The Heritage Foundation

Executive Summary #2129 on Trade, Economic Freedom

April 30, 2008

April 30, 2008 | Executive Summary on Trade, Economic Freedom

Executive Summary: The U.S.-Colombia Free Trade Agreement: Strengthening a Good Friend in a Rough Neighborhood

Colombia , America’s best friend in the Carib­bean–Andean region, faces hostile regimes on its borders and unfriendly nearby neighbors who dis­like Colombia’s partnership with the United States. Big protectionist U.S. labor unions and far-left anti-globalization groups have joined these far-left allies of Hugo Chávez—the Castro brothers in Cuba, Daniel Ortega in Nicaragua, Rafael Correa in Ecuador, Nestor and Cristina Kirchner in Argentina, and Evo Morales in Bolivia—in doing all that they can to block the U.S.–Colombia Free Trade Agree­ment (FTA).

Regrettably, on April 10, 2008, the leadership of the U.S. Congress forced a vote along party lines that has delayed consideration of the pend­ing U.S.–Colombia FTA indefinitely. With this ex post facto change in the “fast track” ground rules that have been a bedrock principle of U.S. trade negotiation policy for the past 35 years, Congress reneged on its pledge that trade agreements would receive a straight up-or-down vote within 90 days of submission. Congress also sent an alarming message to America’s trading partners around the world that Congress puts short-term political expediency above the long-term interests of the U.S. and its allies.

The Colombia FTA would spur economic devel­opment and strengthen Colombian government institutions. Much more than a simple trade agree­ment, the FTA would seal a deep partnership between two nations that are long-time friends and great defenders of market-based democracy. It would fortify a bulwark against the rising tide of Chávism that has nearly surrounded Colombia and threatens to undermine U.S. hemispheric interests.

Leftist Excuses. Opponents argue that Colom­bia’s history of violence against trade unions should disqualify it from an FTA, but the trade unionists who oppose it have studiously ignored the consider­able progress that the Colombian government has made in ending that violence. When pro-U.S. Presi­dent Álvaro Uribe took office in 2002, violence was ripping the very fabric of the Colombian nation. The combination of the Revolutionary Armed Forces of Colombia (FARC, a violent narcoterrorist guerrilla group and long-time enemy of Colombian democ­racy), drug traffickers, and paramilitaries had nearly destroyed the Colombian state.

With U.S. help under Plan Colombia, nearly all of the paramilitaries have been demobilized and disbanded under the Uribe administration, and the murder rate has dropped by 40 percent, including a drop of 75 percent among trade unionists. Most of the recent “trade unionist” homicides have been nonpolitical in their motivation but are categorized as “anti-union violence” by leftists to further their anti-globalization, protectionist agenda.

The restoration of order and civilian authority has allowed President Uribe’s free-market policies to bear fruit, and economic growth in Colombia has taken off. The gross domestic product (GDP) has been rising at an increasing rate since Uribe took office, growing an estimated 7 percent in 2007. Meanwhile, the people can walk Colombia’s once-mean streets safely for the first time in memory. Uribe’s popularity has soared along with the econ­omy, while the FARC’s favorable rating has plum­meted to almost zero.

The AFL–CIO alleges that the Colombian gov­ernment is violating International Labor Organiza­tion (ILO) core labor standards, yet the ILO itself says that the labor situation in Colombia is positive and that the government has made significant progress. Opponents allege that the FTA will hurt Colombia’s small farmers when, in fact, it will ben­efit them.

Two recent actions by Congress give the lie to all of these excuses from FTA opponents and demon­strate that their opposition is purely political and protectionist. First, these objections were not raised when Congress recently voted overwhelmingly to renew the Andean Trade Preference legislation that grants Colombian products one-way access to the U.S. market. Second, Congress recently approved a nearly identical FTA with Peru. Colombia and Peru have very similar economies, significant mineral and other natural resources, and similar histories of chronic poverty and income inequality, especially among their indigenous populations. Peruvian economist Hernando de Soto argues that the same rationale that led Congress to approve the Peru FTA should be applied to the Colombia FTA.

Leftist arguments against the FTA are based either on faulty or outdated assumptions about the reality on the ground in Colombia today or on a destructive and fiercely partisan socialist ideology that would diminish economic freedom for every­one. A defeated FTA would hurt Colombian and U.S. workers and their families—the very people the far-left U.S. groups claim to be protecting. By refusing to approve the Colombia FTA, Congress is punishing American workers and businesses for Colombia’s tragic history of violence. Rejecting the FTA will not save anyone’s life in Colombia, but its passage will be a strong vote of confidence in Colombia’s fledgling democracy.

What the U.S. Should Do. Congress should promptly reverse itself and approve the U.S.– Colombia Free Trade Agreement so that it can come into force quickly.

The Bush Administration should continue to give high priority to passing and implementing the Colombia FTA. After the FTA is ratified, the Bush Administration and U.S. businesses can begin a new chapter in U.S. economic engagement with Colom­bia and the region.

Conclusion. If Congress continues to take its marching orders from the AFL–CIO and blocks the FTA, it will deliver a potential knockout blow to President Uribe and severely damage U.S. prestige and influence in the entire Andean region. A failed FTA will lead Colombians and other Latin Ameri­cans to question U.S. reliability as a partner. A vote of “no confidence” against the Colombian people would be a public relations bonanza for Hugo Chávez and the FARC narcoterrorists that he is using to undermine the Uribe government. A defeated FTA would also put at risk the considerable progress made by Plan Colombia since 1999.

James M. Roberts is Research Fellow for Economic Freedom and Growth in the Center for International Trade and Economics at The Heritage Foundation.

About the Author

James M. Roberts Research Fellow For Economic Freedom and Growth
Center for Trade and Economics (CTE)