Thursday, February 24, 2011

US-Colombia FTA

Amidst all of the talk regarding the various pernicious effects of unions, there is an overlooked aspect deserving of more attention: their reflexive opposition to free trade deals. A particularly egregious example is the US-Colombia free trade agreement, which has languished since its signing in late 2006. Some highlights:
  • Over 6,000 Colombia products already enjoy duty-free access to the US market under the Andean Trade Preference Act. The US-Colombia FTA would simply grant tariff-free status to some additional products, duty-free status for goods covered by ATPA would be made permanent (the ATPA has to be periodically renewed, and actually lapsed earlier this month) and would ease some regulatory barriers.
  • The US, meanwhile, faces an average tariff of 12.5% on the products it exports to Colombia, and has paid over $3 billion in tariffs since the agreement was first signed. Under the trade deal it would be granted immediate duty-free access on 80% of its goods, with an additional 7% duty-free after five years and the remainder duty-free after ten years. The US International Trade Commission projects the US would see exports boosted by $1.1 billion and GDP increased by $2.5 billion. In other words, the US gives up very little (a term I hate to use since it implies imports are bad, but for the sake of discussion...) and gets a lot in return.
  • Colombia has signed a free trade deal with Canada that goes into effect on July 1. Canada is a US competitor that makes many of the same products, and it stands to reason the US will be at a distinct disadvantage if the US-Colombia deal is not passed by that date. We have already seen this play out in the agricultural arena vis-a-vis Argentina, which entered into a free trade deal with Colombia on Jan. 1, 2009. Result: US market share declined by 44% while Argentina's rose by 37%.
Given these facts, who could possible oppose a trade deal that is so obviously a slam dunk? The AFL-CIO, that's who. A look at the group's fact sheet explaining why they oppose the deal reveals it to be almost entirely devoid of any economic arguments, resting almost entirely on concern over violence against trade unionists in the country. While violence of any kind against anyone is deplorable, this is a bogus argument. As Juan Carlos Hidalgo explains:
If we look at the homicide rate as defined by the number of murders per 100,000 inhabitants, the rate for union killings was 5.3 per 100,000 unionists in 2010, six times lower than the homicide rate for the overall population (33.9 per 100,000 inhabitants).

...In 2010 there were over 1,400 trade unionists under a government protection program—more than any other vulnerable group of Colombia’s civil society. In 2007, a special department was created in the Office of the Prosecutor General dedicated exclusively to solving crimes against union members and bringing the perpetrators to justice.
Plainly the AFL-CIO's opposition doesn't stem from concern over the fate of their union brothers in Colombia, it is simply a desire to halt free trade everywhere in all of its forms. Furthermore, how are Colombia workers helped by reducing trade opportunities with the US?

While the union's stance on this issue is unsurprising, of far greater concern is the lack of leadership shown by President Obama. Why hasn't passage of this agreement been made a priority by the administration? This is a cost-free means of helping the economy that would present an easy bipartisan victory (Speaker Boehner as well as the relevant committee chairmen in the House, Dave Camp and Kevin Brady, are fully on board, as is Senate Minority Leader Mitch McConnell). Either the president does not believe in the virtue of free trade or he lacks the courage to confront the unions. Neither thought is particularly comforting.

No comments: