Evidencia 3: Ensayo "Free Trade Agreement (FTA) : Advantages and Disadvantages"

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

WENDY YOULIETH LOZANO RODRIGUEZ

SERVICIO NACIONAL DE APRENDIZAJE SENA


TECNOLOGÍA EN NEGOCIOS INTERNACIONALES
ACTIVIDAD DE APRENDIZAJE 11
2019
A Free Trade Agreement (FTA) is an agreement between two or more countries, signed

after several rounds of negotiation, which seeks to accelerate the economy through the

opening of the national market for foreign supply.

Basically, an FTA seeks to increase capital flows derived from trade between countries,

promote foreign investment and, consequently, encourage economic and social

development of the nations involved.

In the case of the agreement signed between Colombia and the United States, this is

known as TLC, although its technical name was Trade Promotion Agreement, in English

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 the tariffs for the entry into the country of about 82% of the

industrial products generated in the United States, meanwhile, USA. He eliminated them

for almost all Colombian products that cross their borders.

This FTA, like the other agreements signed by Colombia, is constituted by rules and

procedures derived from them, which are applicable on equal terms for both 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 regulations in force.

The FTA is a kind of methodological guide on how to export - import between 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 that the two countries 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 appropriate to boost

international trade and especially protect and promote the export of its products.

The current agreement with the United States is organized in a twenty-three chapter

document, each one dedicated to specific topics, as follows:

FTA Organization Colombia - United States

Preamble

Chapter 1 Initial Provisions and Initial Definitions

Episode 2 National Treatment and Access of Goods to the Market

Chapter 3 Textiles and Dress

Chapter 4 Rules of Origin and Procedures of Origin

Chapter 5 Customs Procedure and Trade Facilitation

Chapter 6 Sanitary and Phytosanitary Measures

Chapter 7 Technical Barriers to Trade

Chapter 8 Commercial Defense

Chapter 9 Public Procurement

Chapter 10 Investment

Chapter 11 Cross-border Trade in Services

Chapter 12 Financial services

Chapter 13 Competition Policy

Chapter 14 Telecommunications
Chapter 15 Electronic Commerce

Chapter 16 Intellectual Property Rights

Chapter 17 Laboral things

Chapter 18 Environment

Chapter 19 Transparency

Chapter 20 Agreement Administration and Strengthening of Commercial Capabilities

Chapter 21 Dispute Resolution

Chapter 22 General Exceptions

Chapter 23 Final Provisions

The FTA signed with the United States entered into force on May 15, 2012, as presidents

Juan Manuel Santos and Barack Obama agreed at the Summit of the Americas this year.

This Agreement, like other FTAs, does not have an "expiration date", but any of the parties

may request the reform or termination of the other by following the procedure contained

in the final document of the Agreement.

What are the advantages of having signed this FTA?

It is still too early to assess the advantages or difficulties arising 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 as “traditional” in the market.

Increased 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 staff 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.

What are the disadvantages?

As with the advantages, the picture of difficulties and risks is not easy to foresee, 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 the negotiation of the Treaty.

Mismatch in tax revenue, since eliminating the import tariffs of foreign products would

cease to receive taxes for this concept, which could deepen the national fiscal deficit;

However, analysts expect this money to be recovered by 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

standards of production, generating monopolies and capture of the market by the North

American supply that enters the country

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