Proposed U.S.-Colombia Free Trade
Agreement: Background and Issues
M. Angeles Villarreal
Specialist in International Trade and Finance
April 12, 2011
Congressional Research Service
7-5700
www.crs.gov
RL34470
CRS Report for Congress
P
repared for Members and Committees of Congress
Proposed U.S.-Colombia Free Trade Agreement: Background and Issues
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 the U.S. Congress before it can enter into force. The
Colombian Congress approved the agreement in June 2007 and again in October 2007, after it
was modified to meet labor and environmental concerns. Upon congressional approval, it would
immediately eliminate duties on 80% of U.S. exports of consumer and industrial products to
Colombia. 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%, and even higher for certain products.
The 112th Congress may consider implementing legislation for the proposed CFTA. Negotiations
for the agreement were conducted under the trade promotion authority (TPA). 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).
The congressional debate surrounding the agreement has mostly centered on the violence and
human rights issues in Colombia. Numerous Members of Congress oppose the agreement because
of concerns about violence against union members and other terrorist activity in Colombia.
However, other 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.
President Barack Obama has expressed the importance of strengthening U.S. trade relations with
Colombia. On April 6, 2011, the Obama Administration announced an agreement between the
United States and Colombia that resolves the concerns related to labor rights and violence in
Colombia. The announcement states that the agreement would “clear the way” for the U.S.-
Colombia FTA to move forward to Congress. The agreed upon “Action Plan Related to Labor
Rights” includes a number of specific and concrete steps that the Colombian government agreed
upon to address issues related to violence against union members, impunity, and worker rights.
The Obama Administration’s announcement states that the successful implementation of key
elements of the plan will be a precondition for the agreement to enter into force.
The United States is Colombia’s leading trade partner. Colombia accounts for a very small
percentage of U.S. trade (0.9% in 2010), ranking 20th among U.S. export markets and 25th 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 1.9%).
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Proposed U.S.-Colombia Free Trade Agreement: Background and Issues
Contents
Introduction ................................................................................................................................ 1
Trade Promotion Authority.......................................................................................................... 1
Rationale for the Agreement ........................................................................................................ 2
Colombian Tariffs on Goods from the United States .................................................................... 3
Review of the Proposed U.S.-Colombia Free Trade Agreement ................................................... 4
Key CFTA Provisions ........................................................................................................... 4
Market Access................................................................................................................. 5
Tariff Elimination and Phase-Outs................................................................................... 5
Agricultural Provisions ................................................................................................... 5
Information Technology .................................................................................................. 6
Textiles and Apparel........................................................................................................ 6
Government Procurement................................................................................................ 6
Services .......................................................................................................................... 7
Investment ...................................................................................................................... 7
IPR Protection................................................................................................................. 7
Customs Procedures and Rules of Origin......................................................................... 8
Labor Provisions ............................................................................................................. 8
Environmental Provisions ............................................................................................... 9
Dispute Settlement .......................................................................................................... 9
Labor and Environmental Provisions after May 10, 2007, Bipartisan Trade
Framework......................................................................................................................... 9
Amendments on Basic Labor Standards......................................................................... 10
Provisions on Environment ........................................................................................... 10
Other Provisions ........................................................................................................... 11
U.S.-Colombia Trade ................................................................................................................ 11
U.S.-Colombia Merchandise Trade...................................................................................... 12
Andean Trade Preference Act .............................................................................................. 14
U.S.-Colombia Bilateral Foreign Direct Investment............................................................. 16
