The Colombian Ministry of Commerce views the trade treaty as a major way to improve access to the markets. The US is a world leading market and getting preferential access for Colombia would be a strategic step towards fighting competition from other economies. The FTT accords access to Colombia in different sectors of the economy. First, the treaty boosts agriculture, as Colombia would easily get local products such as meat, margarine, vegetable and fruits to the US market. Colombia does well in the production of these agricultural products and would manage to meet the market standards. The tripling of the sugar quota and the achievement of the 4 million tobacco quota is a demonstration of how the treaty works to improve exports. The treaty further improves access for sugar and oil-based products. Improved access for milk and milk products help to develop employment in the rural sector of the country. The treaty enables farmers and producers in remote parts to access international market. It helps to advance production techniques in the agricultural sector by protecting the producers and allowing them a chance to adjust to the technological changes. It does this by utilizing an array of protective mechanisms including the use of tax-free periods, baseline tariffs, and automatic safeguards. Domestic producers will reap and distribute among themselves profits from the quota of rice extended to the US. Agricultural products from Colombia would be processed in an expedited process as the country receives priority in most of the traded products. The government would embark on projects that would help the local producers such as poultry farmers to meet the required international standards. This would be important in making them realize increased revenues and higher productivity. Colombia has a relatively high surplus of corn. It requires more access to the market and the treaty keeps off other potential importers to allow Colombia sell more of the grain to the US.
Second, the treaty bolsters access for industrial goods as the locally manufactured goods are allowed 99.9% access to the US. Local manufactures would experience more sales that would help them expand their businesses. The tariff reductions are critical in the achievement of lower costs that would encourage growth of small businesses. Local producers would experience higher productivity as they would import some products duty free for their production processes. The effect of the tariff reduction goes a long way to help the local companies to adjust to technology and improve productivity besides lowering of costs. Third, the service sector would be more efficient as the treaty eliminates the existing barriers. The treaty brings down the costs of transportation across the border, heightens internet use and motivates technological advancements. These eliminate the barriers of the service industry helping to spur growth. The treaty removes tariffs from digital products encouraging their usage. This would see more ecommerce activities. The effect of the treaty on the services promotes investments, exports and job creation. Fourth, the country would have more investments from the US and other economies. Investors would be guaranteed of the market for the goods they produce. The country would offer more favorable conditions for the investors in a bid to achieve more products for export. Lastly, the treaty eliminates the barriers of access for Colombian businesses to purchase from federal and non-federal organizations in the US.
The treaty would work to encourage production of industrial goods in the US. The Trade Promotion Agreement would have 80% of the goods enter Colombia duty-free. This would improve access and enable producers sell more to the trade partner. Local manufacturers would experience lower production costs and elimination of the duty would give them chance to improve their technology and productivity. It would extend to achieve higher employment in the manufacturing sector. US agricultural products such as high quality beef, cherries, cotton, almonds and peaches that are majorly exported would become duty free. The agricultural sector in the country would grow and farmers would earn higher incomes because of the incentives in the trade agreement.
Fifteen percent of the industrial exports were information technology products. This was despite the existence of an 8.2% tariff. The agreement allows the US to export the information technology products to Colombia duty free and this is set to benefit all the exporters of this category of goods. The US will export more machinery and equipment to Colombia as most of these products would become duty free upon entry to the agreement. Colombia has planned to spend more on development of its public infrastructure by seeking to increase expenditure by 78%. It has planned projects including the $ 1billion Cartagena Refinery. The country therefore has high demand for the specialized machinery and equipment and would be a strategic market offering opportunity for US exports. Chemicals that comprise 34% of the industrial exports would become duty free or have 8%-2%. This would be a significant fall from the current 20% enabling the country to increase exports of this product. Currently, there is a ban on the importation of remanufactured products in Colombia. The agreement will see the US sell these products to Colombia for the first time. 96% of the medical equipment and 65% of energy equipment would be duty free. The US would receive a 100% duty free on its aircraft and related parts sold to Colombia on entering the agreement. The overall effect would be an increment in the country GDP as a result of increased productivity in different sectors of the economy. More people would get employment and small businesses would have significant growth.
