Internally Displaced Persons. Human rights activists opposed to the FTA have faulted the Colombian government for its treatment of IDPs. However, some of those persons labeled as IDPs by the left are actually economic migrants who have gravitated to large cities in search of work and a better life, as is common in many developing countries.
Furthermore, numerous neutral observers have noted tremendous progress on human rights in recent years. Retired General Barry McCaffrey, former commander of the U.S. Southern Command and Director of the White House Office of National Drug Control Policy, visited Colombia in October 2007 and reported that “[t]he human rights situation has improved immeasurably during the President Uribe tenure.”
According to a report from the Colombian government:
Impressive progress has been made in poverty reduction, education and health since 1999. Increased stability has allowed the government to provide more and better services to the country’s poor.
Social spending represents 40 percent of the national budget.
Poverty levels have decreased since 1999 from 55 percent to 45 percent.
Programs have been developed to improve infant nutrition and health, encourage school enrollment, empower women, and provide food for millions of children.
More than 20 million of the country’s poor receive full or partial health coverage
Infant and child mortality have decreased.
Child immunizations have steadily increased.
Student completion of elementary school has increased to almost 100 percent, while the number of completing secondary school has also significantly risen.
Small Farmers Would Benefit. Anti-FTA activists have also alleged, without any factual basis, that the FTA will hurt Colombia’s small farmers. According to the U.S. agricultural attaché in Bogota, small farmers generally grow high-value-added crops (e.g., coffee and mangoes). These crops would be far superior in quality and lower in price than any coffee or mangoes imported from the U.S., and the FTA would enhance small farmers’ access to niche markets (e.g., organic foods) in the U.S.
Of all the agricultural producers in Colombia, the small farmers “would be the least affected by the FTA,” according to the U.S. Embassy. The agricultural attaché noted that the large landowners in Colombia are inefficiently producing rice, corn, wheat, and other high-volume, low-margin commodities that are currently protected by high tariffs but would face stiff competition from U.S. imports after the FTA is ratified. Lower food prices would more than offset any dislocation actually felt by small farmers due to U.S. agricultural imports. The urban poor would also benefit from cheaper food.
In fact, the whole Colombian economy would benefit because the currently underutilized large landholdings would become attractive investment targets for more efficient, better-funded U.S. agribusinesses, which would bring in advanced technology and better equipment, creating good, sustainable new private-sector jobs in the process.
Some of the large landowners have supported paramilitaries, and some are drug lords. Few Colombians would shed any tears if the FTA caused these owners some economic dislocation. Of course, this would leave the large landowners who have sponsored and funded the paramilitaries with less money to do so in the future. Their potential reversal of fortune would further weaken that source of conflict.
The FTA Is Crucial to Both Colombia and the U.S.
President Uribe already has made impressive strides against poverty in Colombia, as shown in Chart 6, which shows that poverty, as measured both by the Gini Coefficient and by a unique formula devised by an international study team (Mision para el diseno de una Estrategia para la Reduccion de la Pobreza y la Desigualdad— MERPD) that was funded by the United Nations Development Program, USAID, and other international development assistance agencies, has decreased substantially while President Uribe has been in power. The increased trade, investment, and job creation from the U.S.–Colombia FTA would only accelerate this laudable trend.
The FTA will spur additional economic development in Colombia and, just as important, will push the Colombian government to build up and strengthen government institutions and judicial and economic regulation to ensure that continued economic progress will not depend on any particular political personalities. Susan Segal, president of the Council of the Americas, notes:
The U.S.–Colombia Trade Promotion Agreement is our single most effective tool to help bring economic and political security to Colombia. Without this agreement and the investment security it provides, hundreds of thousands of Colombian jobs are in jeopardy of being lost. Each job opens an opportunity for a Colombian worker to enter the formal sector and to build individual economic prosperity—the alternative to narcotrafficking and the direct threat that poses to U.S. national security. Increased foreign investment and export market guarantees would further help to create the right economic conditions.
If Congress were to reject such an agreement, it would be inflicting real pain on Colombian workers and the Colombian economy. As the Cato Institute recently reported:
A recent study by the University of Antioquia shows that not approving the TPA would decrease investment by 4.5 percent in Colombia. Furthermore, it would increase unemployment by 1.8 percentage points, representing a net loss of 460,000 jobs. GDP would go down 4.5 percent, and the poverty level would rise by 1.4 points.
