The United States and Colombia have historically maintained a strong bilateral partnership that has been the envy of much of Latin America. However, the bilateral relationship today is facing a test as U.S. and Colombian approaches to shared problems increasingly diverge. The next several months present milestones that will have significant implications for bilateral trade, investment, development aid, and security cooperation.
In particular, by September 15, the U.S. government will have to decide whether to identify Colombia as a major illicit drug-producing and drug-transit country (the “Majors List”) and whether it has “failed demonstrably” to cooperate with the United States on counternarcotics. This decision will bring to the fore security, economic, and policy concerns that the Trump administration may choose to address through a wide range of policy tools, beyond the Majors List itself.
Amid this uncertainty, companies with a presence in or exposure to Colombia should consider developing contingency plans to manage potential repercussions in the bilateral relationship. These may include scenario planning, assessment of available risk mitigation strategies, and Anti-Money Laundering / Combating the Financing of Terrorism (AML / CFT), anti-corruption, and sanctions compliance program reviews and risk assessments.
Upcoming Majors List Determination
The Foreign Relations Authorization Act for Fiscal Year 2003 (FRAA) requires that every year, no later than September 15, the President of the United States identify major illicit drug-producing and drug-transit countries (commonly referred to as the “Majors List”). Inclusion on the Majors List is based on statutory metrics of drug flows set out in the Foreign Assistance Act of 1961 (FAA) and does not necessarily reflect the U.S. Administration’s views of a country’s counternarcotics efforts.
The FRAA also requires the President to determine which of those countries have “failed demonstrably” to make substantial efforts to adhere to their counternarcotics obligations or take counternarcotics measures set forth in the FAA during the past year. These measures include, for example, actions to combat illicit drug cultivation and trafficking, money laundering, and public corruption.
Countries that have “failed demonstrably” may only receive U.S. assistance in the following year if such assistance is deemed to be “vital to the national interest of the United States” or if, following the determination, the country makes substantial efforts to adhere to its counternarcotics obligations. In addition, under the FRAA, the U.S. Secretary of the Treasury may also instruct the United States Executive Director of each multilateral development bank to vote against any loan or other utilization of funds in favor of a major drug-producing or drug-transit country, for example, to support local infrastructure projects.
The Majors List process established by the FRAA replaced the prior Narcotics Certification Process, under which the United States “decertified” Colombia in 1996 and 1997 for failing to fully cooperate with the United States on counternarcotics efforts.
Potential Factors for “Failed Demonstrably” Determination
Several factors that the U.S. government is likely to consider raise the risk of Colombia being subject to an adverse finding in this year’s Majors List determination. First, the administration has taken note of the significant increase in Colombia’s coca cultivation and cocaine production. According to a U.N. report, crops reached a record 253,000 hectares and production grew approximately 50 percent in 2023.
Second, this increase in cultivation and production, and the accompanying increase in violence and instability, is being reported at the same time as the Trump administration has signaled a clear intention to take more aggressive action against cartels and other Transnational Criminal Organizations (“TCOs”) linked to drug trafficking. The recent use of military force against alleged drug traffickers off the coast of Venezuela is an example of this new approach. In addition, the administration recently designated twelve TCOs from Mexico, Venezuela, Haiti, and Ecuador as Foreign Terrorist Organizations (“FTOs”), adding to the three Colombian entities—the National Liberation Army (ELN), Revolutionary Armed Forces of Colombia – People’s Army (FARC-EP), and Segunda Marquetalia—that had already been designated as FTOs in Latin America under prior U.S. administrations.
Third, Colombia’s policy on Venezuela could be an additional factor in the Majors List determination process and a growing irritant in bilateral relations given the Trump administration’s frustration with the Maduro regime and allegations that Maduro heads the Cartel de Los Soles, which the Treasury Department’s Office of Foreign Asset Control (OFAC) recently designated as a Specially Designated Global Terrorist (SDGT).
