FREE TRADE AGREEMENTS BETWEEN PERU, COLOMBIA AND THE UNITED STATES: EFFECTS OF NEGOTIATIONS AND IMPLEMENTATION ON FDI AND NON-TRADITIONAL EXPORTS

Abstract

This dissertation uses a mixed methodology that combines interviews and data analysis to evaluate the process of negotiating and implementing the U.S.-Peru and U.S.-Colombia Free Trade Agreements (FTAs) and to provide initial evidence on the impact of the respective agreements on foreign direct investment (FDI) and export diversification in the two Andean Countries. I find that institutional elements in each country impacted the process of negotiation and the outcomes of the two FTAs differently. Colombia had a relative initial advantage in institutional capacity and negotiating expertise, while Peru had a stronger leadership and commitment that made the FTA a reality sooner. At the same time, both Peru and Colombia had in common the continuity of their trade policies through different administrations, their pledge to maintain structured consultation mechanisms with the private sector and non-government agents, and the vision to continue to build their institutional capacity. The signing, ratification and implementation of these FTAs coincide with an expansion of non-traditional exports from the two Andean nations and an increase in inward FDI into sectors outside of commodities such as oil, natural gas and minerals. Although the external shocks and already established economic trends may play a big role in these increases, the extent to which they are related with the FTAs is analyzed in this dissertation.