Basic issues

What is the FTA between Colombia and the United States? This FTA, as indicated by its acronym, is a Free Trade Agreement of a bilateral nature that seeks to deepen the trade and investment relations between Colombia and the United States through the elimination of barriers of entry for various economic sectors and a set of clear and transparent rules. FTAs are governed by the legal framework of the WTO, and have as their main purpose the liberalization of trade in goods and services among WTO members through additional reciprocal commitments.

When does the FTA enter into force?The FTA between Colombia and the United States will enter into force 60 days after the exchange of notes between the two states. The exchange of notes will take place once the stage of implementation is completed, which has an estimated duration of 12 to 18 months. Accordingly, it is estimated that the FTA will enter into force at the end of 2012, or in the first half of 2013.

What's next for the FTA? The next step in the FTA process is the stage of implementation, during which certain legislative changes, required by the FTA, will be implemented by Colombia. Some of these required legislative changes have already been implemented in recent years. An internal agenda of non-mandatory adjustments in policy and institutional aspects has also been set in order to take advantage of the FTA. In addition, entrepreneurs should start to plan and adapt their business schemes to be fully prepared for the upcoming entry into force of the FTA.

What chapters does the FTA contain?

  • National Treatment and Market Access for Goods
  • Textiles and apparel
  • Rules of Origin and Origin Procedures
  • Customs Administration and Trade Facilitation
  • Sanitary and Phytosanitary Measures
  • Technical Barriers to Trade
  • Trade Remedies
  • Government Procurement
  • Investment
  • Cross-border Trade in Services
  • Financial Services
  • Competition Policy
  • Telecommunications
  • Electronic Commerce
  • Intellectual Property Rights
  • Labor Matters
  • Environment

  • Transparency

How to take advantage of the FTA? Although the FTA between Colombia and the United States opens a significant window of unprecedented business opportunities in the history of foreign trade in Colombia, the key to obtain the maximum benefits from this new economic reality requires a proper understanding, planning, and acceptance of increased international competition arising from the implementation of the FTA. In essence, for the private sector, the FTA represents a critical point in the structuring and management of commercial activities. At this point, entrepreneurs should carefully analyze their business schemes, including elements such as costs, structure, suppliers, target markets and financing. In addition, companies should identify possible strategic alliances with suppliers established in highly productive economies such as China and Brazil, and try to combine their low production costs with the American market access commitments to be established through the FTA. In other words, the private sector must expend great efforts to maintain competitiveness. Only to the extent that the private and public sectors understand that competitiveness is the key to maximize all the benefits generated by the FTA, all the expected positive effects will become an economic reality.

Finally, we would like to briefly mention some of the most significant business opportunities we have identified as a consequence of passage of the FTA between Colombia and United States:

  • In the provision of cross-border services: national treatment in the field of cross-border trade in services, such as distribution, which is essential in the logistics of business operations.
  • In government procurement processes: reciprocal benefits and equal treatment in the access and awarding of projects in the bidding and public procurement processes in both countries.
  • In the provision of financial services: market liberalization of financial services, in areas such as the acquisition of insurance policies and administration of collective investment schemes.
  • In the trade in goods: elimination of tariffs for approximately 80% of goods originating from the FTA parties.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.