Actividad de aprendizaje 11

Evidencia 3: “Free Trade Agreement (FTA): advantages and disadvantages”

Nombre: Sandra Milena Pérez Casallas

Documento de identidad: 53159433
Programa: Negociación Internacional (1565304)

The Colombia - US TLC is constituted by norms and procedures derived from them, which
are applicable in equal conditions for the two countries. The TLC is not a Law, nor is it
conformed by them; However, according to the Political Constitution of our country,
international agreements have all the rigor and have to be complied with like any other
current legislation.
The TLC is a kind of guide on how to export - import among the signatory countries, with
general recommendations and criteria that determine the framework under which each
country can act to obtain the greatest benefits. In this sense, on the one hand, it is necessary
for the two countries to issue legislation on specific issues that take advantage of bilateral
conditions; on the other, each country is free to dictate its national economic policies and
take the measures it deems pertinent to boost international trade and especially to protect and
promote the export of its products
TLC went into effect on May 15, 2012, signed between Juan Manuel Santos and Barack
Obama at the Summit of the Americas without possessing a due date but with the possibility
of seeking reforms or termination by each of the parties . This agreement is organized in a
document of 23 chapters dedicated to different topics

FTA Organization Colombia - United States

Preamble
 Initial Provisions and Initial Definitions
 National Treatment and Access of Goods to the Market
 Textiles and Clothing
 Rules of Origin and Origin Procedures
 Customs Procedure and Trade Facilitation
 Sanitary and Phytosanitary Measures
 Technical Barriers to Trade
 Commercial Defense
 Public Contracting
 Investment
 Cross-border Trade in Services
 Financial Services
 Competition Policy
 Telecommunications
 Electronic Commerce
 Intellectual Property Rights
 Labor Issues
 Environment
 Transparency
 Administration of the Agreement and Strengthening of Commercial Capacities
 Dispute Resolution
 General Exceptions
 Final Provisions

These international trade agreements bring to Colombia, the advantage that their employers
can sell their products and services abroad under better conditions, without paying taxes
(tariffs) without being subject to other barriers, which do have to pay in case of not having
these treaties.
This helps the national economy of a country to grow as it has a much wider consumer market
than when it is limited to its entrepreneurs to sell in the domestic market.
Therefore, free trade is considered positive, because the lack of trade barriers makes
exporting easy and relatively cheap. In this way, a country can focus its resources more
efficiently and achieve a higher real income. Despite the global benefits of free trade for a
country's economy, there may be some important drawbacks to the establishment of free trade
agreements.
Colombia is not a threat to the US in political and economic matters, since the total
production of the country is only ¼ of their production. Colombia we are small in the impact
that it can generate in the North American production therefore the economists consider that
the TLC will be generous.
Colombia is still at a disadvantage because the US is in a greater capacity to generate
competition and production in sectors where Colombia is more dynamic. In turn, Colombia
has sectors in which it can compete in fruits, vegetables, footwear, textiles, etc. Without
ignoring the great disadvantage of the gap between a developed country such as the US and
a developing country like Colombia
In general, the main disadvantages of the TLC are:
 They are not equitable as multilaterial agreements
 Emerging economies lose
 Complicated competition to sustain for national industries
 Imbalance of the internal economy and lack of protection of productive sectors little
benefited with the negotiation of the Treaty.
 Mismatch in terms of tax revenues, since by eliminating tariffs entry of foreign products
would be leaving to receive tax concept, which could deepen the national fiscal deficit;
However, analysts expect this money to be recovered as a result of IVA and Income Tax
derived from the greater movement of the economy.
 Little capacity of adaptation of the national companies in front of the international
production standards, generating monopolies and capture of the market by the North
American offer that enters the country
Advantage of TLC in the United States

Access to broader markets:

 Fundamental for small companies

 Access to higher quality products at a lower price
 Contact with technological and scientific advances
 Better salaries and quality of employment
 We open the doors to the largest market in the world
 Consolidate preferences ATPDEA and it covers the entire tariff universe
 It is binding because the insertity will be reduced
 It implies lower cost of imports of goods and capital

Disadvantages of TLC with United States

 The commercial opening generates greater integration of the country into the world
economy, which will make it possible to reduce the volatility of its growth, the level of
risk, country and financial cost of private activity in general
 It gives us a new market with greater acquisition power than ours.
 Not all economic sectors benefit equally from free trade agreements, there are
undoubtedly products of greater sensitivity that are protected with certain trade defense
mechanisms.
 Social upheaval due to the exacerbation of poverty and exploitation of small farmers and
micro entrepreneurs.
 Loss of economic development opportunity due to the sale of products at market prices,
before the rigged exploitation of our natural resources.