Background on Colombia.......................................................................................................... 17
Presidential Elections in 2010 ............................................................................................. 17
Internal Conflict .................................................................................................................. 17
Human Rights Issues........................................................................................................... 18
U.S. Policy Toward Colombia ............................................................................................. 19
The Proposed CFTA: Issues for Congress.................................................................................. 20
Economic Impact ................................................................................................................ 20
Study Findings on Economic Impact ............................................................................. 20
Possible Economic Impact on Agricultural Sector.......................................................... 22
Issues Related to Labor ....................................................................................................... 23
Issues Related to Colombia’s Labor Cooperatives................................................................ 24
Violence Issues ................................................................................................................... 25
U.S.-Colombia Agreement on Action Plan Related to Labor Rights ........................................... 26
Outlook..................................................................................................................................... 27
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Proposed U.S.-Colombia Free Trade Agreement: Background and Issues
Figures
Figure 1. U.S. Trade with Colombia: 1996-2010........................................................................ 14
Tables
Table 1. Colombian Tariff Rates on U.S. Exports......................................................................... 4
Table 2. Key Economic Indicators for Colombia and the United States ...................................... 12
Table 3. U.S. Trade with Colombia in 2010 ............................................................................... 13
Table 4. U.S. Imports from Colombia ........................................................................................ 15
Table 5. U.S. Imports from Colombia under ATPA .................................................................... 16
Table 6. U.S. Direct Investment Position in Colombia ............................................................... 16
Contacts
Author Contact Information ...................................................................................................... 29
Congressional Research Service
Proposed U.S.-Colombia Free Trade Agreement: Background and Issues
Introduction
The proposed U.S.-Colombia Trade Promotion Agreement, also called the U.S.-Colombia Free
Trade Agreement (CFTA), is a bilateral free trade agreement between the United States and
Colombia which, if ratified, would eliminate tariffs and other barriers in goods and services
between the two countries. The CFTA negotiations grew out of a regional effort in 2004 to
produce a U.S.-Andean free trade agreement (FTA) between the United States and the Andean
countries of Colombia, Peru, and Ecuador. After numerous rounds of talks, negotiators failed to
reach an agreement, and Colombia continued negotiations with the United States for a bilateral
FTA. On February 27, 2006, the United States and Colombia concluded the U.S.-Colombia FTA,
and finalized the text of the agreement on July 8, 2006. On August 24, 2006, President Bush
notified Congress of his intention to sign the U.S.-Colombia FTA. The two countries signed the
agreement on November 22, 2006. The Colombian Congress approved the agreement in June
2007 and again in October 2007, after the agreement was modified to include new labor and
environmental provisions.
On April 8, 2008, President George W. Bush submitted implementing legislation for the United
States-Colombia Trade Promotion Agreement Implementation Act (H.R. 5724/S. 2830) in the
110th Congress. The bills were introduced under the Trade Promotion Authority (TPA) provisions
of the Trade Act of 2002 (P.L. 107-210). This act made expedited legislative procedures
established in § 151 of the Trade Act of 1974 (P.L. 93-618) available for congressional
consideration of legislation to implement free trade agreements negotiated under TPA. The House
leadership took the position that President Bush had submitted the legislation to implement the
CFTA without adequately fulfilling the TPA requirements for consultation with Congress, and on
April 10, 2008, the House, by a vote of 224-195, adopted H.Res. 1092, making certain provisions
of the expedited procedure inapplicable to the CFTA implementing legislation.
The 112th Congress may consider implementing legislation for the proposed U.S.-Colombia FTA.
In his January 2011 State of the Union address, President Barack Obama mentioned his intent to
“strengthen” U.S. trade relations with Colombia. In 2010, the Administration initiated a new
National Export Initiative (NEI) to boost U.S. exports and create jobs. One component of the NEI
calls for opening new markets for U.S. exports by resolving outstanding issues with three pending
FTAs at the appropriate time.1
Trade Promotion Authority
Under the statutory procedures, known as “trade promotion authority” or “TPA” and sometimes
called “fast track” procedures, Congress has a maximum of 90 days to consider the implementing
legislation, the measure is privileged for consideration, the length of consideration is limited, and
amendments are precluded.2 The House must act first on the bill, because the legislation would
1 The White House, Office of the Press Secretary, “President Obama Details Administration Efforts to Support Two
Million New Jobs by Promoting New Exports,” March 11, 2010.
