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

The Trade Promotion Agreement between the United States and Colombia, also called TLC (in
English: Colombia Trade Promotion Agreement (TPA)), is a Free Trade Agreement (FTA)
between Colombia and the United States. Approved on October 12, 2011 by the Congress of
the United States and in effect from May 15, 2012.

1. What is the FTA?

A Free Trade Agreement (FTA) is an agreement between two or more countries, signed after
several rounds of negotiations, which seeks to accelerate the economy through the opening of
the domestic market for foreign supply.
Basically, an FTA seeks to increase the flows of capital derived from trade between countries,
promote foreign investment and, consequently, encourage the economic and social
development of the nations that intervene.
In the case of the agreement signed between Colombia and the United States, this is known as
FTA, although its technical name was the Trade Promotion Agreement (TPA). The basic
objective of this deal is the reduction of tariffs and taxes so that the producers of the two
countries can trade freely. Under this treaty, Colombia eliminated tariffs for the entry into the
country of about 82% of industrial products generated in the United States, meanwhile, the
United States. he eliminated them for almost all Colombian products that cross their borders.
This FTA, like the other agreements signed by Colombia, is constituted by norms and
procedures derived from them, which are applicable in equal conditions for the two countries.
The FTA 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 must be complied
with like any other current legislation.
The FTA is a kind of methodological 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 for 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.
 2. What are the advantages of having signed this FTA?

It is still too early to evaluate the advantages or difficulties derived from the signing of the
Treaty, however it is possible to make a general balance according to the projections of
international trade specialists:
• Increase and acceleration of economic growth derived from the greater flow of capital.
• Increase in exports, especially those of products and services that were not previously
considered "traditional" in the market.
• Increase in the competitiveness of the national industry derived from access to new
technologies, raw materials and knowledge from the other country at lower costs.
• Stability of the labor market in the industrial sector, to the extent that companies will require
their personnel plant to produce the goods they will export. Likewise, there is the possibility of
generating more employment as sales in the foreign market expand.
• Increase in investor confidence.
• Modernization of the State and organizations related to foreign trade.

The supporters of the Treaty consider that it has the following favorable effects:

• The contribution of some percentage points to economic growth: the figure of this contribution
also remains without consensus.10
• The growth of the country's international trade volume, both in exports and imports.10
• Improving the international perception of Colombia abroad, which should "reduce somewhat
the country's risk and the cost of borrowing abroad" .10
• Access (in a difficult proportion to be precise) of Colombian companies to purchases of the US
public sector.10
• Colombia wins with the FTA, because it has a stability contract in the rules of the game with its
main commercial partner.

Those who are against the FTA argue in general that in the net balance Colombia would
continue to obtain a minimum profit, and reproach the following:

• Unequal distribution of advantages of the FTA: The government officially assumed that there
are winners and affected when this treaty came into force. Different unions have expressed their
rejection of this agreement considering it harmful to the national economy, mainly in the
agricultural and intellectual property aspects.12 Harmed sectors are rice, wheat, corn, sugar,
poultry, cattle and cattle the swine They will be affected, not because they disappear, but
because now they will have to earn less, work more and compete more. In any case, there will
be very large structural changes if the FTA goes into effect. The sectors most affected by these
changes will be: the agricultural sector, the public health sector (access to health is affected by
the section of the same in which the North American pharmaceutical monopolies "managed to
raise the protection standards of their sector, above the parameters of the WTO ... This will be
reflected in less competition, greater monopoly and, therefore, the increase in consumer prices
"13), the industrial sector (by the entry of remanufactured products that would compete with the
domestic producers at very low costs).

• Lack of popular consultation (which would be essential in such an important matter). The
disputes around the FTA are increased by the absence of a popular consultation on the matter.
Until now, different unions, unions and ordinary citizens have expressed their rejection of this
agreement considering it harmful to the national economy, mainly in the agricultural and
intellectual property aspects.12 Other economic sectors are clearly benefited, such as
garments, flowers, Plastics and leather goods. Faced with these wide divergences, a popular
consultation could be useful.

3. What are the disadvantages?

As with the advantages, the panorama of difficulties and risks is not easy to predict, but experts
suggest paying special attention to the following points:
 Imbalance of the internal economy and lack of protection of productive sectors that
have little benefit from negotiating the Treaty.
 Maladjustment in terms of tax revenue, since eliminating import tariffs for foreign
products would stop receiving taxes for this concept, which could deepen the national
fiscal deficit; However, analysts expect that this money will be recovered as VAT 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.

4. What opportunities do they really open up for Colombian entrepreneurs?

Once the Agreement entered into force, the great opportunity of entrepreneurs, merchants and
in general anyone who can provide a product or service to the United States is able to access a
market of more than three hundred million inhabitants with a GDP per capita. capita of USD
46,715, willing to achieve the best cost / benefit ratio.
Not all products and services are covered by the FTA, that is, not all can cross borders without
paying tariffs. Proexport published the official lists of graded products and services, classifying
them as agricultural and non-agricultural. As we already mentioned, the United States has
reduced the entry of almost all the industrial products produced by Colombia, so that large
sectors of the economy can benefit from this Treaty.
With the information provided by Proexport, El Tiempo produced a map that locates the
business opportunities in the United States available to national entrepreneurs.