After the White House fought hard to complete its negotiations over the South Korea Free Trade Agreement, which was endorsed by the United Automobile Workers and the United Food and Commercial Workers, many expected that a similar deal with Colombia would also move forward. But last Friday, the White House unexpectedly said it would not send the pending Colombia Free Trade Agreement to Congress, arguing that this piece of legislation does not have enough support to win a vote. Many in Congress think otherwise. This decision represents a lost opportunity for the Obama administration to boost U.S. exports, reduce unemployment and improve relations with an important South American ally.
Under the Andean Trade Promotion and Drug Eradication Act (ATPDEA), 90 percent of Colombian exports already enter the U.S. duty-free while U.S. goods face tariffs of up to 20 percent in Colombia. This means that signing the proposed FTA would only slightly increase Colombia’s competitiveness in U.S. markets while dramatically increasing U.S. competitiveness in the Colombian market, which has been also affected by multiple tariff-lifting trade agreements that Colombia has signed with other countries.
Delaying this FTA makes no sense. The U.S. International Trade Commission estimates that signing the Colombia FTA would increase U.S. exports by $1.1 billion as well as boost U.S. GDP by $ 2.5 billion. Good diplomacy is also at stake with Colombia being a key ally of the U.S.
For more than four years, this FTA has been blocked in Congress because of concerns over Colombia’s anti-labor violence record. It is true that Colombia suffered greatly from labor rights violence in the past. However, a recent study by Daniel Mejía from Universidad de los Andes has documented that labor groups are not more affected by crime than Colombia’s population at large, challenging the idea that these groups are less protected by the state. Moreover, after labor violence peaked during the 1990s, there has been a steady decline in several crime measures. Human Rights Watch also notes a considerable increase in convictions for labor violence offenses and suggests these improvements are largely in response to pressure from the U.S. Congress.
Labor laws in Colombia have been another source of concern, particularly in relation to a legal provision that allows employers to hire workers through “cooperatives” with lower payroll contributions for social security. In response to some of these concerns, the Colombian Congress passed a law last week ensuring that employees hired through workers’ cooperatives comply will all labor protection clauses, including the right to form unions. This piece of legislation corrects one of the primary reasons some U.S. Democrats had rejected the FTA in the past.
Under current conditions, U.S. businesses are spending billions each year on tariffs to Colombia— a country which is willing to do away with these costly barriers. Continuing to delay a vote on the Colombia FTA will in the end only make it more difficult for the U.S. economy to recover. If the White House is serious about the Obama’s 2010 State of the Union target to double exports over the next five years, it must seize this opportunity to increase trade and send the Colombian trade agreement to Congress. Passing the FTA is in the best interest of the U.S. economy and its competitiveness in regional markets. Failure to pass the Colombia FTA means missing a significant opportunity for growth, while sending the wrong signal to a region that is looking elsewhere for economic partnerships.