How Colombia Can Seize Opportunities as US Shifts Its Supply Chain Away from China

The US is looking to change its supply chain to lessen its dependency on China, and there are opportunities for Colombia to compete, according to US government advisor Juan Verde

Colombia Sees Opportunities as US Shifts Supply Chain Away from China.
September 08, 2023 | 09:40 AM

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Bogotá — The Covid-19 pandemic in 2020 revealed many of the vulnerabilities of international trade, and countries such as the United States are rearranging the location of key logistics chains for their economy in order to mitigate that risk, and Colombia is one of the countries that can benefit from that new strategy.

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However, to achieve this, it must not only make investments that allow it to take advantage of these opportunities, but also work on issues such as sustainability, an important point for investors around the world.

Juan Verde, a member of the US Presidential Advisory Council on Foreign Trade and Competitiveness, spoke to Bloomberg Línea about the points that Colombia can take advantage of, but also about the challenges it must face to be a strong actor in this discussion.

He explains that the current reality of US trade offers Colombia alternatives that it could take advantage of if it makes the right decisions.


“Colombia is at a historic crossroads because the US is in a moment of transition,” Verde says. “China-United States polarization creates an opportunity for Colombia, the US had a large dependence on China and incentives are being created for investment funds and US companies to relocate part of the supply chain in the region, and there Colombia has a free trade agrement and an approach that must be taken advantage of.”

“Colombia also has the potential to be a leader in the three sectors where the US has to diversify its economy geographically which are mining with rare earths and critical minerals, in the health sector where the US was in pandemic begging for vaccines, masks and sanitary materials, the pharmaceutical industry has much to relocate in the region and food security where Colombia can play an important role,” Verde added.

‘Good news and bad news’

“There is good news and bad news,” he said, however. “The good news is that almost 70% of the main companies in the country are working on sustainability plans, that is good because they are the largest and most competitive in the country and they are in line with the international market and know that they have to adapt to the new reality and global trend”, he said.

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However, he also explains that “the bad news is that, for the vast majority of Colombian companies, except for the larger ones, this is a pending issue: They have not understood that talking about sustainability is talking about competitiveness, that forces them to digitalize, to be more innovative and above all to read the consumer signals, market habits are changing, the rules and conditions of the multilaterals, banks and investment funds that are demanding greater responsibility with the environment”.

But, in addition, Verde assures that adapting not only implies innovating but also updating regulations and commercial practices according to the new international requirements.

“There are Colombian companies that export and must understand that they must adapt to the regulatory frameworks of Europe and the United States, where companies are being required to be more sustainable; it is an economic issue, it is ethical and moral, but above all economic and competitiveness,” he says.

He says that a good way to adapt to this new global order is related to the energy transition, but emphasizes that this transition must be orderly to avoid a major shock within the economy.


“The energy transition cannot happen overnight. Economic, financial and fiscal incentives have to be created to make it efficient and easy and as fast as possible. Colombia has enormous potential in this area and despite this, part of its export matrix continues to be closely linked to fossil fuels”.

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Verde also highlights the role of banking in this process: “What is happening worldwide is that banking is playing a dynamic, catalyzing and transforming role in the sustainable economy. In part, because private banks have realized that there is a lot of money there, there is a way to make money, and also to help companies to be sustainable, the consumption habits of customers are changing, market preferences, and demands are also changing”.

Despite the awareness of sustainability issues, he assures that the challenge in Colombia is to make smaller companies also incorporate such practices into their businesses.


“Now the challenge for Colombia is that private SMEs that are not in international markets can enter because today they do not have that incentive. That is the opportunity, everything is still to be done, and there the government can play a very important role, the regulatory framework and the incentives it can generate will be very important, but Colombian companies have always been characterized by being dynamic and willing to reinvent themselves, this is an unstoppable trend and if they want to participate in the global market they have to adapt to these changes,” says Verde.

He also warns that legal certainty is important to attract capital interested in developing clean energy and other sustainable technologies; “it is a major barrier that the rules of the game are constantly changing, there must be stable rules and a stable regulatory framework because there is nothing more useful for energy and economic transition than a stable regulation and that is what European countries have done. Colombia has been characterized for not having it and that is a pending issue”, according to Verde.

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