More U.S. Exports to Colombia. U.S. Under Secretary of Commerce Chris Padilla recounts that:
Ninety-two percent of imports from Colombia currently enter the United States completely duty free. It has been that way for 16 years, since Congress first passed the Andean Trade Preferences Act that gave Colombia access to our market as a way to reduce poverty and fight the drug trade.
The FTA would then simply level the playing field and give U.S. exporters access to the Colombian market of 44 million consumers. Padilla describes the current situation:
[A] can of Colombian coffee comes into the United States duty-free. But [a] bottle of Pepsi, made in the USA, pays a stiff 20% tax when sold in Colombia. [B]eautiful Colombian flowers—a major Colombian export—come into our market and pay zero tariffs. But…U.S.-made fertilizer, which helps those flowers grow, is charged up to 15% when exported to Colombia. [A] bag of carrots comes into the United States—and onto your dinner table—without paying any U.S. tariffs. But [a] tractor, made by Caterpillar in East Peoria, Illinois, faces a 10 percent duty when sold to a Colombian carrot farmer. [A] Pennsylvania apple pays a 15 percent tariff when sold in Colombia. Meanwhile, [a] Colombian banana enters the United States duty-free.
Padilla summarizes that:
Colombian exporters pay tariffs on only 8% of the goods they send to the U.S. Meanwhile, U.S. exporters currently pay tariffs— some as high as 35%—on 97% of the products we sell Colombia….
The U.S. exports more to Colombia than Russia, even though Russia has a population that is three times larger and an economy seven times that of Colombia.
Demonstrating bipartisan support for the FTA, former White House Chiefs of Staff Ken Duberstein (Reagan Administration) and Mack McLarty (Clinton Administration), recently wrote in The Wall Street Journal:
[Under the FTA] U.S. exports to Colombia, from cars to chemicals to consumer products, would grow by an estimated $1 billion per year—a direct benefit to U.S. workers and their families. From Colombia’s perspective, the FTA would add a welcome dimension of certainty to our trading relationship, encouraging investors to commit to Colombia and help create jobs there, too.
As U.S. Secretary of Commerce Carlos Gutierrez reported earlier this year:
In 2007, trade contributed over half a percentage point to total GDP growth—the largest contribution in 16 years. We need to keep up the momentum. Trade agreements are critical to lowering barriers to American exports and creating better-paying American jobs.
With specific regard to the effect of the housing/ subprime mortgage crisis on the U.S. economy, Secretary Gutierrez said that during the second quarter of 2007, U.S. GDP growth of 1.4 percentage points from trade offset a 1.2 percentage point decline in GDP caused by the housing crisis.
Partisan Politics and U.S. National Security. During the presidential primary season, Democrats in the congressional leadership have made one excuse after another to explain their delay and intransigence in acting on the FTA.
The AFL–CIO says that Colombia will just have to wait “until 2009” for a “new” FTA to be negotiated and signed. Big Labor clearly hopes that a Democratic President will take office next year. Practically speaking, a new FTA could not be ready for implementation before 2010. Meanwhile, every day, Colombia will face oil-funded, multipronged assaults and challenges from Hugo Chávez and his Chavista followers in Colombia and neighboring Ecuador and Bolivia. The AFL–CIO wants President Uribe to cool his heels until the end of his term in 2010, but neither Colombia nor the United States can wait to address these problems.
Congress Keeps Raising the Bar. On April 4, 2008, six Bush Cabinet secretaries sent Speaker of the House Nancy Pelosi (D–CA) a letter reminding her of the May 10, 2007, agreement between the White House and the congressional leadership. According to one account:
The letter opens with a reminder that Pelosi stood with [Treasury Secretary Henry M.] Paulson and U.S. Trade Representative Susan C. Schwab last May “to announce an agreement to restore a bipartisan consensus on trade,” and sets out a detailed case for how the Bush Administration has done to [sic] more than enough to hold up its end of the bargain.
“Over the past year, we have continued and intensified our efforts to work directly with you and other Members of Congress to identify a path forward for the United State[s]– Colombia Trade Promotion Agreement,” the officials wrote. “In addition to the private conversations you have had with several members of the President’s cabinet, the Administration has made broad and comprehensive efforts to reach an agreement with House and Senate leadership on a package to consider and approve the Colombia free trade agreement.”
