U.S.-Colombia FTA takes effect May 15
The White House announced Monday that the U.S.-Colombia Trade Promotion Agreement will take effect on May 15.
The announcement follows completion of work by the United States and Colombia to review each other’s laws and regulations related to the agreement's implementation, as well as Colombia’s steps to deal with labor rights. Before President Obama’s announcement, U.S. Trade Representative Ron Kirk exchanged letters with government officials in Colombia in which each country confirmed it had completed its applicable legal requirements and procedures for the agreement’s entry into force.
“Taking this next step toward entry into force of this agreement is recognition that Colombia has met the milestones of, and continues to demonstrate its strong commitment to, the Action Plan Related to Labor Rights,” Kirk said in a statement. “We will continue working with the Santos administration to help it continue to meet its long-term commitments to improve its labor practices and deter violence against labor leaders.”
On May 15, more than 80 percent of U.S. exports of consumer and industrial products to Colombia will become duty-free, including agricultural and construction equipment, building products, aircraft and parts, fertilizers, information technology equipment, medical scientific equipment, and wood. Also, immediately more than half of U.S. exports of agricultural commodities to Colombia will become duty-free, including wheat, barley, soybeans, high-quality beef, bacon, and almost all fruit and vegetable products.
The agreement will also provide significant new access to Colombia’s $180 billion services market, supporting increased opportunities for U.S. service providers, the White House said. For example, Colombia agreed to eliminate measures that prevented firms from hiring U.S. professionals, and to phase-out market restrictions in cable television.
U.S. goods exports to Colombia in 2011 were $14.3 billion. An analysis of the U.S.-Colombia trade agreement by the U.S. International Trade Commission estimates the agreement will lead to an increase in U.S. GDP of $2.5 billion. The two countries’ economies are mostly complementary in terms of the goods each exports to the other. For example, Colombia is a large importer of grains from the United States, while it exports a number of tropical fruits to the United States. In addition, U.S. cotton, yarn and fabric exports to Colombia are used in many apparel items that Colombia exports to the United States.
U.S. industry groups praised the Obama administration’s action with the long-awaited FTA.
“We are making steady progress toward regaining lost market share in Colombia, and this agreement will markedly advance that progress,” said Danny Murphy, first vice president of the American Soybean Association.
Under the agreement, soybeans and soybean meal and flour will become duty-free, with virtually all of the remaining tariffs to be eliminated over the next 15 years. The agreement also provides duty free tariff rate quotas (TRQ) on soybean oil, as well as livestock and dairy exports that use soybean inputs. Last year, the U.S. exported more than $182 million in soybeans and soybean products to Colombia, as part of $832 million in agricultural products.
“The Colombia FTA will benefit retailers by bringing certainty and stability to the trade relationship between the United States and Colombia,” said Stephanie Lester, the Retail Industry Leaders Association’s vice president of international trade.
Colombia already has duty-free access to the United States for most goods under unilateral U.S. trade preference programs, although those programs have been plagued by uncertainty caused by expirations and short-term extensions. When implemented on May 15, the U.S.-Colombia FTA will provide certainty for U.S. importers, RILA said.
“Colombia is fast becoming a leading economic player in Latin America. With the third largest economy and more than 46 million consumers, Colombia is an expanding market for U.S. goods and services,” the National Foreign Trade Council said. “Implementation of the agreement will ensure that American companies, farmers and ranchers will remain competitive in this critical market and have new opportunities to maximize economic growth and create American jobs.”
NFTC continued to urge the Obama administration to continue work with the Panamanian government to implement the U.S.-Panama FTA as soon as possible.