CDG

Until some years ago, Colombia like many other Latin American countries remained isolated to the world with regard to trade. Commercial activities with other countries were limited to the export of traditional products such as coffee and bananas, and the import of heavy machinery and industry goods. Around 1990 Colombia opened its markets. At this point in time the new economic policy was not very good for the Colombian industry, since it was not prepared to compete against products from the rest of the world in its own market, and even less to compete in international markets. This process, painful as it has been, has brought as a positive effect a change of mentality in many Colombian managers, who have realized that competing internationally with its products is no longer a choice but rather a necessity and an obligation if they want to survive in the medium and long term. This change of mentality has brought about a considerable increase of Colombian exports of non-traditional products in the last ten years. It is this way that exports of this kind of products have increased from US $1.170 millions in 1985 to US $5.260 millions in 1997.

This change of mentality has unfortunately not been very widespread. A big percentage of company directors in our country still continue to think exclusively in domestic terms without wanting to explore other markets. Due to this fact Colombian export figures continue to be low in comparison with those of other countries in Latin America.

But... which are the reasons why many Colombian managers don't dare to give their product an opportunity outside Colombian borders?

There are many reasons and each company may have its own. Such problems as the lack of support to exporting companies from the government, the bureaucratic obstacles and the terrible state of the infrastructure needed to export (highways, railroads, ports, etc.) are common points that although can be real, are used for many managers to shield other problems inside the company. The truth is that in Colombia there are companies that although facing those barriers, do successfully sell their products to international markets... Why do most of the companies not belong to this group?

The following paragraphs will highlight the more obvious obstacles within the companies that prevent Colombia from being an exporter country.

In Colombia�s past commercial history, the country had a closed and protective market. During this time entrepreneurs were mainly interested in winning a place in the local or regional market, and only the more ambitious ones zoomed in on the national market. For so many years they followed this business model that, like all habits being practiced for years, was rooted into their subconscious. Now, that the market realities are different and that we have entered into a new century which integrates the different regions of the world, eliminates the borders and accelerates and simplifies the commercial activities among regions, this closed and isolated way of thinking continues to prevail in the mentality of many of our managers today. We have not realized, that the key for the survival of our companies in the medium to long term future is conquering new markets. Our very own market is being threatened by companies from other parts of the world that understood several years ago that the commercial war had already turned from being a national to becoming a global one.

As a result of Colombia having been a closed market for many years, the export procedures, the alliances with companies in other markets and the penetration of new international markets are seen as something mysterious, complex, risky and outside of its possibilities. One believes that only the big multinational companies are able to face this challenge, while it is natural and human to fear the unknown; And for many Colombian executives the topic of international trade is as unknown as their own fear to export.

3. Lack of know-how (exporting is very complicated." " We would like to export... but how can I do it"?)

Because selling to other international markets has not been standard procedures for Colombian companies during the last 50 years, it is understandable that they are lacking know-how to carry out such activities. Despite the efforts of institutions like Proexport which exist to instruct and inform on external trade topics and specifically on the subject of how to export, there are still many companies that stay with their products in their national market for lack of experience, information and export training.

4. Logistical problems. (I know how to export..... but who can help me with the handling of my products in a foreign market?)

Although one might have an open-minded attitude towards exporting, its decisiveness and the knowledge of how to export, critical points still subsist that can be problematic. How do I determine which is my best market?�. How do I find a good partner in that market?... How will the handling of my merchandise be carried out in the new market? �How do I assure the payment of my merchandise?

These are all the kinds of problems that discourage the majority of Colombian managers to explore new international markets.

The objective of this manual is to motivate and encourage Colombian managers to fight against all barriers that have impeded the development of Colombian exports and slowed down the speed of our export rate growth. The following pages will provide the industry with effective weapons and tools to triumph in the fight and gain victory that will surely allow our companies a quicker integration in international trade, thus fostering a greater level of development of our country.

Today there are many examples of Colombian companies that have succeded in international markets and have send the message to all those that have not yet decided to export,� It can be done!� In addition to that, the message this document wants to send is � Lets do it now! � �This is how we can do it��, targeting the European market and Germany as its entrance door.

The European Union, nowadays the major commercial block inthe world, has around one sixth of the total world trade volume (even excluding the communitarian commerce) which represents a bigger portion to anyone of its main associates and competitors, the United States and Japan.

The European Union (EU) is the result of a cooperation and integration process that began in 1951 among six countries (Belgium, Germany, France, Italy, Luxembourg and the Netherlands). The new export opportunities that were created by the removal of internal tariffs gave a new impulse to the economies of the member states. Trade among them increased, along with rising optimism for the market and investment growth in the Community. The consumers benefited more because they had a wider range of products at a lower price. The trade volume tripled between 1958 and 1972, and the innercommunitarian commerce had a spectacular increase since it was multiplied by nine in the same period.

After almost fifty years and four rounds of extensions (1973: Denmark, Ireland and United Kingdom; 1981: Greece; 1986: Spain and Portugal; 1995: Austria, Finland and Sweden), the EU has fifteen member states today and it gets ready for its fifth extension, this time towards Eastern Europe and to the south. These achievements that seem normal nowadays, were the result of many years of hard work, perseverance and development of a mutual trust between historical rivals. Who had thought that an united Europe could be build from the ashes of the Second World War? We could say the same after the cold war, now that the EU prepares its first round of extension towards Central and Eastern Europe.

The European Union, with its development promotion policy that is the market that gives most help to the developing world in its commercial activities, providing a � preferential " access to the communitarian Market. Until now these agreements have been in a �single direction ", since the developing countries do not grant preferential treatment to the communitarian exports.

The European Union�s mission is to organize the relationships between the member states and their citizens in coherence and solidarity. The main goals of the EU are:

�        The acceleration of the economic and social progress (the accomplishment of the inner market from 1992, the introduction of the single currency in 1999);
�        The consolidation of the European identity in the international scene (European humanitarian aid to third countries, common foreign and security policies, common positions in international organizations);
�        The establishment of an European citizenship (that complements the national citizenship without replacing it and provides European citizens with a certain number of civil and political rights);
�        The development of a society with freedom, security and justice
�        The maintenance and development of the communitarian heap

The five institutions responsible for the good operation of the European Union are: the Parliament, the Council, the Commission, the Court of Justice and the National Audit Office. These institutions are supported by different organizations: the Economic and Social Committee and the Committee of the Regions, the Defender of the citizen, the European Bank of Investments and the European Central Bank.

These institutions were created to make " a more integrated union" between the different European nations. Their responsibilities are:

2.1 The European Parliament

The European Parliament is the greatest multinational assembly of the world. It is elected by a direct universal vote and it is the democratic reflection of the political will of the people of the European Union. It represents 370 million citizens of the Union and its basic objectives are, like those of any Parliament, to approve laws and to control the executive body.

2.2 The Council of the European Union

There is nothing comparable to the European �Council of Ministers� in any other country of the world. In the Council, the member states legislate for the Union, establish their political objectives, coordinate their national policies and solve the existing differences among them and with other institutions.

2.3 The European Commission

2.4 The Court of Justice of the European Communities

The European Communities are Communities of Right, and the EU being founded on them shares this nature. The same condition of its existence is the recognition of the binding character of its norms on part of the member states, the institutions and the individuals.

2.5 The European National Audit Office

The European National Audit Office is the taxpayer�s representative body. Its task is to verify that the European Union invests their money in line with budgetary norms and for the intended purposes.

2.6 The European Bank of Investments

The financial institution of the European Union (EU) grants long-term loans, to facilitate the accomplishment of conducive investments of capital to balance the economic development and the integration of the Union.

2.7 The Economic and Social Committee

In compliance with the Treaties, the Committee carries out a consultative function before the Commission, the Council and the European Parliament. The rulings that are issued (previous consultation or by own initiative) are processed by representatives of the different sectors of the economic and social life within the European Union.

2.8 The Committee of the Regions

The Committee of the Regions is the youngest institution in the European Union (EU) and its creation reflects the will of the member states to not only respect the regional and local identities, but also to make them participate in the development and execution of the policies of the EU. For the first time in the European Union�s history, it exists the legal obligation to consult to the representatives of the local and regional authorities in various subjects that directly concern them.

2.9 The Defender of the European Citizen

The citizen of a member state is at the same time both a national and a European citizen. The European citizens have many rights, and one of these rights is to resort to the Defender of the European Citizen in cases were he or she becomes a victim of bad practices by the institutions.

The Intergovernmental Conference on Institutional Issues was summoned by the European Council of Helsinki on December 10 and 11, 1999, with its objective to prepare the European Union for the integration of new member states. This process began on March 30, 1998. At the current moment, negotiations with the twelve following candidates are under way: Bulgaria, Cyprus, Slovakia, Slovenia, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Czech Republic, Romania. The basic principle of the negotiations is the acceptance of the communitarian heaps.

4. The Euro

On January 1,1999, at 0,00 hours the Euro became the official currency with eleven member states of the European Union and a fixed conversion rate to their national currencies. The Euro bills and coins will not begin to circulate until January 1, 2002. However, the new currency can already be used by consumers, retailers, companies and public offices in forms of book money. The following chapter(s) will examine in detail this important subject.

5. The EU Market

The EU is the largest single trading body in the world. Currently, it accounts for 40 percent of world merchandise exports and imports (including intra-EU trade).

With 375 million inhabitants and a total Gross Domestic Product (GDP) of US$ 7,743 billion in 1998, the European Union belongs to the largest economies in the world. As a comparison, total GDP for the EU is some 13 percent higher than the GDP of the USA, 38 percent higher than that of Japan, but somewhat smaller than total GDP of the NAFTA area (US$ 7,863 billion). The four major markets in the EU (Germany, France, Italy and United Kingdom) together contribute about 72 percent of the GDP of the EU.

There are several factors that make market access to this atractive market difficult for exporters in developing countries.

First of all, the European market is diverse and is becoming more diverse with each new member joining the Union. Although technically speaking it is a single market, the EU market is in fact a grouping of different national and regional markets, each with its own identity and characteristics. This is often overlooked by exporters in developing countries. Different countries in the EU offer different opportunities and demand different approaches.

Secondly, the EU market is characterised by enormous competition, which forces companies to offer a higher customer value than their competitors. This means that product quality is continuously increasing, product innovation takes place faster than before, product life cycles become shorter, product prices become lower and service offered is getting better. Exporters in developing countries can no longer rely on low labour cost to be competitive. High quality, continuous product development, a sound corporate image and good service have become at least as important as the quotation of a sharp price.

Thirdly, concern for consumers� and workers� health and safety, as well as the environment have spurred the emergence of international standards, markings, labels and certificates. These are either enforced through legislation or increasingly demanded by the market itself. It means that exporters in developing countries have to comply with these regulations and market requirements

Nowadays, some 375 million people are living in the European Union. This means that the EU is three times the size of the Japanese market, around 40 percent larger than the US market and bigger than the entire NAFTA area which houses about 360 million people

Despite the unification process in Europe, the cultural differences are not likely to diminish.This means that a diversity of markets will continue to exist within the Single Market. The most important thing to acknowledge is that the demographic and cultural differences have an impact on the effectiveness of marketing techniques. The EU can not be seen and approached as a uniform market. It is a grouping of diverse markets. The specific �European consumer� does not exist.

Europe is characterised by the general phenomenon of ageing societies. This trend can be observed throughout the EU, but is more profound in the north-western EU states than in the Mediterranean states. In The Netherlands, for example, some 3 million people or 20 percent of the population, is aged 55 or above and their share in the total population will continue to grow well into the next century. These elderly people form an

interesting market segment. Not only because of their growing number but also because of their considerable spending power. One has bear in mind that these elderly people have specific demands for clothing, personal care products, health care products, health food products, convenience products and the like.

The fact that small household sizes are more common in north-western states is partly attributed to cultural differences between the Mediterranean states and the north-estern states. People from north-west European states like Denmark, Sweden, Finland, The Netherlands and Germany are often referred to as �cold blooded� persons. The Spanish, Italians, Portuguese and Greek, on the other hand, are referred to as �warm blooded� people. A relation with the differences in climate is obvious. Mediterraneans have more emotion, they have stronger family ties. They are family-oriented. This results in families living together for a longer time, while in the north-western European countries, people are more individual-oriented. One of the consequences of the phenomenon of rising numbers of small households is that, both in the case of youngsters and elderly, the demand for convenience products increases. In the case of food products, for example, pre-cooked, pre-packed, microwaveable products have become increasingly popular. The same applies to products packed in small volumes (one or two person servings).

One can truly say that the diversity between the EU members is reflected in their culture. There is a considerable diversity of cultures, not only between member states but also within national borders. Germans will immediately agree that Bavarians (southern Germany) are different from Germans living in the industrialised Ruhr area, who again are different from the �Ossies� from former East Germany. The same applies to Italy, with a marked difference between Southerners (for example Naples and Sicily) and Northerners (Milan). In Spain, Basques in the North have a fundamentally different culture from other Spaniards. In fact, the situation applies to all the member states.

Consumer behaviour

The �European consumer� does not exist. In the wealthier, northwestern parts of the EU a bigger part of the disposable income is spent on housing, luxury items, travel, recreation and medical care, the latter being also as a result of the ageing factor. Quality, although EU-wide considered as a very important factor in the buying decision, is even more important in the north-western states.

Light, healthy and �green�

In north-western Europe, a preference for, �light�, healthy and organically produced food is more pronounced than in the Meditteranean countries. Consumers in Scandinavia and western Europe increasingly adopt lifestyles which reflect a concern for physical health and the environment. Light products, in terms of lower calories, sugar and fat; healthy products; fresh products, vegetables, fruits and food supplements (herbs, sea weed etc.); and environment friendly products in the sense that both

production (reduction in chemicals, and pollution), packaging (recycling), and promotion is done in an environment friendly manner. Organically produced food products are also associated with healthy products. Although the actual market shares of organically produced food products are still relatively small, the trend for the long term is manifest.

