Mr. President, Submit the Colombia, Panama Trade Agreements

By March 9, 2011Labor Unions, Trade

Top former Executive Branch trade officials recently sent a letter (available here) to President Obama and Congressional leadership calling on the President to submit the pending U.S. Free Trade Agreements with Colombia and Panama to Congress for enactment. The bipartisan signers were six former United States Trade Representatives; two former White House Envoys to the Americas; and 10 former Assistant Secretaries of State for the Western Hemisphere.

The letter with a strong appeal to geopolitical imperatives — standing by your allies. It has been more than five years since the U.S. negotiated its free trade trade agreement (FTA) with Colombia and nearly five years since negotiations with Panama. Delays cast into question America’s reliability as a partner.

For manufacturers and farmers and U.S. workers, there economic argument is especially compelling. First, for Colombia:

Colombia has been the largest purchaser of U.S. agricultural products in South America. In the five years prior to 2008, U.S. exports of wheat, corn, soybeans, soy oil were expanding 38 percent per year, accounting for nearly $4 billion a year in U.S. exports. In recent years, however, while the United States failed to move forward to ratify its trade agreement with Colombia, Colombia concluded trade negotiations with Canada, Chile, and the European Union, and implemented new trade agreements with the Mercosur bloc: Argentina, Brazil, Paraguay, and Uruguay. Each of these countries is a competitor with the United States for agricultural exports to Colombia.

As a result, between 2008 and 2009, total U.S. exports of agricultural products to Colombia dropped by 48%. That decline in U.S. exports continues with an additional drop of 45% in 2010. We have seen U.S. exports plummet while Colombia’s imports of those products have held steady and Argentina and Brazil’s sales to Colombia have climbed by over 20 percent. In dollar figures, U.S. exports of corn, wheat, and soybeans to Colombia dropped from $1.1bn in 2008 to $343mm in 2010, a decline of 68%. That nearly $700
million in lost exports costs U.S. jobs.

With Panama, the authors cite the possibility of increased manufactured goods exports from the United States.

[Over] 88% of U.S. exports of consumer and industrial products to that country will become duty free immediately upon ratification of the U.S.-Panama Free Trade Agreement. Key U.S. sectors which will receive duty free treatment immediately include aircraft, construction equipment, fertilizers, medical and scientific equipment. In addition, more than half of U.S farm exports to Panama will become duty free immediately giving American farmers and ranchers an advantage over competitors in Canada and the EU. An analysis by the U.S. International Trade Commission (ITC) estimates that if the U.S. ratifies its FTA with Panama, U.S. exports of grain to Panama will increase by 61%; cars and light trucks by 43%; meat products by 62%; and processed foods by 36%. While opening these markets to U.S. exports, these FTA’s also require Colombia and Panama countries to treat U.S. investors with fairness and transparency.

The Obama Administration has put great emphasis on supporting the domestic auto industry, investing public funds and the President’s political capital, and yet fails to move on an agreement that would immediately boost U.S. auto exports.

The Wall Street Journal drew on the trade letter in an editorial on Tuesday, “The Trade Equivocator,” reporting (correctly, in our estimation) that the votes exist in Congress to enact the U.S.-Panama and U.S.-Colombia trade agreements. With the economic arguments and simple vote-counting requirements all stacked up on the side of enacting the FTAs, what could possibly be the hold-up?

The Journal concluded that the President was submitting to the political might of organized labor. That seems right, but it’s wrong to give Big Labor a veto over U.S. trade and foreign policy.

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