Fourth, despite the history of bipartisan support for Colombia in Washington, senior members of the U.S. Congress have also called for a reassessment of U.S. aid to the country. The House Appropriations Committee has already proposed cutting non-military U.S. assistance by 50 percent, expressing deep concerns “about the detrimental policies, erratic behavior, and malign relationships of the Petro Administration, which are at odds with United States security and economic interests.”
Finally, these Colombia-specific concerns are taking place against the backdrop of a broader reassessment of U.S. foreign assistance. In August, President Trump invoked his authority under the Impoundment Control Act of 1974 to cancel $5 billion in foreign aid funding already appropriated by Congress through a “pocket rescission” because the funding went against his America First priorities. This included USAID funds appropriated to programs in Colombia. Litigation on the President’s decision is ongoing.
Under these conditions, Colombia appears to be at risk of being found under the FRAA to have “failed demonstrably” to meet its counternarcotics commitments and losing hundreds of millions of dollars in U.S. foreign assistance in the absence of a determination by the Trump administration that such assistance is “vital” to the U.S. national interest. Companies with a presence in or exposure to Colombia should be aware of how the potential policy consequences of this action could affect their businesses.
Policy Tools and Business Impacts
While the FRAA establishes that a country determined to have failed demonstrably in its counternarcotics efforts may face restrictions on U.S. foreign assistance, there are other consequences that may also result, even if not directly required under the statute. U.S. law provides a number of tools, including those specific to countering drug trafficking, that the administration might draw upon against Colombia, consistent with the President’s demonstrated interest in linking national security, trade, and political issues for maximum leverage.
For instance, Section 311 of the USA PATRIOT Act and certain subsequent statutes, including the FEND Off Fentanyl Act, allow the Treasury Department to designate foreign jurisdictions, financial institutions, or types of accounts or transactions as being of “primary money laundering concern.” The result of such a designation would typically be to constrain or cut off a foreign financial institution’s access to the U.S. financial system, including prohibiting or restricting correspondent and payable-through accounts.
The Foreign Narcotics Kingpin Designation Act (“Kingpin Act”) – which is modelled on a 1995 program administered by OFAC, against Colombian drug cartels – allows the president to impose sanctions to deny drug traffickers and their related businesses access to the U.S. financial system and prohibit all trade and transactions between the traffickers and U.S. companies and individuals. In the past, the U.S. has used these sanctions to target foreign corporations and even foreign government officials who are deemed to be aiding the cartels.
In addition to these statutory tools that are specifically designed to address drug trafficking, money laundering, and terrorism financing concerns, the Trump administration has shown a preference for using tariffs to address a broad range of foreign policy issues, including non-economic ones. Tariffs, particularly those under the International Emergency Economic Powers Act (IEEPA), can pose a significant risk to a broader set of business activities across sectors than the aforementioned Treasury sanctions, even as certain IEEPA tariffs are reviewed by the U.S. Supreme Court in the coming months.
Taken collectively, these potential policy responses could require a wide range of companies doing business in or with Colombia to review their operations and take steps to anticipate or react to those responses. The actions taken by the Trump administration against Brazil in response to the country’s prosecution of former Brazilian President Jair Bolsonaro and other judicial developments—tariffs, visa restrictions, and Global Magnitsky Human Rights Accountability Act sanctions—demonstrate the potentially broad impact of U.S. economic restrictions.
Even in a scenario where the United States does not make a “failed demonstrably” determination on Colombia, the factors outlined above indicate that the U.S.-Colombia relationship is likely to experience renewed turbulence. While the Trump administration is not likely to take as severe an approach to Colombia as it has to Brazil, it is very possible that the United States will begin to ratchet up pressure on Colombia in the coming months, making for an especially complex period in the lead up to Colombia’s 2026 presidential elections.
Covington’s cross-practice team of policy, trade, sanctions, and compliance professionals is available to help companies prepare for and manage developments related to the U.S.-Colombia relationship. Our team – which includes senior former White House, State Department, Pentagon, Commerce, and Treasury Department officials (including a former OFAC Director) with experience with Colombia – can help companies address the challenges resulting from changes in the bilateral relationship.
If you have any questions concerning the materials discussed in this update, please contact the following members of our team.
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