U.S.-Colombia Free Trade Agreement Archives - Shopfloor

U.S.-Colombia Free Trade Agreement Takes Effect Today!

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Today our free trade agreement with Colombia, passed by Congress last October, goes into effect. This agreement allows manufacturers to begin reaping the benefits of  the Colombian market. The implementation of this agreement presents a major opportunity for manufacturers in the U.S. to expand their exports to Colombia, whose products mostly enter the U.S. duty-free already. 

With a population of 46 million, Colombia represents a significant market for U.S. exports – the third largest in Latin America. Furthermore, Colombia’s GDP is $467 billion with expected growth of 4.7 percent this year.  Until now the average tariff on U.S. products entering the Colombian market has been 15 percent, adding substantial cost to the purchase of U.S. goods in Colombia and therefore putting American goods at a severe disadvantage.  With this FTA in force, U.S. competitiveness will be enhanced and our exports to Colombia will expand as a result of our new market access there.

Colombian duties on 80 percent of U.S. manufactured products will immediately be dropped to zero, with the remaining tariffs phased out over the next ten years.  This means expected growth for manufacturers in the U.S. in the following key sectors:  oil and gas machinery and services, plastics, construction and mining equipment, telecommunications equipment and services, information technology, safety and security, automotive parts and accessories, electrical power systems, building materials, food and beverage processing and packaging equipment, and medical and pollution control equipment.

We’re pleased that we now have a level playing field with Colombia but we can’t afford to just stop here. There are currently dozens of trade agreements being negotiated all over the world and we are party to only one. If we are going to meet the President’s goal of doubling exports then we need to do more. With 95 percent of the world’s consumers living outside of the U.S. we must continue to negotiate new free trade agreements to open new markets for manufacturers.

Jessica Lemos is director of international trade policy, National Association of Manufacturers.

Barriers in Colombia Fall, But Not to American Manufacturers

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The Canada-Colombia free trade agreement went into effect today. Canadian exports are now duty-free in Colombia.  Since the effective duty on manufactured imports into Colombia is 15 percent, that gives Canadian manufacturers an attractive advantage.

This adds further to the imperative of passing and implementing the U.S. – Colombia trade agreement.  Distributors, wholesalers, and retailers in Colombia may be willing to bear a 15 percent disadvantage in importing U.S. goods for a short time; but if they see that time difference persisting, many of them will consider shifting to Canadian suppliers wherever Canadian and American products compete with each other.

Passage of the U.S. – Colombia trade agreement by Congress does not mean the agreement goes into effect the next day.  Some months are needed after passage to ensure that both governments have done what they said they would do, that customs officials have their procedures and systems in place, and that necessary regulations have been published. So every day of legislative delay pushes implementation of the U.S. – Colombian agreement one more day into the future – adding to the risk of losing U.S. business.

Also, every day the pending trade agreements with Colombia, Korea, and Panama languish, American workers lose another $8 million in wages and benefits.  That adds up.  As of the afternoon of August 15, 2011, their cumulative loss was a staggering $12 billion.

Opponents of trade agreements are badly mistaken in thinking they hurt our trade. Over the past three years, American manufacturers have enjoyed a cumulative surplus of over $70 billion with our existing trade agreement partners.  During that same time, however, manufacturers faced a cumulative deficit of $1.3 trillion with countries that have not entered into trade agreements with us.

It is time to open more markets to American goods and services, starting with quick action by Congress to pass the three pending agreements.

World Not Waiting for U.S. on Trade Agreements

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It is no secret other countries are racing ahead with trade agreements while the U.S. stands idly by. There are 120 free trade agreements being negotiated around the world, and the U.S. is a party to just one.

As for pending trade pacts, the U.S. free trade agreements with Panama, Colombia and South Korea have languished for four years.  (But see this post from Monday for a dose of optimism.)

Those countries aren’t waiting for the U.S.  The Wall Street Journal reports today that Colombia is seeking to increase its trade ties with China.

Colombian lawmakers passed legislation they hope will open the floodgates of trade with China, where the government plans two high-level trade missions over the next three months, as a long-delayed U.S. trade deal with the South American nation stalls in Congress.

Colombia Trade Minister Sergio Díaz-Granados said Tuesday’s passage of the “Chinese Trade Promotion and Protection” bill—which affords China certain legal guarantees on its investments in Colombia—could also propel talks with China to build a railway that would link Colombia’s Caribbean and Pacific coasts, and would serve as an alternative to the Panama Canal.