Trade Agreements do not work as it is said. Using an example of China, the country has experienced higher benefit since joining WTO even as other countries keep struggling. China as the third-largest economy is relatively too much exportation instead of looking to better small countries by importing more. When it joined the WTO, in 2007, the manufacturing sector in the US lost millions of jobs. The currency of China is undervalued at 20-80%. The beneficiaries of the trade agreements are the large multinational companies as seen from their high performance in the stock exchange when China joined the WTO. The multinationals access the cheap raw materials and products from China to attain low costs of production
Colombia lacks a proper framework to hold the government accountable for labor rights. There are no norms that would see the relevant authorities liable for labor rights violations. The country is only guided by the principles enshrined in the constitution. Mexico presented 28 cases of labor rights violations and none of the cases was dealt with. The companies involved were not held accountable for their actions. The FTA agreement has a weakness whereby there is no point in the section where the US is obligated to comply. The chapter does not provide guideline that would allow the civil society to intervene where there are labor rights violations. It leaves such cases to be handled by the parties involved in the agreement. In the past agreements, Colombia has not held any country liable such as through the issuance of sanctions when violations are reported. The government has only been concerned about the trade flows and failed to voice concerns on labor issues. Coca-Cola and Drummond companies have been reported to harass workers and leading to the death of some. This shows how the country has failed to protect its workers exposing them to violations by the large foreign companies. Flower companies in Colombia have forced women to work for ten hours and government bodies have harassed union leaders. The unions and civil societies in the country have often been silenced and lacked the capability to fight for the labor rights.
Colombian Ministry of Commerce
The treaty would improve access to the US market. Agriculture sector in the country would grow as products are given priority over other importers. The agreement would see elimination of tariffs from most of the goods. This would reduce costs for the producers and allow them opportunity to advance technology and increase productivity. Companies would import duty free products from the US and gain a pricing advantage. It would cost cheaper to transport goods into the US helping more traders to access the world’s largest market. There are many countries and businesses seeking to gain entry into the US market. Most of them have been unable and this treaty offers a golden opportunity for Colombia to enter a major world market.
The signing of the treaty could see Colombia face more violations of labor rights. This would emanate from the multinationals as seen in the past where companies such as Coca-Cola engage in harassment of their employees. The large companies overwork the employees and perform inhuman actions to them yet they are applauded to be contributing towards economic growth.
Unions are weakened by the lack of support from government. The country has a high number of unemployed people and this hampers the activities of the unions. Over time, workers have continually suffered while government bodies molest union leaders who attempt to help them. There is need for encouragement of the unions and respect to the right of expression
Women and children are often victims when there are such agreements. Some foreign companies thrive on the employment of under-age people. Others overwork women and pay them below the minimum wage. Such practices are common and could be escalated by the agreement with the US.
Response from the Ministry
The FTT would employ the use a labor advisory committee whose aim would be to oversee the observation of the relevant human rights. The committee monitors implementation of the agreement to ensure that rights of workers are upheld. The Chapter recognizes the labor laws of the countries involved and foreigners have no chance to engage in unfair activities. The treaty provides incentives for Colombia to build on the norms of following up on matters regarding labor rights.
Free trade agreements may not yield the expected results. The trade policies are constructive only to a limited extent. First, the foreign country could benefit more by increasing its exports while the US trades sells to it relatively low amounts of products. This has been seen as is the case with trading partners of China. Secondly, Colombia could engage in manipulation of the exchange rates and other unfair practices that would water down the expectations. Thirdly, the US would have difficulties in the preservation of intellectual property.
Colombia has great demand in terms of energy projects. The US has the ability to supply this and the country would reap huge prospects in doing business with Colombia. This is in consideration of the fact that there is high competition because of globalization. The treaty would enable the US to gain preferential access against other exporters. The treaty respects the legislations of the respective countries and therefore the intellectual property laws of the US would maintain. Colombia is bound to respect all the legal regulations of the US and an advisory committee would oversee the implementation of the agreement to ensure fair trade.
The Colombian and the US governments should look at the labor and environmental issues that today have great impact on business. This would be important for the long term sustainability of the agreement. The agreement should involve advisory committees on labor and environmental matters to ensure that these areas are given priority. The countries should address the issue of unfair trade practices especially manipulation of the currency.
Lessons about Trade Policy
Trade policies only work to help the country to a small extent. There needs to be competition, fiscal and monetary policies to help realize the expectations of a trade policy.