Tag: U.S.-Colombia Free Trade Agreement

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

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: (continue reading…)

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Delay of Colombian FTA is Costing American Workers

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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Mr. President, Submit the Colombia, Panama Trade Agreements

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. (continue reading…)

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From the President, a Solid Trade Agenda. Now, Let’s See Action

President Obama released his 2011 Trade Agenda on Tuesday. It seems a bit more forward in promising action on trade than in previous years, which is good. America has effectively been in a time-out on trade for the last four years, and our industrial competitors around the world have been using that to their distinct advantage. The European Union, Korea, Canada, Australia and other nations have been in a flurry of bilateral and regional trade agreement negotiations that will provide their exports with preferential treatment at the expense of our own.

The President’s 2011 agenda sets forth a number of highly laudable goals, including passage of the U.S.-Korea Free Trade Agreement (FTA), continued support for the National Export Initiative (NEI) goal of doubling U.S. exports in five years, concluding a balanced and ambitious agreement to the World Trade Organization (WTO) Doha Round, finishing negotiations on the Trans-Pacific Partnership (TPP), and bringing Russia into the WTO. He also promises engagement with Colombia and Panama to resolve outstanding issues so they can be sent to Congress for approval. President Obama also calls for strong enforcement of our trade laws, strong protection of our intellectual property, commits to continuing America’s core strengths in innovation and competitiveness.

The agenda is certainly one that manufacturers can endorse. Two-thirds of U.S. exports are manufactured goods.

It’s one thing to set goals, and another to deliver them. On the pending FTAs, the National Association of Manufacturers wants all three pending agreements submitted to Congress and acted upon as quickly as possible. Passing the three pending FTAs is the fastest way to aid our national goal of doubling exports. The Korean deal is huge for manufacturers. The strides Colombia has made over the last decade are nothing short of astounding, and the commitments it has already lived up to in addressing labor issues have been exemplary. Panama has met all demands made upon it. There is strong bipartisan support in Congress for all three agreements, and it is quite possible we could celebrate Flag Day by opening three new markets worth $13 billion annually in increased U.S. exports. By the Administration’s math, that’s more than 60,000 new jobs that could be created.

On the WTO Doha Round, the Administration has been correct in refusing to settle for the anemic texts on the table – they do not open high-value markets in advanced developing nations. The NAM is in close alignment with this position. Without significant concessions by Brazil, China, India and others, the Doha Round will result in virtually no new benefits for manufacturing in America. We continue to urge Ambassador Kirk and his team to drive this point home to the recalcitrant negotiators in those nations – if they can make commitments equal with their economic size, the entire world will reap the benefits.

The President’s annual Trade Policy Agenda, like the annual Budget, is a chance for the Administration to put forth its philosophical views on how it plans to engage in market liberalization and economic growth. There is much here that, if it can be delivered – and quickly – would create jobs and increase our domestic economic development. The key question is not what the Administration wants to do, it’s how fast the President is willing to do it.

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On Trade: Promises, Promises

U.S. Trade Representative Ron Kirk is testifying before the House Ways & Means Committee on the Obama Administration’s trade agenda this morning. I am sitting in the hearing, and there is good news and bad news.

Good news: We are extremely pleased to hear Ambassador Kirk indicate the timeline for Congressional consideration of the Korea Free Trade Agreement (FTA) is “weeks.” (Ambassador Kirk’s opening statement.) The European Union’s FTA with Korea (to be approved next month) threatens U. S. manufacturing exports to Korea, and swift completion of our agreement is necessary to keep our competitive balance. 

Bad news: No real new thoughts on how to move our languishing agreements with Colombia and Panama.  Amb. Kirk did say the Administration will “immediately intensify our engagement to resolve the outstanding issues with Colombia and Panama so that Congress can consider them this year.”

We did that with Korea on autos, and it resulted in real improvements to that agreement. The National Association of Manufacturers supported the supplemental agreement.

But it took six months, and addressed a real problem of specific market access. With Colombia and Panama, the issues are not specific. In fact, we would argue they aren’t even real issues. We would argue that the enforceable labor provisions included in our agreements as a result of the May 10 2007 bipartisan agreement addressed these concerns.

Efforts have also been made by Colombia and Panama in recent years. Colombia was removed from the International Labor Organization’s watch list this year. In short, this Administration has had two years to provide an actionable list of concerns. As Rep. Sam Johnson (R-TX) has just noted, these agreements were signed in 2007, and it is now 2011.

Chairman Camp (R-MI) has just asked Ambassador Kirk to elucidate the outstanding issues in Colombia, noting the agreement was signed in 2007. “We need to address underlying concerns on labor rights” was the response.