Socially responsible

Consumers in the EU also become more critical towards social aspects related to the production of goods. Fair trade labels to indicate that goods have been produced with a fair income distribution for the actual producer, proper labour conditions and without the (ab)use of child labour, are increasingly rated as important by consumers. Again, this is

Convenience

The same applies to convenience food and convenience shopping. Pre-packed, pre-cooked, microwaveable food is more popular in north-western Europe than in the southern countries. This is partly because of the continuing trend of women increasingly participating in the workforce and the high number of single person households. In the Mediterranean countries, consumers traditionally favour daily fresh products bought at open-air markets, but the popularity of convenience food and shopping at supermarkets and hypermarkets is fast gaining ground.

Do-it-Yourself

The do-it-yourself attitude is highly developed in the EU. It is a means to use non-working hours in a way that affords pleasure, relaxation and satisfaction at the same time. As such, a considerable part of leisure time is filled with gardening activities and doing odd jobs in and around the house. Sometimes this is done as a hobby, but sometimes as a must, due to the high labour costs involved when hiring professionals.

In north-western Europe, the do-it-yourself trend leans on a drive to derive satisfaction from manual work in an increasingly service economy. Looking at screens and using the keyboard, clicking a mouse, and holding meetings gives people an itch to wield a hammer. There is a challenge to create something. The success of big do-it-yourself chains selling building materials, garden centres and knock-down furniture stores like IKEA can be attributed to the do-it-yourself attitude. IKEA and the do-it-yourself chain stores are steadily expanding into Southern Europe.

The European market is the second most important destination of Colombian products, and Germany in particular is the third most important buyer of these products, following the United States and Venezuela. The figures of Colombian exports by country and region of destination are in the following chart:

Destination of Colombian products	1997	1998	1999
Million dollars FOB
Total export/1	11,549	10,866	11,569
By commercial Group
Aladi	2,659	2,633	2,218
Andean Community of Nations	2,112	2,144	1,637
MERCOSUR	231	201	227
G-3	1,104	1,274	1,117
European Union	2,614	2,482	1,925
By Country
United Estates	4,262	4,049	5,615
Venezuela	990	1,146	916
Germany	730	684	485
Ecuador	541	582	324
Belgium	340	318	261
Peru	543	370	357
Japan	362	269	245
Mexico	114	129	202
Other countries	3,666	3,32	3,163
Source: DANE

Germany is also the fourth most important Colombian supplier with a total sales volume of US$ 492 million during 1999, after the United States, Venezuela and Japan.

Origin of Colombian Imports	1997	1998	1999
Million dollars CIF.
By commercial Group
Aladi	3,098	2,815	2,677
Andean Community of Nations	2,116	1,803	1,438
MERCOSUR	681	664	554
G-3	2,067	1,832	1,33
European Union	2,683	2,796	1,909
By Country
United States	5,071	4,364	3,831
Venezuela	1,519	1,246	868
Japan	892	925	527
Germany	725	743	492
Mexico	549	586	461
Spain	326	424	235
Brazil	477	441	420
Other countries	5,821	5,906	3,824
Source: DIAN

The commercial activity between Colombia and Germany during the last years concentrates on the exchange of Colombian primary products and German chemicals, machinery and equipment.

Trade Balance Colombia � Germany
Figures in thousands of Dollars	1996	1997	1998
Colombian Imports � CIF Of products coming from Germany	765,387,400	712,634,800	749,321,100
Colombian Exports � FOB To Germany	602,054,300	729,793,200	682,884,800

Colombian exports to the German market are mainly primary products. As we can see in the following chart, the industrial products with added value nowadays only account for a very small percentage.

Colombian exports to Germany

Although there are many reasons why many companies in Colombia do not feel stimulated and attracted by the exporting activity, there are also companies that have taken the risk of leaving their nest and conquered new markets. Among them the attractive European market. Although the Colombian exports of non-traditional products to Germany is not as big as it could be, we can see in the following chart that it has been possible for companies of our country to successfully compete in this market by offering quality products and good service. Several companies are already doing it in fields where nobody could think of a Colombian product competing in a market like the German one. Trousers, fabrics, purses, greeting cards and suitcases "Made in Colombia" are sold nowadays in this market, besides traditional products like coffee, banana and coal.

DESCRIPTION	EXPORTS 1998
Banana	27,532,085
Coffee extract	23,879,943
Cotton trousers	10,158,492
Cotton towels	5,515,474
Shoe parts	5,383,011
Livestock	4,955,444
Gelatins and its derivatives	3,182,900
Palm oil	2,995,374
Black tobacco	2,002,665
Emeralds	1,033,876
Catgut for sutures	1,002,665
Fabrics	930,249
Uchuvas (Exotic fruit)	918,198
Fresh roses	717,965
Mini-calves	695,99
Handbags	654,812
Zinc oxide	643,065
Briefcases	640,771
Mills	634,44
Crude cacao grains	485,4
Suitcases	427,464
Ornamental fish	423,225
Bed linen	412,412
Skins	402,751
Rubber molds	390,228

The information shown in this chapter represents a very important challenge for Colombian managers. There is no doubt about the fact that these export figures are not satisfactory, considering Colombia�s production potential and the potential of the German market. The exports of industrial products with added value have had a tendency to increase during the last years, and the efforts of Proexport and the Colombian government must be directed to the support and promotion of this kind of exports. In Colombia exists the production capacity, the qualified manual labor, the creativity and the potential to offer to the world a wide array of export goods that respects the Colombian process and added value.

The Germans have painfully given up their solid currency, the Deutsche Mark; the Italians the devaluated Lira, the French the colorful Franc and the Spaniards the Peseta... all this to allow the new European currency, the Euro, to take their places. The Europeans hope this new currency will be as successful and representative as the American dollar...but what is the Euro anyway?... The following paragraphs will explain the most frequently asked questions about this new currency that the European Union has adopted.

The Euro is the single currency of the European Monetary Union which was adopted by 11 member states on January 1, 1999. These countries are: Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, The Netherlands, Austria, Portugal and Finland. The name " Euro " was chosen by Government leaders of the European States during the meeting of the European Council which took place in Madrid in December of 1995.

For most Europeans, the Euro will enter their lives from January 1, 2002 at the latest, when bills and coins enter into circulation. However, the Euro is a legal currency already from January 1, 1999, date from which this new currency could be used in the financial and banking sectors.

Not all countries did in 1999. For example, Denmark and Great Britain have not yet adopted the Euro as their national currency.

Because the economy of Europe is one whole market, it works far better with a single currency. More than 70% of the EU countries� trade is done among them, that will increase with a stable single currency. The Euro will not solve the economic problems of Europe, but a stable currency will help build a stronger economy with a faster economic growth.

�        The turbulent exchange rate fluctuations between the different European countries will be gone. In general, the instability of a currency harms jobs and economic growth. The last period of instability occurred in 1995 and cost the EU a 2% reduction of its economic growth and more than 1,5 million jobs.
�        Second, the Euro will create bigger prosperity since the costs of doing business will be lower. The costs of handling several different currencies will not exist anymore between the member states.
�        Third and most importantly, the economic handling of public finances will see the reduction of interest rates, a fact which will be good for investments and for creating more jobs.

No. On this day, the Euro became the official currency of Europe, but not available yet in bills and coins.

I do not understand how the Euro can be a real currency from 1999 when it does not yet exist in form of bills and coins?

The monetary union could not begin on January 1, 1999, since many activities are not carried out in cash. For example, on stock markets and markets where state funds are bought and sold. The currency exchange is done in two steps to give banks, companies, shops and public administrators enough time to prepare to work with the Euro and to print the new bills. This is not a simple task, since more than 12 billion bills have to be printed and 70 billion coins have to be made. These bills and coins will begin to circulate as of January 1, 2002 in parallel to the old currency.

This can be made starting January 1, 1999, for transactions where cash money is not involved. Starting January 1, 2002, all transactions will finally be made in Euros.

What effects will the Economic and Monetary Union have on the competitiveness of the member states?

With the introduction of a single market and the creation of more effective markets for products and services, the Euro will increase the competitiveness of the participating economies. Among other things, it will cause a faster development of new lines of products, a more agile application of new techniques in the production process and a greater investment in human capital. Therefore, it will encourage growth in production, employment and will limit inflation.

Who will benefit and who will lose with the Economic and Monetary Union (EMU)?

The beneficiaries will be the European citizens who will enjoy the advantages of a economic stability generated in the " Euro zone " in their daily life as workers, consumers, house owners and managers. Some of the advantages will derive from growth and the increased competitiveness of the companies that take advantage of the opportunities offered by the Euro. From a global economic perspective, the Economic and Monetary Union (EMU) will reinforce the trust in the European economy. The losers could be the big and small companies that are not well prepared and on time for the change to the Euro.

What effect does the Economic and Monetary Union have on the small and medium-sized companies?

The Economic and Monetary Union (EMU) will offer the small and medium-sized companies more selection possibilities and commercial opportunities. Many of them will acquire solidity and competitiveness thanks to:

�        The disappearance of fluctuating exchange rates in most of the main markets of the European Union. In the past, these small companies did not have the same access as the big ones to the financial instruments that hedge against the exchange rate fluctuations.
�        A stronger competition in the banking sector and the decrease in interest rates will allow the small and medium-sized companies (SMC) to finance their operations at lower costs than ever before.
�        An approach to the Euro zone as a local market. The SMC�s will have the possibility to sell their products and services on a broader basis (large scale economies) to a bigger number of possible customers. In other words, the troublesome exports will become simple domestic commercial activities. In this case, it will encourage the small and medium-sized companies to incorporate innovations and new technical solutions into its company strategies, thus benefiting the entire European economy.

What effects will the Economic and Monetary Union have on the big companies?

The European companies will experience a general cost reduction mainly in the areas of treasury management and currency exchange services, as well as the elimination of the risks greatly associated by these operations. But the influence of the Euro will be much bigger, affecting employment policies, the calculation of prices, marketing and decisions regarding the location of production and distribution centers. The competition in some sectors will intensify and price transparency will become bigger. It is possible that the consumers will benefit from a decrease in prices for certain products in certain markets.

How will the exchange rates be determined between the Euro and the currencies of the states that do not participate in the Monetary Union?

The currencies that do not participate from the beginning in the Euro zone will not have fixed exchange rates.

The Euro makes the European companies become more competitive within this market due to:

� The business between customer and supplier is done in the same currency, which avoids costs of converting currencies.
� When having a common currency, it avoids fluctuating exchange rates of foreign currencies, thus creating more stable prices.

That means, that if a customer in Germany has a supplier in Colombia and another one in Spain, and both offer raw materials at the same price and conditions, the Spanish company now has an additional advantage over the Colombian supplier, which makes the Spanish offer cheaper and more attractive. The Colombian company would have to reduce its price or offer better sales conditions, if they wanted to keep this German customer.

On the other hand, the Euro makes it easier for those Colombian companies already having a business with several European countries, since it will avoid the difficult handling of different currencies. With the Euro, Colombian companies in doing business will only have to convert between the Euro and the Colombian Peso.

Relative to debts and terms of payment, contracts etc., the Euro will not affect the current conditions. The transaction figures with the previous currency should just be converted to the new currency.

For commercial handling information flow is as important as the product it self. It is becoming a big need that many products be explained, because the diversity of offers create decision making a difficult task. The exchange of experiences and knowledge, and relationships based on trust and personal treatment is becoming extremely important nowadays. It is especially important to establish and maintain new contacts. What could be a better place to carry out this task other than in fairs and exhibitions? Through direct contact with potential partners?. In Germany, due to its location in the heart of Europe, and for its tradition of immemorial times as the center of European trade, where leading fairs at world level in most fields of trade and industry are held.

� Trade fairs are the mirror of the market. They show in small scale the current situation of the hole market

� Trade fairs allow a direct comparison among products, prices and services of the exhibitors

The low sales figures of Colombian non-traditional products in Germany, and in the European market are reflected in the scarce participation of Colombian companies in the main trade fairs in Europe. When the Colombian manager dares to exhibit their products in the largest international fairs, the presence of Colombian products in these markets undoubtely will increase.

But...How do I participate? The process of participation in a German fair is simple. Nothing but good programming is required with enough time in advance for it�s planning and a big commitment from the companies directors to obtain the best results.

The activities that must be carried out to make this adventure a successful experience for the company, are the following:

A Fairs is a Marketing tool that not only serves as a distribution mittel, but also to satisfy many of the company�s� objectives. When participating in a fair the exhibitors can simultaneously apply the communication, prices and conditions, distribution and production policies of their company. A different marketing tool could hardly combine the detailed presentation of the company and its products with personal contact with the customers.

1.1 Communication / Promotion

Communication is one of the most fundamental functions of fairs and exhibitions. The instruments of the communication politics in a company are: Advertising, sales promotion, contacts and public relations, market research, corporate image, etc.

There is no other marketing tool that can be used in such individual way, and that can offer the opportunity to have such direct communication with clients, to wake up needs of information or to satisfy the already existing ones. It can clearly point out the advantages of the company and its product.

The participation in a trade fair allows companies to reach potential customers and to further positively influence previously existing clients.

The participation in a fair can contribute to a new concept of price and sales conditions policy. A very important direct information exchange is presented between sales representatives and customers, which allows the evaluation of the existing policies.

1.3 Product

When you speak directly to the visitors in a trade fair, product acceptance can be examined and therefore the company can win valuable stimulus for its product policies and assortments.

In a trade fair, the acceptance of a new product can also quickly be determined. The reaction of the visitors provides valuable information for the research and development of a new product.

During the participation in a trade fair we can acquire vital information in relation to distribution policies. What can determine if it is necessary to restructure or change the current sales group; for example to restructure the sales section, look for representatives or distributors (which could be found at the same fair), look for partners to support with transport and storage. Furthermore it can be determined if the current distribution net needs to be changed or modified.

