April 15, 2008

April 15, 2008 | WebMemo on Trade, Economic Freedom

Stalling the Colombia FTA: A Major Blow to U.S. Public Diplomacy

In the Democratic response to President George W. Bush's 2004 State of the Union Address, Congresswoman Nancy Pelosi said, "As a nation we must show our greatness, not just our strength. America must be a light to the world, not just a missile."[1] Four years later, in a volatile presidential election year, House Speaker Nancy Pelosi has deployed a legislative "missile" at the front line of U.S. foreign policy: free trade with an important ally, Colombia.

Effectively ending our more than five decades of bipartisan consensus that has sustained U.S. trade policy, on April 10, Speaker Pelosi and her like-minded colleagues succeeded in amending House rules to circumvent the 90-day timetable for taking up the Colombia free trade agreement (FTA) that President Bush submitted to Congress.[2] This is not a good way to show either "our greatness" or "our strength" to our trading partners. The unprecedented congressional action has also damaged our image abroad as a beacon of economic freedom, severely undermining our public diplomacy.

What Happened?

The Colombia accord was negotiated under presidential trade promotion authority (TPA), which has since expired but which clearly and specifically covered votes on the trade agreement. The expired law forbade amendments to trade pacts and required that both the House and Senate act on the agreement within 90 days after the President submitted the pact to Congress. The spirit of this trade rule was never violated until April 10, as the House and Senate previously had responsibly and dutifully held a straight yes-or-no vote on trade deals within the timeframe set by the statute. This strong tradition of U.S. trade policymaking has been ignored by the congressional Democratic leadership.

Regrettably, the fallout from this unprecedented situation goes beyond trade policy: It has irrevocably hurt our ongoing efforts in public diplomacy, particularly through free trade. Free trade and its expansion through multilateral, regional, and bilateral agreements is a vital foreign policy tool.

Expanding America's trade relationships has been a critical means of promoting our immediate national interest as well as America's reputation abroad as the land of opportunity through economic freedom. Total U.S. trade with the world, almost 30 percent of our GDP in 2007,[3] is a strong indicator of our engagement with the global economy. We not only trade industrial and agricultural products with our partners, but also communicate to them our values founded on liberty. Free trade is an effective and commanding transmitter of that exchange.

Halting the Colombia FTA by Changing Rules Taints Our Trade Diplomacy

The Colombia FTA, at the center of the current trade policy chaos, has been a critical case study in the use of trade policy to strengthen public diplomacy. As Secretary of State Condoleezza Rice stressed in The Wall Street Journal, the Colombia FTA provides a chance to "send an unequivocal signal to the entire world that the United States is a confident, capable global leader that acts not only in its own interest, but in the interest of its friends."[4] Passing the agreement in a timely fashion would both demonstrate our role as a reliable partner and be a powerful vote of confidence in an ally that needs and deserves our support.

Under the agreement negotiated 16 months ago, Colombia agreed to open its agricultural, manufacturing, and service markets to U.S. companies. In doing so, Colombia made generous concessions on the extent of tariff cuts in hopes of attracting more foreign investments and cementing its progress toward greater economic freedom and democratic governance. Last year, Colombia made additional compromises, adding provisions demanded by Democrats even after formal negotiations had been concluded, in order to protect labor rights and the environment.

These are tangible signs of the extent to which Colombia wants to solidify a free trade agreement with the United States, particularly in light of the fact that total U.S. trade with Colombia in 2007 accounted for about $18 billion, less than 1 percent of total U.S. trade worldwide.[5] As Colombian Defense Minister Juan Manuel Santos correctly pointed out, "For the U.S., the free-trade treaty is one more treaty. For Colombia, it's the symbol of our relationship with the U.S."[6]

More important, the world has been carefully watching developments surrounding the Colombia FTA and House Speaker Pelosi's shortsighted actions. Given that the current World Trade Organization negotiations have stalled, European trading partners and developing nations are vigilantly monitoring our trade policy to gauge America's true commitment to free trade. Particularly in Asia, South Korea has been anxiously watching the progress of the Colombia deal as a reliable indication of the probable fate of the U.S.-Korea free trade agreement. China, which just signed a free trade pact with New Zealand and looks for more trade deals,[7] is surely monitoring current developments with amusement.

Conclusion

Following the statement on the House of Representatives' vote to change TPA rules, Treasury Secretary Henry Paulson said, "It also sends an unwelcome signal to global markets at an economically sensitive time."[8] In addition, our image abroad as a beacon of economic freedom and reliable partner has been tainted. The House majority leadership has argued that America's image has been tarnished by careless foreign policy and unilateralism. They need look no further than the mirror to find the source of the latest counterproductive action.

Anthony B. Kim is a Policy Analyst in the Center for International Trade and Economics at The Heritage Foundation.



[1] Democratic Response to State of the Union Address to Joint Session of Congress, January 20, 2004, at
www.cnn.com/2004/ALLPOLITICS/01/20/
dems.transcript/index.html
.

[2] Nicole Gaouette, "U.S.-Colombia Free Trade Agreement Put on Hold," Los Angeles Times, April 11, 2008,
www.latimes.com/news/nationworld/washingtondc/
la-na-uscolombia11apr11,1,6242325.story
.

[3] U.S. Department of Commerce, Bureau of Economic Analysis, National Accounts, at
http://bea.gov/national/nipaweb/index.asp.

[4] U.S. Secretary of State Condoleezza Rice, "The Colombia Trade Stakes," The Wall Street Journal, April 7, 2008, p. A13.

[5] U.S. Department of Commerce, International Trade Administration, National Trade Data, TradeStats Express, at
http://tse.export.gov/NTDChart.aspx?UniqueURL
=pdbhuki1vjo23i55240vv5bs-2008-4-14-14-29-46
.

[6] Greg Hitt, Bob Davis, and José De Córdoba, "Bush's Colombia Push Fans Flames on Trade," The Wall Street Journal, April 8, 2008, p. A1.

[7] Shu-Ching Jean Chen, "Landmark Trade Deal Struck by China, New Zealand," Forbes.com, April 7, 2008, at
www.forbes.com/markets/2008/04/07/china-nz-
fta-markets-econ-cx_jc_0407markets2.html
.

[8] U.S. Secretary of the Treasury Henry Paulson, "Statement on House Trade Vote," April 10, 2008, at
www.ustreas.gov/press/releases/hp916.htm.

About the Author

Anthony B. Kim Research Manager, Index of Economic Freedom, and Senior Policy Analyst
Center for Trade and Economics (CTE)

Related Issues: Trade, Economic Freedom