The U.S. Colombia Trade Agreement Action Plan announced today on outstanding issues in the U.S.-Colombia free trade agreement is very good news. The agreement has languished without approval since 2007, allowing other trade partners time to swoop in, sign their own deals, and capture market share from U.S. manufacturers, service providers and farmers. Colombia is the second largest market for the United States in South America and is an enormous potential market for U.S. manufactured goods exports.
Manufactured goods exports are one of the true bright spots in our economic growth and the Obama Administration should do everything it can to promote, expand and encourage more manufacturing exports. One of the easiest, fastest and cheapest ways to do that is to push through the three pending free trade agreements we have with Colombia, Korea and Panama. Today’s announcement of a deal presumably puts the U.S.-Colombia agreement on track for Congressional consideration – and there are plenty of yes votes on both sides of the aisle for all three agreements – before July 1st, which is the day the Canada-Colombia FTA is implemented.
U.S. businesses have nothing to fear from this trade agreement. It will not have a deleterious impact on manufacturing in America – rather, given that many U.S. companies rely on imports from Colombia as the basis for their business, the FTA will benefit them. More than 90 percent of Colombian exports are one of five things: oil, fruits, flowers, coffee and precious stones/metals – basically, all the things you need for a great date!
Colombia offers U.S. manufacturers a growing opportunity for exports in a stable and expanding market. Over the last 15 years, Colombia’s GDP has grown at an average rate of 8.5 percent, according to the IMF. Small and medium manufacturers will strongly benefit from the U.S.-Colombia Agreement: more than 10,000 small and medium companies export manufactured goods to Colombia, representing 85 percent of total U.S. exporters.
In 2010, the U.S. exported more than $11 billion worth of manufactured goods to Colombia. Manufactured goods are 85 percent of total U.S. merchandise exports to Colombia. Last year, we had a $7 billion trade surplus in manufactured goods with Colombia. U.S. manufactured goods exports to Colombia have grown by 130 percent over the past five years. Due to preferences programs, more than 90 percent of Colombia’s exports to the U.S. enter our market duty free – they face no tariffs on their goods. U.S. manufactured goods face an average tariff of 14 percent in Colombia. This agreement will lower these tariffs to zero, in most cases immediately. It’s a one-way agreement that benefits American exports and American jobs.
The NAM is pleased that President Obama, USTR Kirk and their trade team have engaged in such intense discussions with the Santos Administration, and we are thrilled to see such quick resolution of the outstanding issues. Let us hope that transmission of the agreement to Congress will be equally as rapid, and just as successful.
Doug Goudie is director of international trade policy at the National Association of Manufacturers.