free trade agreement

U.S. Continues to Ignore Staunch Trade Partner and Ally Colombia — And Possible Consequences

by Fran Smith on February 17, 2011 · 1 comment

in Agenda for Congress, International, Trade

As the U.S.-Colombia Free Trade Agreement languishes, the U.S. stands to lose some of its influence with that staunch and critical ally in South America. The agreement was signed in 2006, then, in mid-2007, at the behest of the Congressional leadership under Nancy Pelosi, had stringent environmental and labor provisions inserted, and since then, has been largely ignored by the administration.

The major opposition all along the way has been from U.S. trade unions, which charge the Colombia is not doing enough to stop violence against domestic trade union leaders and members. Yet Cato research has shown that “the rate for union killings was 5.3 per 100,000 unionists in 2010, six times lower than the homicide rate for the overall population (33.9 per 100,000 inhabitants).” Colombia is still a violent country, but the strengthening of the legal system in Colombia under former President Alvaro Uribe and continued under the new President Juan Manuel Santos has meant that a larger percentage of perpetrators of union violence have come to justice.

Meanwhile, Colombian leaders were gracious even though they were pushing for fast action on the pact. The U.S., after all, is Colombia’s chief trading partner, and they were looking for assurance through the trade pact that the tariff preferences in the Andean Trade Promotion and Drug Eradication Act (ATPDEA) would continue into the future, without having to be reauthorized each year as is now the case.

Colombia’s patience may be wearing thin, and that wouldn’t be good news for the U.S.  Already China is Colombia’s number two trading partner and may overtake the U.S. if the FTA isn’t implemented. There’s also a new twist that increases the odds that this will happen. China and Colombia are having very serious discussions about China building a transcontinental railroad across Colombia – from the Atlantic to the Pacific — that would be a “rail canal” rivaling the Panama Canal for moving imports and exports across Latin America.

Now that would be a real coup of a different kind.

The Obama administration should get its head out of the sand and put the three pending FTAs on the fast track. Colombia already gets preferential tariffs under the ATPDEA. With the U.S.-Colombia deal, Colombia would remove more than 80 percent of Colombian duties on U.S. imports, with the remaining tariffs being phased out over ten years.

But that’s not the only reason, as CEI noted:

The agreement can also promote the national security interests of both Colombia and the U.S. Colombia faces increased tensions with its near neighbors, as Venezuelan President Hugo Chavez stokes anti-American sentiment. Ecuador briefly suspended diplomatic ties with Colombia after Colombian forces raided a narco-terrorist camp located in that country. Approval of the FTA will bolster Colombia’s ties with the U.S. and standing in the region, and help counter Chavez’s influence.

Image credit: tanya~b’s flickr photostream.

The Colombia FTA Deserves a Speedy Vote

by Fran Smith on December 22, 2010

in International, Trade

President Obama needs to look beyond pushing only the U.S.-Korea Free Trade Agreement to standing behind ratification of the other pending trade agreements with Panama and Colombia, says Cato’s Dan Griswold in a Washington Times article today.

Griswold points out that while the FTA with Korea is economically of far greater consequence than the Colombia FTA, that agreement would help cement our relationship with an important ally that is a strong pro-democracy counterpart to dictators like Hugo Chavez.  In economic terms, the trade pact would completely eliminate most tariffs on U.S. goods and services — providing companies like Caterpillar Inc. with strong market opportunities.

He takes issue with the Obama administration’s pronouncement that they will not be introducing the implementing legislation for the Colombia FTA anytime soon because they don’t have the votes.  That shouldn’t be the case, Griswold says, because of the influx of new legislators who aren’t bound to the union-led opposition to free trade.  As Griswold says,

It sounds more like a convenient and self-fulfilling prophecy on the part of the administration. If the votes are not there for the Colombian agreement, it is only because Mr. Obama so far has failed to exercise the same leadership he recently displayed in moving the Korean agreement toward passage.

Here’s what CEI has to say on the need to vote for the U.S.-Colombia FTA.

Image credit: tanya~b’s flickr photostream.

Stalled Korea FTA May Get a Boost

by Fran Smith on October 26, 2010

in Agenda for Congress, International, Trade

U.S. Trade Representative Ron Kirk is scheduled to meet today with Korean Trade Minister Kim Jong-hoon in San Francisco to discuss the pending U.S.-Korea Free Trade Agreement.  Hopes are high that with this discussion some lingering issues (autos and beef) holding up the pact could be resolved before President Obama’s upcoming meeting with South Korean President Lee Myung-bak at the G-20 Summit in Seoul in mid-November.

The National Association of Manufacturers has focused on the importance of the FTA in building market share for U.S. manufacturers, who, with the stalled trade agreement, are losing out to countries that have already signed trade agreements reducing tariffs for their goods and services exported to South Korea.  An earlier post at OpenMarket made that point as well.