1.5 Glance at the concurrence

The participation in a trade fair where different companies meet with a similar offer structure, allows the visitors to observe the market with extra transparency,

It is no a coincidence that Germany is known as � The country of fairs.� The major fairs of most of the industrial and service sectors are carried out in Germany, a country with long tradition as the center of European trade.

The figures of exhibitors continue to increase in the 110 fairs and exhibitions that are carried out in Germany every year. But there is something more important: the participation of companies from other countries has increased by 43% during the last years. More than one fourth of these foreign exhibitors are coming from proximately 170 countries that have their headquarters outside Europe. The numbers of visitors are also interesting: from 9 to 10 million visitors annually, and approximately 1.5 millions come from others countries outside Germany.

Unfortunately the participation of Colombian companies in these trade fairs is awfully scarce. This lack of participation makes that the world market does not have a good knowledge of the offer from the Colombian exporter.

It is especially important to acquire excellent information on the subject of German trade fairs, so one can make an idea of the possibilities that exist to present a product. The most complete and reliable information is obtained by AUMA.

The publications of AUMA offer general information on German fairs. The manual AUMA �Germany, country of fairs�, �regional Exhibitions�, and �International� available in Spanish. Upon request, AUMA send a list of fairs where you can find the trade fair of your choice in which you can exhibit your products in the most convenient way. This information can be requested to AUMA directly:

Additional Information can be obtained through the different fair organizers. They offer a wide range of informative material:

In order to accomplish the results that are expected by participating in a trade fair, the communication, price, distribution and product objectives should be previously established. The general objectives of the company defined in a medium-term frame of planning, should be considered the starting point in defining its participation abjectives, as part of the marketing strategy. Although in Trade fairs and exhibitions an entire marketing package is accepted out, we will state the different objectives that can be reached by means of partaking in a fair, classified in the different components of marketing:

3.3 Objectives in the price / sales conditions policy

3.4 Objectives of the product

3.5 Objectives of the visitors

� Orientation on the technical function and the nature of certain products or systems

Based on the analysis results of the Company�s needs and objectives to a medium and long term, and keeping in mind the fairs classification, we can now detect those fairs that could allow us to achieve our objectives. The main questions that should be answered to select a commercial fair are:

Fairs are often classified for its conceptual or thematic organization and also for the area of influence.

Universal fairs: they gather economic goods (of consumption and investment) of all type.

� Specialized fairs: These are the type of fairs that prevails in Germany nowadays. It exhibits only products related with the fairs theme.

� Specialized fairs are fairs of special interest that concentrate on one or few fields of manufactures or buyers. These can be:

� The fair- or exhibition-Congress is characterized for being accompanied by a congress

4.2 Selecting a fair

Once it is clear which is the appropriate fair for the product or service, keeping in mind the target groups (who will visit the fair), it is advised to observe the chosen trade as a visitor first, to obtain a direct impression of the event. It can be seen and perceived how exhibitors or competitors present themselves (the stand size, costs in the design/ equipment of the stand, presentation of the products), how they present their sale arguments and how the visitors behavior is influenced (massive affluence in certain days, time of permanency in the stands. This visit pays off in the sense that its costs are lower than the costs of making a wrong decision of participation or only when it�s partially correct.

In summary, the following steps should be taken in choosing the correct trade fair:

There is a big demand for German fairs; therefore, registration must be done on time. According to the period of the event, the closing of a registration can vary from

When participating for the first time in a trade fair, the costs are very difficult to forecast. Registering the exact costs for the first participation makes it possible to have a better forecast for a second participation.

Structure of costs radically varies depending on the fair, section, stands size, decoration and design, the duration of the fair, etc. However we will present the average costs structure for the participation in a trade fair in Germany, according to a study made by AUMA.

Looked at overall, the average costs per m� are around DM 1,150. (587.99 EURO), whereby there are of course, considerable deviations according to type of event, company and stand size. For example, the costs per m� according to company size vary between DM 600 (306.77 EURO) with up to nine employees and over
DM 1,800 (920.33 EURO) with over 2,500 employees. With respect to stand size, the costs range from DM 950 (485.73 EURO) for stands up to 25 m� to DM 1,400 (715.81 EURO) for stand sizes over 250 m�. The average stand size in Germany is around 40 m�.

The relevant spectrum at international consumer goods trade fairs from around from DM 600 (306.77 EURO) to DM 1,100 (562.42 EURO) and at international consumer goods exhibitions for private visitors from DM 600 (306.77 EURO) to
DM 1,900 (971.45 EURO). This top value is reached, in particular, at automobile and entertainment electronics exhibitions.

6.1 Support in the participation of fairs to foreign companies of developing countries and to countries on the road to reform.

The German government grants financial support to a collective participation of companies of developing countries, for German fairs.

The conditions that have to be meat to be given this support is the minimum of three exhibitors per stand, which should be private, small to medium size companies. This help is obtained directly by:

Proexport also offer support to companies that want to participate in international fairs. Further information on this subject must be asked in Proexport offices in Colombia.

Individual participation with its own stand offers the best opportunities for a successful presentation. But to take the first steps in the German fair scenario, there are also other forms of participation that release beginners from many of the organization activities in fairs.

� Collective Stands: Governmental institutions, associations, Chamber of Commerce, etc, organizes joint participations of several exhibitors under one roof. This kind of participation is an excellent opportunity to gather experience without incurring high financial costs and mayor time investment.

� Subcontractor: The participation as subcontractor in a stand of a linked company can be beneficial for obtaining experience in fairs.

Through its architecture, the trade fair stand should provide a positive setting for rational and motivating information.

For the conduct of the trade fair participation, a wide range of services is available, from stand constructor via freight forwarders right through to interpreters.
As a rule, the organizer provides information about them. These companies offer among other services, the design and assembly of stands, that allows the exhibiting company to delegate those tasks to people with know-how and experience.

A fair should be taken just as the initial contact of commercial relations. At this stage the follow up work should be carried out, that essentially consists of:

� Evaluation and visitors� classification: The number of people that visited the stand, the quality of visitors, and classification of the visitors in different categories, evaluations of visitor�s survey.

� Sendi n g of catalo gs and information to clients over what was exhibited in the fair.

� Setting up appointments with interested customers and journalists that were not able to attend the fair.

8.2 Trade success monitoring

As there are still numerous companies that fail to define their participation in concrete terms prior to the event, major potentials for optimal utilization of a participation in a trade fair is left unused. Unfortunately, monitoring the trade fair�s success cannot be taken for granted, while it serves the use of assessing the participation and the decision as to whether participation at the next event makes sense. Anyone who fails to define participation objectives cannot measure his success

The participation in a trade fair must be planned for a minimum of three events. Participation in just one fair will present a distorted and incomplete image of the company and will not allow to tighten the first business contacts which were established in the first participation.

If the first thing that comes to mind when speaking of Germans is beer, sausages and

cars, your knowledge on this culture is on the right track. Its no coincidence that each German annually consumes as an average 150 liters of beer, that there are approximately 1500 different kinds of sausages and that they manufacture the best cars in the world.

When we dig a little deeper about this culture, the image that foreigners have on Germans varies between fear and admiration. They are considered efficient, arrogant, dominant, organized and especially good at the production of high quality products. Their automobiles are appreciated worldwide, and one of their most valued qualities is definitively not their humor.

To have successful contact with Germans, either on business or private plans, some details of their culture, behavior and their way of thinking have to be noted. This point is extremely important, since there are many cases in the building of commercial relationships among managers from Latin America and Germany that failed despite all ingredients being there for a successful outcome. The differences in cultural approach and customs caused the entire operation to fail. The more we know and understand about our counterparts, the more consciousness we have of their necessities, fears, expectations and priorities, the greater the chances are of developing a satisfactory and durable commercial and personal relationship.

The German values have hidden aspects in the soul of its own culture. There are diverse theories that try to explain the aspects that determine the German way of being. One of the more widespread theories says that Germans are tormented by fears and doubts, and that their lives are a battle against chaos. Inside their very subconscious they have the wish of having everything under control; but not everything in real life is in order and planned. This fills them with uncertainty and fear because they know that life is full of risks and that at any moment they could loose control.

This fear is in the center of the German feeling. Other feelings such as spontaneity and sympathy are blocked. Fear, says this theory, is responsible for German tendency to regulate, control, prove, supervise, register, document and plan everything.

Generally, life in Germany is serious...along with everything else. They don't wait for anything to be given. Everything should be a result of organized, planned and well-done work.

Germans are proud of their efficiency, order, discipline, cleanliness and punctuality. These are expressions of their orderly life. There is no sentence more pleasing to the heart of a German as �alles in Ordnung" (everything in order). Everything that goes against these values is not very tolerable since it goes against their very own ideals.

This is extremely important to understand since cultural differences exist. To a Latin person to arrive at a meeting 10 minutes late or not follow the days agenda already set up or simply not to follow the content of a meeting are details without importance. For a German instead, it is a violation of their own culture and their valuable values (punctuality, order, planning, discipline), what could take him to definitively dismiss the participation of the other person.

Unlike many people form Latin culture, to whom work is a discussion topic among family members and circle of friends, who take work home to be finished at home while at the office speaking with co-workers or on the telephone about their personal life, Germans consider their lives as being made up of two perfectly separated parts: the working life and the private life. Two sides that should not be mixed. At work, Germans only speak of work topics...and not of private matters. These separate lives are so clear that there are things one is allowed to carry out in private life that would never do in labor life and vice versa. Their behavior and the attitude towards other people can also be completely different depending on the circumstances they find themselves in. The foreign manager first experiences the hard working German who precisely fits this stereotype one has of a German. Serious, frigid, efficient, concrete and direct in what he has to say. With some common sense and tact one can get to know Germans in their personal environment, and discover kind, carefree, cultured and good talkative persons.

Another unmistakable trait of the Germans is clarity and precision. If you ask a German whether he knows what time it is, the German will probably respond.... yes... I do.

Don�t get bothered by it .... they have given an exact answer to your question!

Contrary to the Latin culture, where to say something important should include a long introduction with a thousand twists and ideas (so that it sounds more appealing or smoother), the typical German doesn't do this nor supports it. They are direct to the point, what in our culture could be interpreted as indifference, lack of tact or being rude.

This characteristics also apply to meetings. Unlike some meetings among Latins, the Germans are limited to discuss specific and concrete topics that are pertinent to the meeting. It is difficult to find them discussing spontaneous or personal topics among the ones on the agenda.

"Niemand ist perfekt, aber wir arbeiten daran"... Nobody is perfect, but we are working on it. This slogan is used by one of the leading companies in the automotive industry; it depicts the concept of quality that they offer as car makers to the world market and it is the same quality that consumers expect to obtain. In general, mainly the Germans from Western Germany have enjoyed a high purchasing power in the last decade, the fact of which has allowed them to always acquire products of high quality. It has converted this country into an extremely demanding market regarding quality. Germans like appliances that work and products that fulfill their expectations. It goes against the very order of society for products to fail after a few weeks of being purchased or to not fulfill the qualities promised by the maker. It is very important for the Latin American directors to be aware of this and to keep in mind that their products will face a higher demand for high quality in Germany than in their originating markets. It is also important to know that even when consuming day-to-day products Germans do not always look for an aesthetic appearance, but for quality and comfort.

Although today�s social status quo is not defined on a cultural level, but based on economic revenues, Germans appreciate a high level of education and culture over other things. Culture, unlike in other countries, is not a secondary activity to which some spare time is dedicated. The German cultural level is high. Most Germans can

comfortably speak about �Criticism of the pure truth� by Kant as well as about the main works of Goethe, Beethoven and Handel. They also have a great knowledge of other languages. Starting from a top-level executive to a taxi driver, they can speak at least two languages. English is spoken by 90% of the population. The knowledge of French is also widely spread. Lately, Spanish is catching more and more interest as a replacement of the previously widely used Latin language.

Education, as stated before, is highly appreciated in Germany. This is owed to the fact that they built the most successful models of education; and most admired in the world is the dual model, where the student simultaneously receives the theoretical and practical knowledge.

It is important to understand this education system due to its importance in the social and cultural structure of Germany. This model of education is not involved in the crystallization of character or moral values. The objective is to prepare the student so that he or she may successfully carry out his or her work professionally when entering the labor market.

The German student begins and finishes relatively late at a mature age, in comparison with students from other countries. A German child will normally be sent to Kindergarten at the parents� discretion. At 6 years of age, this child has to enter primary school (Grundschule), which is mandatory and free of charge to all German citizens. Having finished primary school at the age of ten, they have to make their first decision concerning their future studies. Some of these students choose to attend the " Gymnasium ". The remaining 60 % choose to attend other high schools for 5 or 6 years, which have a technical profile and form their students in different trades. Afterwards, they start their careers in a company internship that normally lasts 3 years with a theoretical guidance by the " Berufschule " or technical school. At the age of 18 they are obliged to register for the military service or the civil service. Those that have chosen the Gymnasium, should at the end of their studies pass the " Abitur " which is a general state exam. The final grade of this exam is decisive whether one is accepted or not by the universities, which the student finishes between the ages of 28 and 30 years.

Leisure time

Leisure time is also very important in the lives of the Germans as an opportunity to increase their knowledge and to improve their skills. In the past it seemed that Germans lived to work. This already changed some years ago, when they discovered that there were other things with which they could supplement their life. They look for and need their spare time to travel, to engage in sports, in cultural activities etc., since in Germany there are limitless offers in sports, cultural and recreational activities. They make good use of their spare time (they have one of the shortest workdays, cut down to - 35 hours weekly) in which they use it constructively. One out of three Germans is member of a club.

