NCPA - National Center for Policy Analysis


December 1, 2008

In a grim world economy, the news that Canada and Colombia signed a free trade agreement at the Asia-Pacific Economic Cooperation summit is something to celebrate.  Unless you are an American farmer or manufacturer, says the Wall Street Journal.

The Canada-Colombia Free Trade Agreement will expand bilateral trade by lowering tariffs on a wide variety of products.  Some Canadian agricultural products -- including wheat, barley and lentils -- and many manufactured goods will enter Colombia tariff-free immediately.  Running in the reverse direction, Colombian producers will find a more open Canadian market and Canada's consumers will have more choice at better prices. 

The agreement will also give new legal protections to investment and improved market access in services.  It's what you call a win-win.  But not for American exporters, who compete with Canadians in Colombia, says the Journal:

  • Because Speaker Nancy Pelosi has blocked a vote in Congress on the U.S.-Colombia Free Trade Agreement, American goods will automatically be more expensive than those from Canada by the amount of the existing tariff.
  • For example, if the United Auto Workers thought their Caterpillar exports were losing global ground before, wait until they compete on this not-so-level playing field.

Her protectionist stance has helped open markets for everyone other than the United States.  In fact, by agreeing to the deal, Canadian Prime Minister Stephen Harper was able to show geopolitical leadership: "By expanding our trading relationship with Colombia, we are not only opening up new opportunities for Canadian businesses in a foreign market, we are also helping one of South America's most historic democracies improve the human rights and security situation in their country." 

Source: Editorial, "Why Canada Loves Nancy Pelosi," Wall Street Journal, November 25, 2008.

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