COMMERCE | 3/12/2010 12:00:00 AM
FTA with the EU, for 2012?
While the FTA with the United States is still uncertain, the agreement with the European Union is on track. But it is not a fact because the European Parliament still has to approve it.
After almost tree years of difficult discussions between Colombian and European negotiators, the conversations were finally finished.
There is no doubt that it is a very important agreement for Colombia, because the EU has a potential market of 500 million people in 27 countries. The region is the largest exporter in the world and the second importer, with a per capita income of more than 32.000 dollars.
Although a very important phase is over, the final agreement is not. An important thing that is still unresolved is the negotiations about the dairy products, a sensible topic for all the countries that are affected by it. The difficulty is that the EU wants to be treated the same way as the US: to have free commerce for 15 years without duties. Colombian negotiators are worried about this because Europe is very strong in dairy products and give incentives for their production. Now the Colombian government has to study how to protect this sector. Colombian Commerce Minister, Luis Guillermo Plata, says that Europe must “dismantle” the export subsidies for the agreement to be definitely closed. The negotiations led to agreements in all the other sectors.
But even if the dairy products’ negotiation is closed, there is a long way ahead for the FTA to start. If there are no problems, it will be working by 2012. Before that, the European Commission has to approve the signature. The Commission has said it will do it on May, in the meeting between the EU and Latin American countries. Then it will be revised, because the text should show faithfully what was agreed during the negotiations. This phase could last up to four months. After that the text has to be translated to 16 languages before the two parts sign it. Around October it is expected to be in the Colombian Congress and European Parliament for its final approval.
Another difficulty is that in the European Parliament it has a difficult path. The organizations for the defense of workers and human rights associations have already said that it is unacceptable that the EU signs an agreement with a country where there are constant attacks against labor unions.
Even though there have been critics in Europe because of the “silence” of the agreement about the workers’ rights, Plata says that it includes sections that talk about sustainable development and human rights.
This FTA is very important for Colombian commercial future. According to Plata, it will control the commerce of goods and services and the investment. With the agreement, Colombian exporters will have the rules to make any commercial deal.
Up to now there have been some achievements. If the agreement is signed, 99,9% of industrial goods could be exported to the EU. Then the exporters have a huge market in sectors like leather, textiles, plastics, fishing products… Sugar, meet, banana and other goods will have more possibilities to reach the European market, that today are difficult to export because of the high taxes and tough procedures. Other products that will receive good conditions are flowers, coffee, bottled rum and ethanol. The EU will have the possibility to export easily to Colombia products like jam or liquors like whisky and vodka.
Colombian producers will have benefits of importations with no taxes of goods and services that can improve their competitiveness. Nowadays those products pay taxes. The agreement will also open some opportunities for Colombia to export services.
Now we have to wait to see if this FTA works or it ends like the one between Colombia and the US, that today is more complicated than ever.