The most important and contentious trade vote in Congress this year will probably be the free trade agreement the United States has signed with its South American neighbor and ally, Colombia. In his January 28, 2008, State of the Union speech, President Bush called on Congress to approve the agreement this year.

Calling Colombia “a friend of America that is confronting violence and terror, and fighting drug traffickers,” the president warned Congress that “if we fail to pass this agreement, we will embolden the purveyors of false populism in our hemisphere. So we must come together, pass this agreement, and show our neighbors in the region that democracy leads to a better life.”

Progress Still Required

Signed by the two governments in November 2006, the agreement would eliminate most tariffs and barriers to commerce between both countries. The U.S.-Colombia free trade agreement (FTA) follows a series of similar agreements-—negotiated by the Bush administration and approved by Congress—with five Central American countries, the Dominican Republic, Chile, and Peru.

The current Democratic Congress approved the Peru FTA late in 2007 after changes were made to its environmental and labor chapters, but Democratic leaders have repeatedly claimed that the FTA with Colombia will not face a vote until that country achieves as yet undefined progress in tackling violence against union leaders. Rejecting a free trade agreement with Colombia because of lingering violence in that country would be a mistake by Congress.

More than its economic benefits, an FTA with Colombia would reward and institutionalize the dramatic progress made in the past five and a half years by the government of Colombian President Alvaro Uribe.

Violence is a real issue for union members in Colombia. Since 1991, more than 2,200 union members have been assassinated, mostly by right-wing paramilitaries. Colombia is the most dangerous country in which to be a union member, as a recent publication from the AFL-CIO points out. And the justice system has failed in most cases: out of so many murders, there have been only 37 convictions.

However, many fail to credit the Colombian government with the dramatic progress it has made against what only a few years ago seemed to be hopeless odds.

A History of Conflict

The real story in Colombia is not the current level of violence but its dramatic fall in a relatively short period, and the credit due the Colombian government for the progress. The number of assassinations of union members in Colombia has dropped sharply since 2001, a year before Colombian President Alvaro Uribe was sworn into office.

Trade unionist killings also must be seen in the context of a society that for decades has been one of the most violence-plagued in the world. Since independence from Spain in 1819, the country has been engulfed in violent civil conflicts that cost hundreds of thousands of lives.

In the 1960s two Marxist armed groups, the FARC and ELN, started a guerrilla war against the Colombian government. Later in the 1980s, powerful drug cartels battled the authorities and each other in the streets of important cities such as Medellin and Cali. Medellin was, until a few years ago, the deadliest city in the world.

In the early 1990s, right-wing paramilitary groups were formed by landowners to battle the left-wing guerrillas. These groups soon became criminal forces of their own.

In the mid 1990s, once the drug cartels were dismantled, both guerillas and paramilitary groups moved into the narcotics business. Colombia’s rugged geography makes it an ideal place for growing illegal crops such as marijuana and coca. It is estimated that 90 percent of powdered cocaine consumed in the U.S. comes from Colombia. This represents a multimillion dollar business that illegal armed forces have exploited for over a decade.

A Remarkable President

President Alvaro Uribe is a rarity in Latin American politics. After five years in office, his approval ratings are still very high, currently above 80 percent.

Before Uribe’s tenure, Colombia was considered on the verge of becoming a “failed state.” The Marxist guerillas who had waged a war against the Colombian government for almost 40 years controlled an area the size of Switzerland. Thousands of kidnappings and assassinations made Colombia one of the most violent countries in the world. As former U.S. Assistant Secretary of State for Western Hemisphere Affairs, Otto Reich, noted, “Barely five years ago, the big debate inside the U.S. government centered on how long the government of Colombia could survive.”

Uribe’s policies have changed Colombia. He adopted a tough policy against the Marxist guerrillas by strengthening the army’s presence in rural zones and moving the FARC out of central Colombia. He also pushed for a controversial plan to persuade the paramilitary groups to disarm in exchange for reduced sentences and incentives to reincorporate former paramilitaries into the workforce. This process has not been exempt from criticism. Many argue that demobilization of paramilitaries represented an amnesty to confessed criminals. Others point out that many demobilized paramilitaries have gone into regular criminal activities. However, the numbers clearly show that crime has plummeted under Uribe’s watch.

Today, Medellin has a lower per capita homicide rate than Baltimore. Colombia is still a very violent country, but critics fail to see the greater picture when looking at crime data without taking into account the trends of the last five years.

Not only have crime figures improved during Uribe’s presidency, economic and social indicators also show remarkable progress. The economy, which grew at an average of 5 percent in the last four years, is estimated to have grown by almost 7 percent in 2007.

Direct foreign investment ballooned from $2.1 billion in 2002 to $6.3 billion in 2006 (a 200 percent increase). Poverty fell by 11.9 percentage points to 45 percent during the same period, and the unemployment rate decreased from 15 percent to 11 percent. A combination of pro-growth policies and improved security has delivered better living conditions for millions of Colombians.