Trade officials in Bogotá expressed frustration with the slow pace of progress in Washington, which they say contrasts with Chinese eagerness to invest in Colombia, Washington’s closest ally in South America.

In an interview, Mr. Díaz-Granados said he remained hopeful a free-trade pact with the U.S. would be passed before year’s end, but that Colombia can no longer “sit with its arms crossed, waiting.”

“We’ve been talking about a U.S.-Colombia free trade deal for 20 years, and it’s certainly the trade deal we want more than any other,” Mr. Díaz-Granados said. “But in the meantime, we have to continue working in other directions. Our business leaders need to pursue other markets and diversify.”

The U.S. has been waiting for too long.  Every day that lawmakers sit on the trade agreements is a day the country is missing out on opportunities for growth and jobs.

Colombia Meets Requirement of FTA Action Plan

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The road to pass the three pending free trade agreements with Colombia, Panama and South Korea has at times been reminiscent of the seemingly endless drive to a favorite vacation destination – with the back seat repeatedly asking “are we there yet?” The answer, finally, is “almost.”

On the U.S.-Colombia trade agreement, the Obama Administration reached an action plan with the Santos Administration which contained two key tranches of action items, each with a deadline. Today, the U.S. Trade Representative announced that Colombia has met the requirements of the June 15th tranche of actions (a few days early, no less). This is an important milestone, and one that should be followed by immediate submission of the three pending agreements for Congressional approval.

President Santos and the Colombian people are to be commended for the swift and far-reaching actions they’ve taken in recent weeks. In meeting the commitments to the action plan, they have made first and foremost a commitment to their country to continue healing the divisions of the past and to strengthening the future.

Now that Panama’s tax treaty is passed, the first two Colombia action plan deadlines are met, and the automotive provisions in the Korea agreement have all been resolved, it’s time for votes on the agreements. And the deadline set by Chairman Camp in January of this year – July 1st – is still reachable. It will take swift action by both the Administration and Congress – but given that these three agreements will open markets worth an estimated $13 billion annually in new U.S. exports, speeding on this road is not only forgivable, it’s required.

Manufacturing in America stands to benefit from increased exports, and the three pending agreements are the fastest and easiest way to prime the pump of economic expansion. One in five U.S. manufacturing workers has a job dependent on exports. Increase our manufactured goods exports, and you’ll increase American jobs.

The slow climb out of the recession is by no means complete. And the answer to the back seat on the recovery is “not yet.” But by quickly passing these three trade agreements – and then moving to an ambitious Doha Round agreement, a strong Trans-Pacific Partnership (TPP) agreement and launching new bilateral negotiations with key trading partners – the answer will be “we’re getting closer.”

Doug Goudie is director of international trade policy, National Association of Manufacturers.

Choosing the Right Tools for Economic Growth

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Nina Easton, senior editor-at-large of Fortune, looks at the Administration’s efforts to revive the economy.

Talk to business leaders — the people who actually hire people — and you don’t hear worries that Washington is running out of tools. What you hear, pretty consistently, is that this White House stubbornly insists on reaching for the same wrong toolbox.

One policy from the right toolbox, she writes, is free trade.  Members of both parties support free trade policies, but that bipartisan accord has yet to break the stalemate on three pending trade agreements: Korea, Colombia and Panama.

“Overseas markets are ripe for American products,” says Jay Timmons, CEO of the National Association of Manufacturers, who likes to repeat the mantra that 95% of customers are abroad.

The administration has given lip service to the importance of this fact — the President says he wants to double exports. But the only three free trade agreements now before Congress — with South Korea, Colombia, and Panama — have yet to move forward, trapped in negotiations over spending more money on trade adjustment assistance. According to the U.S. International Trade Commission, the South Korea deal alone would result in an estimated net increase in American exports of up to $4 billion in its first decade. No magic bullet, but nothing to sneeze at either.

Meanwhile, economies around the globe are forging deals with each other. As Timmons notes: “There are 120 free trade agreements being negotiated. We’re party to one. We’re getting our clocks cleaned.”

Easton goes on to highlight some of the NAM’s other concerns about U.S. policy, namely the corporate tax rate (the second highest in the world) and the high cost of doing business in the country.

Earlier: Timmons writes about the pending trade pacts in the Daily Caller.

