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100 faqs about TLC.
Today, without the FTA, the Colombian economy has grown by 5%. How much could this reach with the FTA?
There are many models and calculations that indicate that FTA will have a positive effect on the growth of the Colombian economy. Some estimates are between 0.5% and 1% of GDP. But after five years with the FTA, Colombia's economy is expected to grow by an additional point- Meanwhile, unemployment is expected to fall by two points.
Is it true that this will enhance foreign investment?
On this point, we also welcome the calculations of other entities, in this case, the Corporation for Economic Development Research and Teaching (CIDE), which estimates an increase of over 19% in foreign investment, once the FTA is in force. It is worth remembering that last year, we reached a new record for investment, so we expect to continue this positive trend.
How much could our exports increase?
There are two effects: one is the immediate extension of ATPDEA tariff preferences, which is a relief of hundreds of millions of dollars for our exporters of clothing, food, and flowers, among others. Another effect is for the medium term, there all the calculations and projections can be realized if a good combination of policies is made for the use of the FTA. Only textiles and clothing can triple its exports to the U.S. market over the next three years. There are other key sectors of Colombian industry will grow at an accelerated rate, because there will be more business opportunities, including those for services as well.
Based on the experience of neighboring countries, will we see a marked increase in exports to the U.S.?
Much of Mexico's sustained growth over the past 16 years has been related to the implementation of its FTA with the U.S. and something similar to this also happened to Peru, Chile, and Central America. In general, countries of this region that have signed FTAs with the U.S. have reported a 25% increase in exports during the first year of their FTAs.
How will the FTA affect the U.S. economy?
The FTA will enhance U.S. trade with our country. Some analysts say that in a scenario with the FTA, there would be a trade increase of 40.5%, whereas without the FTA and without the tariff preferences that have governed since 1991, the decline of bilateral trade would reach 57.6%.
How much would a decline in the U.S. economy affect the results of the FTA?
Trade agreements are structural measures that do not depend on the various joints. Therefore, a deceleration of the U.S. economy would not affect the FTA. The fact is that this FTA is a golden opportunity for Colombia, given that we maintain the higher levels of trade with the U.S. than the other countries of South America.
What other items are in the work plan?
We have been working on many other issues, such as making changes so that service exporters do not have to pay VAT, as well as creating incentives for investment in the hospitality sector.
What is the goal on this issue?
Colombia currently has 850 kilometers of divided highways and aims to reach 2,000 km in four years. It is an urgent need to build a true road network that consists essentially of trunks that connect the country.
Where will the resources for these works be obtained?
Most of the items come from the disposal of 10% of Ecopetrol, which is expected to rise to about $ 15 billion. Another component of the funds will come from royalties, the national budget, and resources of Findeter.
What other works are in progress?
The second tunnel of the Line is also planned, which will require more investment to complete the Arterial Corridor for Competitiveness.
Of those projects, which ones are priorities for the competitiveness required for the FTA?
The first, which is being implemented by the Ministry of Transport, includes the integration of a road connector that will start in Buenaventura, continues through Arauca, and ends in Puerto Carreño. The idea behind this major work is to connect the country with Venezuela. Additionally, earlier this year, the Government handed over the first 10 kilometers of the new highway road project of the Ruta del Sol, located in the municipality of Puerto Salgar and the village of Puerto Araujo in Cundinamarca. The total construction investment in the Sector 2 is of $ 3.6 trillion, and has an area of 528 kilometers, stretching from Puerto Salgar to San Roque, in Cesar.
Does the Government have an estimate of the cost of an infrastructure work plan to address the FTA?
From the time when the Government announced that it would support the development and economic growth of five of its engines, we began working on an infrastructure plan. At that time, there was an estimated investment projection of $ 100 billion to be executed in 10 years. This strategy includes work on roads, waterways, railways, ports, and airports.
Is there an immediate plan to move forward the Domestic Agenda?
There is a strong commitment to identify infrastructure and technology projects to be financed with royalties. This undoubtedly will be a priority to boost regional development. It is worth remembering that when the FTA negotiations began, this also led to the identification of a so-called Domestic Agenda, in which all regions were involved, and each formed their committees. 4,700 betting actions were identified, including those of production shares and the identification of who would run them. The National Government did the same to identify those regulations and investments that have the greatest impact with the FTA. All that evolved into what is now called the National Competitiveness System. To this, the field of innovation was added.
What will be the extension of the new airport?
The goal is to go beyond the 60 thousand square meters that currently exist, to an area of 180,000 square meters. Of that total, 110,000 square meters correspond to the international terminal, expected to be ready in the second half of this year. The remaining area corresponds to the construction that will be done in the area where the existing terminal sits, and it is scheduled to be ready by August 2014.
In terms of the key infrastructures necessary to meet the challenges of the FTA, the expansion of Eldorado Airport is still unfinished. Can we be competitive without having completed such an important project?
No, this is not so. The Government is determined to move forward in a work that will provide the country with one of the most modern airports in Latin America. The expansion of Eldorado International Airport in Bogota is intended to reach the highest standards of airports in the region, as Tocumen in Panama City, Jorge Chavez in Lima, and Benito Juarez in Mexico City.
There are doubts about the guarantees for the competitiveness of business with the current infrastructure ...
There is been a significant progress in this topic, such as in the Colombian Caribbean, a region that today is better prepared to deal with trade agreements. They have efficient ports and free zones with industrial space available with which to compete and attract foreign investment. The Pacific is also going through a transformation stage, which must accelerate more, to take advantage of the treaty. It is urgent to advance in the so delayed channel access.
And from a purely municipal standpoint?
The National Government plans to give advice to about 500 municipalities to help them start their own Development Plan, their first cost and investment budget, as well as to help them in structuring their first projects.
What specific plan is being carried out for this purpose?
After the legislative approval of the FTA with the US and its imminent entry into force, an outreach plan in the 32 provinces and in twelve US states with the greater opportunities began. This outreach strategy aims at teaching business people the opportunities that are possible. Currently, a program to strengthen management capacity in municipalities and departments that are most in need have been devised.
By the way, what are the different regions doing to make the best use of the FTA?
The new mayors and governors have the challenge of boosting the competitiveness of their regions to address the benefits the FTA will bring. The Government will work with them hand in hand. The idea is that, through a joint and coordinated effort, the different regions and municipalities can get to know, not only the details of what is being done to identify opportunities for each region, but that regional business people become aware of the regulations that need to meet to successfully reach this market.
Which cities will benefit the most?
We can’t specify the cities that will benefit the most because as a whole, with the FTA, the whole country wins. Never the less, cities with ports on the Caribbean, Cartagena, Barranquilla and Santa Marta, or on the Pacific, like Buenaventura have already seen their economies boost due to the effect of ore open trade treaties.