A Friend in a Region of Foes

The importance of Colombia has grown in recent years given the ideological battle taking place in the Andean region. With the ascendancy to power of populist left-leaning presidents in South America, President Uribe stands as the closest U.S. ally in Latin America. Even more, Colombia is now surrounded by two anti-American presidents who have friendly ties or are sympathetic to the Marxist guerillas: Venezuela’s Hugo Chavez and Ecuador’s Rafael Correa.

The situation is particularly troubling in the case of Chavez. The Venezuelan president has repeatedly tried to export his “Bolivarian” (socialist) revolution to other Latin American countries, taking advantage of a windfall in oil revenue of approximately $300 billion since he came to power.

President Chavez has openly supported the political campaigns of left-leaning candidates in the region such as Evo Morales (Bolivia), Shafik Handal (El Salvador), Daniel Ortega (Nicaragua), Ollanta Humala (Peru), and Rafael Correa (Ecuador). Moreover, in the last four years Chavez has spent $4 billion in armaments.

Enter the U.S.-Colombia FTA

The proposed trade agreement with Colombia grew out of America’s policy engagement with Colombia since the early 1990s. In 1991, a Democratic Congress enacted the Andean Trade Preferences Act. The bipartisan law, which is up for renewal again in 2008, allows 90 percent of Colombia’s exports to enter the U.S. duty free.

Since the late 1990s, in an effort instigated by then-President Bill Clinton, Congress has appropriated more than $5 billion in aid for “Plan Colombia,” a Colombian government program to battle violent insurgents and eradicate the production of illicit drugs.

The free trade agreement with Colombia was designed to both strengthen civil society in Colombia and also to open economic opportunities for U.S. producers to sell to the country’s 44 million upwardly mobile, American-friendly consumers.

Like similar agreements the United States already has negotiated in the region, the agreement would knock down barriers to U.S. exports. More than 80 percent of U.S. exports of consumer and industrial products to Colombia would become duty free on enactment, and remaining tariffs would be phased out over the next 10 years.

For American farmers, the agreement would deliver immediate duty-free access for high-quality beef, cotton, wheat, soybean meal, and major fruits and vegetables (including apples, pears, peaches, and cherries) and many processed foods, including French fries and cookies. It would improve access for exported pork, beef, corn, poultry, rice, and dairy products.

The agreement also would strengthen investment protections for U.S. companies trying to reach Colombian consumers with a direct presence. It would guarantee the nondiscriminatory rights for U.S. companies to bid on contracts for a broad range of Colombian government ministries, agencies, and regional governments and better access for U.S. telecommunication service providers. It goes further than previous bilateral agreements to meet the ever-shifting demands of trade agreement critics for enforcement of certain labor and environmental standards within Colombia.

Two-way trade between Colombia and the United States amounted to $15.9 billion in 2006 and was on course to top $17 billion in 2007. That is similar to the value of America’s two-way trade with Chile, another FTA country, and nearly double our trade with Peru, which became an FTA partner in 2007.

Because U.S. tariffs are already low to non-existent on the large majority of imports from Colombia, the agreement should not arouse the opposition of domestic special interests. More than half of our $9.3 billion in imports from Colombia in 2006 were petroleum and coal. Another sixth of our imports from Colombia are agricultural products, with coffee beans and cut flowers dominating the trade. Apparel and shoes made up about 6 percent of our imports, amounting to less than half a billion dollars.

America’s most competitive exports to Colombia in 2006, comprising more than 40 percent of U.S. goods sold there, were manufactured products such as drilling and oil-field equipment, excavating machinery, computers and computer accessories, telecommunications equipment, and medical equipment.

Other major categories of U.S. exports were chemicals and agricultural products, with corn being by far the top U.S. farm export.

The agreement would eventually eliminate Colombia’s 11.3 percent average tariff against U.S. farm goods compared to the average U.S. tariff of 0.1 percent under existing preference programs. A December 2006 study by the U.S. International Trade Commission estimated that the agreement would boost U.S. exports by $1.1 billion. With Colombian exporters already enjoying virtually duty-free access to the American market, a trade agreement would deliver the “level playing field” that skeptics of trade always demand.

Approving a free trade agreement with Colombia is about supporting a market democracy in a region where liberal values are under attack. It is about being a reliable partner in turbulent times. It is also about building long-lasting institutions for economic prosperity and democracy for millions of Colombians.

Daniel Griswold is director for the Center for Trade Policy Studies at the Cato Institute. Juan Carlos Hidalgo is project coordinator for the Center for Global Liberty and Prosperity at the Cato Institute. This article is adapted from the February 2008 Cato publication, A U.S.-Colombia Free Trade Agreement: Strengthening Democracy and Progress in Latin America. This article appeared in Impact Analysis, March-April 2008.
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Daniel Griswold and Juan Carlos Hidalgo
About The Author Daniel Griswold and Juan Carlos Hidalgo
Daniel Griswold is senior research fellow and co-director of the Program on the American Economy and Globalization at the Mercatus Center. Juan Carlos Hidalgo is project coordinator for the Center for Global Liberty and Prosperity at the Cato Institute.




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