The U.S.-Colombia Trade Promotion Agreement was signed on November 22, 2006, in Washington, D.C. This comprehensive trade agreement eliminated tariffs and other barriers to goods and services. Currently, no U.S. agricultural exports enjoy tariff -free access to the Colombian market. If the United States has a comparative advantage in agricultural, which of the following is true?

Question

Quizplus · Accepted Answer

If the United States has a comparative advantage in agricultural, it means that U.S. agricultural producers are able to produce agricultural products at a lower opportunity cost than Colombian agricultural producers. Therefore, with the elimination of tariffs and other barriers to goods and services, Colombian agricultural producers might face increased competition from U.S. agricultural producers in the Colombian market. As a result, it is likely that Colombian agricultural producers were better off before free trade when they faced less competition.

The US-Colombia Trade Promotion Agreement Was Signed on November 22, 2006