Three Years of Missed Opportunity in U.S-Colombia Trade

By November 23, 2009Trade

Three years ago, the President of the United States and the President of Colombia signed a bilateral free trade agreement. That agreement has yet to be sent to the U.S. Congress for approval. As a result of this long and fruitless delay, American manufacturers continue to face tariffs averaging 14 percent on our exports to Colombia. American manufacturers could be benefiting from increased exports to one of the fastest-growing economies in Latin America – in fact, they could be in their second or third straight year of benefiting from increased exports. Colombia’s economy has grown at an average rate of 8.5 percent over the last 15 years, according to the IMF. That’s a big increase in demand for the products we make and ship beyond our borders. Still, Congress refuses to consider the agreement.

CIA World Factbook map of ColomibaYou could ask, why is this such a big deal? There are bigger export markets to focus on, right? Like, South Korea, for example, another nation we have a stalled trade agreement with . . . but we’ll get to that in a later blog.

Colombia is a big trading partner. In addition to the $11.4 billion worth of exports we shipped to Colombia last year — $9.7 billion of which were manufactured goods – Colombia is a staunch and strong ally of the United States in a region where it is very important for us to have a close friend. While other nations in Latin America have reneged on commitments to U.S. drug interdiction efforts, Colombia has recently made additional strong commitments that will further help secure our national security. And what was their reward for this? Venezuela’s President Chavez has shut his borders with Colombia in a fit of pique, bringing Colombia’s trade with its No. 1 partner to a virtual standstill. Colombia has been there for us as a strong ally against the drug trade – we need to be there for Colombia.

For three years, Congress has refused to consider the U.S.-Colombia FTA. In 2008, Speaker Pelosi even moved to strip Colombia of its Trade Promotion Agreement protections, leaving its passage in the House further in doubt. This, despite the May 10, 2007 Bipartisan Agreement on Trade, which for the first time included enforceable provisions on labor and environment in trade agreements, including the one with Colombia. That’s right – the U.S.-Colombia Agreement is groundbreaking in its enforcement of labor rights.

This isn’t enough for the AFL-CIO, apparently. The labor unions in Colombia – the “productive” labor unions, as they call themselves (the unions that represent manufacturing, mining, production – as opposed to municipal employees) ardently support the agreement and have from the very first day.

Critics say, well, this only benefits a few large companies. But, they are incorrect. Small and medium manufacturers will strongly benefit from the U.S.-Colombia Agreement: over 7,700 small and medium companies export manufactured goods to Colombia, representing 84 percent of total U.S. exporters. It is the small businesses in America, the job-generating (and we need that right now) small and medium businesses, that will benefit from this agreement.

Right now, we have one-way trade with Colombia, because the U.S. Congress has repeatedly removed our tariffs on Colombian goods through preference programs. Due to these preferences, nearly all of Colombia’s exports to the U.S. enter our market duty free. And American manufacturers are not facing competition from Colombian imports: two-thirds of Colombia’s exports to the United States are mineral fuels (i.e., oil) that are in high demand in the United States. Other major exports include coffee, cut flowers, fruits and vegetables. These are the components of a good brunch — not a threat to U.S. manufacturing.

Doug Goudie is director of trade policy for the National Association of Manufacturers.

Join the discussion 2 Comments

  • On September 15, the United States Trade Representative requested public comments (http://www.regulations.gov/search/Regs/home.html#docketDetail?R=USTR-2009-0021) on how the U.S.-Colombia TPA will benefit the U.S. economy and U.S. workers, businesses, farmers, ranchers, and consumers. Hundreds submitted comments, and since then the administration has left the trade agenda for dead.

    USTR continues to hold the treat behind its back while U.S. businesses and consumers are asked to do more tricks. However, the Latin American Trade Coalition’s broad-based group of more than 1,200 U.S. companies, business organizations, farm and ranch groups, and chambers of commerce continues to bark as unemployment rises to alarming levels. Trade liberalization can be the first step in fostering economic growth in the hemisphere while addressing job growth at home. Therefore, it is essential that we take advantage of free and fair trade and America’s innovation to help put Americans back to work and keep the world coming back for more U.S. goods and services.

  • Patrick Kilbride, U.S. Chamber of Commerce says:

    Doug is correct to focus in on the economic potential of the U.S.-Colombia FTA. Tremendous benefits have followed from our bilateral free trade agreements, which today cover 17 countries that purchase more than 40% of U.S. exports. Trade deficits are not the best measure of the success of these agreements, but they are often cited by trade skeptics as a reason why we shouldn’t negotiate trade agreements. And yet, taken as a group, the United States is now running a trade surplus in manufactures, services and farm goods with those 17 FTA partner countries. In fact, imported oil and gas from Canada and Mexico accounts for most of the remaining U.S. trade deficit with these countries – and that’s a result of geology, not trade policy.

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