The Free Trade Agreement (FTA) executed between Colombia and Israel entered into force on Aug. 10, 2020. This FTA is considered one of the most innovative FTAs to date, to the extent that it includes, in addition to the tariff provisions that are typically part of these commercial agreements, the possibility of negotiating services, as well as regulation on investment and public procurement. Through this agreement, Israel becomes a strategic partner for Colombia in the Middle East, which will allow the consolidation of a solid commercial exchange that will meet the needs of both nations. Israel interests, in turn, will be of particular importance in Colombia.
Regarding the three novel points of the FTA listed above, it is possible to states that:
1. Investments: both states have the possibility of creating frameworks for the protection and benefits of their own markets and the development of strategic investment alliances.
2. Services: the most-favored nation clause, was included. This seeks to avoid discriminatory situations of services from the signatory countries and thus guarantee a much more equitable access to markets.
3. Public procurement: the possibility of advancing public procurement processes of Colombian and Israeli national companies was agreed. These commercial ties can be established in the public sector in a stable and transparent manner, protected by the FTA framework.
It is possible to point out that the signing of this FTA is a significant advance for the trade agendas of both nations. In the specific case, Israel has strengthened its trade relations with various nations and international organizations, such as European Free Trade Association-Mercosur (EFTA-Mercosur), United States, Canada and Mexico. Now, Israel has Colombia as a commercial partner in South America.
According to data from the Ministry of Commerce of Colombia1, commercial relations between both nations have evolved considerably in the last decade. To that extent, it is convenient to have an instrument that creates a solid commercial route for the entry of products, in a competitive way, to one of the most important markets in the Middle East, supported by principles of legal and economic security. This panorama makes it possible to demonstrate that solid commercial relations can be strengthened with the economic, customs and commercial benefits agreed in the different rounds of negotiations, which began in Jerusalem in March 2012.
Likewise, it cannot be overlooked that Israel, according to figures from the Ministry of Commerce, has exported machinery and equipment, basic chemicals, textiles, weapons and plastics, among other products to Colombia. This highlights the existence of a commercial exchange that has been solid and that with the new regulatory framework, has the intention of expanding, thereby increasing the flows of direct foreign investment in both countries.
It is important to highlight that within the agreement, Colombia will deduct industrial goods originating from Israel in order to adapt the Colombian market to the new commercial agents that will enter the country. To that extent, it is expected that 69.5 percent of the industrial tariff lines will enter Colombia free of any tax as of the entry into force of the FTA. It is expected that the remaining percentages will adapt over time, in order to achieve the agreed upon goals.
It should be noted that in addition to the trade agreements, both countries established provisions aimed at launching cooperation projects in sectors such as 1) technology for agricultural development; 2) telecommunications; 3) public health; 4) innovation; 5) biotechnology; and 6) development of environmental technologies. This will undoubtedly allow Colombia to have the support of Israel and its industrial sector to obtain benefits that go beyond the commercial sector.
Thus, attention must be paid to the process of entry into force of the FTA, because once it is fully operational, a wide door will open.