Actividad de Aprendizaje Nº 11

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

Rubén Darío Gutiérrez Piedrahita

Servicio Nacional de Aprendizaje

Tecnología en Negocios Internacionales

2019
Agreement between Colombia and the United States, approved on October 10, 2011 and launched since
May 15, 2012 with objectives to maintain the economy between the two countries in terms of imports
and exports. 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.

According to critics of this issue, they affirm that the FTA is a straitjacket because the United States
takes this agreement as a payment to the debt that is owed, which is more an obligation than an
economic exit, because by accepting this treaty, they did not think if the people or the people win or
lose they only linked themselves to their own good but they did not see that we Colombians are the
most affected, for the mere fact of being an underdeveloped country where our competitiveness of the
majority of products does not increase nor are competent in the potential of the United States.

The Colombian economy has been so affected, that the producers of our country have had to sell at
lower cost, to be able to sell their product to their places of origin since the number of imports increases
every day, Colombia is preferring to bring coffee and prepared for daily consumption instead of
improving the quality of ours and exporting it, all these factors are the biggest losers because now they
have to earn less, work more and compete more in terms of quality and prices.

According to expert economists from Colombia, such as Mauricio Rodriguez, Juan Camilo Restrepo,
Hernando Gomez Buendia and others, the FTA is something that Colombia has to do, because
otherwise other countries will also arrive that also produce and export the same as we do, and They will
"steal" the market, condemning us to underdevelopment. Sooner or later Colombia will come to
establish economic pacts in this country or with other countries of the world; the fundamental thing is
that you can not miss an opportunity of these, since the first of the countries that arrive in the United
States, through an FTA, will be the colonizer that will control the market and will know it better than
the others. Additionally, ours is a medium economy that needs to open its doors to other countries, to
achieve development, and if it does not do so with its internal economy, it will not be able to survive.
The United States is a country of 285 million inhabitants, with 35,000 thousand dollars of income per
capital, which represents a great purchasing power. It is also a very rich market and one of the largest
and most dynamic in the world, in which Colombia will be able to sell, negotiate and export
innumerable products, which will generate a better level of economic and social development for our
country.
Colombia is not a great threat to the United States in political and economic matters, since the total
production of our country is only a quarter of their production. We are irrelevant in the impact that we
can cause to its productive apparatus, for which, the economists consider that the United States will be
generous with us in this agreement that is trying to sign. What has to be taken into account, is that
Colombia is in total disadvantage with respect to the United States, since it has greater capacity for
competition and production in the sectors where our country is more dynamic. But this way, Colombia
also has sectors in which it can compete with its main ally and rival, such as: fruits, vegetables,
footwear, textiles, etc. Although Colombia may have advantages and certain competition options, as
mentioned above, it has a great disadvantage represented in the great gap between a developed country,
or rather, a world power, and an underdeveloped developing country, such as ours.
The main cause for Colombia to have a competitive capacity with other developed or developing
countries, is that it does not have a state that makes a total presence in its territory, added to this the
great problem represented by the presence of insurgent groups, the disinterest in our nation or the lack
of nationalism, and many other factors that prevent Colombia from being an integrated Nation-State,
factors that the United States does not have.
the disinterest in our nation or the lack of nationalism, and many other factors that prevent Colombia
from being an integrated Nation-State, factors that the United States does not have.
Another factor of disadvantage for Colombia, is the little infrastructure that has to control and make a
treaty of these characteristics, such as roads to transport products, ports, machinery, bridges, railways,
warehouses, plant capacity of companies and so many others that are needed to compete with the
United States.

Additionally, in order to enter this trade under equal conditions, the country must make a radical social
change in terms of production, competitiveness, protectionism, education, quality processes and the
improvement of the judicial and commercial system, since With this agreement the demands will be
greater, requiring a more effective and effective response in these fields With this agreement the
demands will be greater, requiring a more effective and effective response in these fields.

Today, the biggest concern with the openness that the country will have for the signing of the Free
Trade Agreement, are the different negative repercussions, especially on two sectors of our economy:
the field or agricultural system and SMEs (small and medium enterprises) .

FTA Organization Colombia - United States

 Initial Provisions and Initial Definitions

 Treatment and Access of Goods to the Market
 Textiles and Clothing
 Rules of Origin and Origin Procedures
 Customs Procedure and Trade Facilitation
 Sanitary and Phytosanitary Measures
 Technical Barriers to Trade
 Commercial Defense
 Public Contracting
 Investment
 Cross-border Trade in Services
 Financial Services
 Competition Policy
 Electronic Commerce
 Intellectual Property Rights
 Labor Issues
  Environment
 Transparency
 Administration of the Agreement and Strengthening of Commercial Capacities
 Dispute Resolution
 General Exceptions
 Final Provisions

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.
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

1 https://colombiadigital.net/actualidad/articulos-informativos/item/2057-que-es-el-tlc-colombia-estados-unidos.html