NCPA - National Center for Policy Analysis


November 17, 2008

The European Union will sign off on a free-trade agreement with Colombia and its neighbor Peru by June 2009.  It's a strong opportunity, because 10 years ago Colombia was a drug-trafficking hellhole with 30,000 murders a year.  It's now transformed into a safe country that values rule of law and has attractive emerging markets opening up.  The change didn't come out of nowhere, says Investor's Business Daily (IBD).

Europe traded $3 billion in goods with Colombia in 2007, and once the pact is signed will trade far more. This is partly due to Colombia's growing economy.  But Europe will also grab our existing markets there, because U.S. companies export virtually the same products to Colombia as Europe: $9 billion in chemicals, auto parts, industrial equipment and capital goods. Europe's goods will sail in duty-free. America's will be saddled with 35 percent tariffs.

Why did Colombia become such an attractive market?  It's not just good leadership and citizens fed up with drugs and terrorism.  It's because the United States spent a decade cleaning up the country.  Plan Colombia and other programs contributed decisively to Colombia's peace and security, laying the groundwork for new markets to form, explains IBD:

  • According to the Center for International Policy's Just the Facts database, the United States spent $5.8 billion on military, police, economic and social aid to Colombia from 1996 through 2009.
  • Washington trained 37,000 soldiers to become a professional fighting force; the United States lost at least 11 service members in that effort.

How much did Europe contribute?  Not much, says IBD:

  • In September, Colombia's President Uribe called out Europe for its stingy aid, scolding it for doing little even though Europe is the world's second-largest consumer of cocaine, spending $10 billion a year on the drug.
  • The European Union's database shows that Europe issued grants for humanitarian assistance, not all of which were dispensed, of 3 billion euros in 2003, 8.5 million in 2004, 12.5 million in 2005, 12 million in 2006, 13 million in 2007, and 19.5 million in 2008, for a grand total of 68.5 million euros, or $91.41 million.
  • The United States by contrast, not only spent $5.8 billion for military and police training, it also spent millions on economic aid; the assistance was decisive in breaking 40 years of civil war, making Colombia's major cities safe enough to do business and creating conditions for new markets and a new middle class.

Source: Editorial, "Pelosi Serves Up Colombia To Europe," Investor's Business Daily, November 17, 2008.


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