“We need specifics and an action plan, we need benchmarks” responded the Chairman.

We couldn’t agree more. What I am fairly certain about is that our competitors in Europe, Canada, Korea and MERCOSUR have a pretty specific list of manufactured products they’ll be shipping to Colombia and Panama as they take advantage of THEIR trade agreements.

American workers benefit from our nation’s exports. Exports create jobs in American factories. Agreements with Colombia and Panama will lead to billions in increased U. S. exports. We need all 3 agreements. And we need them now. In fact, we needed them in 2007.

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Indications of Signs of Moving on the U.S.-Colombia Free Trade Agreement

From the media briefing Friday, Jan. 28, after a meeting of Secretary of State Hillary Clinton and Vice President Angelino Garzon of Colombia:

QUESTION: Madam Secretary, two points. The first one is: (inaudible) Vice President Garzon asked two days ago the Obama Administration to send this year to Congress the Free Trade Agreement. With all due respect, is the – you – Obama Administration going to do that, yes or no?

SECRETARY CLINTON: Yes.

QUESTION: This year?

SECRETARY CLINTON: Yes

The follow-up adds various qualifiers, but there’s no misconstruing the “yes.”

Brian Wingfield at Forbes this morning provides a good round-up of positive developments, “Colombia Trade Agreement Gaining Momentum In Washington,” pegged to the return to Washington of Colombia Ambassador Gabriel Silva, who represented Colombia in the early 1990s.

According to Silva, the U.S. is seeing what opportunity it has in Colombia slip away. Documents provided by the Colombian Embassy show that the U.S.’ share of agricultural imports to Colombia has dropped from 46% in 2008 to 22% today, due in part to the integration of Latin American markets. Last May Colombian officials concluded negotiations on a free trade agreement with the European Union, and in August they signed a trade deal with Canada that is expected to become effective later this year. By the end of the decade, China could replace the U.S. as Colombia’s largest trading partner.

“We are asking the U.S. to turn things around,” says Silva.

Among the evidence for momentum, Wingfield cites the comments by Sen. Max Baucus (D-MT) after President Obama’s State of the Union address, which were: “Our free trade agreements with Colombia and Panama were signed more than three and a half years ago, so it’s extremely disappointing the president did not lay out a timeline for submitting them to Congress.”


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A Good Day in Congress for Export-Driven Jobs. Mr. President?

It was a busy and very positive day for a forward-looking trade policy in Congress, to be sure. Over in the House, Chairman Dave Camp (R-MI) called a hearing of the full Ways and Means Committee to examine the importance of passing the pending free trade agreements with Colombia, Korea and Panama, and their impact on job creation and economic growth. The National Association of Manufacturers was represented by Roy Paulson, president of safety equipment manufacturer Paulson Manufacturing, based in Temecula, Calif. Paulson exports to more than 80 countries, including the three with pending FTAs, and he was plain, direct and straightforward in telling the Committee that his exports to those nations will increase once their tariffs are removed with passage of the FTAs. (Prepared testimony.)

The same theme was echoed by all the witnesses at the hearing – themes well familiar to anyone who’s spent time reading this blog. The United States, with very low tariff rates, is open to the world. Many of the fastest-growing markets for our exports have high barriers. Trade agreements remove those barriers, drive U.S. exports and create jobs and economic growth here in America. If we chose to sit on the sidelines, as we have for the past four years, our competitors in Europe, Latin America and Asia will seize these markets with trade agreements of their own. Instead of preferential access for our manufactured goods exports, we will be confirmed as the suppliers of  higher priced goods. Market share will dwindle. Instead of increasing production at home for consumption abroad, we’ll be cutting production and losing markets. That’s a recipe for job losses and economic contraction.

As Cong. Peter Roskam (R-IL) noted at the close of the hearing (relying on notes): “The time to say we’re thinking about these agreements is over. The time to act on them and reap the benefits has arrived.” It is, in fact, well overdue, as anyone who exports to Colombia, Korea or Panama knows. We could have had these barriers down in 2007, well ahead of the competing FTAs our competitors are now rushing to complete. The President and Congress need to move quickly on all three agreements in the first half of 2011. The votes are there, as Trade Subcommittee Chairman Kevin Brady (R-TX) noted at the start of the hearing.

