Actividad de aprendizaje 11

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

Aprendiz:

Jeisson Fabián Niño Ortiz

Ficha de caracterización:

1565321

Instructora:

VICKY BERENA GOMEZ SAUDA

Servicio Nacional de Aprendizaje – SENA

Tecnólogo Negociación Internacional

Bogotá D.C

Mayo 2019
 EVIDENCIA 3: ENSAYO “FREE TRADE AGREEMENT (FTA): ADVANTAGES AND DISADVANTAGES”

Let's start by understanding the concept. A free trade agreement (FTA) is a trade agreement
signed by two or more countries to agree on the granting of mutual tariff preferences and
the reduction of non-tariff barriers to trade in goods and services. That is, these agreements
simplify the entry and exit of products from one country to another, avoiding the restrictions
that normally exist.

For many companies it is a great benefit since they have new markets to sell their products
to. But do not forget that many small sellers get more competition from outside, sometimes
at cheaper prices, and that hurts them. Now that Colombia is thinking of signing a Free Trade
Agreement with China and another with the European Union that they have been talking
about for years, and that already has one, long discussed with the United States, we take
the opportunity to analyze well what this would mean for Colombians.

In the last decade, Colombia's foreign trade policy was based on the deepening of trade
relations with the Andean Community and the efforts to obtain unilateral access to certain
markets, especially the United States, through the ATPA schemes. / ATPDEA, and that of
the European Union, through the GSP scheme.

Due to the increasing gap between exports and imports, being the second largest in
Colombia, it is evident the need to promote important changes in trade policy, such as finding
new markets and for this it is important to move forward without delay to the subscription of
free trade agreements such as the one that was decided to negotiate with the United States.
After the last extension of the ATPDEA in 2010 that ended on February 15, 2011, the FTA
with the United States is seen as a possibility for entrepreneurs to make long-term
investments that increase their productive capacity and have a stability over time. and in
favorable conditions for exports.

The FTA is an agreement that generates opportunities for all Colombians, without exception,
as it contributes to creating jobs and improving the performance of the national economy.
Initially it benefits the exporting sectors because they will be able to sell their products and
services, under very favorable conditions, in the US market. But not only to exporters, also
to all other domestic producers.
The subjects that were negotiated were those considered as general, that is, access to
markets, in its two aspects (industrial and agricultural); intellectual property; investment
regime; State purchases; dispute resolution; competition; electronic commerce; services;
environmental and labor

The service sector is already the largest in the Colombian economy. High value-added
services are the great driver of the world's economies, foreign investment is included
because there is great interest in attracting it. Intellectual property was also negotiated, a
highly sensitive issue; and State purchases, a very important element to boost trade.

In February 2006, the Free Trade Agreement between Colombia and the United States was
sealed after 21 months of meetings between the parties. Although both governments
approved the agreement, the final approval to enter into force depends on the Congresses
of both countries and that of the United States has not yet reached a decision.

The objective of this FTA is the insertion of Colombia in the US market with bilateral relations
that will promote economic and commercial interests, and encourage investment. In general,
it seeks to provide investors with a more stable business environment and ensure that the
agreements are favorable for the provision of goods and services and encourage their
export.

One of the advantages These international trade agreements contribute to a country, as in

this case Colombia, the advantage that its businessmen can sell their products and services
abroad in better conditions, without paying taxes (tariffs) and without being subjected to
another type of barriers, something that does have to be paid 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 it easy
to export 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 major drawbacks to the establishment of free trade
agreements.

Another positive point is that there are Free Trade Agreements that force the partner country
to give better working conditions to its workers, often exploited.
We could say that the disadvantages are that agreements between nations with different
levels of economic development, that is, between countries with a developed economy and
emerging countries are not as equitable as multilateral agreements that do try to balance
the role of economies.

Emerging economies are those that lose, according to experts who said that a problem that
exists is that trade agreements between developed and emerging countries should not be
made based on the differences that exist.

On the other hand, the elimination of international trade barriers may open, within some
national industries, a very complicated competition to sustain. Some international markets
are not at the same level as the national industry and are able to produce a certain form of
product cheaper than in many Latin countries, being the case of China a very prominent
when we talk about labor costs. As such, this surplus merchandise floods the local market
at much cheaper prices and, essentially, comes to dominate that industry.

Free trade can also increase domestic economic instability, as local markets become
dependent on world imports. Thus, if the country that is a trading partner has financial
problems, this can greatly affect the other country.