SERVICIO NACIONAL DE APRENDIZAJE SISTEMA INTEGRADO DE GESTIÓN
NEGOCIACIÓN INTERNACIONAL
Evidencia 3: Ensayo Free TradeAgreement (FTA): advantages and disadvantages
INSTRUTOR:
JAVIER ROLANDO VEGA SALDAÑA
PRESENTADO POR:
JORGE LUIS LINDARTE GUERRA
2022
1Evidencia 3: Ensayo Free TradeAgreement (FTA): advantages and disadvantages
Theentryintoforceofthe Free TradeAgreement (FTA) between Colombia and theUnitedStatesisthebeginningof a "new era" in relationsbetweenthetwocountries.
“Itisoneofthemostimportantdays in thehistoryofrelationsbetweentheUnitedStates and Colombia. Westarted a new era in thediplomatic and commercialallianceofbothcountries.
With NAFTA, Colombia entersthebig leagues,” saidAmbassador Silva.
In thelastdecade,
Colombia'sforeigntradepolicywasbasedonthedeepeningoftraderelationswiththeAndeanCom munity and theeffortstoobtain unilateral accesstocertainmarkets, especiallytheUnitedStates, throughthe ATPA schemes. / ATPDEA, and thatoftheEuropeanUnion, throughthe GSP scheme. He reaffirmedthat Colombia istoday a country more open totheworld, with a productive sector that has matured and has betterconditionstoattractinvestment and conquerforeignmarkets.
Duetotheincreasing gap betweenexports and imports, beingthesecondlargest in Colombia, itisevidenttheneedtopromoteimportantchanges in tradepolicy, such as finding new markets and forthisitisimportanttomove forward withoutdelaytothesubscriptionof free tradeagreementssuch as theonedecidedtonegotiatewiththeUnitedStates. After
thelastextensionofthe ATPDEA in 2010 thatendedonFebruary 15, 2011, the FTA
withtheUnitedStatesisseen as a possibilityforentrepreneurstomakelong-terminvestments.
term, thatincreasetheir productive capacity and have a stability intime and favorable conditionsforexports.
The Colombia - US TLC isconstitutedbynorms and proceduresderivedfromthem, which are applicable in equalconditionsforthetwocountries. The TLC isnot a Law, norisitconformedbythem; However, accordingtothePoliticalConstitutionofour country, internationalagreementshaveallthe rigor and haveto be
compliedwithlikeanyothercurrentlegislation.
The TLC is a kindof guide onhowtoexport - importamongthesignatorycountries, with general recommendations and criteriathat determine theframeworkunderwhicheach country can acttoobtainthegreatestbenefits. In thissense, ontheonehand,
itisnecessaryforthetwocountriestoissuelegislationonspecificissuesthattakeadvantageof bilateral conditions; ontheother, each country is free todictateitsnationaleconomicpolicies and takethemeasuresitdeemspertinenttoboostinternationaltrade and especiallytoprotect and promotetheexportofitsproducts.
TLC wentintoeffecton May 15, 2012, signedbetween Juan Manuel Santos and Barack Obama at the Summit oftheAmericaswithoutpossessing a due date
butwiththepossibilityofseekingreformsorterminationbyeachoftheparties.
Thisagreementisorganized in a documentof 23 chaptersdedicatedtodifferenttopics.
"Botheconomies are complementary.
Colombiancitizenswillbenefitbecauseourexportswillincrease; therewill be more
investmentforinfrastructure, forindustry, for rural development, in short, more opportunities
”.
General benefits
The FTA opens for Colombia thelargestmarket in theworld in goods and services, with more than 300 millioninhabitants.
Thetreatycreates a stablelong-termframework, promotingnational and
foreigninvestment in Colombia. Likewise, itis a permanentinstrumentthat, unliketheAtpdea (foritsacronym in English), doesnotrequireperiodicrenewals and, therefore,
providesstability and predictability in the rules ofthegamefortrade in goods and servicesbetweenthetwocountries.