South Korea has not been shy about entering into trade deals.  Just this month, the European Union and South Korea signed a trade agreement that opens up both markets.  According to the Korea Herald,

South Korea has so far signed six FTAs with 17 countries including Chile, Singapore, the four-member European Free Trade Association (Norway, Switzerland, Iceland and Liechtenstein), the 10-member ASEAN, India and the U.S. All of them except for the one with the U.S. have taken effect.

As Gabriel Sahlgren wrote in a 2007 CEI Issue Analysis:

The agreement is expected to abolish about 95 percent of tariffs on all industrial and consumer goods within three years, and remove most of the lingering 5 percent within a decade. According to a study by the U.S. International Trade Commission, the deal would increase U.S. GDP by $10.1-11.9 billion, and may boost annual trade between the countries by as much as $17.8 billion.  But critics ignore those gains.

* * * * *

The KORUS-FTA is not a perfect agreement, but it would generate so many economic and political gains for the U.S. that the benefits appear greater than its attendant problems. It would increase U.S. GDP by $10.1- 11.9 billion and bilateral trade by $17.8 billion annually, boost America’s standing in the region, and generate momentum for the cause of global free trade. Finally, to ratify it would bolster good relations with South Korea, an important ally, which negotiated and renegotiated the agreement in good faith.

An agreement that would make sense economically and politically — what’s not to like?

A Full-Court Press on Trade? Not Likely

by Fran Smith on August 19, 2010

in International, Politics as Usual, Trade

Today’s Washington Times has a lengthy article on the Obama Administration’s trade agenda vis-à-vis the stalled free trade agreements with South Korea, Colombia, and Panama.  The article explores the likelihood of President Obama being able to resolve issues with the South Korea FTA before the November summit in that country – a deadline he had earlier announced.  The South Korea FTA has some tough opposition from some automakers and labor unions — and little support among Congressional Democrats.

While the U.S. dithers on this agreement, the article notes, the European Union, Canada, and Australia are going full-speed ahead to finalize their own trade pacts with South Korea, which will leave the U.S. in a weakened position regarding some important exports to that country.

The two other languishing deals also face some fierce opposition, especially from labor unions.

To get some movement on these trade pacts, the president will have to do more than make a few public pronouncements  expressing his support.  He’s going to have to take on the union opposition, get House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid in line, rally his troops by touting the benefits of these agreements, bring together those spurned business groups, and reach out to some Republican supporters of free trade.  A likely scenario?  Not hardly.

Check out CEI’s publications on the South Korea, and the Colombia and Panama FTAs.

Bipartisan letter urges action on Korea FTA

by Fran Smith on May 11, 2010

in International, Legal, Trade

On May 10, 2010, two high-ranking senators, a Democrat and a Republican, sent a joint letter to President Obama asking him to take action on the stalled free trade agreement with South Korea.  In their letter, Senate Foreign Relations Committee Chairman John Kerry (D-MA) and Ranking Member Dick Lugar (R-IN) said that the FTA would be an economic boon to the U.S. and would show solidarity with a close U.S. ally.  The letter noted:

The U.S. International Trade Commission estimated in September 2007 that U.S. merchandise exports to Korea would increase by $10-12 billion annually as a result of the KORUS FTA and that services exports would expand.  The potential for innovation through competition and collaboration is also immense.

Through inaction, the United States will cede Korea’s vast markets to other countries, a luxury that we cannot afford.  In 2004, China displaced the United States as Korea’s number one trading partner.  Recently, the European Union and India signed agreements with South Korea to lower trade barriers.  As these countries effectively gain preferential access compared to American products, the United States risks missing significant opportunities, while other countries’ economies grow and create jobs from trade expansion.

CEI has long argued for ratification of the agreement.  Here’s a CEI issue analysis that sets out more detailed arguments for the Korea FTA and here’s a short piece on why the three pending FTAs should be ratified.

Movement on the U.S.-Korea FTA?

by Fran Smith on July 29, 2009

in International, Trade

It looks like things may be moving – slowly — on the trade front.  The U. S. Trade Representative has published a notice in the Federal Register asking for comments on the pending U.S.-Korea Free Trade Agreement.

The United States Trade Representative (USTR) is assessing how and to what extent the free trade agreement (FTA) between the United States and the Republic of Korea (Korea) signed on June 30, 2007 makes progress in achieving the applicable purposes, policies, priorities, and objectives of the Bipartisan Trade Promotion Authority Act of 2002 (”TPA Act”) (19 U.S.C. 3801 note) as set out in section 2102 of the TPA Act and carries out the provisions of the May 10, 2007 Congressional-Executive Agreement on Trade Policy.

Comments are due September 15, 2009. And, of course, comments have to be compiled and evaluated.  Then, the implementing legislation for Congress to consider has to be submitted.  All this, of course, is happening in an environment of increased skepticism about trade, plus an overloaded Congressional agenda, with massive health care and energy bills, not to mention the restructuring of the financial system.

Here’s some information published by CEI on the U.S. Korea trade agreement.