The environment is a basic point that concerns and worries many Germans. In no other part of the world there is such a profound environmental consciousness as in Germany. This has transpired due to the environmental damages caused by the industrial waste during the post-war time. The river Rhine which for centuries was the source of life became the sewer of Europe. During the era called the economic miracle, the FRG (Western Germany) exported all their garbage to the GDR (Eastern Germany), where it was headed to the nearest river. What had a great impact in the consciousness of the Germans was the destruction of their very own forests. When they realized that the economic miracle had destroyed their precious forests, it caused them a real trauma. To Germans the forests have a very special meaning: They were the home of the first German towns. The Germans arose from the forests 2000 years ago and reduced the Roman Empire to ashes. The forests can even be found in the more traditional stories and myths. They are a sacred national symbol. Crisis to the forests means crisis to the German soul. Germany�s environmental policies are neither rhetoric or a trend. They are reality which all the organizations or institutions that already have or want to have a commercial relationship in this country have to obey by. This is a decisive factor for the Latin American director that could open or close the doors to the German market, and consequently to the European common market.

Today, the family in Germany is not a very strong institution. To modern couples, the possibility of spending vacation in Majorca or having a good dog matters more than having a child. One additional child could harm their professional career; increase the level of expenditures and limit their mobility, which today are high-priority values. The importance of values has been shifting over the years.

The German nature is a distant one. Germans therefore do not mingle with personal aspects. This is their culture.

Shaking hands is a prerequisite when greeting and when saying goodbye, just as it is in other countries of western culture. A strong hand squeeze even brief, is interpreted as a stronger appreciation towards the other person. On the telephone, Germans generally answer by stating their last name. As if it was a handshake in a personal meeting.

Another important aspect to the interpersonal relationship with Germans is the treatment�s formalities. The rules of courtesy for the usage of you (du) or you (Sie) are simple and follow the same structure like in the Spanish language . When initially meeting a person, the approach should be to say �Sie� (you) and to call him �Herr� or call her �Frau� followed by the last name. The usage of you (du) and of the personal pronoun should only be made upon the other person�s request or at the point where a relationship becomes a personal relationship. Depending on the age, the addressed person should be approached in a formal manner.

In a working environment, one should always use the formal treatment (you resp. Sie, e.g. Herr Stein), although it may be a relationship of several years. If a boss approaches his secretary by you �du� or by her first name, this could easily be interpreted as if between the both of them already existed a relationship that extends more than a purely working one.

It is necessary to pay special attention to titles and hierarchies. These are very respected. For someone who is a Doctor, it is necessary to use his title before the last name. The same thing applies to the title of a Professor. Having a title is an honor that should not be ignored when addressing persons by their last names. Extremely cordial and sweet phrases can be interpreted by Germans as hypocrisy. It is recommended not to be very expressive and to be prudent. Germans tend to be very reserved even after a long period of acquaintance; but when you have reached the level of �du�, you can leave all the formalities behind and you will have won a friend for a lifetime!

The majority of German companies are small to medium-sized and are family-owned. The relationship between employers and employees is a friendly one, and between company and workers it is even better than in most other countries. Both parties acknowledge the importance of working together and to cooperate in reaching their mutual aims as a group.

Punctuality at work is one of the most important demands. Most Germans leave their workplace on time. They are flexible in their working schedules, so long as the weekly working schedules are fulfilled.

In the subconscious of many Colombian executives who have no experience in exporting exist towards this challenge a negative frame of mind, not only because they fear putting their product in foreign markets, but also because of the countless procedures, papers, forms, and bureaucratic activities that are involved in an export operation. Exporting is truly not an easy task. It implies risks and it requires time, procedures, forms and bureaucratic activities... but a well planned and organized order of executions reduces the level of difficulties and does not allow this activities to become a barrier in introducing the products abroad.

At all times, exporters have to bear in mind that the markets in Europe differ, not only in size and spending power, also in specific preferences for product characteristics, in customer values (the importance of quality or image over price for example) and consumer behaviour. Also, the trade and distribution structures may differ, as well as the interpersonal customs of doing business. Therefore, a well motivated, strategic selection of target markets is important. To define the European market as a target market is not specific enough. One has to force oneself to narrow down the options in order to obtain and maintain focus. Desk research, especially through Internet, makes a first assessment and pre-selection feasible in a fast and economic way. Field research, by means of a personal visit or through a independent consultancy firm, may follow the desk research to validate the desk research findings and provide first hand specific information.

Please note that conducting market research costs money. One should not make the mistake of thinking that exporting is just about making money. Investments precede the actual making of money. Exporters, who are not prepared to invest in market research, have to conclude they are not fit for export. Market intelligence, staying tuned to market developments, is of the utmost importance in a competitive buyer�s market. Exporters, who are reluctant to spend money to stay informed, will definitely lose out to competitors, simply because they will lose touch with market demands.

Once a market assessment and pre-selection of the most promising market(s) has taken place, a company assessment needs to be carried out in order to determine whether the company is strong enough to obtain and maintain a position in the identified target market.

Opportunities and threats in the market will be compared to the strengths and weaknesses in the company. Elements to be assessed include amongst others: product characteristics, production facilities, production process, production capacity, production flexibility, quality, packaging, personnel qualifications, management systems and standards, financial capabilities, and export experience.

Strategic action needs to be based on the outcome of the market and company assessment. Opportunities and strengths need to be optimised whereas threats and weaknesses need to be turned into opportunities and strengths. By turning weaknesses into strengths, threats automatically turn into opportunities. That is because threats are identified as threats because the company can not deal with them. In other words, it has a weakness in that particular field. By turning that weakness into a strength, the threat will disappear and turn into a opportunity For example, the environmental requirements in the European market may be a threat to companies which are not aware of the requirements or reluctant to adjust packaging and /or manufacturing processes. For companies that are ISO 14001 certified (see chapter 11), it is an opportunity!

In the case strengths and opportunities dominate over weaknesses and threats, the company is ready to formulate an export strategy for the particular market and plan export activities.

Again, as is also noted in the section about market assessment, investment will in most cases be needed to prepare the company, to turn weaknesses into strengths. Exporters who are reluctant to invest in strengthening the company to meet the high demands of the EU market, are discouraged to begin export operations towards Europe. However, if one follows the three steps of market assessment, company assessment and strategic action, one adopts a systematic approach that offers a framework for well motivated decisions and a guiding light into the future.

Representatives, agents, distributors, sell to the final consumer, consortiums, joint ventures, franchising, licenses.

Once the systematic path of export planning has been followed and selection of target market and prospective trade partners has been made, direct contact has to be established. In most cases, this means sending out direct mail to agents, importing wholesalers or industrial buyers. Databases with contact details of potential trade partners can be found on the Internet, in business directories, or obtained from trade promotion organisations or embassies.

Do not underestimate the importance of correspondence. It is the presentation of your company and should be as correct, accurate and neat as possible. Documentation for both the company and the corresponding products, and if applicable technical specifications and information on quality certificates, should be sent in English and in full detail. Please also bear in mind that the immediate effect of direct mailings tends to be limited. Business people in Europe are inundated by a continuous flow of direct mail. Therefore any direct mailing campaign should be followed-up by telephone enquiries or personal visits. Besides that, the utmost care should be paid to the use of address databases. Addresses quickly become outdated.

If there is a promising response from the side of the European trade partner, a business trip to the target market can be the next step. This allows the exporter to establish direct and personal business contacts with the prospective partners. At the same time, it is possible to obtain samples of similar products (product substitutes) available in the target market, to compare price, quality, design and packaging. This is very important, as in most cases the potential exporter�s product needs to be adapted before it can be successfully launched in the market. An orientation visit to a trade fair linked to some company visits can prove to be a very effective and efficient combination.

Setting up business contacts requires considerable efforts to build bridges. Customs, habits and tradition are often problems that arise in international business contacts, even after both partners have carried out sound preliminary investigations. This is especially the case in Northwest European countries where importers are very careful in their selection of a supplier. Not only will they study the product offered carefully, they will also investigate the production facilities of the supplier. Furthermore, they are characterised by a no-nonsense approach. In some cases this may lead to a culture shock for exporters in developing countries (see chapter 5). The more so since the EU market is a buyer�s market where the buyers are in control. Often, European buyers will request product adaptation. Competition is strong, which gives the buyers an excellent negotiation position.

Besides that, trust and reliability are key words for successful relationships. In this respect, swift communication and an open and honest attitude will definitely pay off. Late replies to queries, late deliveries, shipment of poorer quality than agreed upon, or exaggeration of capacity are deadly when trying to establish lasting business relations.

The German market is remarkably demanding, with high safety and environmental standards which makes it difficult to break into the market. Before exporting to this market It is very important to know the exact demands on product quality, and attain the respective analyses and certificates. Information and support can be obtained according to your requirements in specialized organizations such as, Colciencias, Colombian center of Packing, Icontec, international Colombia Corporation and other technological Centers such as Proexport, Sena and Unions.

To adjust export prices it is vital to have solid information on the market. What are the competitors� prices?... How much is the people willing to pay for the product?. Exporting prices are also a result from a course of action of quantitative and qualitative analysis over the operations and components cost, according to the commercial term in which it is negotiated.

Costs that must be calculated with are: packing, marking, handling, transportation to boarding port or airport, port and boarding costs, international shipping, insurances and forwarding agents fees, among others. According to negotiations made with the buyer of the foreign market, the exporter assumes total or partial part of the coordination.

8. Design of the offer (prices, commercial terms and conditions, payment terms)

To successfully enter the German market it is important to understand that you are required to have innovative products of high quality and in modern styles. The quality of the product is more important to the German buyer than the price, inclusive in the case of raw materials, since German manufacturers appreciate the reputation they obtain when offering their customers a high quality product. Any offer to be established includes all important details from product description and price to payment terms as well as product quality. This information should be unmistakably clear to the seller and buyer to prevent any misunderstandings.

When providing price information and offers, it is strongly advised not to guarantee product prices over an extended period of time, but to quote the price linked to date and exchange rate. This avoids problems with fluctuating exchange rates. Also, offers should always be subject to written confirmation. It is best to quote prices, according to the Incoterms 2000, in US$ or Euro always remembering that the exchange rate between the US$ and the Euro varies. When dealing with trade partners in countries outside the Euro-zone, e.g. United Kingdom, Greece, Denmark, Sweden, a quotation in US$ or the national currency of the target country is more convenient. Exporters in Colombia should not think of the EU market as a place for quick profit. Due to high competition, price margins are narrow. It is therefore essential to quote sharp prices.

At this point it is necessary to define the terms of delivery according to commercial-Incoterm. This decision depends on many factors: The buyer�s requirements, the experience of the exporting company, the capacity of the exporter to coordinate the logistic chain and commercial uses, among others.

A quotation that says: ��.the export price is US$ 10�� is useless. One should always make quotations referring to the internationally accepted Incoterms. The Incoterms 2000 is the latest version of the delivery terms, which is revised every 10 years by the International Chamber of Commerce in Paris, France. Incoterms 2000 describes the internationally recognised delivery terms. It spells out the responsibilities of the selling and buying parties. The terms make clear at which point the risks pass and which party has to bear which particular costs.

The most widely used terms in international trade are FOB (Free on Board) and CIF (Cost, Insurance and Freight). Technically speaking, these terms can only be used for sea and inland waterway transport. Many exporters (and importers alike) are unaware of that. The terms are frequently misused for air transport. In case of conflicts, this may cause additional disputes. Terms that are actually underrated, but are more convenient to use, applicable for any mode of transportation, are FCA (Free Carrier) and CIP (Carriage, Insurance Paid to). These terms are also more transparent and practical when it comes to the point of passing of the risk. For more information, please refer to the Incoterms 2000 publication of the International Chamber of Commerce

The terms of sale (Incoterms) agreed upon between seller and buyer are stipulated in the sales contract indicating the responsibilities of both parties.

The prerequisite for a quotation by an external buyer, the exporter should submit a quote invoice - pro forma, with the objective to assist the importer with the petition of import licenses or permissions along with establishing payment resources in favor of the exporter.

In the pro forma-invoice should also include the following data: the buyers identification, its location, validity of the quotation, the quantities, unit price, total value of the order and the conditions of the negotiation.

The importer abroad authorizes the Colombian exporter the purchase of merchandise and his acceptance of the negotiated conditions. According to the Invoice the importer opens a letter of credit in the corresponding bank or at the disbursement of letters or promissory notes for the respective amount.

This is one of the most important points in an international negotiation. The choise of the right term of payment depends mainly on tne relationship and trust between the customer and the seller.

This is the most common method of payment in the EU. The bank carries out the transaction through swift electronic data system once the buyer issues the bank with an order to transfer. The process is fast and the transfer costs are relatively small. The system is based on trust, there is no guarantee to the seller. The buyer will have possession of the goods before payment has been issued. It is not recommended to accept �open account� terms in the beginning of a business relationship or in situations of political instability. Only once a business relationship is established and both parties have come to mutual understanding and trust, can payment on �open account� basis be accepted.

Also known as cash against documents. Seller supplies documents to the buyer�s bank (which include invoice, bill of lading, certificate of origin, inspection certificates). Bank will hand over documents to the buyer upon payment or against a draft, a legally binding promise to pay: bill of exchange. Although this method is theoretically safe, practical complications may occur, for example when goods have been shipped to the destination and the buyer does not accept the goods and documents.

The LC is very often used in the beginning of a business relation when the importer and exporter do not know each other very well yet. It is, next to advance payment, the best guarantee for payment. The LC, unless stated otherwise, is irrevocable and will always be paid (except in cases of fraud). The procedure is as follows: the buyer asks his bank to open credit in favour of the seller�s bank. After shipment, the seller presents export documents to his bank, which will study the documents. The seller�s bank presents documents to the buyer�s bank. The seller will receive payment in the case that the documents are in order. The buyer will receive documents upon payment or promise to pay. The costs are higher when compared to the open account or D/P method. Nevertheless, LC�s are widely used by importers in the European Union when dealing with exporters from outside Europe. Use of LC�s is governed by the Uniform Customs and Practice for documentary credits (UCP 500) as issued by the International Chamber of Commerce.