ThismeansthatColombiancompanieswill be abletodeveloplong-termbusinessplans and makethenecessaryinvestmentstotakeadvantageofopportunities in the US market.
Multiplestudies show the positive impactoftheagreementoneconomicgrowth, increasedexports and thegenerationofqualityjobs. AccordingtotheGovernmentof Colombia, GDP willgrowbetween 0.5 and 1 additionalpercentagepointeachyear. Likewise,
theunemploymentratewill be reducedbyonepercentagepoint and 500 thousandadditionaljobswill be createdwithinthenext 5 years.
Thesectorswiththehighestgrowthpotentialincludeclothing, textiles, leatherproducts, metal products, vegetable oils, fruits, vegetables and services. There are
alsosignificantopportunitiesforbeauty and agroindustrial products.
Withthe FTA, Colombianfamilieswill be abletoenjoy a
widervarietyofproductoptions at more competitive prices, increasingtheirpurchasingpower TheUnitedStatesisthemaindestinationforColombianexports, with a 38 percent share in 2011. The FTA guarantees total and
permanenttaxreliefonallColombianmerchandiseexportedtothat country.
The FTA guaranteesgreateraccessfortheColombian productive apparatustotheacquisitionof capital goods, mainlymachinery and
equipmentimportedfromtheUnitedStates, byimmediatelyeliminatingthevastmajorityoftariffs (between 5 and 20 percent). Theeffectwill be anincrease in
competitivenessfortheentirenational productive apparatus, both industrial and agricultural, and a specialbenefitforsmall and medium-sizedenterprises.
ADVANTAGE
Theadvantagesofsigningthisagreement are
thatforColombiancompaniesthereisthepossibilityofexportingtheirproductstothenorthofthe American continent, thusbenefitingtheagricultural sector mainly, the industrial sector, services and SMEs; Ontheotherhand, havingthetariffbenefitswillenterthe country allkindsofmerchandise at verylowcost, thusharmingthetrade sector
ACCESS TO WIDER MARKETS: FUNDAMENTAL FOR SMALL BUSINESSES.
ACCESS TO PRODUCTS OF HIGHER QUALITY AND LOWER PRICE
CONTACT WITH TECHNOLOGICAL AND SCIENTIFIC ADVANCES
BETTER SALARIES AND QUALITY OF EMPLOYMENT
IT OPENS US THE DOORS TO THE LARGEST MARKET IN THE WORLD
CONSOLIDATES ATPDEA PREFERENCES AND COVERS THE WHOLE TARIFF UNIVERSE
IT IS BINDING BECAUSE IT WILL REDUCE INSERT
IT INVOLVES LOWER COST OF GOODS AND CAPITAL IMPORTS DISADVANTAGES
Amongthedisadvantages, it can also be consideredthatmanyproductswillenterthe country, tryingtoreplacetheonealreadymanufactured, thusgeneratingloss and tax-
typedisturbancesbynotharboringthosetaxesforimports,
smallcompanieswillnothavetheabilityto compete internationallycausingthat are stagnant and limitingthemselvestothe manufacture ofproductsonlyforthefew local
clientsthatmayremain, the productive sector willalso be
harmedbynotreceivingtheexpectedsupportforboththecultivation and
harvestingoftheirproducts, thusachievingeconomiclossesduetothe do notbuyfromyour farm. Thefirst sector will be affected,
sincetheColombiancountrysideisnotfullyindustrializedto be ableto compete
againstagriculturalproductsfromtheUnitedStates, nor do theyhavesufficientproduction and qualitymechanisms. Colombianpeasants do
nothaveenougheducationalcapacitytorespondtothedemandsthatwill be madeofthem. We are also at a complete disadvantagewiththe US countryside, sinceit has
totallyprotectionistpolicies in its favor in itsdifferenteconomicsectors, theygeneratelowercostsforitsproducts.
