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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
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16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
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Congressional Research Service (CRS)

The Proposed U.S.-Colombia Free Trade Agreement

M. Angeles Villarreal, Specialist in International Trade and Finance

January 26, 2011

http://www.opencrs.com/document/RL34470/2011-01-26/download/1005/

[full-text, 31 pages]

Summary

The proposed U.S.-Colombia Trade Promotion Agreement, also called the U.S.-Colombia Free

Trade Agreement (CFTA), was signed by the United States and Colombia on November 22, 2006.

The agreement must be approved by Congress before it can enter into force. Upon congressional

approval, it would immediately eliminate duties on 80% of U.S. exports of consumer and

industrial products to Colombia. An additional 7% of U.S. exports would receive duty-free

treatment within five years of implementation, and most remaining tariffs would be eliminated

within 10 years of implementation. The agreement also contains other provisions in services,

investment, intellectual property rights protection, labor, and the environment. About 90% of U.S.

imports from Colombia enter the United States duty-free under trade preference programs or

through normal trade relations, while U.S. exports to Colombia face duties of up to 20%.

It is possible that the 112th may consider implementing legislation for the proposed CFTA.

Negotiations for the agreement were conducted under the trade promotion authority (TPA), also

called fast-track trade authority, that Congress granted the President under the Bipartisan Trade

Promotion Act of 2002 (P.L. 107-210). The authority allowed the President to enter into trade

agreements that would receive expedited congressional consideration (no amendments and

limited debate). Implementing legislation for the CFTA (H.R. 5724/S. 2830) was introduced in

the 110th Congress on April 8, 2008, under TPA. The House leadership, however, took the

position that the President had submitted the implementing legislation without adequately

fulfilling the TPA requirement for consultation with Congress. On April 10, 2008, the House

voted 224-195 to make the provisions establishing expedited procedures, inapplicable to the

CFTA implementing legislation (H.Res. 1092).

In his January 2011 State of the Union address, President Barack Obama mentioned the

importance of opening foreign markets for U.S. goods and services, and strengthening U.S. trade

relations with Colombia. In 2010, the Administration initiated a new National Export Initiative

(NEI), which includes a component that calls for opening new markets for U.S. exports by

resolving outstanding issues on the pending CFTA. The Obama Administration also has made a

case for pursuing free trade agreements as part of the National Security Strategy of the United

States, though the CFTA is not specifically mentioned in the report.

The congressional debate surrounding the agreement has mostly centered on the violence issues

in Colombia. Some members of Congress oppose the agreement because of concerns about

violence against union members and other terrorist activity in Colombia. However, numerous

members of Congress support the CFTA and take issue with these charges, stating that Colombia

has made progress in recent years to curb the violence in the country. They also contend that the

agreement would open the Colombian market for U.S. exporters. Other policymakers argue that

Colombia is a crucial ally of the United States in Latin America and that if the trade agreement is

not passed, it may lead to further violence in the region. For Colombia, a free trade agreement

with the United States is part of its overall economic development strategy.

The United States is Colombia’s leading trade partner. Colombia accounts for a very small

percentage of U.S. trade (0.8% in 2009), ranking 22nd among U.S. export markets and 27th as a

source of U.S. imports. Economic studies on the impact of a U.S.-Colombia free trade agreement

(FTA) have found that, upon full implementation of an agreement, the impact on the United

States would be positive but very small due to the small size of the Colombian economy when

compared to that of the United States (about 1.6%).

Contents

Introduction ...............................................................................................................................1

Trade Promotion Authority..........................................................................................................1

Rationale for the Agreement........................................................................................................2

Review of the Proposed U.S.-Colombia Free Trade Agreement ...................................................3

Key CFTA Provisions ...........................................................................................................3

Market Access.................................................................................................................4

Tariff Elimination and Phase-Outs...................................................................................4

Agricultural Provisions ...................................................................................................4

Information Technology ..................................................................................................5

Textiles and Apparel........................................................................................................5

Government Procurement................................................................................................5

Services ..........................................................................................................................6

Investment ......................................................................................................................6

IPR Protection.................................................................................................................6

Customs Procedures and Rules of Origin.........................................................................7

Labor Provisions .............................................................................................................7

Environmental Provisions ...............................................................................................8

Dispute Settlement ..........................................................................................................8

Strengthening of Labor and Environmental Provisions ..........................................................8

Amendments on Basic Labor Standards...........................................................................9

Provisions on Environment .............................................................................................9

Other Provisions ...........................................................................................................10

U.S.-Colombia Economic Relations ..........................................................................................10

U.S.-Colombia Merchandise Trade...................................................................................... 11

Andean Trade Preference Act ..............................................................................................13

U.S.-Colombia Bilateral Foreign Direct Investment.............................................................15

Background on Colombia..........................................................................................................15

Presidential Elections in 2010 .............................................................................................16

Violence in Colombia..........................................................................................................16

Human Rights Issues...........................................................................................................17

U.S. Policy Toward Colombia .............................................................................................18

The Proposed CFTA: Issues for Congress..................................................................................19

Economic Impact ................................................................................................................19

Study Findings ..............................................................................................................19

Agricultural Sector........................................................................................................21

Labor Issues........................................................................................................................22

Violence Issues ...................................................................................................................24

Outlook....................................................................................................................................25

Figures

Figure 1. U.S. Merchandise Trade with Colombia .....................................................................13

Tables

Table 1. Key Economic Indicators for Colombia and the United States ...................................... 11

Table 2. U.S. Trade with Colombia, 2009 ..................................................................................12

Table 3. U.S. Imports from Colombia ........................................................................................14

Table 4. U.S. Imports from Colombia under ATPA ....................................................................14

Table 5. U.S. Direct Investment Position in Colombia ...............................................................15

Contacts

Author Contact Information ......................................................................................................27

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Institute for Workplace Studies 
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