Colombia’s free-trade agreement with the United States is “not only a strategic issue with respect to trade but also has great geopolitical importance”, Colombian finance minister Oscar Zuluaga told Emerging Markets yesterday. In advance of US trade representative Susan Schwab’s trip to Colombia this weekend, Zuluaga said his government is focused on the difficulties of getting the deal through US congress.
Zuluaga recognizes that the Colombia deal has become part of the political debate in the US, but said he was still confident that agreement would get passed.
“The basic premise is that the agreement will be approved by the US Congress,” he said. “What is being evaluated [in the talks with Schwab] this weekend is if there is a certainty that it will be passed by the two chambers of the US Congress in the current context.”
The deal looks to be a tough sell, given strong doubts among the Democratic majority and the focus on US elections. US senator and presidential candidate Barack Obama has announced that he would vote against the agreement if it gets to the Senate floor.
But presidents George W. Bush in the US and Alvaro Uribe in Colombia see the agreement as vital in Latin America’s divided geopolitical context.
They are stressing Colombia’s importance on a host of issues, including the wars on drugs and terrorism, as well as trade. In the shadows is Venezuelan president Hugo Chavez and the notion that the trade pact would bolster Colombia in the ideological battle in the region.
The Bush administration needs to decide if it will remit the agreement, known as the CTPA, to Congress in the coming days, something it has hinted at strongly. Schwab, who was accompanied to Bogota by nine lawmakers, including two Democrats, has tried to strike a balance between the politics and economics of the agreement.
“Passage of the US-Colombia FTA will yield substantial economic benefits for American and Colombian businesses and consumers, while also strengthening ties with a critical Latin American ally,” said Schwab in a statement before her trip.
Two-way trade between the two countries was $18 billion last year, with Colombia enjoying a slight surplus. Most Colombian products do not pay tariffs to enter the US under the Andean Trade Promotion and Drug Eradication Act (ATPDEA), which has been extended to the end of the year.
Politicians and business leaders both in Colombia and across Latin America see the issue as a bellweather of US influence and interest in the region.
“Failure to pass the Colombia free-trade agreement would be the worst sign the US could send,” David Lemor, head of Peru’s privatization agency, ProInversion, told Emerging Markets. “If the US says no, it is unlikely that any other country would want to negotiate.”
Peru began negotiating a free-trade agreement with the US at the same time as Colombia, but completed the process in December 2007.