2 For more information on Trade Promotion Authority, see CRS Report RL33743, Trade Promotion Authority (TPA)
and the Role of Congress in Trade Policy, by J. F. Hornbeck and William H. Cooper.
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Proposed U.S.-Colombia Free Trade Agreement: Background and Issues
affect revenue, and under the act it must do so within 60 days; the Senate cannot act until the bill
passes the House. The Senate could, nevertheless, take up and pass its own implementing bill,
then hold it at the desk pending the arrival of the House companion. In that case, however, the
expedited procedures of the statute (limiting debate, precluding amendment, etc.) would not be
applicable for the Senate’s consideration of its measure (except by unanimous consent).
The adoption of H.Res. 1092 in the 110th Congress removed the obligation for the House to vote
on the CFTA within 60 days of session, although the House leadership retained the ability to
schedule a vote at any time under the general rules of the House. H.Res. 1092 did not change the
TPA provisions that the CFTA was not amendable once it came up (although in principle, this
restriction could be altered by the terms of a special rule for considering the implementing bill).
Nor did it alter the applicability of TPA rules in the Senate. The adoption of H.Res. 1092
suspended the TPA provision requiring that the committees of jurisdiction automatically be
discharged from the U.S.-Colombia FTA implementing bill if they had not reported it by 45 days
of session after its introduction. It also removed the TPA provision that making a motion to
proceed to consideration of the bill is highly privileged and not debatable, thereby restoring the
normal control exercised by the leadership over the floor schedule if the committees of
consideration were to report the implementing bill.
Because the 110th Congress did not consider implementing legislation for the CFTA,
implementing legislation is not necessarily eligible for “fast track” consideration in the 112th
Congress. Under TPA, a trade agreement and its implementing legislation can be submitted to
Congress pursuant to the act only once, and it is the President’s initial submission of the
agreement that triggers the 90-day process under expedited procedures. For this reason, it is
generally understood that the eligibility of the CFTA for expedited consideration under the statute
would not carry over or be renewed in a subsequent Congress. The CFTA implementing
legislation, however, could still be re-introduced in the 112th Congress under the general rules of
both houses, and could be considered in the House under a TPA-like procedure pursuant to a
special rule reported by the Committee on Rules and approved by the House.
Rationale for the Agreement
Since the 1990s, the countries of Latin America and the Caribbean have been a focus of U.S.
trade policy as demonstrated by the passage of the North American Free Trade Agreement
(NAFTA), the U.S.-Chile Free Trade Agreement, the Dominican Republic-Central America Free
Trade Agreement (CAFTA-DR), and the U.S.-Peru Trade Promotion Agreement. The Bush
Administration made bilateral and regional trade agreements key elements of U.S. trade policy.
U.S. trade policy in the Western Hemisphere over the past few years has been focused on
completing trade negotiations with Colombia, Peru, and Panama and on gaining passage of these
free trade agreements by the U.S. Congress. The U.S.-Peru FTA was approved by Congress and
signed into law in December 2007 (P.L. 110-138).3
3 For more information, see CRS Report RL34108, U.S.-Peru Economic Relations and the U.S.-Peru Trade Promotion
Agreement, by M. Angeles Villarreal.
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Proposed U.S.-Colombia Free Trade Agreement: Background and Issues
A free trade agreement with Colombia would increase market access for U.S. goods and services
in the Colombian market, currently not the case under the Andean Trade Preference Act (ATPA).
ATPA is a unilateral trade preference program in which the United States extends preferential
duty treatment to select Colombian goods entering the United States. It is part of a broader U.S.
initiative with Latin America to address the illegal drug issue (see section on ATPA later in this
report). About 90% of U.S. imports from Colombia enter the United States duty-free under ATPA,
under other U.S. trade preferences, or through normal trade relations.
