dems’ misguided trade stance

Posted on April 10, 2008

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Don’t believe it when House Speaker Nancy Pelosi declared that she is looking out for the concerns of American families in her maneuver to kill the free-trade agreement between the US and Colombia.

She is merely trying to hold the trade pact hostage while pushing the White House to come with a second economic stimulus package.

But in delaying the vote to ratify the trade pact, she is hurting the US economy and workers.

Consider this — the pact would immediately allow 80 per cent of US exports of consumer and industrial products to Colombia to be duty free, with the goal of all tariffs to be cut within ten years. This covers a cross section of the US economy, from farm exports such as beef, cotton, soybeans and wheat, to textiles, medical, scientific and heavy equipment.

Services like telecommunications would gain access to the Colombian market, and US suppliers could bid for Colombian government contracts, on a similar basis as Colombian companies.

The US currently has an Andean Trade Preference Agreement, which already allows many Colombian products to enter the US duty-free. It only makes sense to subject US goods to tariff-free export into the Colombian market with the bilateral trade pact and level the playing field for US companies. And if companies stayed in business and do better, workers benefit.

The Wall Street Journal cites Illinois-based heavy machinery company, Caterpillar Inc., as a company that could lose out if the trade pact was left to languish.

Cat sells off-highway trucks to the Colombians with a 15 per cent import tax or $200,000, but would have an edge in price if the trade pact was approved and tariffs were dropped. More crucially, Cat is in competition to export to the Latin American country other heavy equipment like motor graders with Canada. Incidentally, Canada is also in talks with the Colombians for a free-trade agreement and should that be concluded before the US-Colombia one gets passed, guess whose equipment will be cheaper to purchase for the Colombians?

“If Colombians don’t buy our tractors, they’ll buy them from Japan,” Commerce Secretary Carlos M. Gutierrez warned. “If they don’t buy our wheat, they’ll buy it from Canada. And if they don’t buy our high-tech equipment, they’ll buy it from China.”

But beyond economic considerations, the FTA with Colombia is an important tool to show support for all the strides the Colombian president, Alvaro Uribe, has made in taking on violent crime and drug trafficking to stabilize the country.

Uribe has stuck his neck out to remain the region’s staunchest US ally, defying the tide of anti-US sentiments that had been swelling in many South American countries, led by Venezuelan president Hugo Chavez. A yes vote for the trade pact would have been a strong show of support for a loyal ally. A no vote comes across as a “slap in the face” for the Colombians, its vice president had said. It could also curb US influence in an already tough neighborhood.

A bone of contention for the Democrats is that Colombia is not doing enough to fight the extra-judicial killings of unionists there. The Colombian government is by no means perfect on that record but the numbers have fallen from a peak of 196 in 2002, to last year’s 26. While it is still too many lives and families affected, it is a marked improvement.

Uribe has also turned Colombia’s economy around in the past five years, with his emphasis on reducing public debt, modest budgets and better security to lure investments. The approved pact would have been another boost to the economy.

The US has a lot to gain from the ratification of the US-Colombia FTA. Not doing so would not only hurt US-Colombia relations and US credibility, but most importantly, American companies and workers, subjecting them to tariffs and higher vulnerability of losing businesses to other countries eager to gain market share in the Colombian market. Unfortunately, the Democrats just don’t seem to get it.

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