FTA with the European Union: Possibilities for renegotiation
The trade relationship between Colombia and the European Union could change. The signing of an agreement with Mercosur and the renegotiation of the agreements with Mexico and Chile may be the prelude to a renegotiation of the current agreement with Colombia, whose positive impacts are widely questioned.
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Entry into full force and effect of the FTA with the European Union
On November 1, Colombia’s Free Trade Agreement with the European Union entered into full force and effect, after 13 years of having entered into force provisionally.
The Belgian parliament, which had not yet given its approval due to reservations regarding environmental protection and human rights, finally approved it on October 7 of this year.
In Belgium, the process had to be carried out in each of the regional parliaments and the approval of the Walloon parliament was still pending, a process that took place in December 2023.
This entry into force is of more political than economic importance, as the economic clauses have been in force for thirteen years.
For the European Union it is important in view of the upcoming G20 meeting of the world’s largest economies to be held on November 18 in Rio de Janeiro, Brazil, the European Union is pushing for the signing of an FTA with Mercosur.
FTAs with Latin American countries
The European Union has had a free trade agreement with Mexico for 24 years but in recent years it has been renegotiated with a mechanism that they have called renegotiation but its essence is the incorporation of new issues such as Investment and, electronic commerce, but whose ratification has had difficulties, including clashes between the Mexican and Spanish governments.
Chile has an FTA with the European Union that entered into force in 1999, but which began a modernization process, involving a renegotiation of the previous one, in 2017 and whose negotiation and final ratification culminated in 2024.
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Colombia and the European Union: a controversial FTA
The FTA between Colombia and the European Union, once fully ratified, could enter into a renegotiation process in accordance with the trade policies in force in the European Union.
The Multiparty Trade Agreement between the European Union (EU), Colombia, Peru and Ecuador became provisionally effective on August 1, 2013.
Between 2011 and 2014, the country presented a trade surplus and, since 2015, the trade balance has been in deficit for Colombia.
In 2023, there was a negative trade balance of USD $2,648 million. That year Colombian exports to the EU totaled USD $6,809 million, a figure that decreased by -15.1% with respect to 2022.
The largest sales during 2023 correspond to pulp and briquettes; coffee; bananas; raw, semi-manufactured or powdered gold; petroleum oils, except crude oils.
In the same year, imports reached USD $9,927 million with a negative variation of -6.2% with respect to the year 2022.
This increase was presented, in essence, by lower purchases of aircraft and space vehicles (-17.4%), tractor parts and accessories, transport vehicles (-13.2%), etc.
Since 2021, FDI in Colombia from the EU has shown an increasing trend to stand at US$3,754 million in 2022, equivalent to 22.26% of the USD $16,868.7 million invested in Colombia. In 2023 FDI from the EU was USD 3,636, a decrease of -3%.
The European Union has included in its new version of the treaties issues such as greater guarantees for foreign investment, controls on environmental issues in accordance with the environmental stipulations of the “Green Pact” that involve new requirements for products arriving to the block and the inclusion of new issues resulting from new technological developments.
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