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

Alejandra Daniela Monsalve Rodríguez

Deisy Yohana Dionisio Navarrete

David Santiago Muñoz Sandoval

Cristian David Reíta Aragón

Servicio Nacional De Aprendizaje - Sena

International Business

Ficha 1966040

Bogotá

2020
 INTRODUCTION
For Colombia, broadly speaking, a free trade agreement with the United States can ensure
significant changes in the economy, but it must take into account that progress will have to be
made in an attractive macroeconomic and institutional environment for investment,
adequately administering the negotiation process, and managing proactively the positive and
negative effects derived from FTA.
A good number of Colombian companies are taking advantage of the time and preparing for
the oceanic change that will come with the fall of the trade barriers that protect the
Colombian market.The Free Trade Agreement with the United States appears today as the
most important and viable option they have Colombia in the context of international
integration.

FREE TRADE AGREEMENT BETWEEN COLOMBIA AND UNITED STATES

The free trade agreement between Colombia and United States was approved the 12 of
October of 2011, by the congress for United States entered into force as of May 15 2012 signed
by Colombia and United States with the aim of promoting trade between the two countries,
achieving permanent preferential access to the United States, Colombia now has privileged
access to the US market, it is a great opportunity for our country, it is the commercial space
we need to take advantage of our business energy and transform it into well-being and wealth
for all.
The final result of the negotions is totally consistent with this aim, since not only are great
export opportunities open to the country, but effective mechanisms were established to
achieve real access for our exports and protection instruments for sensitive products of our
agriculture.
Article published by Colombia magazine informs Due to the growing gap between exports
and imports, being the second for most shares for Colombia, the need to promote changes in
trade policy is fundamental.

In addition, it is necessary to find new markets and for this it is important to advance without
delay towards the signing of free trade agreements such as the one that was decided to
negotiate with the United States. https://encolombia.com/economia/internacional/colombia-
estados-unidos/tlc-firmado-usa-col/

It’s important to note that the FTA, plus 10,634 tariff positions between agricultural, will be
able to enter the United States without tariffs the most privileged are pymes, they are
especially benefited with the agreement on access to industrial goods because the reduction of
tariffs not only reduces their production costs but it makes them cheaper to upgrade
technology and improve productivity.
April 15: Obama and Santos announce in Cartagena Indians where they were holding the
Summit of the Americas the entry into force of the FTA on May 15.
https://encolombia.com/economia/internacional/colombia-estados-unidos/tlc-firmado-usa-col/

ADVANTAGES OF THE TLC BETWEEN COLOMBIA AND UNITED STATES

• The FTA opens the largest market for goods and services opens the largest market for
goods and services
• The FTA creates a long-term regulatory framework, thus promoting national and
foreign investment in Colombia. The FTA is a permanent instrument that, unlike the
ATPDEA, does not require periodic renewals and therefore provides stability and
predictability in the rules of the game for trade in goods and services between the two
countries.
• The United States is the main destination for Colombians exports, with a 42% share.
In 2010, despite enjoying Andean tariff preferences, Colombian exporters of goods
paid more than US $ 9 million for entry tariffs to the United States. After the
expiration of the ATPDEA, that figure could rise to about $ 125 million. The FTA
guarantees total and permanent tax relief for all Colombian merchandise exported to
that country.
• Flowers: The FTA guarantees stable and duty-free access to the United States for
Colombian flowers that, in the absence of the agreement and of the tariff preferences,
must pay a tariff of more than 6%. This sector is totally dependent on exports and
generates more than 200 thousand jobs in Colombia.
• Dairy products: Colombia is a preferential access share for dairy products, most of
which are concentrated in cheese, our greatest export potential. Butters and other
dairy products such as flavored milk also play a significant role in the quota. Sanitary
provisions will allow these commercial opportunities to materialize in the short term.

https://es.search.yahoo.com/search?fr=mcafee HYPERLINK
"https://es.search.yahoo.com/search?fr=mcafee&type=E210ES91215G0&p"& HYPERLINK
"https://es.search.yahoo.com/search?
fr=mcafee&type=E210ES91215G0&p"type=E210ES91215G0 HYPERLINK
"https://es.search.yahoo.com/search?fr=mcafee&type=E210ES91215G0&p"& HYPERLINK
"https://es.search.yahoo.com/search?fr=mcafee&type=E210ES91215G0&p"p
 DISADVANTAGES OF THE FTA BETWEEN COLOMBIA AND THE UNITED STATES
⦁ Causes an imbalance in the internal economy and the lack of protection of little benefited
productive sectors.
⦁ There is a mismatch in terms of tax revenue, since by eliminating tariffs on foreign products,
they would stop receiving taxes for this concept, which could deepen the national fiscal deficit.
⦁ There is no capacity for adaptation of national companies to international production
standards, generating monopolies and market capture by the North American supply that
enters the country.
⦁ Migrate employment. Especially when it comes to more developed nations exploiting smaller
nations, industries and businesses tend to move to where there are more favorable conditions
and this often destroys employment.

• Source: https://concepto.de/libre-comercio/#ixzz6ZBlfMzAC

CONCLUSIONS
We can conclude that the treaty for the microentrepreneurs was not a good negotiating
decision. It is also not possible to analyze the effects of a free trade agreement without
considering the general context of public policies in which it is implemented and that
according to projections made by the National Planning Department, the impact of
eliminating tariffs will allow the economy growth of an additional 0.48 points and a two point
decrease in unemployment, five years after its launch.