'Happy Birthday,' Free Trade Agreement?
After a long and agonizing wait, the free trade agreement with the United States celebrates its first anniversary.
The most apocalyptic prognostics about the disappearance of the most affected business sectors due to competition from the United States — among them the grain, rice and aviculture industries — have not come to pass. But the exaggerated promises made by the government, such as the creation of 300,000 new jobs and an increase in economic growth by 1 percent, haven't either. It is therefore legitimate to ask whether there are reasons to celebrate.
According to official numbers, exports from Colombia to the United States grew more slowly in 2012 than the imports from the United States to Colombia (3.3 percent versus 14.6 percent), which can be explained just as much by the global economic crisis and the strengthening of the peso as by the fact that 90 percent of Colombian products already enjoyed low import taxes under the unilateral Andean Trade Promotion and Drug Eradication Act (ATPDEA). It’s also not surprising that the United States’ agricultural and agro-industrial sectors are among the areas that have benefited the most. For Colombian consumers, the United States-Columbia Free Trade Agreement (FTA) has been innocuous, with the exception of supermarkets like Carulla and Éxito, where a few miscellaneous products like nuts, juice and toiletries now have more affordable prices. Possibly the main piece of positive data is Proexport's indication that 187 non-traditional exports to the United States were new out of a total of 2,000.
Independent of the numbers — which don’t really shine — you could argue that the trade agreement bestows a strategic value that transcends the merely commercial. It constitutes a public endorsement from the United States regarding the strength of the Colombian economy, but is also a wink of acknowledgement to the improvement of Colombia’s internal situation, reinforcing along with it, and in parallel form, the strongest bilateral security alliance in Latin America.
It appears that the FTA has not helped to improve Colombia’s international competitiveness. The 2012-2013 Global Competitiveness Report indicates that the country went down one position to 69 in the ranking of 144 countries, in contrast to other Latin American countries like Brazil, Mexico, Panama and Peru that all improved in rank. An even bigger concern is that in critical areas like public institutions, infrastructure, health and basic education, and labor efficiency and technological readiness, Colombia ranks between 85 and 109.
In addition to these structural weaknesses, some nongovernmental organizations have also denounced the lack of implementation of the Action Plan for Worker’s Rights, signed two years ago as a condition by the United States Congress in order to ratify the trade agreement. According to the National Labor Union School, at least 20 union members were killed in 2012 and 431 threats against others were reported. Likewise, certain practices that violate basic labor rights, among them the cooperatives, continue in spite of commitment to combat them.
It’s no coincidence that Forbes magazine has described Colombia as a free trade paradise. With dozens of agreements signed and others being negotiated or discussed (with South Korea, Costa Rica, India, Israel, Japan, Panama and Turkey), the free trade agreement with the United States has been an appetizer for the Santos government in its quest for more agreements with anything that breathes. The question is whether the country, with all its weaknesses and in the midst of a complicated negotiation and peacebuilding process, can endure such a pace.
The most apocalyptic prognostics about the disappearance of the most affected business sectors due to competition from the United States — among them the grain, rice and aviculture industries — have not come to pass. But the exaggerated promises made by the government, such as the creation of 300,000 new jobs and an increase in economic growth by 1 percent, haven't either. It is therefore legitimate to ask whether there are reasons to celebrate.
According to official numbers, exports from Colombia to the United States grew more slowly in 2012 than the imports from the United States to Colombia (3.3 percent versus 14.6 percent), which can be explained just as much by the global economic crisis and the strengthening of the peso as by the fact that 90 percent of Colombian products already enjoyed low import taxes under the unilateral Andean Trade Promotion and Drug Eradication Act (ATPDEA). It’s also not surprising that the United States’ agricultural and agro-industrial sectors are among the areas that have benefited the most. For Colombian consumers, the United States-Columbia Free Trade Agreement (FTA) has been innocuous, with the exception of supermarkets like Carulla and Éxito, where a few miscellaneous products like nuts, juice and toiletries now have more affordable prices. Possibly the main piece of positive data is Proexport's indication that 187 non-traditional exports to the United States were new out of a total of 2,000.
Independent of the numbers — which don’t really shine — you could argue that the trade agreement bestows a strategic value that transcends the merely commercial. It constitutes a public endorsement from the United States regarding the strength of the Colombian economy, but is also a wink of acknowledgement to the improvement of Colombia’s internal situation, reinforcing along with it, and in parallel form, the strongest bilateral security alliance in Latin America.
It appears that the FTA has not helped to improve Colombia’s international competitiveness. The 2012-2013 Global Competitiveness Report indicates that the country went down one position to 69 in the ranking of 144 countries, in contrast to other Latin American countries like Brazil, Mexico, Panama and Peru that all improved in rank. An even bigger concern is that in critical areas like public institutions, infrastructure, health and basic education, and labor efficiency and technological readiness, Colombia ranks between 85 and 109.
In addition to these structural weaknesses, some nongovernmental organizations have also denounced the lack of implementation of the Action Plan for Worker’s Rights, signed two years ago as a condition by the United States Congress in order to ratify the trade agreement. According to the National Labor Union School, at least 20 union members were killed in 2012 and 431 threats against others were reported. Likewise, certain practices that violate basic labor rights, among them the cooperatives, continue in spite of commitment to combat them.
It’s no coincidence that Forbes magazine has described Colombia as a free trade paradise. With dozens of agreements signed and others being negotiated or discussed (with South Korea, Costa Rica, India, Israel, Japan, Panama and Turkey), the free trade agreement with the United States has been an appetizer for the Santos government in its quest for more agreements with anything that breathes. The question is whether the country, with all its weaknesses and in the midst of a complicated negotiation and peacebuilding process, can endure such a pace.
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