Tlc Con Europa

1. Please focus on the TLC with Europe. Choose a sector or a company in Colombia and analyze which opportunities but also what threats will that company or sector face after September 2012 when the TLC with Europe will be valid. Analyze points like competition, demand in new markets, tariffs at the moment and after the TLC, advantages of the TLC because of cheaper imports for production, etc.FTA with European Union is an excellent opportunity for Colombia and for the EU because in this globalized world the solution for been competitive and to succeed in it, is by making treatments with economic blocks around the world. In this case, the EU due to the actual crisis in the basic structure of their economy caused by Greece and other countries has took them to look for growing economies,in this case Colombia and Peru, because this two countries are the ones that had presented significant growth in their economy and society over the past years. In the case of Colombia, this brings incredible opportunities for all the sectors because they would have to industrialize their production in order to be competitive with European companies if they want to succeed. Also because the FTAwould cause a direct impact on the exports, making them grow almost 30% (to the European Union) and letting almost 99% of Colombian exporters enter to European markets with zero tariffs.
The sector most affected with the FTA between Colombia and the European Union is the sector of milk in Colombia. The FTA has caused some impacts and reaction on the sector because even though there are going to bebenefits, the disadvantages are going to be huge and important. Some examples and evidence of the benefits that the FTA is going to bring to the milk sector in Colombia is that it would allow the local companies to have permanent and preferential access to a market of almost 500 million of habitants which more than the 80% consume milk. There is going a benefit that is the most important in thecase of the FTA with the European Union and is the industrialization that the sector is going to have, because now a days the industrialization in the sector is miserable, some people said there is almost no industrialization because the general productive process of the sector is primitive and has been always like this, but as they have no external competition they didn’t do anything to changethat. But now that the FTA is a reality and is going to start working on September 2012, the market will demand better processes in order to make the companies competitive and allow them to enter the European market. So this benefit functions like Natural Selection (Darwin’s Theory) which implies that the strongest members of the sector (the ones that are going to industrialized their processes) aregoing to be the ones that survive, and the companies that doesn’t adapt to the changes and demands of the market are going to be the ones that disappear.
The disadvantages and problems of the FTA for the milk sector is that the European milk is going to enter the country cheaper than the local one, so that could knock out some local companies but the ICTA (Technology and science of alimentsinstitute) said that to face this problem what the local companies should do is to increase the quality of the milk in order to be more competitive by paying attention to aspects like microbiology and sanitary quality.
The problem with this is that with the FTA in the country is going to be excess milk and the market is going to lose thanks to the fact that the production costs are extremely higherthan other countries, for example, in Argentina, Uruguay and Brazil the production costs are between 20-25 cents by liter, while in Colombia is about 40 cents by liter. So this will cause an important need from the government in order to face this costs and it is subsidies. This theme is polemic as well because the European Union destinies almost 225.000 million euros to subsidize the milk...