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Monday, October 10, 2011
Perspectives

Happy Colombia Day!

Congressional approval of the US-Colombia FTA can help stem lost market share by US exporters.
U.S. agricultural producers have already lost more than $1 billion in sales due to delays in approving the trade agreement with Colombia. (Photo: Colombian Agriculture Ministry)


BY JOHN MURPHY

 

With Congress considering three long-awaited trade agreements this week, there’s a growing recognition in Washington of the overriding importance of the U.S.-South Korea Free Trade Agreement. Known as KORUS, it will be the most commercially significant trade deal for the United States in more than a decade, and the agreement has the potential to generate as many as 250,000 new American jobs, according to several estimates.

 

In addition, President Obama has rightly called the U.S. alliance with South Korea “the linchpin of not only security for the Republic of Korea and the United States but also for the Pacific as a whole.” With President Lee Myung-bak’s state visit to Washington later this week, it’s welcome news that Congressional leaders are galvanized to approve KORUS swiftly.

 

But setting aside false choices, it’s vital that Congress bear in mind the importance of the U.S. relationship with Colombia. Indeed, many of the arguments supporting KORUS apply just as powerfully to the agreement with Colombia.

 

Just as KORUS will open that market and create a level playing field for American workers, farmers, and companies, so will the agreement with Colombia. In fact, the accord with Colombia will eliminate tariffs on U.S. exports of manufactured goods (15 percent) that are roughly twice as high as Korea’s (7 percent), while imports from Colombia face an average U.S. tariff of just 0.1 percent.

 

As President Obama has warned: “If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores.” The July 1 entry-into-force of the EU-Korea FTA has put U.S. exporters to Korea at a competitive disadvantage, and their market share is reportedly already slipping.

 

However, what’s unfolding in Korea is already a dark reality for U.S. exporters to Colombia. U.S. farmers and ranchers have already seen their market share in Colombia collapse from about three-quarters to one-quarter as Bogotá has implemented trade agreements with other nations over the past two years, notably with Colombia’s South American neighbors in Mercosur.

 

In dollar terms, it’s a grim toll. U.S. agricultural producers have already lost more than $1 billion in sales due to delays in approving the trade agreement with Colombia. When the Canada-Colombia Free Trade Agreement entered into force on August 15, the United States became the only major wheat provider for Colombian buyers not benefiting from permanent duty-free access to the Colombian market, which has for many years been one of world’s ten most lucrative for American wheat farmers, according to the National Association of Wheat Growers.

 

It’s true that South Korea’s economy today is much larger than Colombia’s, but like South Korea, Colombia has a population of nearly 50 million and is enjoying rapid economic growth. Implementing the U.S.-Colombia trade accord now will ensure that U.S. companies can enter the Colombian market at an earlier stage in its economic development, with commensurately larger benefits over time.

 

Further, the same high standards for the protection of labor rights and the environment included in KORUS are included in the agreement with Colombia, whose government has secured recognition by the ILO for its laws and practices protecting worker rights.

 

Like Korea, Colombia is among America’s closest allies. Colombian troops fought alongside Americans in the Korean War and today are providing counter-narcotics training and assistance in Afghanistan. Colombia has displayed a commitment to democratic values and institutions that stands in contrast to some of its regional neighbors. America neglects this important ally at its peril.

 

U.S. standing in Latin America would surely suffer if Washington abandoned the agreement with Colombia at this juncture. And the cost would be immense: Our neighbors in the Americas purchased 43 percent of U.S. merchandise exports last year ($550 billion worth), while East Asia and Europe each purchased about a quarter of the total.

 

The success enjoyed by U.S. exporters in hemispheric markets is to an important degree the result of a chain of free trade agreements stretching from the Canadian arctic to Chilean Patagonia that covers 85 percent of U.S. trade in the Americas.

 

The tripling in U.S. exports to Colombia over the past decade — despite the often steep tariffs Bogotá imposes on U.S. goods — and the remarkable success of past trade agreements underscores the promise of the U.S.-Colombia trade agreement.

 

But these facts appear not to be wasted on Congress, which seems poised to finally approve the trade agreement signed nearly five years ago by the United States and Colombia. So Happy Colombia Day!

 

P.S. We need to pass the U.S.-Panama Trade Promotion Agreement too!

 

John Murphy is Vice President for International Affairs at the U.S. Chamber of Commerce.

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