Economics student at Universidad EAFIT, Medellin-Colombia.
Few has been written about the free trade agreement (FTA) between the State of Israel and the Republic of Colombia, and that appears to be unexplainable since this FTA is completely beneficial for both countries.
Israel is a relatively new State, with only 66 years it has reached an incredible level of development. Additionally, its GDP per capita (US $32,212)1 makes it a very interesting market with a high purchasing power and great opportunities for Colombian goods to be sold.
This agreement seems to be very promising because both countries’ industries are complementary and not competence, which without any doubt reveals the greatness and importance of the agreement for both countries. The FTA does not only include goods, it also involves services and investment. According to Yoed Magen, Ambassador of Israel in Colombia in a conference at EAFIT University2, “This is the most complete agreement that Israel has ever signed”. In the Economic theory can be found the principle of Comparative advantage which “says that countries prosper first by taking advantage of their assets in order to concentrate on what they can produce best, and then by trading these products for products that other countries produce best”.(WTO.org)
There are no sectors that can be harmed because of the complementarity of the economies. Israel will offer cheaper technology to Colombian farmers and industries. Hopefully, our productivity and efficiency will increase, which would lead to greater international competitiveness and therefore a rise in both trade and foreign direct investment. In addition to this, “Israel also counts with a two-way cooperation framework which will allow the development of projects in priority areas, such as the technification of the agriculture, innovation, telecommunications, biotechnology and the development of environmental technologies, in which Israel is a global leader” (Portafolio.co, 2013).
Furthermore, in the article 5.2, numeral d) of the text of the agreement it says that the parts have given special attention to the strengthening of SMEs (Small and Medium Enterprises) (MinTIC, 2013). The fact that this kind of economic agents are being enhanced and accompanied by a foreign government and supported by the chance of getting cheaper technology, certainly leads the country to grow more in economic terms.
Seeking for this kind of agreements which are completely beneficial for our country is a priority for the government. And of course, is a fundamental duty of the government to make sure that the gains obtained from these agreements are being well distributed in pro of the development.
Ministerio de Comercio, Industria y Turismo. Acuerdo comercial entre Colombia e Israel. Available in: http://www.tlc.gov.co/publicaciones.php?id=2007.
Ministerio de Comercio, Industria y Turismo. Texto del Acuerdo- Español. Available in: http://www.tlc.gov.co/publicaciones.php?id=8077.
World Trade Organization. The case for open trade. Available in: http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact3_e.htm.
1. GDP per capita for 2012, taken from “Ministerio de Comercio, Industria y turismo”.
2. Conference “Agreements and FTA between Israel and Colombia”. February 19/2014. Universidad EAFIT, Medellin-Colombia.