Leaving the House, we move to a bipartisan effort on trade in the Senate, where Rob Portman (R-OH) — who was President Bush’s Trade Representative — and Joe Lieberman (I-CT) introduced a bill today that would move all three agreements AND provide President Obama with Trade Promotion Authority (TPA). (Lieberman and Portman issued a joint news release. (continue reading…)

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NAM Testimony: Trade Agreements Mean Manufacturing Jobs

Roy Paulson, President of Paulson Manufacturing Corporation, is testifying today on behalf of the National Association of Manufacturers before the House Ways and Means Committee, “Hearing on the Pending Free Trade Agreements with Colombia, Panama, and South Korea and the Creation of U.S. Jobs.” 

His prepared statement (available here) talks about the reality of trade and tariffs and how enactment of free trade agreements would expand opportunities for manufacturers and small business. Excerpt:

Take a moment and think of the opportunity these agreements will present to the small business community here in the United States. I have had success selling such varied items as patented eye care products on South Korean cable television to Electrical Safety equipment in Colombia. The security products sold to Panama are a continuing source of repeat business, and safety equipment with a 6 percent duty that will be eliminated will be a viable item as the canal is widened over many years. In addition to my own sales, I encourage other manufactures to sell their products in these countries and freely supply my contacts and experience gained from my years of effort.

In all three countries with pending Free Trade Agreements the reduction in tariffs will have a direct impact on sales of our products. I just spoke to my Korean contact, Bryan Kim, and he is extremely excited about the 8 percent tariff being removed immediately because now he is in a stronger competitive position and the market immediately becomes broader allowing sales into main stream applications. He also commented that the Korean consumer’s perception of US products is one of quality and that the Made in the USA label is very important. He went on further to say that the price is critical and import duties are generally paid by the importer along with the freight charges. Eliminating the eight percent tariff will have a direct and immediate benefit and increased sales.

Colombia is truly a special case in South America. The Free Trade Agreement has been sold to the people as tremendous improvement and everyone is waiting for this to occur. My customers have been paying 20 percent tariffs on hundreds of thousands of dollars of my imported products and this has reduced the range of items that they could purchase from me. In other words, from my broad product offering, only the items that they could not purchase from Europe, Brazil or China were being brought in from the USA. After the agreement we can all begin to enjoy a more competitive environment for my full product range.

Other prepared statements:

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Manufacturers Testifying on Free Trade Agreements

The House Ways & Means Committee has posted the witness list for its hearing 10 a.m., Tuesday, “On the Pending Free Trade Agreements with Colombia, Panama and South Korea and the Creation of U.S. Jobs. ” NAM Board Member Roy Paulson leads things off.

  • Roy Paulson, President, Paulson Manufacturing Corporation, on behalf of the National Association of Manufacturers
  • Bob Stallman, President, American Farm Bureau Federation
  • Michael L. Ducker, Chief Operating Officer and President, International, FedEx Express
  • William J. Toppeta, President, International, MetLife
  • Stephen E. Biegun, Corporate Officer and Vice President of International Governmental Affairs, Ford Motor Company

Paulson Manufacturing is based in Temecula, Calif. From its website:

Since 1947 we have been providing protective equipment for various industries worldwide. From industrial to fire and rescue, tactical and ballistic verification testing, we have the right products for you. Specializing in face protection, our family owned and operated business consistently delivers quality and innovation to each and every customer.

We’ll post all the testimony when it becomes available on Tuesday.

The hearing is perfectly timed. President Obama delivers his State of the Union address Tuesday evening, and export-driven job growth is expected to be a theme. The president can lend substance to the rhetoric by announcing his intention to submit not just the Korea, but also the pending FTAs with Colombia and Panama to Congress for enactment.

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Who Lost Colombia? It’s Still Too Early to Ask That Question…We Hope

Noted journalist, author and Latin America hand Andres Oppenheimer writes a worrisome but justified column in The Miami Herald, “Colombia takes a step back from U.S.“:

Colombia’s right-of-center President Juan Manuel Santos may have been kidding when he recently said that radical leftist Venezuelan President Hugo Chávez is his “new best friend,” but few in Washington are laughing.

There is a growing feeling in the U.S. capital — especially in Congress — that Santos is moving closer to Chávez, and shifting away from Colombia’s close alliance with the United States over the past eight years.

Oppenheimer quotes Enrique Santos Calderon, the president’s brother and a long-time El Tiempo columnist, who says Colombians are disillusioned with the United States, adding, “There is a feeling that we need to take some distance, and stop making unilateral favors that are not reciprocated.”

At The Wall Street Journal, Mary Anastasia O’Grady takes the Obama Administration to task for its inaction on the long-pending U.S.-Colombia Free Trade Agreement in a column, “Obama’s Trade Contortions.” In effect, the Administration has given Big Labor a veto over trade agreements, while embracing a neo-mercantalism that embraces exports but not trade. Neverthless, O’Grady writes: (continue reading…)

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