The United States-Colombia free trade agreement approved just a few months ago has helped business growth in Colombia and is expected to continue to help boost Colombia’s economy. The main benefit from the free trade agreement is often seen as attractive conditions for increased exports and imports. However, some companies in Colombia see the main benefit coming from the growth of demand that the free trade agreement will likely generate. Besides these major benefits, there are also many other positives for business in Colombia derived from the newly passed free trade agreement.
With the free trade agreement approved, this past year trade between the United States and Colombia has already grown by 33 percent reaching to a total of $27.7 billion. This was the fourth-best result among Latin American countries. Many people may assume that the free trade agreement will largely benefit United States exports. However, this is not the case as Colombian exports to the United States are currently growing faster than United States exports to Colombia. Colombia also happens to be one of the largest trading partners in South America for the United States. Both countries will acquire many benefits from the trade agreement as U.S. and Colombian exports are expected to increase greatly in the upcoming years.
Along with increased international trade and competitiveness, foreign direct investment is also predicted to rise in Colombia. One official estimates that the free trade agreement will increase foreign investment to $10 billion annually, a major increase given the fact that foreign direct investment only totaled $6.8 billion in 2010. The free trade agreement will also put pressure on Colombia to improve its infrastructure, institutions, agriculture, and transparency. These factors are critical if Colombia wants to continue to stay competitive among its international trading partners.
Over the past years, Colombia has made significant strides in solidifying itself as a major player in international trade activities. Along with the United States, Colombia has also passed free trade agreements with Switzerland and Canada. Now, Colombia is looking towards the next step by planning to sign a trade agreement with the European Union next year. These free trade agreements will allow Colombia to be competitive in global trade and also remain an important part of the global economy.