Payment takes place through a cheque which is issued in the name of a person. One has to be aware that the bank will only pay the amount if the customer�s account shows sufficient balance, unless, the cheques are guaranteed by the bank. Therefore, one should only accept guaranteed cheques that are issued by a reliable, preferably internationally recognised bank.

Payment on consignment basis is mostly used in the trade of perishable products, for example fresh fruit and vegetables.The products are sold at a predetermined price after a mutually appointed arbitrary person (General Super Intendance Company (GSC)) has controlled the quantity, quality and other aspects of the traded products at the moment of acceptance/sale. If the products do not meet the conditions as described in the contract, the contract is not valid and, depending on the conditions of the contract, prices are generally adjusted. An open account is used to make the payment after 14 � 30 days as from acceptance/sale.

The most favourable term of payment for any exporter, however, not for the importer. Therefore, in a buyer�s market like the EU, it is not very common. However, it may occur in the arena of fair trade or in the case of a long standing business relationship where the exporter can convince his trade partner of the need for the advance payment.

It is an essential document in every commercial transaction. It is a totality of the products sent abroad to the buyer, and it is frequently used by the country�s customs authorities of the importer as the basic document to determine the customs value of the merchandise on which the import rights will be applied.

In the absence of a selling contract agreement , the invoice, although not been an actual contract, is a document that in a certain way gathers the conditions decided between the parties.

Its generally accompanies the commercial invoice, providing pack information, quantity of bulk or boxes, its contents, weight and volume as well as their handling conditions and transport.

The exporter will contract the appropriate means of transportation and the transport company (According to the class of merchandise, costs and the necessities of availability), in the terms decided with the buyer.

In the event the importer requires that the origin of the goods be certified, because it is a prerequisite for its nationalization or to obtain tariff preferences in the designated country, the INCOMEX through the Regional Directions issues the Certificates of Origin for the different export products that enjoy these tariff preferences granted in the different Commercial Agreements and Preferential Schemes.

The export document or Declaration of Export, DEX is sold at Customs Administration and in some chain stores.

The export of certain products demands that the exporter be enrolled in the organization in charge of its control and/or the granting of approval. This prerequisite must be previously fulfilled for the export of some products.

The National Government sets an export quota when it considers that there are deficiencies in the internal consumption. The control of these quotas are normally made by the INCOMEX, the organization to which the exporter asks for the allocation of an amount and/or value. When an external market has quantitative restrictions and Colombian products are assigned a Quota, INCOMEX must control and monitor the fulfillment of the quota by each exporter.

Once the DEX has been presented, and provided the documents match the stipulated requirements, Customs accepts the boarding authorization requested or the definitive declaration according to the case, coming to the gauging of the merchandise and authorizing its boarding.

Export generates the obligation to reintegrate the apparent currencies. The exporter, according to exchange system will have to carry out the sale of currencies through the financial intermediaries authorized by the Bank of the Republic (commercial banks and financial organizations), within the terms briefed in the related export declaration.

If the exported product is supported by CERT, the exporter will authorize the bank its processing by INCOMEX.

This way the export procedures are concluded. Although it is true that the agility whereupon this process is carried out can be influenced by the credentials of the government officials who are in charge of the different proceedings, it is also true that good development of these operations depend to a great extent on the clarity whereupon the different forms are finished, and the order whereupon the different activities are executed.

� Be willing to invest in market research and in establishing business contacts. Sustainable export business generally does not come for free, especially not in a buyers market like the EU.

� Correspondence is important, since it is the presentation of your company. It should be in English and as correct, accurate and neat as possible.

� Communication needs to be swift. Answer any question as soon as possible. You are not the only party in the market.

� If you do not respond, your place will be taken by a competitor. Telephone, fax and e-mail are the means to communicate.

� Do not rely on e-mail alone to establish business contacts. Chances are that your e-mail will not be read at all.

� The affluence of the market does not mean that price margins are high. The strong competition conditions the price margins.You will have to quote sharp prices;

� Quote prices according to the Incoterms 2000 and in internationally recognised currencies (Euros, US$ or in the national currencies of the countries outside the Euro-zone, e.g. British Pound Sterling).

� Do not guarantee product prices over an extended period of time and quote the price linked to date and exchange rate.

� In the case of a new business relationship, insist on the use of Letter of Credit (LC).

� Regardless of how successful you are in the domestic market, the EU market is a different matter: it is a buyer�s market and will likely require that your product be adapted. Be willing to adapt and open your eyes and ears for suggestions.

� An orientation visit to a trade fair linked to some company visits can prove to be a very effective and efficient combination.

� European businessmen and business habits differ. In Northwestern Europe, businessmen tend to be direct, open and straightforward. Study the customs of the particular target market you have identified. There are series of publications about

� Consistency, punctuality, reliability and honesty are very important. Be honest and direct about delivery times, quality and production capacity.

� Ignorance of quality and regulations in the field of health, safety and the environment will inhibit market entry.

� If you are not ready to meet the EU market demands, do not make the mistake of accepting an order. You will spoil your future chances. Postpone your entry efforts and prepare yourself further until you can meet the requirements.

The Colombian Government has designed a series of internal incentives that stimulate and favor the exporting sector. They are aimed to promote and to diversify the Colombian exports.

The Certificate of Tributary Reimbursement - CERT, is a return of the totality or a portion of indirect taxes or other taxes payed by the exporter, within the process of production or commercialization of export products .

They are bonds issued to the carrier, freely negotiable which can be used for the payment of the following taxes:

The products that are to be exported dont pay the Value Aded Tax (VAT), other taxes, rates and contributions, of national , regional or local order.

The �Plan Vallejo�, is an support instrument to the Colombian exports by means of which the natural or legal people, (producers, exporters and trader) can ask for authorization to the INCOMEX to import raw materials, intermediate goods, spare parts, machineries, and equipment to be used in the production of goods to be exported. These imports are free of Previous License. They are imported under a special regime with total or partial exemption of tariffs.

According to the product to be imported, there are different modalities, such as:

- Direct operations: This policy facilitates the producers or traders to import raw materials to process goods to be exported.

- Indirect operations: It allows the temporary import of raw materials to process goods that, although are not destined directly to the foreign markets, are going to be used in their totality by third companies, to produce export goods.

These imports are free of the tariffs and VAT. This policy requires from the importer, the commitment to re-export all the goods which were imported.

It allows the import of machinery and equipment directed to installation projects, widens or replacement of capital assets, that are going to be used in the processing of goods to be exported

The imports of capital assets and spare parts are free of tariff rights and the VAT must be payed in deferred form when the export operation is already done.

It is also called Plan Vallejo Junior. This program allows that the companies import raw materials in the same amount of which were used in the processing of exported without paying tariffs and VAT. This system can be use within the following year to the boarding of the export.

A delimited area of the national territory is defined, to which a special regime in customs, tributary, investment of capitals and foreign trade is applied

The main objective is to promote industrial projects of goods and services, tourist services or technological investigation, to produce goods or services, directed basicaly to foreign markets and secondly way to the internal market.

There are three kinds of Free Zones, which are classified according to their economic activity:

� Industrialists of goods and services

They are basicaly directed to promote and to develop the process of production, transformation, processing and assembly of goods and services, directed to foreign markets.

Their main objetive is to develop and promote the tourist services, oriented to the receptive tourism.

Its object is to promote and to develop minimum 10 companies of technological investigation, whose production is directed to foreign markets.

The following are the free zones of Goods and Services that there are in Colombia : Barranquilla, Cartagena and Candlemas in Cartagena, C�cuta, Palmaseca, Santa Marta, Bogota, Pacific, Rionegro and Malambo in Barranquilla.

As Industrial Free zones of Tourist Services are those of Bar� Beach Resort and Eurocaribe de Indias in Cartagena and Pozos Colorados in Santa Marta.

Financial Incentives are financial services that opportunely satisfy the needs of the market, with the purpose of impelling the Colombian foreign trade and the maintained expansion of the colombian exports

Bancoldex, known as a second floor bank, is a society of mixed economy which belongs to the Ministry of Foreign trade, that has as main target the financing of productive and commercial operations, for the sale of products in the foreign markets.

Bancoldex, offers to the Colombian industralist lines of credit in different modalities:

The use of the different lines of credit generates commitments of export in agreement with the used modality of credit.

� The natural or legal people dedicated to produce, to commercialize or to promote goods and services to the export.

� The producers of raw materials or goods and services when they participate in indirect or joint exports.

� Producers that later sell their articles to Societies of International Commercialization to be exported.

� Companies of services that contribute to the accomplishment of the exporting process.

� Natural people or legal producers of export goods and services that in order to improve their competitiveness require to import technical capital assets, intervals or services.

The IFI, grants credits to the private sector through intermediaries of the exchange market, to the natural or legal people (small, medium and big companies), in pesos or dollars, for the development of industrial projects directed to create or to extend companies.

The IFI grands directly the credit to the big companies, previous the fulfillment of the requirements established by this organization.

FINAGRO, must als primary target stimulate the technology transference, fortify the exports and improve the social conditions of the farming sector, by means of the canalization of capital of work and investment in agro-industrial projects.

This organization manages financial resourses for work capital and investment, specially in agricultural programs, cattle, forest and fishing resources.

All the natural or legal people can accede to these lines of credit who develop agricultural and agro-industrial activities, but in any case must do it through the financial intermediaries.

The new exchange regime allows the exporter to refund their currencies through financial intermediaries or to pay them to a bank account abroad. Additionally the Colombian residents can receive the payment of the exports in Colombian legal currency whenever they are canalized through the intermediaries of the exchange market.

SEGUREXPO, allows the exporter to contract an insurance that covers the risks of delay or nonpayment by the buyer or the cancellation of an export order in the production stage.

� Commercial Risk: It assures the negotiation in the stage Pre-boarding and Post-boarding, by insolvency of the buying customer of the outside or the prolonged delay.

Segurexpo Of Colombia Street 76 No. 6-44 Floor 12 Tel: 2 17 09 00 Fax: 2 11 02 18

They are defined as the societies formed in any of the ways established in the commerce code, with the main object to do operations of foreign trade and to orient his activities towards the promotion and commercialization of Colombian products in the foreign markets.

Within his object they can make the import of goods to supply the internal market or to transform them and to export them.

� To benefit partially or totaly from the CERT, according to agreement between the supplier and the S.I.C.

� Direct or indirect access to the special systems of import-export Plan Vallejo

� They are free of the total of the IVA by the purchase of merchandise destined to the export.

� They are free of the tax of retention in the source by the purchase of merchandise destined to the export.

In order to access these benefits the S.I.C.s must issue the Certificate to Proveedor-C.P. to its suppliers.

This document credits this purchase and forces the society to export the goods, and confers to the producers the export presumption from the moment at which it transfers (sales) the merchandise to the S.I.C.

This certificate is enough to demonstrate the fulfillment the commitment to expot previously acquired, such as the derivatives of the use of special systems of import-export or credit to the exporter whom the Bancoldex grants.

The S.I.C.s have the obligation of exporting the totality of the merchandise that receive from their suppliers and to present report to the following organizations:

� To inform the DIAN, on the distribution of the CERT received during the year calendar.

In order take advantage of this plan, the societies of international commercialization must register in the Ministry of Foreign trade.

MINISTRY OF FOREIGN TRADE Technical manual for the Development of the Tel Interchange: 2 86 91 11 Santa Fe de Bogota D.c.

Proexport-Colombia is the organization in charge of promoting the Colombian exports, basicaly the not-traditional ones. It offers services aimed to satisfy the needs of the small and medium sized companies in his actions directed to export their products, and in doing so, contributing to create an exporting mentality, with emphasis in the competitiveness, for the development of the country.

� Export qu alification that includes: Basic qualification, intermediate and advanced

� Support and Integral Consultant's office to the companies that conform groups to export.

In addition to the services at individual level, another modality of support is the conformation of Exporter Groups. Within these we found:

� Groups of Initiation: they are Made up by several companies that develop in six months a series of activities such as: qualification, studies of market, missions of study, consultant's office in products adjustment and search of partners or technology. Also, the preselection of countries and selection of the target market work in, advised by the Sectorial Group (conformed by professionals of the areas of Consultant's office, Intelligence of markets, Transports and Fairs) and the coordinators programs. In addition they count on the economic support destined by Proexport for this type of groups.

� Exporting Units: a group of companies ist chosen among those which participated in the Groups of iniciation. They design its strategic plan in order to consolidate in the selected target market, under the coordination of the Program Director and, like in the previous one, with the economic support of Proexport.

Additionally, Proexport supports the exporter with the Mechanism of transport compensation. Through this policy, Proexport-Colombia grants the exporter, a compensation due to higher costs of transport originated by lack of a direct, regular and suitable transport service between Colombia and the target market.

In foreign trade, transportation and distribution of goods between place of origin and destination is of great importance. Insofar that there are factors which significantly affect the products� final price, which to a great extent determine the right timing of the delivery and the possibility of assuring product quality until it reaches the buyer.

Nonetheless it is clear that each one of the transportation means has very particular characteristics that identify them and differ with regard to their practical performance in operation. It is necessary though to know them in order to select the best means of transportation for each individual case of import or export.

1. Supply of Transport Colombia - Germany

The traffic of goods between Colombia and Germany can count on a wide variety of maritime and aerial possibilities with either direct services or connections via other European countries. It exist means of transportation for all kinds of goods. However, consolidated maritime services are somehow reduced.

Because of its location, Germany is one of the destinations with best services from Colombia.

The majority of maritime transportation services leaving from Colombia�s Atlantic Coast and Pacific Coast to Germany are direct services. They are being offered by the syndicates Eurosal and New Caribbean Services. The few services with transshipments are carried out by maritime lines at the main ports of Panama, the United States and Europe.

Services for loose loads are only available from one maritime line and three consolidators en route.

