Experts have warned that the free trade agreement (FTA) between Colombia and Europe, which came into force on August 1st, may not be beneficial to Colombia, local media reported on Monday.
The European Union (EU) and Colombia’s government praised the new agreement, expecting it to generate new job opportunities subject to international labor standards, generate productive investments and ensure the protection of the environment and human rights.
Despite the enthusiastic rhetoric, some experts are worried about what the real effect of the agreement will be on Colombia’s economy. Speaking to Universidad Nacional’s radio station, economics professors Ricardo Mosquera and Alvaro Zerda emphasized how the makeup of Colombia’s exports will inhibit its ability to develop.
“42% of our exports are coal, and after you add in petrol, coffee and bananas you have 90% of our exports – in other words, the industrial development [that the agreement with the EU promotes] will be very small and will barely generate any new employment,” said Mosquera.
“[There is] an asymmetrical relationship between our economy and the EU’s, in that theirs is a highly developed, technologically advanced economy, whereas Colombia’s has enormous problems and there are all kinds of restrictions when it comes to getting products into Europe’s demanding market,” added the professor.
Zerda specified that “this asymmetry is emphasized by the agricultural subsidies that exist in all the developed countries; everyone knows they have them, but [the developed countries] refuse to even discuss them in the trade agreements, as happened in the FTA with the United States.”
The professors also pointed out the fact that Colombia is not the only developing country entering into agreements with the EU.
“Colombia is not going to enter this market alone,” said Zerda. “It’s main competition will come from European ex-colonies in Africa and Southeast Asia, who export products similar to Colombia’s, but under more favorable market conditions.”
The problem, according to Zerda, is that Colombia offers no exports that stand out above the competition. He claims that this is mainly due to a lack of investment by the government in creating a knowledge-based economy.
“The logical thing would have been to first strengthen our national industry and afterwards sign trade agreements” he said, citing China as an example of what to do: “they imposed conditions on foreign investment so that there would be a transferral of knowledge – although [the foreign companies] were bringing in their own machines, they were also teaching [the Chinese] how to make them.”
Concern over the flurry of free trade agreements recently signed by Colombia were also expressed by ex-minister and internationally recognized economist Jose Antonio Ocampo at an economic conference.
“The tragedy of deindustrialization in Colombia is that companies that were producing things and creating employment have now been converted into importers,” he said.
In May, Colombia Reports showed that Colombia’s imports from the United States had risen by 15% since the FTA came into force a year before, while their exports had fallen by 13%. This is one of the main reasons behind the strikes currently gripping the country, with rice-growers explicitly calling on the government to shut off the importation of rice from the United States due to the increase that internal demand has had on prices.
Colombia currently has nine trade agreements with 17 countries, while agreements are currently being negotiated with Turkey, Costa Rica, Panama and the Pacific Alliance.
- El TLC con Europa no es como lo pintan (Dinero.com)