Saturday, May 10, 2008

Why the Bush Administration thinks an FTA is bad for Colombia

I’ve written several times about the U.S.-Colombia FTA and am not looking for overkill, but President Bush gave another speech while an administration official wrote in the State Department’s blog, and their logic prompts me to write again.

We’ve been told, in no uncertain terms, that failure to pass the FTA is a slap in Colombia’s face, as the Uribe government has been a close ally. Colombia, we are told, really needs this FTA to promote both economic prosperity and security. Much is at stake.

If that is the case, shouldn’t we expect to hear that the FTA actually benefits Colombia? From Bush’s speech:

Today almost all of Colombia's exports enter the United States duty-free. Yet American products exported to Colombia face tariffs of up to 35 percent for non-agricultural goods, and much higher for many agricultural products. Think about that. They export into the United States duty-free, and we don't have the same advantage. I would call that a one-sided economic agreement.

So the POTUS himself is saying that this FTA is good because it reduces Colombia’s advantage. How, then, does that promote Colombian prosperity? The status quo is currently one-sided in favor of Colombia.

Now, from Charles S. Shapiro, the Senior Coordinator of the State Department’s Western Hemisphere Affairs Free Trade Task Force:

The cup of Colombian coffee that I had this morning, the roses that I’m going to send to my mother for Mother’s Day along with the box of chocolates all come from Colombia into the United States, tariff free. American exporters on the other hand, pay high tariffs to send products such as machinery and fertilizers to Colombia that help produce these goods. Every day that we wait to pass the Colombia Trade Promotion Agreement (CTPA) is a day that American farmers, businesses and workers lose out. Free trade will benefit both of us.

If Colombia benefits now, and the U.S. doesn’t, then how does an FTA benefit both of us? Right now, Colombia has access but also protection of domestic industry, and an FTA gets rid of the latter.

If I were an advocate for the FTA, I would argue that the benefit derives from not having to deal with the constant vote wrangling associated with the Andean Trade Promotion and Drug Eradication Act, which offers all those nice benefits but always faces some degree of congressional skepticism. That skepticism is enhanced when Colombia is lumped in with Bolivia and Ecuador. Why, then, does the administration never even mention this dynamic?

All this, I believe, helps us understand the Bush administration’s enduring problems with Latin America. It cannot even construct a coherent argument in favor of its own allies.

32 comments:

Paul 12:27 PM  

"If that is the case, shouldn’t we expect to hear that the FTA actually benefits Colombia?"

Not really. Bush has to sell it to an American public spooked by Democrat and union bedtime stories of outsourcing and fair-trade. The Colombians, already sold on the project, don't vote in the US, so Bush isn't speaking to them.

"So the POTUS himself is saying that this FTA is good because it reduces Colombia’s advantage."

What? How?

"How, then, does that promote Colombian prosperity?"

*It will encourage foreign investment over the long run because it will ease concerns the Andean Preferences wont be renewed.

*Domestic producers in Colombia will see lower input costs. The tarriffs and other entry barriers on items like fertilizer, heavy machinery, telecom, etc., will be reduced/eliminated creating more efficiency.

I can give you a first-hand example. The implementation of CAFTA in Costa Rica has started to get the telecom monopoly(ICE) off their butts and they are now starting to offer
more cell phone service, better internet plans, and other products.
They know Verizon and other producers are coming for their market share. Obviously, business will be easier to conduct when you can travel there and actually have your Blackberry work. ICE is still shoddy, but they know they have to actually try now.

Paul 12:36 PM  

Couple other things, according to the polls there, the Colombian people see the benefits of the FTA. If it were so one-sided, why would the majority of the public approve?

Also, there are many Colombian export oriented unions who approve of the FTA for the incentives I mentioned. Some of the unionists have been assassinated apparently for this very reason. The anti-FTA crowd then cynically adds their deaths to the tolls as part of their campaign to defeat the pact.

