Free trade deal stalled
Free Trade Deal Stalled
Colombia Fears Loss Of Special Preferences On Exports To U.S.
August 31, 2006
By JOSHUA GOODMAN, Associated Press
BOGOTA, Colombia — Major exporters from Colombia, including clothing and cut-flower producers, fear they will be blindsided by tariffs of as much as 20 percent on exports to the United States unless special trade preferences are renewed before they expire on Jan. 1.
The trade preferences were designed to wean Andean nations off cocaine production.
Trade negotiators say Colombia is being unfairly punished because of the White House’s refusal to push a bilateral free trade deal through Congress before the November midterm elections.
And neighboring Peru is also anxiously watching the clock tick down, hoping for U.S. legislative approval of its own pending free trade pact before the end of the year.
The deal with Colombia would be Washington’s biggest in the hemisphere since the 1994 North American Free Trade Agreement. It’s also a unique test of Washington’s leadership in a region where trade deals that lock in billion-dollar subsidies for U.S. farmers have been sharply criticized.
"For us, it’s a question of life or death," said Ivan Amaya, president of Colombia’s Association of Textile Manufacturers.
Washington granted the privileges covering thousands of products in 1991 to help four Andean countries - Colombia, Peru, Ecuador and Bolivia - diversify their economies away from production of coca, the base ingredient of cocaine.
Against stiff competition from Chinese and other manufacturers, Colombia’s textile industry last year exported $600 million worth of clothing to the United States duty-free - a third of its total production.
But they now stand to lose millions of dollars when unilateral trade privileges expire and 18 percent tariffs are restored.
The situation is similarly desperate for other major exporters, such as Colombia’s flower industry, the bulk of whose $758 million in U.S. sales take place in the weeks before Valentine’s Day in February.
President Alvaro Uribe, the United States’ staunchest ally in Latin America, has bet heavily on a trade agreement to replace expiring privileges.
In February, Uribe risked his own re-election chances and traveled to Washington to conclude talks over a deal that eliminated, overnight, all but a fraction of tariffs on the $14.3 billion in goods traded annually between the two countries.
The deal was widely criticized as one-sided because, by locking in current trade preferences, Colombia was effectively turning a blind eye to the $17 billion that U.S. farmers receive annually in government subsidies, making it extremely tough for farmers to compete.
Since talks concluded, ratification has been held up by the White House’s refusal to notify the U.S. Congress, perhaps fearing that another highly politicized trade deal could hurt the re-election chances of Republican incumbents, according to Colombian trade negotiators and Capitol Hill staff members.
Key U.S. congressmen attending Uribe’s inauguration Aug. 7 for a second four-year term told Colombians to expect no action this year on the deal, which would be Washington’s biggest in the Western Hemisphere since the North American Free Trade Agreement in 1994.
Gretchen Hamel, a spokeswoman for the U.S. Trade Representative’s office, said the administration was "moving as quickly as we can" on the Colombia deal. She also said it is up to Congress whether to renew the current trade preferences.
Unlike Colombia, Peru is cautiously optimistic that its free trade agreement will be approved by U.S. lawmakers before Dec. 31. It will remove trade barriers on $1.6 billion in exports, 31 percent of Peru’s total, that annually go to the United States.
Major Peruvian exports under the current trade preferences include asparagus, cacao, mangos, tuna, metal products, jewelry and cotton textiles.
Peru’s Congress ratified the deal in June, and U.S. legislators in the House and Senate have held preliminary committee hearings. Despite Democratic opposition, they recommended passage with only minor amendments.
But ratification depends first on the White House’s submitting a final version of the text.
The Peruvian government has named a special envoy to Washington to lobby for its passage.
"Ratification won’t happen by inertia," said Pablo de la Flor, Peru’s former chief trade negotiator.
