Canadians may pay the price of US Free Trade Agreement with Colombia
Canadian Manufacturers and Exporters
Canadians may pay the price of US Free Trade Agreement with Colombia
By Derek Lothian
8 July 2011
The United States intends to offset the cost of entering into a new Trade Promotion Agreement with Colombia by imposing a $5.50 fee on Canadian and Mexican travelers to the US.
It is a fee that would distort commerce between Canada and the United States – the world’s two largest trading partners – according to Canadian Manufacturers & Exporters (CME). CME estimates that the fee would cost Canadian air travelers to the US almost $34 million per year.
"More than 70 per cent of Canadian business travel to the US is done by air,” explains CME President & CEO Jayson Myers. “So this is not only an issue of fairness, but of economic competitiveness for both our countries.”
Yesterday, the US Senate Finance Committee and the Ways and Means Committee of the House of Representatives marked up mock-ups of pending free trade agreements with Colombia, South Korea and Panama. The next step, which is expected soon, will be for the White House to formally transmit implementing legislation to Congress.
According to the Statement of Administrative Action accompanying the US-Colombia Pact, and supported by the Congressional Budget Office’s preliminary estimates of the bilateral agreement, the fee would raise $533 million by 2016 – a substantial portion of the $538 million the US would suffer in revenue loss from duty elimination on Colombian goods.
“Expanding markets for American products is a laudable goal,” says Myers. “But the cost burden should not be on the back of their NAFTA partners. Here is yet another cost that has to be borne by companies that depend on integrated North American supply chains to compete around the world. It makes no sense at all.”
Canadians spent more than $20 billion on travel and tourism-related goods and services in the US in 2010, and accounted for one-third of all visitors south of the border – more than any other country.
Canada is also the United States’ top trading partner, while Colombia is the US’ 20th largest client and 25th source of imports.
"The US needs to know its major customers are not happy,” says Myers. "I am sure this will be become a priority issue for the Canadian government and the US Embassy in Canada that are both investing so much effort in reducing barriers to trade and commerce between our two countries".