Main shipping lines en route: CMA-CGM, Chilean Company of Navigation, South American Steam Company, Conti Lines, HS/Stinnes, E.W.L., Hamburg S�d, Hapag Lloyd, Harrison Line, Kawasaki kisen kaisha, Maersk, Dole, Maersk, Mediterranean Shipping, Marfret, Sea Land, Horn Line.

The direct access from Colombia to German airports is currently possible through two passenger airlines. However, there are numerous possibilities with aerial or terrestrial connections, for example via Madrid, Luxembourg, Paris and Miami, among others. Outbound flights are concentrated in Bogot�. With regard to flights from other cities, one should verify if there exist contracts with other airlines.

When evaluating different transportation alternatives, it is necessary to consider that for each means of transportation comprises a certain structure of services as well as a number of operators or suppliers which have to be studied in detail.

For this purpose, it is necessary to compile information on each one of the available means with respect to:

� Number of existing services for the route on which it is going to be exported.

� Companies that offer the transport and its offered trajectory in means, tariffs and conditions.

� Characteristics of the ports, airports, terminals of origin, destination and transit that should be used.

� Directory of suppliers of complementary services in the transportation and their background, resources and tariffs.

The overall objective of this selection process is to be able to deliver the goods just on time to the place agreed upon with the buyer, at the lowest possible costs and in the best conditions.

Another important aspect to be taken into account is the agreed term of transaction (Incoterms), which is directly related to the definition of the appropriate point of delivery of goods by the seller to its buyer and to the transferal of the inherent risks and responsibilities resulting from the transportation of the product.

For this purpose, the International Chamber of Commerce developed a total of 13 terms known as the " International Commercial Terms " Incoterms. To be used in international business, they clearly define the responsibilities of seller and buyer with respect to the costs, the risks and the documents that are needed for the transport of the products.

Considering its commercial uses and practices, the Incoterms are classified according to the agreed point of delivery and the means of transportation to be used. For maritime transportation for example, the recommended terms are FAS..., .FOB.., CFR..., CIF..., DES... or DEQ can be used whereas for land transportation the terms DAF... should be favored. In the case of an aerial or a multimode transportation, the appropriate terms could be EXW, FCA, CPT, CIP with the terms DDU and DDP being generally applicable.

4.1 Maritime transportation

In the case of freight transportation, in a regular line of ships, the transport document used is the BILL OF LOADING (B/L) or Knowledge of Boarding, which is a transferable value title endorsed to a third, that it is expedited in 3 originals of equal value and a sufficient number of non-negotiable copies.

This document contains in general form the fundamental aspects of the contract as they are: parts that , object of the contract, description of the merchandise and loads to cancel, as it is possible to be appreciated in the following model.

4.2 Aerial Transport

In this form of transportation, the documents �Air Waybill� (AWB) or �Aerial Guide� can be utilized, which contain similar freight information as the Bill of Loading and other purposes alike.

It is a nonnegotiable document issued in three original and nine copies by the airline or by its representative agent.

It protects the transfer of merchandise from the airport of departure to the destination airport.

4.3 Terrestrial Transport

In similar forms to the previous cases the terrestrial transporter issue a document that protects the transfer of merchandise from point of origin to its destination stated by the Terrestrial Bill of lading.

As previously indicated, along with processing the contract, and before revising it, the transporter carries out a preliminary liquidation of the corresponding freight. For this to take effect, each transportation formality has established different commercial practices, in reference to the relation weight / volume used for its liquidation.

Marine freight shipped by a regular line is determined in dollars (US$) according to the product and for each cubic meter or ton (what suits the shipping company). It covers the transfer of merchandise in the ships flank from the port of origin to equal point in the port of destination.

5.2 Aerial Transport

Aerial freight is defined in specific agreements between two airports. It is expressed in a determined amount of dollars for each kilo or weight/volume ratio, as convenient to the airline.

The Kilo volume is determined by multiplying the dimensions of the pieces in centimeters and dividing by 6000;

The tariff depends on boarding size; higher the quantity lower the tariff. In fixed scales of 1 to 44 kilos; exceeding 45; exceeding 100; exceeding 300; exceeding 500 and exceeding 1,000, with a minimum incomme to the airline for each contract.

- the structure of tariffs make part of a general scheme of rates for all type of products (General position rates) by route and with added relation to preferential tariffs for specific conditional products to a minimum of embarked kilos (Specific Commodity Rates).

For each route (origin-destination), through IATA, the airlines establishes their general cargo tariffs, with a contract of minimum value, the corresponding scales and tariffs. Parallel to, requested by promotional organisms of exporters, exporters, unions and authorities are granted preferential rates, by products, for the export of leading merchandises (specific commodity rates).

- Besides the freight, the exporter must pay supplement fees such as Agent Rights (Due Agent), for additional services rendered, for the estimate of cargo (Valuation Charge), for a declaration on freight value, for the rights of assuring the merchandise and other rights in favor of the transporter (Due Carrier) for various services apart to those of transporting.

5.3 Highway transportation

For freight transportation by truck is liquidated in Colombian pesos or in US$ dollars for each two (2) cubic meters or each ton.

The cost magnitude depends on the haul distance and if the load occupies or not the total trucks capacity. For dispatches that solely occupy a single part of a truck the tariff will be much higher opposed to a completely filled truck.

6. Freights payment

The payment of freights is in each occasion a common agreement between the exporter and transporter or its representative. For the outcome, to the cancellation of the freight can be carried out by the exporter before the trip is initiated (prepaid) or in destination on part of the importer (at collection). The more suitable option is one which adapts to the agreement terms of transaction between the buyer and salesman in the transportation contract.

These payments can be made either in pesos or dollars. For the conversion of dollars to the national currency the exchange rate pool for the representative market is used, established daily by El Banco de la Republica. The applicable value in each case will be effective on the date of subscription of the corresponding contract and/or on the cancellation of freights according to its agreement with the transporter.

Exporting from Bogota to Frankfurt of 100 boxes of ceramic crafts, with unitary weight of 30 kilos and the following specifications:

Maritime tariffs: Cartagena - Hamburg: Basic tariff: US$ 200 per ton or cubic meter Monetary Surcharge:20% of basic tariff Fuel Surcharge: US$ 6 by ton or cubic meter Terrestrial Tariff Bogota-Cartagena:US$ 46 per ton or two Cubic meters

Volume = 120 x 40 x 50cms x 100 boxes/ 6000 = 4,000 kilos

For each case one chooses the largest dimension between weight and respective volume.

Aerial

Marine

Basic tariff: US$ 200 x 24Mts� = US$4,800

Terrestrial

Aerial freight costs more, but is quick, secured, lesser handlings, minors financial costs for immobilization capital, that altogether can compensate the different shipment.

7. Responsibility of the transporter and the shipper

Each way of transport possess its own regime of responsibility to the cargo, contained in specific national and international norms.

In general terms, the transporter is responsible for the delivery of the merchandise to the point agreed upon, on the promised date and in the same conditions which he received them. When involved in a wreck he exonerates himself of the responsibility as a result of a situation of greater force, an act of God and/or an unverifiable cause.

On the other hand, the freights proprietor is obligated to pack and mark the merchandise in a suitable manner and to complete a truthful declaration of the contents and of its characteristics. The exporter will have to assume the damages that resulted in the breach of this contract.

In order to support exports from developing countries, the EU operates its own Generalised System of Preferences (GSP). Under the current GSP, which covers the period 1999 - 2001, the preferential regime includes:

� Preferential market access into Europe for industrial and agricultural goods from developing countries, depending on the sensitivity of the goods;

� Special treatment for Least Developed Countries (LDCs), and a grouping of Andean and Central American counties;

� An encouragement regime to stimulate developing countries to establish and implement trade related social and environmental policies

Under the GSP (Regulation 2820/98/EC), Colombia and the other developing countries are exempted from the main WTO principles of reciprocity and non-discrimination. The non-discrimination principle stipulates that any tariff concession granted to one country must also apply to other trading partners which are members of the WTO. The principle of reciprocity stipulates that any country which grants a trade partner a concession can demand some concession in return.

The GSP as applied by the European Union grants almost all industrial products, originating in developing countries, duty-free access. Preferential access is given to almost all agricultural products, often at reduced rates rather than zero-duty rates.

Under the GSP, basic tariffs have been set for four different categories of products:

Textiles and clothing, as well as agricultural products like a number of citrus fruit, are among the highly sensitive goods. The categories sensitive and semi-sensitive include certain chemical products, fertilisers, dyes, rubber products, wood products, footwear, leatherware, metal products, electrical appliances, optical and precision instruments, ceramics, glassware and precious stones. However, it does not mean that all chemical, wood, rubber products etc. are classified as (semi-)sensitive. It depends very much on the specifications of the product whether it is classified as (semi-) sensitive or non-sensitive. Each individual product needs to be checked as to which tariff applies. Basic products (primarily raw materials and non-ferrous alloys) are exempted from tariff preference.

These products are mentioned in a separate list attached to the GSP regulation (Official Journal L357, 30 December 1998).

In place under the GSP, is a correction mechanism which makes a distinction between favoured nations on the basis of certain developmental and specialisation criteria. Favoured nations which can be regarded as very or sufficiently competitive regarding a specific product will lose their tariff preference for that respective product. This mechanism aims to create preferential space for the least-developed favoured nations, so that their preferential competitive advantage can materialise to its fullest extent.

Regarding the least-developed favoured nations, a tariff of 0 percent applies to all industrial products and a wide range of agricultural products. The same goes for industrial and agricultural products originating in five Andean countries (Bolivia, Colombia, Ecuador, Peru and Venezuela). The Andean countries receive maximum preferential treatment as a stimulus in the fight against production and trafficking of narcotics.

Under the current GSP scheme (1999-2001), the countries in Central America receive the same preferential treatment as the Andean countries.

There are two conditions attached to the application of the GSP preferential tariff:

� Only goods originating in a beneficiary country are eligible for GSP treatment;

� The goods must be transported directly from the exporting country to the EU.

The evidence of origin to be submitted to the EU Customs is the Certificate of Origin �Form A�. This Form must be completed by the exporter and subsequently be endorsed by the authorities which have been nominated to the European Commission by the government of the exporting country as being authorised to issue Form A. This document is issued and endorsed in Colombia by INCOMEX.

The rules of origin in the GSP framework are, on a product-by-product basis, laid down in the so-called Community Customs Code and should be obtainable from the issuing authorities. Depending on the product, rules of origin can vary from a change of tariff heading criterion, or certain working or processing criteria, to a percentage rule restricting the percentage (value-wise) of imported materials in the product. One has to find out per product which criteria apply. Full details of the GSP, including a complete list of products, were published in the Official Journal of the EU L357, of 30 December. Trade partners are strongly advised to check which tariff and which criteria for origin status apply to each product. Other sources of information may be Chambers of Commerce and Trade Promotion Offices.

Accessibility of the EU market to exporters from developing countries is conditioned by various trade agreements, traditional tariff and non-tariff barriers and the increasingly important rules, regulations and market forces in the field of quality, health, safety and the environment. These latter aspects will be dealt with in the next section. Below, we will take a closer look at the traditional market entry obstacles.

1.1 Import duties

One of the most noticeable consequences of the establishment of the Single Market is that there are uniform Customs clearing procedures and that import duties are only payable at the port of entry into the EU. Once the goods have entered the EU, there are no more Customs clearing formalities at internal EU borders. Goods can therefore be transported cheaply and quickly within the EU.

Import duties apply to all products entering the EU. The EU common Customs tariff is based on the Harmonised Commodity Description Coding System (HS). On the whole, import duties are not very high. The average tariff is less than 4 percent for manufactured products. Exceptions apply to agricultural products and sensitive products (especially textiles and clothing), especially since quotas have been changed into tariffs following the Uruguay Round.. Due to the GSP or other trade agreements, exports from developing countries can be exempted from import duties or face a reduced tariff. In particular cases, goods can be exempted from import duties for other reasons, for example, shipping samples of no commercial value, goods for repairs or other products which are only temporarily imported. Exact information on the HS classification and corresponding import duties should be available at Customs, trade promotion offices or through the importer

1.2 Levies

Food products

The Common Agricultural Policy (CAP) was introduced in the EU in an attempt to protect local food production. It covers temperate-zone agricultural products. An important characteristic of the CAP is the system of levies, which are integrated in a system of entry prices. If the import price lies under the minimum entry price, an additional duty is imposed in addition to the Customs duty. The level of duties and entry prices depends on the season. Products affected are, for example, citrus fruit and grapes. Exotic fruits and vegetables are not affected by the entry-price system.

Anti-dumping

Anti-dumping levies are taxes on imported products which are sold in the EU at a lower price than in the market of origin. When imported products have a serious negative effect on the local industry, the same industry may file a complaint in Brussels. If the investigation acknowledges the validity of the complaint, the anti-dumping tax is imposed, based on article 113 of the EU Treaty. These levies may be imposed at relatively short notice so, prior to exporting, all exporters should enquire whether there is such a levy or an investigation going on. Anti-dumping levies are in particular relevant in the high-technology sector.

Taxes

Excise duties are taxes on several products depending on the content and apply indiscriminately to imported and local products. Examples of products which are confronted with Excise duties are alcoholic and non-alcoholic beverages, tobacco and tobacco products and mineral oils used for fuel.

The Excise duties on oil and oil products include a �green tax� for fund-raising for environmental protection measures. It should be stressed that the Excise duties are not harmonised in the EU. Therefore, the level of Excise duties for a certain

VAT

All products sold in the EU are subject to Value Added Tax (VAT). Generally there is a low tariff for basic necessities and a high tariff for luxury goods. Although the original objective is harmonisation of the tariffs, ranges have been narrowed although considerable differences still exist between the EU member states. However, harmonisation of the tariffs is still on the agenda and may therefore be realised at a later stage.