Notwithstanding the May 10 agreement, and even though the Administration agreed to reopen the trade agreements, add onerous and vague new provisions to the labor and environment chapters, and weaken intellectual property rights protection for U.S. companies, the congressional leadership has since said consistently that it wants more from Colombia, but without specifying exactly how much or by when. The congressional leadership appears to have reneged on the May 10 agreement and to have been playing politics with the Colombia FTA, the most important of the three Latin American agreements.
The timing of the opposition suggests that Big Labor is putting partisan politics ahead of national security. The left’s real agenda could be simply protectionism or a desire to deny a “legacy” victory to President Bush and the center-right government of Colombia. Either way, inflicting this kind of economic punishment on a U.S. ally in the Andean region is not in America’s interests. Left-wing populism is fueled by poverty and lack of opportunities, as seen in Venezuela, Ecuador, and Bolivia. To counter this possibility in Colombia, the development of strong democratic institutions must be accompanied by continued economic development and growth.
If Congress votes down the Colombia FTA, it will deliver a major psychological victory to Hugo Chávez, the FARC, and the narcotraffickers that the U.S. has battled for decades in Colombia. It will also seriously jeopardize the progress and momentum made by the Plan Colombia war on drugs on which the U.S. has spent hundreds of millions of dollars since the Clinton Administration.
A defeated FTA might also force Colombia reluctantly into closer ties with a very eager and suddenly conciliatory Hugo Chávez. Venezuela is already Colombia’s second-largest export market after the U.S., and Colombia cannot afford to ignore it. Chávez’s dangling of petroleum carrots will not be ignored by the Colombians. If Colombia is spurned by the U.S., it will continue to seek trade agreements with many other countries (e.g., Canada and Mexico) and trading blocs, such as the European Union, the European Free Trade Association (EFTA), and MERCOSUR (Southern Common Market). This would only further isolate the U.S.
“Yes” to the Peru FTA; Why Not “Yes” to the Colombia FTA? The economies of Peru and Colombia are very similar, yet Congress passed the Peru FTA but holds up the Colombia FTA. Both are Andean countries with significant mineral and other natural resources and a history of chronic poverty and income inequality, especially among their indigenous populations.
Famed Peruvian economist Hernando de Soto has argued that the same rationale that led the U.S. Congress to approve the Peru FTA should be applied to the Colombia FTA. Speaking at The Heritage Foundation, de Soto said that the treaty is “not only about free trade.… We are trying to set up a different model for Latin America. That model is essentially a political one, because we are pro-market.”
In fact, Peruvian President Alain Garcia, a reformed leftist-populist, and Colombian President Uribe are both very capably leading their countries toward stronger, market-based democracies that will become members of the globalized community of trading partners. There is virtually no difference between the two countries, and both are friendly to the United States.
Congress approved the Peru FTA because the congressional leadership is friendlier to center-leftist Garcia than to the center-right Uribe. The congressional leadership also wanted to use the Peru agreement to bind the United States to certain International Labor Organization provisions. According to Senator Orrin Hatch (R–UT):
The Peru FTA requirement to adopt “fundamental labor rights” puts right-to-work, freedom of association and other major U.S. labor provisions at significant risk. Article 17.2 of the Peru FTA requires both Peru and the United States to “adopt and maintain in its statutes and regulations, and practices there under, the following rights as stated in the International Labor Organization ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up (1998) (ILO Declaration)”….
The Peru FTA does not provide any definition of these fundamental rights, leaving the interpretation…to a dispute settlement panel appointed by the U.S. and Peruvian Governments.
Given the agreement’s reference to the ILO declaration, it is widely expected that such a dispute settlement panel would in fact look at and rely at least partially on the standards of the relevant ILO core conventions associated with these rights.
With their ILO concerns satisfied by approval of the Peru agreement, the congressional leadership apparently feels justified in refusing to consider essentially the same deal with a nearly identical country next door. This schizophrenic approach is unjustifiable and unwise.
President Bush recently warned that failing to approve the Colombia FTA, especially given that Congress approved a nearly identical agreement with Peru, would be an “insult to a friend.” The President quoted Canada’s Prime Minister Stephen Harper to the effect that “the biggest fear in South America is not the leader in Venezuela, but the biggest fear for stability is if the United States Congress rejects the free trade agreement with Colombia.”
Interestingly, Eric Farnsworth of the Council of the Americas has reported that, thanks to Peru’s FTA with the United States, its sovereign debt has recently been upgraded to investment grade. This will make it easier and less expensive for Peru to borrow and invest to upgrade its infrastructure. Foreign direct investment in Peru also rose with the FTA. The same positive developments can be expected from the Colombia FTA.
