Delay of Colombian FTA is Costing American Workers

By March 14, 2011Trade

Organized labor, which opposes bilateral trade agreements due to the mistaken belief that they cause trade deficits and costs jobs, has been opposed to having the Obama Administration send the U.S. – Colombia trade agreement to the Hill for a vote. They have successfully delayed the agreement for over four years, costing American exports and jobs.

Organized labor’s opposition has harmed the very workers they purport to be protecting. In fact, labor’s opposition has imposed a tax on American workers of $2.4 billion dollars in lost wages and benefits. That’s how much American workers have had to pay for labor’s misguided view of the Colombian agreement.

The International Trade Commission estimates the Colombian agreement would generate at least $1.1 billion in new U.S. exports annually. The Commerce Department estimates that each $1 billion of exports supports about 6,700 U.S. jobs, so $1.1 billion of exports supports 7,370 jobs. Most of these jobs would be in manufacturing, where the average employee earns $75,500 annually. That works out to $550 million dollars in lost wages and benefits per year, for the four years and four months since the agreement was signed by both governments – a total penalty so far on American workers of $2.4 billion.

This cost on American workers is being imposed in the erroneous belief that these agreements are bad for U.S. jobs. In fact, the record shows that the United States sells more manufactured goods to our trade agreement partners than we buy from them. U.S. manufacturing has shown a trade surplus with our bilateral trading partners for three straight years, cumulating to nearly $70 billion. During that same time, U.S. manufactured goods trade with countries that have NOT entered into trade agreements was in deficit by roughly $1.3 trillion.

Colombian companies have had duty-free access to the U.S. market for years, and will gain hardly any new access. But U.S. companies now have to pay an effective average 15 percent in duties and other import taxes to sell to Colombia. The trade agreement will take that down to zero, yielding substantial new export and job opportunities, and giving American workers the same access to the Colombian market that Colombia already has in the U.S. market.

Colombia’s duty-free access has not resulted in a flood of manufactured goods exports to the United States. In fact, two-thirds of what Colombia sells us is oil, and we need oil from secure sources in our hemisphere. There is every reason for the Administration to move rapidly in sending the Colombian agreement to Congress for a vote. The votes are there for passage. All that remains is to send the agreement up for a vote – and end the $46 million a month that further delay is costing America’s workers.

 Frank Vargo is the NAM vice president for international economic affairs.

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