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 it can produce agricultural goods more efficiently and at a lower cost than Colombia. As a result of the trade agreement and the elimination of tariffs and barriers, Colombian agricultural producers may face competition from U.S. producers, which could result in lower prices for Colombian producers. Therefore, Colombian agricultural producers may not be better off than they were before free trade. However, Colombian agricultural consumers may benefit from access to lower-priced U.S. agricultural goods, which may make them better off.

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