On August 10, 2020, the Free Trade Agreement (hereinafter FTA) signed between Colombia and Israel came into force, considered one of the most innovative agreements by how many 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 consolidating a solid commercial exchange and meeting the needs of both nations.

Of the three novel points of the FTA, the following stands out:

1. Regarding investment: both States have the possibility of creating frameworks for the protection and benefits of their own markets and with this encourage the development of strategic investment alliances.
2. In terms of services: the most favored nation clause was included, according to which it seeks to avoid discriminatory situations of services from the signatory countries and thus guarantee a much more equitable access to markets.
3. Regarding public procurement: the possibility of advancing public procurement processes of Colombian and Israeli national companies was agreed, so that commercial ties can be established in the public sector in a stable and transparent manner, protected by the FTA framework.

According to data from the Ministry of Commerce, ¹ trade relations between both nations have evolved considerably in the last decade, so it is convenient to have an instrument that allows creating 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. Likewise, this agreement will open the door to foster alliances that go beyond a simple commercial exchange of products, since it is expected to achieve active participation in the technological, agricultural, telecommunications, public health and development of environmental technologies sectors, among others.

In what has to do with the main products that Colombia supplies to Israel, they are found in the mining, energy, agro-industrial, machinery and equipment sectors. For its part, Israel supplies Colombia with machinery and equipment, chemical products, textiles and plastics, among others. This panorama makes it possible to demonstrate solid commercial relations that can be strengthened with the economic, customs and commercial benefits agreed in the different rounds of negotiations, which began in Jerusalem in March 2012.

Through the Constitutionality Judgment 254 of June 6, 2019, with a presentation by Judge José Fernando Reyes Cuartas, the constitutionality of this treaty was declared. However, the Court conditioned the ratification process of the same to the adoption of a "joint interpretative declaration" between the States Parties, which was agreed in order to achieve a joint understanding regarding the Chapter on Investment; especially on investment protection, most-favored-nation treatment, and reasonable expectations.

This situation gave rise to the aforementioned joint statement, on which it is possible to point out that:

1. The powers and treatment that Colombia should give to its own investors, compared to investments from Israel, protected by NAFTA, may not be clear.
2. The scope and application of the provisions on the treatment of the most-favored nation is clarified, since in addition to not generating additional obligations to those initially agreed in the FTA, it indicates when there is no breach of the treaty, with regard to the treatment of the MFN.
3. An attempt was made to clarify what is meant by reasonable expectations in light of NAFTA. However, it leaves the door open to future interpretations or disagreements regarding its content and application.

It is worth noting that the Constitutional Court established that the joint declaration would not be subject to an informal constitutional review, if it did not include new obligations or rights. However, this does not mean that the declaration cannot be the subject of public action of unconstitutionality, as has happened with previous international treaties and agreements that have complementary agreements and interpretations.

Notes

¹ ABC of the Trade Agreement with Israel