South Korea - Colombia Free Trade Agreement

Smith Arandu Santos Arias

Two years ago was signed the Free Trade Agreement between South Korea and Colombia.
As a diversity of free trade agreements, the benefits derived of these are questioned from
the sector of development for the nation with a low grown industry. But, from other side, the
sectors that are more prepared for export, pray for the establishment of this agreements,
because they can have a better benefit with low production expenses. Although, the
relationship among this nations have an armony since 1950, the historic and cultural sector
is different at the economic sector. Then is necessary find the advantages and
disadvantages of this agreement, firstly for understand the colombian weaknesses and
strengths to understand the points that could be exploited, because the principal tesis of this
document is that Colombia could prepare for the agreement with Korea, avoiding derived
damages.

Paragraph 1: Advantages of the Agreement

- Idea 1: Sectors that are expected to be benefited: Agroindustry and puntual
sectors.http://es.presidencia.gov.co/noticia/160715-Entra-en-vigencia-Tratado-de-
Libre-Comercio-de-Colombia-y-Corea-del-Sur and potential customers
https://www.legiscomex.com/BancoMedios/Documentos%20PDF/estudio-perfil-
economico-comercial-corea-sur-2016-completo-rci309.pdf .
- Idea 2: Balance at the year from the signed: Sectors that really get the benefits
https://www.dinero.com/economia/articulo/tlc-de-colombia-y-corea-del-sur-cumple-
un-ano-balance/247467
- Idea 3: Agroindustrial sectors that have capacity of export and production, related
with the agreement, which are growing.
http://www.inviertaencolombia.com.co/Adjuntos/Perfil%20Sector%20Agroindustrial%
20Colombiano%20-%202012.pdf
Paragraph 2: Disadvantages of the Agreement
- Idea 1: Principal export products from South Korea
https://www.legiscomex.com/BancoMedios/Documentos%20PDF/estudio-perfil-
economico-comercial-corea-sur-2016-completo-rci309.pdf
- Idea 2: Comparison between the industrial sector of South Korea and the industrial
sector of Colombia. https://www.dinero.com/economia/articulo/produccion-industrial-
en-colombia-2017/255294
- Idea 3: Analysis of the comparison
Paragraph 3: Shortcomings and Exploit Opportunities
- Idea 1: Time as an important option
http://www.mincit.gov.co/tlc/publicaciones/4468/free_trade_agreement_between_the
_republic_of_colombia_and_the_republic_of_korea
- Idea 2: The reduction of the taxes is for the agroindustrial sector,
https://www.ica.gov.co/getdoc/08d0b08f-f704-4e0f-bfb2-14f861fb5215/Certificacion-
de-Semillas.aspx
- Idea 3: The grave of the Colombian Industry.

Conclusión

South Korea - Colombia Free Trade Agreement

Smith Arandu Santos Arias

Two years ago was signed the Free Trade Agreement between South Korea and Colombia.
As a diversity of free trade agreements, the benefits derived of these are questioned from
the sector of development for the nation with a low grown industry. But, from other side, the
sectors that are more prepared for export, pray for the establishment of this agreements,
because they can have a better benefit with low production expenses. Although, the
relationship among this nations have an armony since 1950, the historic and cultural sector
is different at the economic sector. Then is necessary find the advantages and
disadvantages of this agreement, firstly for understand the colombian weaknesses and
strengths to understand the points that could be exploited, because the principal tesis of this
document is that Colombia could prepare for the agreement with Korea, avoiding derived
damages.

Advantages of the Agreement

Sectors that are expected to be benefited: Agroindustry and puntual sectors and potential
customers
In this first aspect we will see the first idea of the government at the moment of sign the
agreement. Initially, the hope of the government, while 2016, was that the exports benefit the
sectors, in first term the objective was increase the low taxes for sectors that was exporting
before the agreement, as the case of plumas, orchids, toothbrush and others. In other side,
is the case of new sectors that had the hope of export, as is the case of the fresh asparagus,
sweet corn, dried vegetables, dried beans, mixes of nuts and spices, vegetable juices and
extracts, wooden furniture, palm kernel oils, unfermented orange juice and pineapple juice,
among others. The expectation of the government then was that more than 176 sectors were
material of export. The other hope was that for 2020 the colombian products could be export
for more than 51.000.000 korean customers.