The major expectation among proponents of the pending free trade agreement with Colombia, as
with other trade agreements, is that it would provide economic benefits for both the United States
and Colombia as the level of trade increases between the two countries. Another expectation is
that it would improve investor confidence and increase foreign direct investment in Colombia,
which would bring more economic stability to the country. For Colombia, a free trade agreement
with the United States is part of the country’s overall development strategy and efforts to promote
economic growth and stability.
Colombian Tariffs on Goods from the United States
The U.S. average tariff on Colombian goods is 3%, while Colombia’s average tariff on U.S.
goods is 12.5%. In 2010, about 90% of U.S. imports from Colombia came into the country duty-
free under trade preference programs or through normal trade relations. Most of Colombia’s
duties have been consolidated into three tariff levels: 0% to 5% on capital goods, industrial
goods, and raw materials not produced in Colombia; 10% on manufactured goods, with some
exceptions; and 15% to 20% on consumer and "sensitive" goods. Exceptions include:
automobiles, which are subject to a 35% duty; beef and rice, which are subject to an 80% duty;
and milk and cream, which were subject to a 98% duty through August 11, 2010. 4 Table 1
provides a summary of Colombian tariffs on goods coming from the United States. Other
agricultural products fall under the Andean Price Band System (APBS). The APBS protects
domestic industry in Colombia, and other Andean countries, with a variable levy by increasing
tariffs when world prices fall, and lowering tariffs when world prices rise.5 The APBS includes 14
product groups and covers more than 150 tariff lines. This system can result in duties exceeding
100%, depending on world commodity prices, for certain U.S. exports to Colombia, including
corn, wheat, rice, soybeans, pork, poultry parts, cheeses, and powdered milk.6
4 Office of the United States Trade Representative (USTR), 2010 National Trade Estimate Report on Foreign Trade
Barriers, March 2010.
5 The Andean Price Band system is applied by the four countries belonging to the Andean Community, a regional trade
integration agreement formed by Bolivia, Colombia, Ecuador, and Peru. The four countries entered into the Andean
Community as a form of trade integration through the removal of trade barriers and the application of common external
tariffs, and a goal to eventually form a common market.
6 USTR, 2010 National Trade Estimate Report on Foreign Trade Barriers, March 2010.
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Proposed U.S.-Colombia Free Trade Agreement: Background and Issues
Table 1. Colombian Tariff Rates on U.S. Exports
Tariff Base Rate
Number of Tariff
% of Total Tariff
(%)
Lines
Lines
0 173
2.5
> 0 to 5
2,083
30.2
> 5 to 10
1,225
17.7
> 10 to 20
3,282
47.5
> 20 to 35
97
1.4
> 35
46
0.7
Total 6,906 100.0
Source: U.S.-Colombia Trade Promotion Agreement, Colombia Tariff Schedule, reported by United States
International Trade Commission (USITC), U.S.-Colombia Trade Promotion Agreement: Potential Economy-wide and
Selected Sectoral Effects, Investigation No. TA-2104-023, USITC Publication 3896, December 2006. Colombia
Trade Promotion Agreement, Colombia Tariff Schedule.
Notes: Does not include tariff lines with base rate values of blanks. Total of 6,906 tariff lines includes 5,986
industrial and textile tariff lines and 920 agricultural tariff lines.
Review of the Proposed U.S.-Colombia Free Trade
Agreement
Key CFTA Provisions7
The comprehensive free trade agreement would eliminate tariffs and other barriers to goods and
services. The agreement was reached after numerous rounds of negotiations over a period of
nearly two years. Some issues that took longer to resolve were related to agriculture. Colombia
had been seeking lenient agriculture provisions in the agreement, arguing that the effects of
liberalization on rural regions could have adverse effects on smaller farmers and drive them to
coca production. The United States agreed to give more sensitive sectors longer phase-out periods
to allow Colombia more time to adjust to trade liberalization. Sectors receiving the longest phase-
out periods included poultry and rice.
