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How to exploit the 1,500 million opportunities in FTAs?

Camilo Vega Barbosa / @ camilovega0092.

Reducing export costs and increasing the number of export-oriented companies are some key points to achieving this goal.

Since the Free Trade Agreement entered into force with the United States, 1,534 new companies have exported to that destination. / Bloomberg

Although Colombia has nine free trade agreements (FTAs) agreed with some of the major trading partners, such as the United States and the European Union, in which the advantages are established for the most important Colombian products (such as textiles) and agricultural), and Although the exchange rate is at an excellent level for export, the country still can not take advantage of the true potential of the important and diversified portfolio of commercial alliances it has.

Read also: what are countries to export Colombian products

What happens?

Javier Díaz, president of the National Association of Foreign Trade (Analdex), explains that "when we started this campaign to sign free trade agreements, Colombia lived a Dutch disease, a situation of strong re-evaluation that prevented the development of sectors that are tradable internationally, and it was only four years ago, when oil prices fell, that this situation reversed (raising the exchange rate from $ 2,000 to $ 3,000). it has been in a short period of time in these new conditions with which factories and agricultural products can excel in international trade ".

On the other hand, this is a country in which exporting is more expensive than in other countries, especially in the face of those with whom there is an FTA. According to the Doing Business of 2018, in Colombia the cost of exporting a load can exceed US $ 630 and take 112 hours, while in the United States it can cost US $ 175 and take less than two hours.

Furthermore, for some union leaders in sectors that have an export potential, there is also a mentality problem. For example, Carlos Eduardo Botero, president of the Institute for Export and Fashion (Inexmoda), explains that "in the case of fashion, for many years our business was very concentrated in the neighboring countries, which has made a situation of conformism But we have already made progress and have explored new markets every time, and both small and large companies can benefit from the current FTAs.But to be successful abroad, businessmen must sell their products with Colombian identity, but with a global vision ".

What can you do?

Minister for Trade, Industry and Tourism, José Manuel Restrepo, explains that "the government has a strategy to take advantage of free trade agreements with which it seeks to exploit these 1.5 billion consumers. The main obstacles were to find export-oriented companies able to meet quality conditions and to know the opportunities that open up in those markets ".

Restrepo adds that for this reason the first task they took was to "find exportable offers in the regions, but in turn identify opportunities for some products in those international markets with which we signed FTA." Secondly, Procolombia important work in the development of round tables to bring Colombian producers and international sellers together Thirdly, we have seen the need to strengthen our commercial and health diplomacy so that articles can enter these countries (with which free agreements exist). exchange.) And finally we are working with the whole chain to reduce export costs and make it simpler. "

How are free trade agreements going?

Although Colombia has nine current free trade agreements, the agreement with the United States is undoubtedly one of the most important, as it is the destination of 26% of Colombian exports. And it stands out that more than 1,534 new companies have exported to this destination since the entry into force of this agreement. So, because of its weight, a special analysis is needed on how to improve the profits of trade with this country.

The director of the Chamber of Commerce of American Columbia (Amcham Colombia), María Claudia Lacouture, explains that "one of the sectors with the greatest potential in the United States is agriculture: not yet all the 97 eligible products have been exported (in the United States).) To take advantage of this opportunity, in addition to the exercise of health and commercial diplomacy, it is essential to strengthen the productivity of the company's doorway to the inside so that the exportable offer is in line with the needs of the market ".

However, according to Procolombia figures, the country has also made progress with the other FTAs. For example, with the European Union, 25 new products began to be exported after the entry into force of the agreement in 2012, with the most exported agricultural products and garments. Furthermore, significant progress has been made in the shipment of fats and oils, aniseed and unroasted coffee.

The most recent FTAs ​​have also shown activity. With that of South Korea, 25 new products have been exported to that destination since the agreement was signed (in 2016), among which pitahaya, pineapple, shrimp and cocoa shipments stand out. And in Costa Rica, 78 new products started to be exported after August 2016, as the sweets of the company Super Food one of the main success stories.

Read also: What goes from Obama to Trump in free trade

This suggests that Colombia is using its FTAs, but they can take much more. For them it is necessary that the country reaches the increase of the number of companies with an export vocation, reduce the costs of exports and that entrepreneurs become aware of opportunities in international markets. There is an incentive for 1,500 million opportunities.

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