A Long-standing, Good Friend of the United States. The U.S.–Colombia FTA is much more than a simple trade agreement. It would seal a strong partnership between two long-time friends. For example, more than 50 years ago, Colombia was the only South American country that sent troops to assist in the Korean War. Colombia is also the oldest continuously functioning democracy in South America.
“Yes” to One-Way Trade; Why Not “Yes” to Two-Way Trade? Congress recently voted overwhelmingly to renew the Andean Trade Preference legislation that grants most Colombian products one-way access to the U.S. market. Thus, by refusing to approve the Colombia FTA, Congress is punishing American workers and businesses, not Colombia, for Colombia’s tragic history of violence. American workers can only gain new job opportunities through the increased U.S. exports to Colombia (about $1 billon per year) that can be realized only if the FTA’s two-way trade regime is approved by Congress.
If a majority of Members of Congress vote against the Colombia FTA (or refuse to vote on it), they will effectively be voting for Hugo Chávez. Venezuela’s dictator-president and would-be Emperor Simón Bolívar II covets becoming the ruler of a reconstituted Gran Colombia. Consequently, Chávez is even more eager to see Congress reject the Colombia FTA than he was to see Costa Rica reject the United States–Dominican Republic–Central American Free Trade Agreement (DR–CAFTA) during the summer of 2007, when he funded leftist opposition in an unsuccessful attempt to block its ratification there. A defeat in either case would place major obstacles in the path of the United States.
A defeated FTA would be a tremendous loss of face for President Uribe and the entire Colombian nation. As with many smaller countries, Colombian and American perceptions of each other differ. Colombians imagine the U.S. cares about their country much more than it actually does. They see the giant to the north preoccupied with whether or not to pass the Colombia FTA. On the other hand, Americans worry a lot less about the future of Colombia and the Andean region than they should.
When asked recently about Congress’s possible failure to pass the Colombia FTA this year, President Uribe said that it would “be a serious setback” in an interview with The Wall Street Journal. “I wouldn’t know what to say. It would be very serious.”
A failed FTA will lead Colombia and other Latin American countries to conclude that the U.S. is not a reliable partner. It will also fuel a return to narcotrafficking and other illicit activity by the urban and rural poor, who would not benefit from the many jobs that would be created by the legitimate alternative economic development that would be created by the Colombia FTA.
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.
In fighting against congressional approval of the FTA, far-left U.S. groups are hurting the very people they claim to be protecting—workers and their families in both the United States and Colombia. A defeated U.S.–Colombia trade agreement would be a tremendous loss of face for President Uribe and the entire Colombian nation and a devastating blow to U.S. prestige and influence in the entire Andean region. Hugo Chávez and his “blood brother,” Iranian President Mahmoud Ahmadinejad, would love to see the FTA defeated.
Colombians deserve the support of all Americans, and Congress should promptly reverse itself and approve the U.S.–Colombia FTA to seal the alliance with this great ally and friend of the United States. Regrettably, the congressional leadership forced a vote along party lines on April 10, 2008, that will indefinitely delay consideration of the pending U.S.–Colombia FTA. With this vote, Congress reneged on its commitment to give trade agreements negotiated by the executive branch prior to June 30, 2007, a straight up-or-down vote within 90 days of submission by the President.
If Congress listens to the AFL–CIO and votes down the U.S.–Colombia FTA, it will have delivered a potential knockout blow to President Uribe, the United States’ best friend in the region. A failed FTA will lead Colombians and people from other countries in Latin America to conclude that the U.S. is not a reliable partner. In effect, it would be a no-confidence vote against the Colombian people and a public relations bonanza for President Chávez and the FARC narcoterrorists, which 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.
American exporters would also lose, and significantly. Colombia currently has one-way duty-free access to the U.S. market, but defeat of the FTA would deny U.S. businesses the same two-way access to the Colombian market.
Ultimately, Congress would serve neither U.S. nor Colombian interests by defeating the Colombia FTA. Everyone would lose, especially the Colombian people. Duberstein and McLarty put it best:
[A]s the many Colombian unions that support the trade agreement know, rejecting the agreement will not save a single life— whereas passing it will be a powerful vote of confidence in the democracy Colombians have struggled so hard to protect.
James M. Roberts is Research Fellow for Economic Freedom and Growth in the Center for International Trade and Economics at The Heritage Foundation.