Timmons on Free Trade in the Daily Caller

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NAM President and CEO Jay Timmons highlights the pending free trade agreements with Colombia, Panama, and South Korea and discusses why they are critical to U.S. competitiveness this morning in the Daily Caller. He writes,

The pending trade agreements with Colombia, Panama and South Korea offer our elected officials a choice — support economic expansion and job growth or retreat from the world economy and watch U.S. manufacturing stagnate as our foreign competitors thrive. U.S. manufacturers are eager to remove the burdens on trade and grow their businesses.

The trade agreements have been pending for years now, and it’s time for Congress and the President to act.

Governors Push for FTA Approval

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This week the Senate Finance Committee holds two hearings on pending free trade agreements (FTAs).  Tomorrow, the committee will consider the Panama FTA, and Thursday the committee will turn to the South Korea agreement.

Ahead of those hearings, 25 governors have written congressional leaders urging them to pass the Colombia, Panama, and Korea FTAs.  The bipartisan group writes,

As the chief executives of our respective states and territories, we appreciate how important international trade and investment are to the economic vitality of our jurisdictions, presenting important opportunities for workers, and enhancing our overall competitiveness.  Export-related jobs pay better than non-exporting industries and, with nearly 95 percent of the world’s consumers living outside of the U.S., exports have been the focus of increased job growth in recent years.

These trade agreements have been awaiting congressional approval since 2007 (and 2006 for the Colombia deal).

Read the whole letter here.

Colombia’s President in Europe Talks Trade, Safety

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Reading Der Spiegel’s recent interview with Colombia President Juan Manuel Santos, we were reminded of the cliched reaction we often encountered in Germany in the 1980s whenever Chicago came up in conversations with the older generation: “Chicago? Gangsters! Al Capone! Bang, bang.”

Now, it’s Der Spiegel unsophisticated take, “Colombia? Drug cartels! Medellin! Bang, bang!”

Santos, who makes a state visit to Berlin on Wednesday, managed to correct the interviewer’s preconceptions and errors to make the case for Colombia as a business partner.

Santos: Europe would be well advised to pay more attention to Latin America. The emerging economies are the engines of the global economy. Colombia has done too little to improve its reputation in Europe. We recently negotiated a free trade agreement with the European Union, and now trade will flourish.

SPIEGEL: That is what you hope …

Santos: Yes, but there is also a reason for that. Our population is primarily young, and more and more poor people are entering the middle class. This is a market of millions of potential consumers.

SPIEGEL: Which investors from Germany would you like to see?

Santos : German high-tech companies that invest in biotechnology, for example. Colombia has a huge variety of plant and animal species, and we have enormous potential. Small and mid-sized companies should come to Colombia. From here, they have access to the entire Latin American market. Besides, Germany could help us improve our education system.

Negotiators with the European Union and Colombia signed the final texts of the Free Trade Agreements last month.

In Colombia, March was Biggest Month for New Car Sales Ever

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Upon enactment of the U.S.-Colombian Free Trade Agreement, Colombia’s tariffs on U.S.-manufactured autos and auto parts will fall from 7.4 percent to zero. (White House fact sheet.)

Here’s the front page of Portafolio, the daily business newspaper in Colombia.

The lead story reports the agreement on the FTA with the headline, “After a long wait, Free Trade Agreement with U.S. Will Become a Reality.”

And the graphic tells the story of a growing market: “Sales of new cars rose 79.4 percent in March.”

The story in Spanish is here. From the Google translation, “New car sales in March totaled 32,320 units“:

As predicted by Portafolio.co, Econometrics SA showed that March was the best month ever. Sales broke the record of November 2010, when 30,963 units were sold. Additionally, the March figure was higher than the same month of 2010, which was 18,015 units.In total, the cumulative sales for the first quarter of 2011 reached 78,618 vehicles, which means that growth was 58.3 percent, compared to the same period in 2010, which 49,676 were invoiced.

The president of the Colombian Association Renault, Saulo Arboleda, said the market reacted to offers and good prices and the preliminary figure is “fantastic.”

The front page comes from Newseum.org, which publishes a global selection of newspaper front pages every day. We’re glad to see the Newseum will remain open in the event of a federal government shutdown. It’s an excellent museum, and Saturday it celebrates its third birthday.

Time to Move the U.S.-Colombia Free Trade Agreement

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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.