In July, the Office of the U.S. Trade Representative announced it would accept public comments on the U.S. free trade agreement with Colombia. The U.S.-Colombia Free Trade Agreement was signed on November 22, 2006, and if put into effect would lower tariffs on U.S. exports to the South American democracy. (USTR web resources.) Unfortunately, Congress has failed to act because of domestic political considerations, specifically the power of organized labor. The delay has made U.S. exporters less competitive and reinforced the image of the U.S. government as an unreliable negotiating partner. (Speaker Pelosi’s unprecedented move last year to set the trade agreement aside did the most damage in that last regard.)
The Obama Administration said it was soliciting additional comments to identify concerns and find a way to move forward with the agreement. The comment period closed September 15 (USTR statement, and the National Association of Manufacturers submitted its comments letter making the manufacturers’ case for the U.S.-Colombia Free Trade Agreement. Excerpts:
The U.S.-Colombia free trade agreement has the potential to have a significant positive affect on U.S. exports. There will be three types of effects: (1) expansion of U.S. exports stemming from the reduction and elimination of Colombian tariffs on U.S. production; (2) expansion of U.S. exports through the reduction of non-tariff barriers in Colombia and the trade facilitation measures they are committed to take; and (3) preservation of existing U.S. exports that would otherwise be lost if Colombia maintains its expansion of trade agreements with other nations who compete with the United States in manufactured goods, like Canada, Brazil or the European Union. Together, these three effects could total as much as $1.2 billion, according to the U.S. International Trade Commission (ITC) analysis of the Colombia TPA.
While almost all of Colombia’s exports enter the United States duty-free, U.S. manufacturers face
significant tariff barriers in Colombia. Colombia’s average import duty on manufactured goods is 11.3
percent. These duties, however, are assessed not only on the invoice value of the goods but also on the freight and insurance charges (known as the “C.I.F value”). When other charges are applied as well, the effective import duty on manufactured goods is 14 percent.
A wide variety of U.S. industrial products will benefit from the immediate reduction of these tariffs, the vast bulk of which would be eliminated immediately upon implementation of the agreement. The ITC’s analysis shows the largest increases in U.S. exports will be chemicals, rubber and plastic products, machinery and equipment, and motor vehicles and automotive parts. NAM analysis shows other sectors that stand to gain include processed food products, electronic and electrical equipment, and transportation equipment.
The manufacturing sector has lost about two million jobs in the recession, the recovery is just starting — we hope — and yet Congress has just ignored a trade deal that would encourage U.S. exports of manufactured products. The economic damage from this inaction will only worsen as other countries export and lock up market share.
So here’s a clear, specific step Congress can take to support U.S. manufacturing jobs: Enact the U.S.-Colombia Free Trade Agreement.
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