crew member of vehicles and cargo ships to the country, in order to facilitate the exchange of goods at the borders.
• Suspension of international disembarking at Colombian airports: it is prohibited for 14 days, but it excludes the technical and managerial personnel of air cargo companies.
• Suspension of domestic flights: until April 13 of 2020 all domestic flights are suspended, save those for air cargo and force majeure.
• Adoption of protocols on air transportation: Aerocivil adopted protocols for the crew of air cargo companies to prevent the spread of the COVID-19.
• National quarantine: all Colombians are mandated to isolate until April 13th with the exception of those involved in specific activities such as healthcare, food supply chain services, banking, utilities, among others.
Trade facilitation measures .
• Extension for the renewal of business registrations: the renewal of business registration and other RUES registrations can be submitted until July 3, 2020, the single registry for bidders (RUP) for government procurement participation by national or foreign persons can be renewed Until July 5th.
• Extension of the term of UAP (Usuario Aduanero Permanente) and ALTEX (Usuario Altamente Exportador) insofar as the emergency persists: subject to renewal of the general surety if it expires before May 31st 2020. Companies that have expired bonds have 5 days to post them. It eliminates the obligation to post bond for the entry of inputs needed to address the COVID-19 crisis.
• Extension of transitory FTZ status: authorizes the Ministry of Commerce, Industry and Tourism extend the temporary Free Trade Zone status for up to 12 months.
• Extension to update membership in the Special Tax Regime: NGOs, or in general entities that qualify for the Special Tax Regime, are allowed to update their status until June 30, 2020.
• Instating the permanent roundtable for Trade Facilitation: in order to monitor trade flows during the crisis and ensure interagency coordination (airports and ports). Three roundtables have been held, one for airports and two for ports.
• Automatic Evaluation in VUCE : with previous clearance of INVIMA and ICA, the risk committee decided to allow automatic approval.
• Prioritizing customs processing of perishable goods, raw inputs, medicines and medical equipment: DIAN’s offices should prioritize documentary inspection over physical inspection. In addition, they must prioritize entry procedures of basic need items, perishable products and medicines.
• Preventive actions to avoid people crowding the facilities of DIAN Directorates, while guaranteeing the continuity of foreign trade operations throughout the country.
• Suspension of terms for customs and tax procedures, including warehouse storage, among other procedures before DIAN.
• Extension of the terms to present the annual report by International Trade Companies.
• Suspension of terms for users: to respond to MinCIT’s requirements on Special Import-Export Systems, International Trade Companies and the Transformation and Assembly Regime, as well as the timely delivery of documents (between March and May), as in the case of evidence studies.
• Suspension of the procedural terms in the proceedings of trade defense measures investigations currently carried out in the Subdirectorate of Commercial Practices of the Foreign Trade Directorate, from March 19 to April 30, 2020. After the suspension expires, the Directorate will decide on the continuity or not of the measure.
• Reagent import facilitation: the first was carried out by the University of los Andes, preserving the cold chain throughout and another taking advantage of the diplomatic pouch from Turkey. The customs clearance process of 26,000 reagents was facilitated in record time with support from INS, Invima, DIAN and the airport.
• Prioritizing essential electronic commerce: e-commerce delivery service providers are required to prioritize shipments of essential products, food, medicine, medical products in general, cleaning and those that allow access to telecommunications, such as televisions, tablets, etc.
• Flexibility in permits for the production and marketing of medical products to deal with the COVID-19 crisis: the Ministry of Health will make more flexible all requirements for sanitary registration, evaluation, notification, marketing, distribution, dispensing, delivery, storage and transportation of medicines for phytotherapeutic products, medical devices, biomedical equipment, in vitro diagnostics, cosmetics and household hygiene products and personal hygiene absorbents. INVIMA will prioritize and facilitate procedures related to medicines for virus and the apostille and official translation requirements are exempted in these procedures.
• Creation of the logistics and transportation center: the center has the participation of the Ministry of Commerce and the agencies involved in the transportation of passengers and cargo. It is in charge of implementing measures to prevent the spread of the virus and guaranteeing the transportation of cargo to address the emergency. The payment of highway tolls and fees for the use of airport infrastructure are suspended, and the use of private ports to supply and import essential goods is authorized.
Measures to avoid shortages.
•Import tariff and VAT 0% on medical supplies, capital goods and others basic products necessary to fend off the crisis for up to 6 months .
• VAT exemption on the purchase of medical devices during the term of the economic and social emergency.
• Restrictions on the export of basic health products: irrespective of their origin, a list of 34 health products cannot be exported and must be sold prioritizing healthcare providers and government entities. Among the products comprised note: alcohol, facemasks, medicine, toilet paper, paper towel, wipes, soaps, disinfectant products, protective gloves, surgery and medical attire, diagnostic medical devices such as xrays and electrocardiographs, compressed oxygen, respirators and medical furniture.
• 0% tariff for a series of products related to the crisis for a period of 6 months including chemical reagents, tests and respiratory therapy equipment, other medicines, cleaning and hygiene products, and supplies or equipment associated with water purification.
• Productive reconversion of plants that have supplies for disinfectants and antibacterial gel. At least 2 companies with this potential have been identified, which are submitting the request for authorization by INVIMA.