Medellin, Colombia The Colombia Free Trade Agreement is proving a great success, as supporters over five years ago predicted. On the first anniversary of its implementation, US exports to Latin America’s third-largest economy are up almost 15 percent. Our country can reap even greater benefits from enacting more such accords with Europe and Asia — but those trade deals may be delayed to death by the same US protectionistswho kept the Colombia pact on ice for so long.
Since the agreement took effect last May 15, through the end of March, US exports to Columbia rose 14.6 percent. This will rise further as more tariffs are phased out. But the lag between negotiation of the deal and its final enactment let many other countries implement their own trade accords with Colombia, giving those nations’ businesses an important head start.
Colombian exports during that time rose just over 3 percent, leading Bogota’s biggest newspaper to title an article “United States began with advantage in the first year of the Free Trade Agreement.” Ah, not so fast! In the first year of the FTA,Colombia’s government says, it “exported 187 new products and increased its number of exporters to that market by 775 companies.”
Further, imports from the US created jobs in sectors throughout the Colombian economy, and gave Colombian consumers products they never had, products at cheaper prices and superior products.
Sadly, all too often Latin American countries are dumping grounds for shoddy, overpriced exports from China and elsewhere. Among my purchases here in Medellín: appliances with itsy-bitsy electrical cords, nails with so little steel they can’t even penetrate drywall, trash bags that simply fall apart. Even my cat-poop shovel was made of crap, snapping within days. Colombia desperately needs the competition US exporters can provide.
The Colombia deal was win-win for both sides, as free-trade pacts almost always are, although specific jobs will be created and lost on both sides. Thus, it’s hardly a tragedy that the US trade deficit with South Korea is slightly larger now than 14 months ago when the South Korea pact took effect.
But President Obama wants more. In his January State of the Union speech, he announced a goal of doubling American exports of goods and services in five years.
He noted that “95 percent of the world’s customers and fastest-growing markets are beyond our borders” and that export-related jobs “pay 15 percent more than average.” When jobs are in short supply, he later said, “building exports is an imperative.”
Yet US exports have barely nudged up since then, even counting the Colombia increase.
What may help?
Surprisingly, we have no free-trade pact with either the European Union or Japan. But trade initiatives under way with both have the potential to encompass 60 percent of world trade, with a tremendous lowering of tariffs and other barriers all the way around.
The idea of a trans-Atlantic trade deal goes back decades, but European governments weren’t so keen on the idea. Now, rocked by one economic crisis after another, they’re having a momentary non-lapse of judgment and the administration has taken advantage of it to announce the start of talks.
With an ambitious trade and investment deal, in five years US and EU exports to each other would be over $150 billion higher, our economies some $250 billion bigger, and we’d generate an extra 500,000 high-paying jobs, according to the Business Coalition for Transatlantic Trade, in what’s presumably a best-case scenario.
On both sides of the Atlantic, trade officials say there is a short “political window” to negotiate such an agreement, yet the Colombia pact was held up for years by protectionist US interests hiding behind transparently false concernsof Colombian human-rights abuses.
At the same time, a free-trade agreement called the Trans-Pacific Partnership (TPP) is being negotiated between the United States and 10 other countries in the Americas and in the Asia-Pacific Region. Just months ago, Japan agreed to join in, with the Obama administration’s encouragement. With Japan in, the partnership would cover 40 percent of global GDP.
Our country can’t afford another long wait as with the Colombia deal.
Michael Fumento is an attorney and author.