Balance at the year from the signed: Sectors that really get the benefits
According the last paragraph is evident that the spectatives was so high, so now is
necessary comparing the sectors that rise around the apply of the North Korea - Colombia
Free Trade Agreement. According to the article of the Dinero magazine, the no mining
exports have increased 32.5% between the July 15 of 2016 to May of 2017. The agricultural
products are the most exported in the vigency of the agreement. But, in the same way, the
products with the most grown are the industrial products, where Colombia export 41.6%
more than before the agreement. In this way, the principal products are the gas meters,
cocoa beans; cocoa paste; mobile phones; nuts; wood; plant products; bananas; video
game; tires; medical instruments and apparatus; pens and markers.

Agroindustrial sectors that have capacity of export and production, related with the
agreement, which are growing
Historically, Colombia has the capacity of export more than nothing, the green coffee, the
green and yellow bananas, the palm oil, the refined sugar, the fresh beans, the cassava
starch, the sugar candies, the coffee extract, the mixtures and masses of bakery and the
cornmeal. This because this are the products that are in the Mundial Ranking about the
colombian exports. Then if compare the products that Colombia historically exports with the
products that are going exporting now, by the South Korea agreement, we can see that the
50% of the tradicional exports are in the list. But also we have to see that the agreement has
encouraging the exports of other products.

Disadvantages of the Agreement

Principal export products from South Korea

Now as we can imagine, the agreement had advantages for the customers as for the
colombian industrial sector. But the problem is the competition about the national market, it
because South Korea can exports New motor cars and other motor vehicles principally
designed for the transport of persons, Other parts of telephone sets, Monolithic integrated
circuits, DRAM (Dynamic random access memory), Tankers cruise ships, Other parts and
accessories of the motor vehicles of headings, Multichip integrated circuits, Gas oils,
Vessels for the transport of goods, Other devices, appliances and instruments for
televisions, Drilling ships, New motor cars and other motor vehicles principally designed for
the transport of persons of a cylinder capacity, Jet fuel, Other light-vessels, firefloats,
dredgers, floating cranes, and other vessels the navigability of which is subsidiary to their
main function, Other telephones for cellular networks or for other wireless networks, Other
devices, appliances and instruments liquid crystal devices not constituting articles provided
for more specifically in other headings, Motor spirit, Other parts of Electric sound or visual
signaling apparatus, DRAM Modules.

Comparison between the industrial sector of South Korea and the industrial sector of
Colombia.
In other way, we have to have present that Colombia haven’t a industrial sector with high
developments, this because his principal activity is the extractivism. But the few industry that
is in the country is based in drinks, dresses and the chemical industry. Then, we can see
that a early affectation couldn’t be in the national industry, because here isn’t industries and
the industries that are actives, don’t produce nothing related with the korean products.

Analysis of the comparison

Then the national industry that want to start in the sector of the technology have a problem if
thinks in produce the same that this gigant of the technology. But, in other way, how we can
see, the asian products aren’t final products as TVs or computers, then it could be a
opportunity for Colombia to start the role of assembler.

Shortcomings and Exploit Opportunities

Time as an important option
According the agreement, we have to know that the most part of the agricultural products, as
the coffee, the flowers, the banana, the vegetables and the fruits, have from 3 to 5 or 7 years
for become the percent of taxes to zero. Then the benefits of the agreement going to come
speeder to Colombia than to South Korea, because the time for the industrial products is of
10 years. Then Colombia could use the excedents of the agricultural sector to finance
himself to an industrialization.

The reduction of the taxes is for the agroindustrial sector

In the case of the reduction of the taxes, is an opportunity for Colombia, because the
production cost depends, generally, of the cost of main resources to produce it, that in
Colombia is a problem for the certification of seeds. Other aspect that modify the production
cost is the transport, that also is a problem because here in Colombia the streets for the
coast are around the mountains instead of cross it. Then we can see that the problems of
the exportation and of the high cost of the colombian products is for the bad logistic. Other
aspect that add cost to the product is the taxes or entry barriers, that with the agreement
could help to increase the demand of the colombian products for the reduction of the cost
become it cheaper.

The grave of the Colombian Industry.

Then the affirmation that the colombian industry could be killed by the korean industry is a
illusion, because we don’t have industry with the focus of the asian country, and if to
Colombia would like become in a industrial potency, have the term of 10 years to develop his
industry until the arrival of the korean industry.

Conclusion

Then how we could see, the free trade agreement between Colombia and South Korea help
the agricultural exportation, driving the products that at the moment, Colombia hadn’t
develop. In other side, the industrial sector has a lot of benefits for the exportation of their
products from Colombia, against of all the politicians argues. Finally, we can see that the
agreement, let to Colombia, do changes with earlier benefits, because the arrival of the
korean products have 10 years.