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

The constant pursuit of Free Trade Agreements (FTAs) with strategic countries is
essential for multilateral trade, since the quality of the entire production process,
logistics, sale and after-sales process must be improved in order to capture and
assure partners. The same situation occurs in the case of imports, due to the
similar conditions.

Currently, Colombia has agreements with Mexico, Triángulo Norte (El Salvador,
Guatemala and Honduras), the Andean Community of Nations (CAN, Peru,
Colombia and Ecuador), CARICOM (Trinidad and Tobago, Jamaica, Barbados,
Guyana, Antigua and Barbuda, Belize, Dominica, Montserrat, Grenada, Saint Kitts
and Nevis, Saint Lucia and Saint Vincent and the Grenadines), Southern Common
Market – MERCOSUR (Argentina, Brazil, Paraguay and Uruguay) Canada, United
States, Partial Scope Agreement with Venezuela, Cuba, Nicaragua, European
Union (Peru and member nations of the European Union), Alianza del Pacífico
(Chile) , Colombia, Mexico and Peru), South Korea and Costa Rica.

Free trade is an economic practice whereby countries can import and export goods
without fear of government intervention. Government intervention includes tariffs
and import/export bans or limitations. Free trade offers several benefits to
countries, especially those in the developing stage. "Developing countries" is a
broad term. According to a widely used definition, a developing country is a nation
with low levels of economic resources and/or low standard of living. Developing
countries can often advance their economy through strategic free trade
agreements.

Advantages

Increased Economic Resources

Developing countries can benefit from free trade by increasing their amount of or
access to economic resources. Nations usually have limited economic resources.
Economic resources include land, labor and capital. Land represents the natural
resources found within nations' borders.

Small developing nations often have the lowest amounts of natural resources in the
economic marketplace. Free trade agreements ensure small nations can obtain the
economic resources needed to produce consumer goods or services.
Improved Quality of Life

Theoretically, free trade can improve the quality of life for a nation's citizens.
Nations can import goods that are not readily available within their borders.
Importing goods may be cheaper for a developing country than attempting to
produce consumer goods or services within their borders. Many developing nations
do not have the production processes available for converting raw materials into
valuable consumer goods.

Developing countries with friendly neighbors may also be able to import goods
more often. Importing from neighboring countries ensures a constant flow of goods
that are readily available for consumption. Making the process work to benefit
residents however requires a well-regulated and functional government which is
not common in developing nations.

Better Foreign Relations

A better foreign relation is usually an unintended result of free trade. Developing

nations are often subject to international threats. Developing strategic free trade
relations with more powerful countries can help ensure a developing nation has
additional protection from international threats.

Developing countries can also use free trade agreements to improve their military
strength and their internal infrastructure, as well as to improve politically. This
unintended benefit allows developing countries to learn how they should govern
their economy and what types of government policies can best benefit their people.

Improved Production Efficiency

Developing countries can use free trade to improve their production efficiency.
Most nations are capable of producing some type of goods or service. However, a
lack of knowledge or proper resources can make production inefficient or
ineffective.

Free trade allows developing countries to fill in the gaps regarding their production
processes. Individual citizens may also visit foreign countries to increase education
or experience in specific production or business methods. These individuals can
then bring back crucial information about improving the nation's production
processes.
Disadvantages

Theft of Intellectual Property: Many developing countries don't have laws to protect
patents, inventions, and new processes. The laws they do have aren't always
strictly enforced. As a result, corporations often have their ideas stolen. They must
then compete with lower-priced domestic knock-offs.

Crowd out Domestic Industries: Many emerging markets are traditional economies
that rely on farming for most employment. These small family farms can't compete
with subsidized agri-businesses in the developed countries. As a result, they lose
their farms and must look for work in the cities. This aggravates unemployment,
crime, and poverty.

Poor Working Conditions: Multi-national companies may outsource jobs to

emerging market countries without adequate labor protections. As a result, women
and children are often subjected to grueling factory jobs in sub-standard conditions.

Degradation of Natural Resources: Emerging market countries often don’t have

many environmental protections. Free trade leads to depletion of timber, minerals,
and other natural resources. Deforestation and strip-mining reduce their jungles
and fields to wastelands.

Destruction of Native Cultures: As development moves into isolated areas,

indigenous cultures can be destroyed. Local peoples are uprooted. Many suffer
disease and death when their resources are polluted.

Reduced Tax Revenue: Many smaller countries struggle to replace revenue lost
from import tariffs and fees.

BAIRON RAMOS RUIZ