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.