1.3 Phytosanitary certificate

Phytosanitary regulations may apply to fresh produce like fruits. That means that a phytosanitary certificate has to be supplied which states that the product left the exporting country in a healthy condition. The product has to be inspected by the authorised (food) inspection department of the country of origin to ensure that it is free of insects and disease.

1.4 Bans

There is a ban on some products, which means that import is forbidden or only allowed under certain conditions. The bans are mainly applied to trade in dangerous products, such as chemical waste. Medicines, pesticides, plants and foodstuff, electrical products and exotic animal and plants can also be subject to bans, based on safety and health considerations. The most recent examples of import bans are related to the food sector. Between 1996 and 1999, there was a ban imposed on the import of beef from the United Kingdom following the growing concern surrounding the so-called mad cow disease. Also forthcoming from health risks, legislation at EU level prohibits the production, marketing and use of substances and preparations containing asbestos.

1.5 Import licensing

Import licences may be required for sensitive and strategic goods, amongst which textiles (under the rules of the MFA), steel products, coal and coke, and weaponry. Import licences are normally granted without too much difficulty and the importer is responsible for applying for the licence. If the product falls under the MFA and is subject to an import quota, the exporter has to supply the importer with an export licence or certificate, in order for the importer to obtain an import licence (double-control system).

1.6 Quota

Quotas are restrictions on the quantity of imports or exports and are used to regulate supply. The most common quota in the EU are the quantitative quota which fall under the MFA. As described earlier, the MFA is being phased out. Consequently the quota system is being dismantled in a number of steps. However, it will take until the year 2005 before all quotas have been abandoned. As for agricultural goods, as mentioned earlier, quantitative restrictions have been replaced by tariffs. Although import regulation of agricultural products still takes place through a system of levies and entry-prices, quotas as such no longer exist.

2. Market requirements

The trade liberalisation process that accelerated with the concluded Uruguay Round, means that non-tariff barriers like quotas are being abandoned and that tariff barriers are being reduced. However, this does not mean that access by exporters from developing countries to the European market will become easier. In fact, access may become more difficult due to fast increasing regulations and market requirements in the field of safety, health, quality, environment and social issues. The traditional protectionist measures make way for a new generation of regulations. The difference between these new technical barriers compared to former barriers is that the new regulations and requirements come forth from a general concern among both governments and consumers on health, safety, quality and the environment. The focus is on the well being of the consumer, now and in the future. In the past, tariff and non-tariff barriers generally emerged as a concern for European producers. Consumer and environment protection has increasingly replaced producer and employment protection.

Standardisation in itself is not a new phenomenon. Standards are traditionally used to describe the quality and performance of goods and services and are critical in the development of the global marketplace. They provide a framework and common language for commerce and economic development world-wide. Most standards are prepared at the request of industry. However, the European Commission can also request the standards bodies to prepare standards in order to implement European legislation.

CENELEC, CEN and ETSI are the three European standardisation bodies recognised as competent in the area of technical standardisation. Together they prepare European Standards (EN norms) in specific sectors of activity and the three make up the �European standardisation system�. For standardisation in other fields, other bodies are responsible (for example ISO).

Standardisation received a new meaning since the European Union started the process of harmonisation of standards linked to legislation to ensure consumers� health and safety. The EU is creating harmonised, European-wide standards in key product sectors to replace the many thousands of differing national standards. Generally, EU-wide minimum levels of requirements are set or will be set in the years ahead. Individual member states are allowed to set additional requirements for their domestic industry. However, any product that matches the minimum requirements is allowed free movement within the EU.

Standardisation is not only important in the field of health and safety, it has also become important in the fields of quality management, environment friendly production and social accountability. Exporters in developing countries have to bear in mind that in some cases market entry is conditioned by regulations that are legally binding, while in other cases market entry can be made easier by complying with market requirements. Regulations are legally binding while market requirements are a reflection of the market forces. Generally, one can say that regulations are established to safeguard health and safety, while market requirements play an important role in the field of quality, environment and social accountability. Exceptions are the regulation for packaging waste and the Convention on the International Trade in Endangered Species (CITES). Both set legally binding conditions.

Standardisation results in the emergence of markings, labels, and certificates. These demonstrate compliance with standards. Below, standardisation and the resulting markings, labels, and certificates established in the various fields, will be described.

Health and safety issues are becoming increasingly important to every individual in Europe. This applies just as much to the consumer as to the employee. They are taking a more and more prominent position in the policy-making of both government and businesses. In the meantime, all kinds of measures have been taken to protect health and safety. Below, some of the crucial regulations in the field of health and safety to exporters from developing countries are described. Note that it is by no means a complete list of applicable regulations. Extensive legislation exists for example in the field of foodstuffs (pesticide residues, heavy metal contents, radiological contamination etc.), asbestos, azo dyes, heavy metals and polychlorinated biphenyles.

The objective of CE marking is to impose a general requirement on producers to introduce only safe products into the EU market. CE marking can be seen as sort of a passport that allows manufacturers to circulate a wide range of manufactured products like machinery, low voltage equipment, toys, personal safety equipment, medical instruments and other, freely within the internal market of the EU. Please note that CE marking does not apply to all manufactured goods. CE marking is only compulsory for products (and hazards) listed under the New Approach Directives. A full list of product categories is given in the box below. CE marking for example does not apply to furniture, garments and leather products, although it is compulsory for (for example) toys, protective workwear, and hydraulic mechanisms of office chairs. The letters CE (French for �European Conformity�) indicate that a product conforms to the European applicable and legal demands, in terms of safety, health, environment and consumer protection. Note that the CE mark is not a guarantee for quality.

The Hazard Analysis Critical Control Point (HACCP) system typically applies to the food-processing industry. The EU Directive on Hygiene for Foodstuffs (93/43/EC) which became effective in January 1996, stipulates that: �foodstuff companies shall identify each aspect of their activities which has a bearing on the safety of foodstuffs and ensure that suitable safety procedures are established, applied, maintained and revised on the basis of the HACCP system�. All food processors in the EU are legally bound to have an HACCP system in place or they must be working on implementing a HACCP system. The HACCP system is applicable to companies that process, treat, pack, transport, distribute or trade foodstuffs. These companies are forced to understand (and act gainst) the possible hazards associated with food production at all stages, from growth, processing, manufacture and distribution, until the point of consumption. This includes macro-biological (vermin), micro-biological (viruses, bacteria, moulds), toxicological (chemical contamination with pesticides), or physical (wood, metal, glass, plastic or fabric) risks.

Food additives

Food additives are subject to EU legislation. In the EU countries, the approved food additives bear identification numbers. The number is preceded by the letter E. Food additives must be stated in the list of ingredients on the package by stating the name of the agent or its E-No. The EU has issued Directives that set requirements for sweeteners (94/35/EC), colours (94/36/EC) and other food additives (95/2/EC) for use in foodstuffs. The EU member states have incorporated (and are currently incorporating) the Directives in their national food legislation.

As mentioned earlier, other legislation exists, for example regarding maximum levels of pesticide residues, heavy metals, microbiological and radiological contamination. For more information on this matter, one is referred to the food inspection service in the country of the exporter or the food inspection service in one of the EU countries

In response to increasing consumer concern for the impact of agriculture on food safety and the environment, the Euro Retailer Producer Group (EUREP - a cooperation framework of leading retail organisations in Europe) has been developing guidelines for Good Agricultural Practice (GAP) for horticultural products. GAP includes criteria on site management, fertiliser use, crop protection and pest management, harvesting, post harvesting and workers health and safety. In the near future, exporters of fresh fruit and vegetables who want to supply European supermarket chains will have to show that the products have been produced according to GAP. It is widely believed that GAP will become an important international standard in the fresh fruit and vegetable sector.

At the moment, the GAP guidelines are being tested as part of two pilot projects. However, exporters from developing countries should take GAP seriously and not loose valuable time

Over the past years, environmental awareness has grown all over the world. Taking into account the principle of �sustainable development�, parties are requested - and occasionally forced �to take their responsibility towards protecting the environment. Consumers, but certainly also industrial buyers, have become increasingly interested in environmentally sound products and services. Consequently, market chances for products produced in a non-environmentally sound way have deteriorated. In Europe, the �environment� is no longer a trend but is now incorporated as a standard issue in business negotiations. The rising concern for environmental preservation and protection has forced the EU to set new standards in this area. In a number of European countries, this has led to legislation and voluntary agreements between government and producers. The agreements do not only apply to products but to packaging as well. Exporters in developing countries will have to comply with the environmental regulations in order to be able to export to the EU, since importers who are confronted with more and more demanding guidelines will pass these demands on to the exporter. Besides that, as already described earlier, it is not only through guidelines and legislation that exporters are being forced to consider the environmental impact of their product, production process and packaging. Consumers demand environmentally sound products and hold manufacturers accountable for their actions and their products. Therefore, exporters have to be aware that complying with product regulations is a necessity, but conforming to consumer demand is at least as important to be successful on the European market.

The EU has issued a Directive on packaging and packaging waste (94/62/EEC). Among other measures, the Directive sets maximum levels of concentrations of heavy metals in packaging and describes requirements specific to manufacturing and composition of packaging. These include the following:

� Packaging shall be manufactured in such a way that the volume and weight be limited to the minimum amount to maintain the necessary level of safety, hygiene and acceptance for the packed product and for the consumer.

� Packaging shall be designed, produced and commercialised in such a way as to permit its re-use or recovery, including recycling, and to minimise the environmental impact when packaging waste or residues from packaging waste management are disposed of.

� Packaging shall be manufactured in such a way that the presence of noxious and other hazardous substances and materials is minimised with regard to the presence in emissions, ash or leachate, when packaging or residues from waste management are incinerated or landfilled.

To exporters from developing countries, the implications are that the demands will be transposed on to them. It means that transport packaging, surrounding packaging and sales packaging materials should be limited and be re-usable or recyclable. Otherwise, the importer will be confronted with additional costs, thus reducing the competitiveness of the exporter.

Green Dot

In Germany, trade and industry are obliged to take back packaging materials, in order to re-use or recycle them. The regulation also applies to imported goods. Foreign companies have to conform to this just as much as German companies. The Green Dot has become the symbol of the German packing waste re-use and recycling system.

The symbol shows the consumer that the sales packaging can be re-used or recycled and that disposal/recycling of transportation packaging is being financed by the parties involved. It is important to note that the Green Dot can not be printed on the packaging just like that. It symbolises a packaging waste recycling system that is financed by the parties involved. There is a charge for permission to affix a Green Dot on the packaging and a contract has to be entered into. The financial contribution of the companies is used for the financing of the waste recycling system. The amount of the financial contribution is dependent on the volume of packaging waste.

A wholesaler, importer or manufacturer who refuses to take back packaging is not allowed to use the Green Dot. Apart from the legal consequences this may have, he may be regarded as environmentally irresponsible in the eyes of the consumer. It is likely that the consumer will be less willing to buy such a product. The Green Dot is also being used in France and Belgium.

The most immediate consequences for exporters in developing countries, aside from the fact that certain products are or will be banned from the European market, are:

� measures taken to reduce the amount of packaging waste and to re-use and recycle packaging material;

� increasing implementation of environmental management and assessment systems and the use of hallmarks;

� increasing importance of hallmarks for a variety of products in the buying behaviour of European consumers.

Environmental management standards give the manufacturer/exporter the opportunity to show external parties that manufacturing is taking place in an environmentally conscious way. Please note that environmental management standards are voluntary standards. At the moment, the most interesting standard for exporters from developing countries is ISO 14001.

ISO 14001

The ISO 14001 Environmental Management standard was published in September 1996. The purpose of the ISO 14001 standard is essentially to enable the international recognition of an individual company�s environmental management system. The relevance of the standard for the future can be clearly seen by following the development and uptake of the ISO 9001 and 9002 quality standard. Although voluntary, customer pressure is resulting in the ISO 9001 and 9002 quality standard becoming increasingly necessary to do business around the world. Similarly, the ISO 14001 environmental management standard may become a defacto requirement for being able to compete in many regions of the global marketplace.

When we talk about ecolabelling, we have to distinguish between national ecolabels, the EU ecolabelling scheme and product specific environmental labels. The national and EU ecolabels are based on a full life cycle assessment and apply for a wide range of products, whereas product specific labels may have a more limited scope and apply only to one single product group or production process. Increasingly, we find that ecolabels also include quality and social aspects.

National ecolabels

National ecolabelling schemes aim at providing consumers with a choice in buying products that have been designed, produced and packaged, and which can be disposed of at the end of their useful life, in an environmentally sound way. The use of such labels also encourages producing and processing industries to make more sustainable use of natural resources. The national ecolabels apply to a wide range of products and are based on a Life Cycle Assessment. The environmental impact of the product is assessed throughout the entire life cycle of the product.

Despite efforts of the European Commission to arrive at one single, all embracing EU ecolabel, there are still different national labels in use. Until today, the national hallmarks are still more important than the EU hallmark.

National ecolabels have so far been introduced in the North-western EU countries. The ecolabels generally apply to the same range of products and are based on similar criteria. However, in some countries standards are higher than in others.The Netherlands, Scandinavia and Germany are the forerunners in Europe. In The Netherlands, the ecolabel is called �Mileukeur� (see focus on The Netherlands). In Germany, the national ecolabel is the Blue Angel (�Blaue Engel�). In the Scandinavian countries the ecolabel is called the Swan.

EU ecolabel

At the moment, 14 product groups are covered by the EU ecolabel scheme. For another 7 product groups, criteria are under preparation. The producer or importer makes the application for a European environmental hallmark on a voluntary basis. The sum, which has to be paid to apply the European environmental logo, depends on the product�s turnover for the importing or producing company and can vary from one member state to another.

Product specific labels

Below, a description is given of some important product specific environmental labels in the European market that exist in addition to the EU and national ecolabels. The list is by no means comprehensive. In different countries, for different products, different labels are in place.

