NCPA - National Center for Policy Analysis


July 13, 2010

More than three years ago, the United States and Colombia signed a free trade agreement that would reduce or eliminate tariffs on most U.S. exports to Colombia.  Unfortunately, the agreement has been languishing ever since, and it is still waiting on the president to submit it to Congress.  In the time since it was negotiated, American exporters have paid over $2.8 billion in tariffs that would have been eliminated under the agreement, says Sen. Mike Johanns (R-Neb.). 

While we continue to dither and our exporters continue to pay the price, Colombia isn't waiting around.  Earlier this month the Canadian parliament ratified a free trade agreement with Colombia that will improve Canada's access to the Colombian market.  Since signing the trade agreement with the United States in November 2006, Colombia has concluded trade agreement negotiations with Argentina, Brazil, Chile, Paraguay, Uruguay and the European Union.  These countries are now gaining a competitive advantage over U.S. exporters, says Johanns.   The agreement between Colombia and Canada, for example, will enable Canadian wheat to enter the Colombian market duty-free.  

According to one report prepared by the House Ways and Means Committee, the failure to implement the U.S.-Colombia agreement thus far has resulted in a jaw-dropping 87 percent decrease in U.S. wheat exports to Colombia:  

  • Over the last five years, Colombia has been the largest market for U.S. agriculture exports in South America, with U.S. exports totaling $4.3 billion.
  • A closer look at the numbers shows that our advantage in that market is slipping; from 2004 to 2008, U.S. exports to Colombia increased at an average annual rate of 38 percent, but in 2009, U.S. agricultural exports to Colombia decreased by 48 percent.
  • Between 2008 and 2009, American companies exporting to Colombia lost $811 million in sales of corn, wheat, soybeans and soybean oil; and already in 2010 U.S. agricultural exports have fallen by another 45 percent. 

The losses we've already realized become all the more troubling when you consider that enactment of the U.S.-Colombia agreement could result in a 10 percent increase in U.S. soybean exports, a 20 percent increase in U.S. corn exports, a 46 percent increase in U.S. beef exports and a 110 percent increase in U.S. dairy exports to that country, says Johanns. 

Source: Mike Johanns, "The World Isn't Waiting on Free Trade," Wall Street Journal, July 12, 2010. 

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