On May 15, the historic free trade agreement (FTA) between Colombia and the U.S. took effect. This FTA supersedes any trading provisions the U.S. has with Colombia under the Andean Trade Preferences Act, as Colombia will have its own negotiated trading structure with the U.S.

The U.S. public may wonder whether this agreement will produce any significant advantage. Colombia, despite its years of civil war and unrest due, remains one of the most industrialized countries in Latin America. In fact, Colombia’s economy is the third largest in Central and South America. U.S. exports to Colombia reached an estimated $12 billion in 2010, and the country has a $166 billion services market. These numbers help to illustrate the competitive advantage U.S. companies could enjoy by trading in goods under this FTA.

The FTA will eliminate tariffs and other barriers to U.S. exports. Previously, tariffs on U.S. exports averaged between 7.4 percent and 14.6 percent. More than 80 percent of U.S. goods will immediately become duty free, with remaining tariffs phased out over 10 years. The U.S. Trade Representative has estimated that this elimination of barriers will increase U.S. exports to Colombia by more than $1.1 billion. The International Trade Commission also projected that the FTA will increase U.S. gross domestic product by more than $2.5 billion, stimulating the economy and job growth.

The U.S. Trade Representative notes that the economies of both countries are complementary, so the agreement should take root and provide a solid commercial footing. For example, U.S. exports of cotton, textiles and yarns are sent to Colombia where they are used to make apparel that is exported back to the U.S. Also, Colombia is a large importer of U.S. grains and exporter of tropical fruit to the U.S. In addition to the textile and agricultural industries, service markets and U.S. small businesses are expected to see significant gains from the agreement. Thousands of U.S. small and medium-sized businesses export to Colombia every year. In 2009, this sector accounted for $3.1 billion in products exported to Colombia.

Colombia’s increasingly stable economy and civil society make it a sought-after trading partner. Colombia has implemented an individual trade accord with the Mercosur union, which comprises Brazil, Argentina, Uruguay and Paraguay. It also instituted an agreement with Canada in 2011. Finally, Colombia and Japan are in negotiations to determine a preferential trade status. As the potential benefits of engaging Colombia’s economy are becoming recognized, the U.S. is at the forefront of suitors vying for Colombia’s hand.