� Label for organically produced food products

The label that is rapidly becoming the most popular label in the European market is the label that ensures consumers of the organic origin and quality of agricultural products. This is especially the case in the Scandinavian and west European countries. There is no EU hallmark (yet) for organically produced food products. At the moment, different national hallmarks exist. In Germany, different labels are used by different growers associations. In Sweden, a country that has among the highest rates of organic production, the organic label is the KRAV label. In The Netherlands, the EKO hallmark is being used. Whereas the market segment for organically grown food products used to be small, the last few years witnessed a marked increase in this segment. Calls for certified organically grown food products became so strong that supermarket chains are offering increased shelf space with certified organically grown products. This has a lot to do with the fact that consumers associate organically grown products with healthy products.

The EU policy is aimed at promoting products on the European market which are made of sustainably produced (tropical) timber. The viewpoint of the European Commission is that all timber (including non-tropical timber) should eventually be brought under one regime. Sustainable forest management can be warranted through a system of certification of timber and timber products. Many initiatives have been developed for the certification of sustainable forestry. At the moment there are two important international systems: one being prepared by the International Organisation for Standardisation (ISO) and one which is offered through the Forest Stewardship Council (FSC). ISO is currently working on a system to include the certification of sustainable forest management within its ISO 14000 series.

The FSC certificate is the best known, internationally recognised certificate which

has been issued for the last few years and which is subscribed to by many environmental and consumer organisations. Aside from environmental criteria, it also includes social criteria. Currently, approximately 8 million hectares of forest are FSC certified world-wide. The FSC certificate also covers the �chain of custody� of timber, which means that it guarantees that timber carrying the label is not mixed with unsustainably produced timber anywhere during transport or during processing. All FSC timber can be traced back to its origins if necessary. Most parties in the forestry sector now see certification as the way forward, and the FSC certificate currently appears to be the safest bet for an internationally recognised certificate for timber and timber products from sustainably managed forests. It is not unthinkable,however, that in the future ISO will �outmarket� FSC. So far, however, the FSC label is gaining popularity. An increasing assortment of wooden garden furniture in the European Do-It-Yourself chains is FSC labelled.

The efforts initiated by the FSC to arrive at sustainable forest management triggered a similar initiative for sustainable fishery. The Marine Stewardship Council (MSC) is a non-governmental, international organisation set up to promote sustainable fisheries and responsible fishing practices worldwide, through developing long term, market based solutions, which meet the needs and objectives of both the environment and commerce.

It is interesting to note that MSC started as a joint-initiative by the World-Wildlife Fund (WWF) and Unilever. Increasingly we find that multinationals and non-governmental organisations (NGOs) join hands to solve (environmental) problems. Whereas in the past, NGOs and multinationals often took opposing and confronting stands, nowadays, the tendency is towards co-operation.

Central to the purpose of the MSC are its principles and criteria translated in a standard, for sustainable fishing, against which independent certification companies may certify fisheries, on a voluntary basis. Fish from certified fisheries and fisheries stakeholders are then eligible to use the MSC logo, which conveys to consumers the assurance that the fish or fish product is from a well managed and sustainable fishery and that it has been fished responsibly. Until today, MSC certification is not as popular as FSC certification, but it is clear that also in the fisheries sector the future direction is for more sustainable methods.

Especially in Germany, environmental labelling of textiles has become very important. The most important label is the German ��ko-Tex Standard 100� label. The �ko-Tex label is introduced to mark textile products which have a good environmental performance in terms of the content of hazardous materials. The products have to meet limits that are set for heavy metals, pesticides, formaldehyde and pentachlorophenol. Also, biocides, flame retardants and carcinogenic or allergy-producing dyes may not be used. In the case of this label, in contrast to the other labels mentioned above, the criteria refer only to the final product. The production and processing stages are not considered.

In addition to the aforementioned importance of standards in the field of quality, health, safety and environment, social issues are also taking on increased significance. Companies are increasingly held accountable for their acts. A growing number of Europeans shares the idea that companies have a moral obligation towards their workers and the society as a whole. The importance of �business conscience� as a selection criterion for consumers is growing. This is partly due to increasing media coverage, triggered by consumer pressure groups that are challenging multinational companies to take up a responsible role in society and to respect human rights and the environment. Consumers increasingly turn their back towards companies that do not respect human rights and the environment. This is well noticed by the business sector. Companies, increasingly realise that they are judged not only on the products and services they offer, but also on their social responsibility. They are being held accountable.

Ways to show the consumers that the companies are socially accountable are transparent and public business principles,or codes of conduct. Also, companies can apply for certification according to a social accountability standard. Besides that, they can also have their products labelled, by means of a social or fair trade label. For example labels that demonstrate that production is free of child labour. The implications for exporters in developing countries are clear. As suppliers to European companies, the demands for social accountability are passed on to them. Therefore, they should incorporate social issues in their business ethics or comply with the criteria applicable to social accountability or fair trade standards. As suppliers, they will not only be assessed on matters of product quality and price, but also on their impact on society.

Business ethics, integrity and social accountability have become an important determinant of the quality of a company as a whole and companies are being held accountable for their societal role. Companies are able to bear responsibility in that respect by establishing their own General Business Principles or Codes of Conduct. These should then clearly reflect the company�s position towards business ethics, labour conditions, child labour, and the environment. It should stipulate how the company will contribute in a positive way to these aspects. Besides that, the company has to introduce assurance mechanisms. Mechanisms designed to measure the true effectiveness of the Code of Conduct.

In September 1997, a code of conduct was agreed to by the ETUF-TCL (European textiles union) and EURATEX (employers� organisation). The agreement covers core ILO conventions and applies to 60-70 percent of European enterprises in the sector, and their subsidiaries or sub-contractors in developing countries.

Social Accountability 8000 (SA 8000) is an international standard for social ccountability. The objective is to ensure ethical sourcing of goods and services. It is a voluntary standard and can be applied to any size of organisation or business across all industries. The standard can replace or augment company or industry specific social accountability codes. SA 8000 sets basic standards for: child labour, forced labour, health and safety, freedom of association and the right to collective bargaining, discrimination, disciplinary practices, working hours and compensation. The requirements in the standard itself are based on recommendation of the International Labour Organisation (ILO) and on agreements and conventions of the United Nations (Human Rights, Rights of the Child).

SA 8000 has the backing of major companies and organisations over a wide spectrum of interests. This support and the demand by consumers for world-wide social standards will likely have SA 8000 certification internationally recognised in the near future.

Fair trade organisations are trading organisations which promote development towards self-reliance and empowerment through establishing fair trade relations. They buy coffee, tea, other commodities, textiles and handicrafts directly from organised producers in Africa, Asia and Latin America. When buying from producers in these areas, a fair trade organisation prefers dealing with democratically organised producers who are interested in:

A fair trade organisation pays producers a �fair� price for their products that enables them and their families to make an adequate living. Fair trade organisations also assist producers in product development, education and training, improving their organisation and marketing, and sharing their skills and experience with others.

Quality management standards, just like the environmental management standard and SA 8000 standard, refer to company management. This is in contrast to the other standards, labels and markings that refer to product or production processes. Quality management standards are not compulsory for market entry into the EU. Certification to a quality management standard is a voluntary process. However, it can definitely contribute positively to the company�s image in the market. Especially when the company is certified according to an internationally recognised management standard. The most important quality management standards are those under the ISO 9000 series.

ISO 9000 series

The International Organisation for Standardisation (ISO) developed the generally accepted ISO 9000 series that provides a framework for quality management and quality assurance. The ISO 9000 standards represent an international consensus on the essential features of a quality management system. Manufacturers that have obtained an ISO 9001 or ISO 9002 certificate possess an important asset. It is a major selling point when doing business in the competitive EU market. It contributes strongly to confidence in a trade partner. Quality, health, safety and environmental management programmes are usually strongly interwoven with the overall ISO management plan. Today, over 200,000 organisations world-wide, are ISO 9000 certified.

12. Kreis Neuss as strategic center for Colombian exports towards Germany and Europe.

Germanys decentralized model has played a great roll in ist economic success. The different states or " L�nder " have a high autonomy. As it was described previously in this manual, Germany hat 16 independent states which develope their own policies and economic plans, and which competes to each other to reach faster levels of development.

This competition has been led for several years by the state of Nordrhrein-westfalen, which is considered the engine of the German economy.

This state, located in the center-West of Germany is one of the most dynamic regions in Europe in terms of production, commerce, services and investigation and development. With a population of 17,5million inhabitants, this region is the one with most inhabitants in Germany. It contains 20% of the total contrys population. In its surface of 34,000 square Km, there are 30 cities with more than 100,000 inhabitants including important cities as Cologne, Bohn, Dusseldorf, Dortmund and Essen. Its geographic location is strategic, since it shares borders with Holland and Belgium, and it is crossed from south to north by the river Rihn, Germanys largest waterway. Its location is so strategic that nearly 40% of the population of the European Union live in a radius of 500 km of his capital, Dusseldorf.

In the economic field, Nordrhein-Westfalen(NRW) became the leader of the German economy some decades ago. The 18,5% of the German exports to the world are "Made in NRW " and 22% of the total of the German Gross National Product is produced in this state. Here concentrates also 27% of the foreign investment in Germany and 50% of the 50 greater companies of Germany have their headquarters in NRW: Metro, Rewe, Tengelmann, Aldi, Karstadt, Haniel, Stinnes, Thyssen Handelsunion. Also Renault-Germany and Toschiba-Europe, benefit to have their base in NRW for the distribution of their products to all Europe.

All these characteristics makes this region, to be the most attractive gateway of the German and European market. But what makes this market be more attractive than any other, is the high spending power of ist inhabitants, much higher als the European and even German average. More than 490,000 million Marks are spent annually by the inhabitants of this region for his personal needs.

In the international fairs field, the situation is similar; 40 % of the international fairs in Germany are carried out in NRW, being Cologne, Essen and Dusseldorf the main fair centers.

This region, like every state in Germany is made up of administrative regions with called " Kreis " or counties. NRW has 31 counties, which give this state the energy and the dynamism that this powerful economic motor needs.

In the following lines we will specifically focus the attention on the county of Neuss, by being this, a strategic place for the future of the Colombian exports towards Germany and in general towards the European Union. The reasons for which this region has so much importance for the Colombian companies are the following:

Due to its favourable location at the heart of Europe, and at the center of several mayor European development axes, the County of Neuss is one of the most significant business development regions in europe. Over a period of just a few decades, a powerful business location has grown up here, which has now become the driving force behind the entire surrounding region.

In neuss County eight urban and rural local authorities were amalgamated to form a strong community: Neuss, Grevenbroich, Dormagen, Meerbusch, Kaarst, Korschenbroich, J�chen and Rommerskirchen. With almost 440.000 inhabitants, this region is one of the Germanys largest counties. The County Seat of Neuss is the largest in the Federal Republic of Germany

This region offers you access to an enormous sales market: Around 8,2 million people with a high spending power live within a 50 km radius. Germanys largest waterway the Rhine, is also located at the boundary of Neuss Country. Its favorable geographic situation is today in affluent day taken advantage of by the companies that have seat there, with a quota of export of more 50 % of its production.

The County of Neuss can be quickly and easily reached via the excellent transport network. Six motorways are routed through the county and all towns are linked up to the rail network; The state capitals of Dusseldorfs International Airport and the Dusseldorf Express Airport in Monchengladbach are just a short car journey away � so are the exhibition center of Dusseldorf and Colongne. Germanys largest waterway, The Rhine is also located at the boundary of Neuss County. The port of Neuss is one of the largest inland ports in germany and the southernmost Rhine port were seagoing vessels can call in from ports such as Rotterdam, Antwerp, Hamburg and Bremen ; This port has an annual transhipment volume of almost 5 million tons. World-wide known companies such as Bayer, Toschiba, Eternit, 3m, Nissan and Rover take advantage of this strategic location to distribute their products in the European market

This point is perhaps the most important for the Colombian managers. Strong bonds of friendship and cooperation have been developed between the County of Neuss and Colombia during the last years. It is dificult to find a region in the world more commited to Colombia als this county.

The most recent history of this relation begins with the accomplishment in October 1997 of the Colombian - German Economic conference carried out in the city of Grevenbroich, in the Neuss County. In this conference took part the Colombian Minister of Economy, Dr Jose Antonio Ocampo, the Director of Coinvertir, Enrique Uma�a, the Director of the German-Colombian Chamber of Commerce , Norbert Pudzich, the Minister of Economy of the state of Nordrhein-Westfalen Franz Jager, the Governor of the county of Neuss Dieter Patt, among others. The conference was also attended by a group of managers from both countries who had the opportunity to make important contacts with potential commercial partners. Some weeks later, a delegation of manegers of this German region traveled to Colombia headed by its governador, Mr. Dieter Patt. In this occasion new contacts with industralists and Colombian leaders were made, developing new talks between representatives of both countries.

Due to the success achieved in the Colombian-German conference in Grevenbroich, the economic German-Latinamerican conference was held in March of 1999..

These bilateral activities have been the seed of many other initiatives that have been created between the two regions, becoming Colombia, along with China, Poland and New Mexico, the pillars and the priorities of the International policy of the Kreis Neuss government with the cooperation of the NRW state.

The economic promotion Departament of Neuss County has always been very commited to Colombia. This it is the optimal bridge to make contact with representatives of companies of the region. Unlike any consulting company that helps to make international contacts, this office, being a governamental office whose function is to promote the commercial interchange between the different regions, does not have economic interest when rendering its services. These characteristics cause that this institution counts on a greater credibility between the German managers.

Those hcrarcteristics are are true advantages that the Colombian industralist can and must take advantage of to achieve the introduction of their products in the European market. These advantages, added to the wide knowledge that the leaders of Kreis Neuss have about our country, as result of their several visits to industralists and Colombian leaders, and to its commitment and conviction in the people and the product of Colombia, make of this region a very attractive place at the time of thinking about making businesses with the European Union.

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