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

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
Disadvantages:

The infrastructure: We have very little to control and make a treaty to possess the
characteristics such as roads to transport products, ports, machinery, bridges, railways,
warehouses, plant capacity of companies.
The Agricultural System: The first sector will be affected, since the Colombian
countryside is not fully industrialized to compete against United States agricultural
products, nor does it have sufficient production and quality mechanisms. The Colombian
peasants also do not have the sufficient educational capacity to respond to the demands
that will be made to them. In addition, we are at a complete disadvantage with the US field,
since it has in its favor purely protectionist policies in its different economic sectors; It
generates lower costs for its producers and therefore a greater threat to our farmers.
Pymes: will be affected due to low productivity, low quality and high production costs that
characterizes them, which prevents them from competing in a highly specialized market,
thus leading them to their imminent disappearance, which is very dangerous, since these
generate more than 80% of employment in the country, the serious thing is that Colombia
does not have a protectionist policy, which obviously affects especially the peasants,
generating unemployment in the countryside. Nor is there a vision of the disasters that can
be generated internally and how to fix them, when the FTA is in execution: unemployment
generated by the disappearance of SMEs, the total lack of protection of the state towards
the peasants, the mass displacement of peasants or Affected population, who are looking
for work or better opportunities in the cities, since in rural areas they did not obtain benefits
thanks to the treaty; the common violence that is generated due to these factors; this will
then bring unemployment, famine, homelessness.
Tariffs: Colombia had previously established tariff reduction agreements, such as the
FTAA or APTDEA -, in which Colombian products no longer have tariffs or have very low
taxes, but which in the Free Trade Agreement are being re-granted as if they had tariff
barriers, that is, they are giving us advantages in this treaty, which we already had. For
example, in the FTAA, for Colombian textiles, 20% of the taxes were reduced or deducted:
for the entry of this product in the United States, and in the FTA, the same percentage of
relief is being granted again, and in reality are not offering us then any real benefit
The non-existence of state-owned companies: They sustain, that when there are
national companies they could not negotiate freely, since they are linked to national
legislation and thus things would present personal political interests and with this the
favorable interest for the FTA would not be achieved, While private companies have total
freedom, their economy is based on the laws of supply and demand, and their managers
do not have to request authorization to make their business decisions. That way they
would be totally capitalizing our economy, their political interests in our country could be
carried out perfectly, and they would not have the barrier of a mixed system that they
consider obsolete, and that operates in Colombia. With this they intend to enter our
country with total freedom.

• 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 country.
Advantage: The FTA opens for Colombia the world's largest market in goods and services,
with more than 308 million inhabitants with an annual per capita income of US $ 47,400.

- 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 of trade in goods and services between the two countries.

- When the FTA negotiation with the United States concluded, multiple studies were
prepared in which the positive impact of the agreement on economic growth, increased
exports and the generation of skilled and unskilled employment was demonstrated. More
than four years later, Colombia is a more competitive country, substantially more open to
the world, with a productive sector that has matured and today has better conditions to
attract productive investment and conquer foreign markets.
The United States is the main destination of Colombian exports, with 42% participation. In
2010, despite enjoying Andean tariff preferences, Colombian exporters of goods paid more
than US $ 9 million for entry fees to the United States. After the expiration of the ATPDEA,
that figure could rise to about US $ 125 million. The FTA guarantees a total and
permanent relief of all Colombian merchandise exported to that country.

- The agricultural sector will benefit from greater access to the US market, not only by the
permanent elimination of tariffs but also by the establishment of clear rules of sanitary and
phytosanitary matters to support real access for our agricultural and agroindustrial
production. USA He pledged to give timely attention to Colombian requests, to take into
account the technical evaluations made in our country and to provide technical
cooperation to put our systems at the level required to have real access to their market.

- The tariff reduction scheme agreed for the industrial field maximizes the competitive
opportunities of our productive apparatus. Opens duty-free access for 99% of Colombian
export products immediately. Colombia grants immediate relief for 82% of our US imports,
mostly capital goods or non-produced goods in the country.
- The FTA guarantees greater access of the Colombian productive apparatus to the
acquisition of capital goods, mainly machinery and equipment imported from the United
States by the immediate elimination of the vast majority of tariffs (between 5% and 20%).
The effect will be an increase in competitiveness for the entire national industrial and
agricultural production apparatus and a special benefit for SMEs. - Consumers will be one
of the most benefited groups with this treaty. In all segments of the economy consumers
will have greater options in terms of quality and price, which will increase the purchasing
power of Colombians.