Greg Weeks 1:23 PM  

Who are you arguing with? The Bush administration's current line, repeated by the president and a State Dept official, is that the current situation is "one-sided" in favor of Colombia, and so the FTA will correct that.

Neither he nor I ever mentioned the Colombian people, Costa Rica, Blackberries, unions, or Verizon.

Justin Delacour 1:53 PM  

Greg: "So the POTUS himself is saying that this FTA is good because it reduces Colombia’s advantage."

Paul: "What? How?"

Uh, Paul, Bush just said how.

Willful blindness is not a virtue.

Paul 2:06 PM  

Greg,

You ask in your post: "How, then, does that promote Colombian prosperity?"

I gave you an answer. Regarding Bush's political strategy, again, he doesn't need to sell the Colombian people who don't vote here and are already sold on the pact.

Paul 2:07 PM  

"Willful blindness is not a virtue."

Funny, coming from someone who incredibly still denies his master's allegiance with the FARC.

Greg Weeks 2:17 PM  

Bush did not have to sell this to the Colombian people earlier this year either, so that is not relevant. His audience has always been in the U.S.

Justin Delacour 2:18 PM  

he doesn't need to sell the Colombian people who don't vote here and are already sold on the pact.

Whether they're sold and whether the pact would actually be good for Colombia are two separate issues, Paul.

But beyond that, I don't buy the polls. According to AP, Gallup's latest is a telephone poll from Colombia's major cities. That's not a random sample. Moreover, if I were in that paramilitary-infested country and somebody called me on the phone claiming he or she was a pollster and asking me questions about Uribe, I'd just shut the fuck up.

If you actually believe that Uribe's approval rating is at 83 percent, I have a bridge to sell you, Paul.

Anonymous,  2:20 PM  

Any idea what the potential impacts of the FTA on the agriculture sector are?

Boli-Nica 6:13 PM  

There is always the easiest justification. Lowering tarrifs and a weak dollar make for cheaper US goods. US car sales to Chile have increased after the free trade pact.

Oh Paul, Justin is ignoring the de-facto free trade treaty b/ween the Chavez and the US. Except Chavez goes even further and actually subsidizes purchases in US goods, by giving preferential exchange rates to importers. And he indirectly provides buyers for these importers through his corrupt government. Steal the state blind, and buy a Hummer..

Bryce 8:17 PM  

Kelby,
From what I've heard some in the flower industry are concerned.

I'd also have to agree that the language used by Bush is largely to help encourage businesses here to press Congress to pass the FTA.

He's long been using security and economic incentives to get it through Congress.

Boli-Nica 9:01 PM  

From what I've I'd also have to agree that the language used by Bush is largely to help encourage businesses here to press Congress to pass the FTA.

He's long been using security and economic incentives to get it through Congress.


In all fairness to Bush - who normally doesn't deserve it - the parameters of the debate were set by the Democrats:
i. Mainstream Unions and pro-Union legislators use Colombia as a proxy to bash all trade agreements. They moan about job losses to other country, cheap labor, etc., etc.,
ii. Then the Unions also use the largely bogus "dead unionist" arguments, as a rhetorical prop. Joining in the fun are the fringe groups and anti-globaloney haters.

i. and ii. play well with Union folk & the unemployed, who think their jobs might leave Peoria for Pereira. b/t/w some of them also believe that handgun registration was going to lead to them losing their 12 gauge.

Bryce 9:16 PM  

I can agree that Bush needed to address Colombia's labor issues in order to satisfy Congress. However, after the recent diplomatic spat between Colombia and Ecuador Bush, along with USTR Schwab, came out in full force demanding that Congress pass the FTA. His arguments were couched in a hemispheric security paradigm to defend the Colombian state against the FARC and its supporters (whomever they may be).

And you can't dismiss the media blitz that Schwab has been doing to get businesses and chambers of commerce to press Congress.

Justin Delacour 9:25 PM  

Then the Unions also use the largely bogus "dead unionist" arguments, as a rhetorical prop.

