Actividad de aprendizaje 11

Evidencia 3

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

Karen Julieth Pinto Rodríguez

Jheison Andrés Díaz Russi

Sena
Centro de Servicios Financieros
Tecnólogo en Negocios Internacionales
Colombia
2019
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

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 country1
 Principales Estados Compradores de
exportaciones Colombia (Millones USD))1

2010 2011 2012 2013 2014 2015

Texas 5,258 8,236 8,447 7,453 5,482 2,413

Florida 2,938 3,300 3,984 3,022 2,309 2,311

California 1,256 3,009 4,132 2,865 2,987 2,608

Louisiana 919 1,689 2,283 2,841 1,930 1,183

Nueva Jersey 466 690 1,148 1,141 N/A N/A

Mississippi 1,823 2,489 974 991 631 405

Massachusetts 164 365 746 760 563 354

Puerto Rico 188 271 306 269 488 271

Alabama 427 293 307 188 230 176

Utah 2 39 1 84 342 328

Delaware 70 365 344 79 378 970

Islas Vírgenes 18 1 6 41 N/A N/A

Nuevo
32 29 14 33 N/A N/A
Hampshire

Vermont N/A N/A 12 13 19 12

Fuente: Exportaciones Colombianas compradas por Estados.1