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Capitol Comment
by Senator Kay Bailey Hutchison
No Justification for Stalling Trade Pact with Colombia
April 25, 2008
President Ronald Reagan once observed, “The way to prosperity for all nations is rejecting protectionist legislation and promoting fair and free competition."
Last week, the Speaker of the U.S. House of Representatives indefinitely blocked a vote on the pending Colombia Free Trade Agreement (FTA). Her action sends the wrong message to trade partners around the world and squanders an opportunity to help Americans shouldering the burden of unemployment and a stalling economy. Indeed, failure to ratify the FTA with Colombia denies economic growth opportunities for both the United States and Colombia, stifles competition, and undermines efforts to create a safer, more stable world.
Economically, enactment of the Colombia FTA would level the playing field and foster fair trade by removing the costly tariffs levied on U.S. exporters trying to sell their goods in Colombian markets. The U.S. International Trade Commission projects the deal would increase U.S. exports to Colombia by $1.1 billion a year, which will in turn create jobs for American workers.
In 2007, America exported high quality beef, cotton, wheat, soybeans, fruits and vegetables, and other goods to Colombia, with sales valued at $8.6 billion. While Colombia was able to export goods into the U.S. duty-free, American businesses and producers are still obligated to pay tariffs on exports to Colombia. The U.S. Trade Representative estimates that, since negotiations of the trade pact were completed in 2006, American products have been taxed nearly one billion dollars in tariffs paid to Colombia. By eliminating this inequity, producers in the U.S. will have greater access to this lucrative market.
This would be particularly beneficial to Texas, which led the nation in merchandise exports to Colombia last year, resulting in $2.3 billion in revenue for the state. Nearly 21,000 companies export goods from locations in Texas. The vast majority of those are small and medium-sized businesses. Without costly tariffs, Texas businesses could bring more of their goods to more customers in Colombia. The FTA would also ease regulatory practices associated with trade and would benefit many Texas small businesses that don’t have the resources to negotiate the customs process.
More broadly, with the U.S. economy declining, Americans are consuming domestic goods at a slower pace. Expanding U.S. exports to international markets can help offset a downturn in domestic consumption.
The economic growth that trade can stimulate is part of a larger imperative – global leadership. If the Speaker of the U.S. House of Representatives successfully subverts the Colombia FTA, our nation could take a step toward an isolationist posture that is short-sighted and imprudent in a global economy. China, Russia, and India are surging into the marketplace and dominating key sectors like manufacturing, technology, and services. Though American manufactures are matchless in quality, without preferential trade agreements, our access to world markets is inhibited, and we jeopardize our competitive edge. Preferential trade pacts between our competitors in Europe, Asia, and Latin America are rapidly outpacing and outnumbering U.S. trade deals. How can we lead if we limit participation?
Countries like Colombia, which has made great strides under the administration of President Alvaro Uribe, are looking to the U.S. as an example of democratic governance and economic freedom. Fostering stable democracies through trade relationships in Latin America and other regions of the world is in our nation’s best interests. But by stalling the deal, we risk sending Colombia – and future trade partners – the message that parochial politics supersede policy.
It is reckless to imperil a partnership with Colombia when neighboring Venezuela is led by a dangerous dictator who threatens freedom in all of Latin America. We will need strong allies, like Mr. Uribe, to stand up against Mr. Chavez’s political abuse of Venezuelan oil and the terrorism he levies against our hemisphere.
The United States has an opportunity to bolster our economy, reaffirm our position as a global leader, and build the diplomatic relationships that will help keep us safe. The time to move forward and ratify the Colombia FTA is now. Congress’ failure to consider the pact cannot be justified.
Sen. Kay Bailey Hutchison is the Chairman of the Senate Republican Policy Committee
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