Colombia Free Trade Agreement Seen As Miamis Gain
Written by Scott Blake on May 3, 2012
By Scott Blake
With the Colombia Free Trade Agreement set to take effect this month, those in Miami’s international trade industry should be among the winners, but concerns about Colombian workers linger.
The agreement is expected to open a higher level of trade between the US and Colombia. With Colombia already its second-largest trading partner, Miami trade businesses are expected to be a chief beneficiary of the agreement.
"I think it will be beneficial to both sides," said Joseph Smith, vice president of the Miami-based Florida Foreign Trade Association.
The Obama administration is holding out the same hope, saying Colombian officials have taken sufficient steps to protect the rights of Colombian workers to allow the trade agreement to move forward. That position has put President Obama at odds with some US labor leaders, who recently warned that it is too early to declare Colombia’s labor action plan a success.
Such concerns mostly have been overshadowed by support for the agreement among the US business community. US businesses have sought easier access to consumer markets in Colombia, which boasts the third-largest economy in Central and South America.
The economic benefits in South Florida are expected to be immediate.
In 2011, the value of Colombian imports and exports through the US Customs District-Miami reached $8.25 billion. That was up from $6.86 billion in 2010, trade statistics show.
Those numbers are expected to grow under the trade agreement, which will eliminate many tariffs on US exports to Colombia, making American goods more price competitive there.
The International Trade Commission has estimated that tariff reductions will expand exports of US goods to Colombia by more than $1.1 billion a year, while Colombia imports to the US would increase by $487 million a year.
The largest estimated increases in US exports to Colombia, by value, would be in chemical, rubber and plastic products; machinery and equipment; and motor vehicles and parts. In terms of percentage increases, the largest increases in US exports would be in rice and dairy products, according the US Congressional Research Service.
That should help offset the current US trade deficit with Colombia. Currently, about 90% of Colombian exports to the US enter the country duty-free, the Congressional Research Service found.
In 2011, for example, the value of US exports to Colombia totaled $14.3 billion, while the value of Colombian exports to the US totaled $23.1 billion, according to the Florida Foreign Trade Association.
On an industry level, the trade agreement would result in minimal to no effect on output or employment for most sectors of the US economy, the Congressional Research Service concluded. It found the US sugar industry would be the only sector with an estimated decline of more than 0.1% in output or employment.
Apart from the US economy, other concerns linger.
The agreement is expected to result in some trade diversion. Exports to Colombia from countries other than the US are expected to decrease by 9% due to the increase in goods coming from the US.
In addition, initial responses to Colombia’s labor action plan from Colombian labor unions have been mostly favorable, but some unions have continued to oppose the trade agreement.
Some members of Congress also have opposed the agreement due to concerns about violence in Colombia against union members and other human rights defenders.
Opponents maintain that Colombia’s labor movement is under attack through violence, intimidation and harassment, as well as through legal channels.
The American Federation of Labor and Congress of Industrial Organizations, or AFL-CIO, has been strongly opposed to the agreement. The AFL-CIO contends that Colombian union members face daily challenges to their rights to organize and bargain collectively.
According to progress reports issued by the Colombian Embassy in the US, government reforms in Colombia since 2002 have helped protect Colombian worker rights. A September 2011 report from the embassy provided data indicating that homicides of Colombian union members dropped by 81% since 2000.
"The Colombian government has responded to US concerns and acknowledged that, while there continue to be killings in Colombia, the situation has improved significantly," the Congressional Research Service report states.
"Government data indicate that assassinations of labor union activists and teachers decreased by 86% between 2002 and 2009, from 196 in 2002 to 28 in 2009," the report states. "In 2010, however, this number increased to 37."