Largely bogus? You're sick in the head, Boli-Nica. In the last four months, unionists have been dropping like flies in Colombia, but you obviously couldn't give a shit. Never mind that Uribe has made statements that only increase the dangers to them. Ask the CUT leadership. You're fuckin' sick, dude.

Tambopaxi 10:16 PM  

Kelby,

To your question on impact on the ag sector (I presume you're asking about the non-US side), the small farm sector in Mexico took a beating as a result of NAFTA; small farmers simply couldn't compete with large, government subsidized producers from the States. I'd have to believe that the same thing is happening in CA as a result of CAFTA, but hopefully not....

Anonymous,  11:05 PM  

Thanks Tambo, thats waht I was getting at. I know that in many cases...like Mexico, or Haiti, US free trade has a negative impact on the small farming sector.

Chile seems to do ok, but they seem to focus more on niche ag like wine, etc. And I dont know if the production is large scale or small. What is your assessment of the Chile-US free trade agreement, Professor Weeks?

Boli-Nica 1:02 AM  

A bogus argument is the much repeated claim that Colombia is the most dangerous place in the world to be a Union member. Bogus because the number cited goes back more than 20 years, and includes ANY MURDER OF ANY UNION MEMBER regardle of whether its for organizing rural workers or getting whacked for getting busy with a neighbors wife. Unfortunately, since the 50's Colombia has consistently had one of the highest murder rates in the world + low rates of punishment regardless of motive.

The crude bottom line is that if the government and/or paramilitaries wanted to end Union membership in Colombia they would have done it. If not ask Pablo Escobar's business associates, members of the FARC's former political front, small town mayors, or the Maoist guerilla groups that disarmed.

Greg Weeks 7:42 AM  

Kelby, Chile is a different case because the military government opened up the economy many years ago, and the Concertacion has also worked to keep tariffs low on the vast majority of agricultural goods (with some exceptions like wheat, which is produced mostly for the domestic market).

Paul 12:03 PM  

Boli,

The "dead unionists" argument is also bogus because the AFL-CIO's line is Uribe should not be "rewarded" because an overall 80% drop in assassinations just isn't good enough. How could the "reward" argument make any sense unless they are implicitly saying the FTA would be good for Colombia because it will bring economic growth and jobs? Well, following the convoluted logic out, wouldn't an economic stimulus help reduce the violence even further? In essence, they're saying Colombians should be kept poor(don't reward Uribe) just because they are victims of violence. Makes absolutely no sense.

And then the purveyors of the "dead unonists" argument will contradict themselves by saying the FTA won't help Colombia anyway, as Dan Kovalik, one of the major players in the anti-FTA movement, said to me just a few months ago.

Paul 12:19 PM  

"In the last four months, unionists have been dropping like flies in Colombia, but you obviously couldn't give a shit."

Perfect Delacour dishonest hack argument. You cite the last 4 months while ignoring the trends of the past 5years. And some of those recently assassinated were probably killed because of their pro-FTA views. Besides, an economic stimulus a la FTA would be another tool for reducing violence even more. But you obviously don't give a shit.


"Ask the CUT leadership."

Ask them and they'll tell you "free trade is killing us as much as bullets are," As CUT official Gustavo Triana put it. They aren't honest brokers anymore than you are, Justin. And CUT's own official statistics show a clearly visible decline in assassinations under Uribe.

Justin Delacour 12:59 PM  

A bogus argument is the much repeated claim that Colombia is the most dangerous place in the world to be a Union member.

Ah, yes, but if it were merely the second or third most dangerous place in the world for a union member, Colombia would be a-okay, right?

Bogus because the number cited goes back more than 20 years

Oh, I see, so long-term trends are "bogus." But, of course, if I cite the short-term trend (all the unionists' bodies piling up in the last four months), well, that's "bogus" too, Paul tells us. You and Paul make quite a team.

and includes ANY MURDER OF ANY UNION MEMBER regardle of whether its for organizing rural workers or getting whacked for getting busy with a neighbors wife.

No doubt if you were to separate out the "whacked-for-getting-busy-with-a-neighbors-wife" ones, the amount of politically-motivated killings of unionists would remain sky-high.

Your arguments are piss poor, Boli-Nica.

Anonymous,  3:04 PM  

According to the Office of the US Trade Representative, in the first few months of the 2004 US-Chile free trade agreement, US agricultural exports to Chile increased by over 22%.

Granted, such information is dated, but even given Chile's previous openness and low tariffs, the 2004 FTA had a big impact.

I guess the question would be, how protected is Colombias agricultural sector from US competition at the moment. If its more protected than Chile was, then there could be a larger jump of US ag exports into Chile. Plus factor in the distance/transportation costs compared to Chile and US goods will be even more competitive, no?

Greg Weeks 3:29 PM  

Two things. One, that report also says U.S. exports everywhere increased 13%. Second, "agriculture" is also referring to things like petroleum products. In general, agricultural disruption in Chile has not been significant after the FTA.

boz 5:13 PM  

One other random note about Chile is that it benefits by being in the Southern Hemisphere and selling agricultural products to us off season (and we can sell to them off season). It actually serves as a huge benefit for both countries, but few other countries could take advantage of that unique situation.

Greg Weeks 5:38 PM  

But Kelby, the answer to your second part is yes, those industries that are currently more protected in Colombia will get hit because the ATPDEA doesn't lower Colombian tariffs.

Greg Weeks 5:39 PM  

Boz is also right, though I've never seen a specific analysis of it. It would be interesting to see how countries with similar agricultural exports may not compete too much if their seasons are reversed (though in places like the Imperial Valley in CA you can produce year round).

Anonymous,  7:26 PM  

Boz is also right, though I've never seen a specific analysis of it.

That's an excellent point by Boz as I can distinctly remember choosing not to eat grapes in the winter until Pinochet was out of power.

Dan Joyce 12:54 PM  

I come to this late, but on the original post:

Surely you can see that Colombia has an advantage now because they can export to the US duty free. But its temporary, so a permanent FTA would give them further advantage. The US obviously would also gain an advantage by reducing Colombian tariffs on US exports.

This isn't a zero-sum game. Colombia doesn't gain when imports from the US are prohibitively expensive. Whether you agree with it or not, there is a coherent logic to the Bush administration's argument: that Colombia's relative advantage vis a vis the US will be reduced under an FTA (making trade more fair), and Colombia's overall utility/welfare will increase by gaining permanent access to US markets and less expensive imports.

Paul 2:12 PM  

"Oh, I see, so long-term trends are "bogus." But, of course, if I cite the short-term trend (all the unionists' bodies piling up in the last four months), well, that's "bogus" too, Paul tells us. You and Paul make quite a team."

Uribe's term and change in policies go back to 2002. It's dishonest to hold him accountable for events that occurred prior, as the unions do. And I do realize that's too high a standard to hold for you as well.


"No doubt if you were to separate out the "whacked-for-getting-busy-with-a-neighbors-wife" ones, the amount of politically-motivated killings of unionists would remain sky-high."

Boli's point was obvious. Leave it to Justin Delacour to distort it.

Greg Weeks 4:37 PM  

As I've argued in past posts, there is a coherent argument to be made for the FTA. That is not the issue.

The issue is that the administration does not make it.

Justin Delacour 6:19 PM  

As I've argued in past posts, there is a coherent argument to be made for the FTA.

Really? What would that "coherent argument" be for this particular agreement? To argue for "free trade" in the abstract is not to make a coherent argument for this particular agreement. I certainly haven't seen anyone around here offer a coherent argument in favor of this particular agreement.

Anonymous,  8:32 PM  

I thought this Bloomberg article on trade by Brazil within Latin America was interesting.

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_marinis&sid=aQh0gA4wqfRI

--John

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