New Mexico News
| Colombian Trade Pact Mired in Politics |
| Posted by () on May 21 2008 at 8:03 PM |
BUSINESS ACROSS THE BORDER: Combine some political animus, mix in an election season, flavor with a sluggish economy and you a have a brew powerful enough to bring almost any new initiative to a standstill.
This is the case with the proposed U.S.-Colombia Trade Agreement (USCTA). As has been the case with past U.S. trade treaties, the USCTA was negotiated by the U.S. administration with the Colombian government, signed and presented to Congress, which has to ratify trade agreements before they become law.
However, the USCTA has become a pawn in the struggle between Congress and the White House, with both sides using the political arena to make their case to the American public.
On April 10, House Speaker Nancy Pelosi changed the rules that would have required a vote this year on the negotiated USCTA. In essentially throwing the timetable to vote on the agreement into limbo, Pelosi said the main concern of the government should be to “address the economic insecurity of America's working families” before a free trade agreement could be considered.
Later, Pelosi provided a more pragmatic view of the Democratic position when she said: “If you're in a conversation with someone and they have all the cards, you're not likely to have a winning hand. Now the leverage is with us.”
What's so special about the U.S. negotiating a free trade agreement with Colombia, a South American country?
At face value, this is not obvious. According to International Monetary Fund statistics, Colombia's 2007 gross domestic product (GDP) was $171.6 billion, or 1.2 percent of the total U.S. GDP. This makes the Colombian economy equivalent to that of the state of Alabama.
In spite of its small size, Colombia has become the new free-trade battleground, which is having far more ramifications than simply lowering trade barriers. The Bush administration has been a supporter of the U.S. enacting free-trade agreements with friendly nations. In this sense, the administration is not taking a unique stance with the USCTA, especially due to the small size of Colombia's economy compared to the U.S.
Under the 1991 Andean Trade Preference Act, which was enacted to combat drug production and trafficking, countries in the Andean region were granted trade benefits with the U.S. Today, Bolivia, Colombia, Ecuador and Peru enjoy duty-free access to U.S. markets for more than 5,600 products.
More than 90 percent of what Colombia exports to the U.S. enters the country duty free. Ironically, U.S. products exported to Colombia still face high tariffs. Therefore, the administration is arguing that from a trade standpoint, enacting the USCTA makes good sense for U.S. businesses.
As important as allowing low-cost access to Colombia's market is for U.S. companies, the administration is arguably even more concerned about the political ramifications of cementing a trade agreement with Colombia.
In the past few years, Colombia's government has proven to be an island of moderation in what has been a move to the left by many Latin American nations. Colombian President Alvaro Uribe, a U.S. ally, stands in stark contrast to anti-Americans such as Venezuelan President Hugo Chavez and Bolivian President Evo Morales.
Since taking office, Uribe has battled the Revolutionary Armed Forces of Colombia (FARC), a leftist insurgency aimed at toppling Colombia's government. The FARC has been supported by leftist leaders such as Hugo Chavez.
From a political standpoint, the U.S. views enacting a free trade agreement with Colombia as a way to empower Uribe's government and to affirm the special relationship which the U.S. has with that country.
On the other side of the Congressional aisle, arguing for provisions to protect American jobs and the ability to assert power over an incumbent president, remain the driving force of the anti-USCTA strategy.
As the U.S. presidential campaign lumbers on, the discussion of new free-trade agreements has become more and more politicized.
The Bush administration, led by Commerce Secretary Carlos Gutierrez, has embarked upon an aggressive promotional campaign to extol the virtues of a USCTA. On April 24, Gutierrez, along with USCTA supporters in the Senate, launched a “Colombia Tariff Ticker,” (http://www.trade.gov), which calculates the cost of tariffs that U.S. companies pay to export goods to this country. The ticker highlights some interesting facts about the current state of U.S.-Colombia trade.
According to this ticker, “American exports face an estimated $1.9 million in tariffs each day that passes without two-way free trade with Colombia.” This device is aimed at demonstrating the cost to U.S. companies of the House decision not to take action on the USCTA. It also highlights the fact that U.S. agriculture exports to Colombia are second only to the country's exports to the North American zone.
More than 9,000 U.S. companies, of which 7,705 are small- and medium-sized, are already exporting to Colombia.
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