U.S.-Colombia Trade Pact Would Strengthen Energy Security

By March 18, 2011Energy, Trade

William D. Marsh, a vice president for the top-tier oilfield service company, Baker Hughes Inc., was a witness Thursday at a House Ways and Means Trade Subcommittee hearing on the pending U.S.-Colombia Free Trade Agreement (FTA). Testifying on behalf of the National Association of Manufacturers, Marsh made an argument that should carry more punch as gas prices rise: The FTA would contribute to America’s energy security.

From Marsh’s testimony:

Because of trade preferences, Colombia’s exports have been entering the United States duty free (though that has temporarily expired). By contrast, Colombia’s average duty on our imports from the United States averages five percent with some tariff peaks at 10 to 20 percent. Eliminating that duty would allow Baker Hughes to more effectively compete in Colombia, increase our exports to serve Colombia’s expanded plans for oil and gas projects, and create more highly-skilled jobs here at home….

[Colombia] is a major prospect for new oil and gas development. According to media reports, the Colombian government plans to increase oil production up to one million barrels per day by the end of 2012, and activity is likely to remain high for the next decade. As a market leader in oilfield services, Baker Hughes intends to be a substantial part of that market. United States trade policy should facilitate our participation in that responsible development.

From a security perspective, there are advantages to developing Western Hemisphere energy sources like those in Colombia. Colombia is considered a U.S. ally with a relatively stable government and economy. Oil and gas from Colombia could displace oil from less secure foreign sources of supply. Helping Colombia maintain a strong economy is also in our national interest. Therefore, adopting this reciprocal treaty is a win for both countries.

Right. Just as it is better economically and strategically to import oil and natural gas from Canada than, say, Russia, it would be preferable to have Colombia instead of Venezuela as a major supplier of energy to the United States.

In a news release, Subcommittee Chairman Kevin Brady (R-TX) provided more details about the energy security implications of the U.S.-Colombia FTA:

The Colombia agreement enhances U.S. energy security by expanding trade with a country that is a reliable, friendly, democratic, nearby source of energy products

  • Colombia is Latin America’s 3rd largest provider of energy products to the U.S., behind only Mexico and Venezuela, and exported over 40 percent of its petroleum production to the U.S. in 2009.
  • In contrast, China lent Venezuela $20 billion in April 2010 to secure a ten-year supply of Venezuelan-produced crude oil.
  • Colombia is the world’s fourth largest exporter of coal, and the United States depended on Colombia for 80 percent of its coal imports through the first nine months of 2009. However, Colombia began making substantial coal exports to China in 2009, according to a March 2010 report by the U.S. Department of Energy’s Energy Information Administration.
  • Rare earth finds in the South American Andes suggest Colombia could eventually source the United States if U.S. firms receive adequate opportunity to help Colombia explore and develop the sector.

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