This section summarizes several key provisions in the original agreement text as provided by the
United States Trade Representative (USTR), unless otherwise noted.8
7 The text of the U.S.-Colombia Free Trade Agreement (CFTA) is available online at the Office of the United States
Trade Representative (USTR) website: http://www.ustr.gov.
8 USTR, Trade Facts, “Free Trade with Colombia: Summary of the United States-Colombia Trade Promotion
Agreement,” June 2007.
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Proposed U.S.-Colombia Free Trade Agreement: Background and Issues
Market Access
The agreement would provide for the elimination of tariffs on bilateral trade in eligible goods.
Upon implementation, the agreement would eliminate 80% of duties on 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 after implementation.
Tariff Elimination and Phase-Outs
The pending CFTA would eliminate most tariffs immediately upon implementation of the
agreement and phase out the remaining tariffs over periods of up to 19 years. Tariff elimination
for major sectors would include the following:
• Upon implementation of an agreement, more than 99% of U.S. and almost 76%
of Colombian industrial and textile tariff lines would be free of duty. Virtually all
industrial and textile tariff lines would be duty-free 10 years after
implementation.9
• All tariffs in textiles and apparel that meet the agreement’s rules-of-origin
provisions would be eliminated immediately (see section on “Textiles and
Apparel” below).10
• Tariffs on agricultural products would be phased out over a period of time,
ranging from three to 19 years (see section on “Agricultural Provisions” below).
Colombia would eliminate quotas11 and over-quota tariffs in 12 years for corn
and other feed grains, 15 years for dairy products, 18 years for chicken leg
quarters, and 19 years for rice.12
Agricultural Provisions
Under ATPA, almost all of Colombia’s agricultural exports enter the U.S. market free of duty. The
pending CFTA would make these trade preferences permanent. Colombia currently applies some
tariff protection on all agricultural products. The pending CFTA would provide duty-free access
on 77% of all agricultural tariff lines, accounting for 52% of current U.S. exports to Colombia,
upon implementation. Colombia would eliminate most other tariffs on agricultural products
within 15 years.13 U.S. farm exports to Colombia that would receive immediate duty-free
treatment include high-quality beef, cotton, wheat, soybeans, soybean meal, apples, pears,
peaches, cherries, and many processed food products including frozen french fries and cookies.
9 United States International Trade Commission (USITC), U.S.-Colombia Trade Promotion Agreement: Potential
Economy-wide and Selected Sectoral Effects, USITC Publication 3896, December 2006, pp. 2-1 and 2-2.
10 Ibid.
11 Tariff rate quotas are limits on the quantity of imports that can enter a country duty-free before tariff-rates are
applied.
12 United States Department of Agriculture (USDA), Foreign Agricultural Service, Fact Sheet: U.S.-Colombia Trade
Promotion Agreement Overall Agriculture Fact Sheet, August 2008.
13 Ibid.
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Proposed U.S.-Colombia Free Trade Agreement: Background and Issues
U.S. farm products that would receive improved market access include pork, beef, corn, poultry,
rice, fruits and vegetables, processed products, and dairy products. The agreement would also
provide duty-free tariff rate quotas on standard beef, chicken leg quarters, dairy products, corn,
sorghum, animal feeds, rice, and soybean oil.14
Colombia’s current results in higher duties for certain U.S. exports to Colombia, including corn,
wheat, rice, soybeans, pork, poultry, cheeses, and powdered milk. A CFTA would remove
Colombia’s price band system upon implementation of the agreement. However, if the rates under
the price band system result in a lower rate than that given under the FTA, the United States will
be allowed to sell the product to Colombia at the lower rates.15
Information Technology
Under a CFTA, Colombia would join the World Trade Organization’s Information Technology
Agreement (ITA), and remove its tariff and non-tariff barriers to information technology products.
Colombia would allow trade in remanufactured goods under the agreement, which would increase
export and investment opportunities for U.S. businesses involved in remanufactured products
such as machinery, computers, cellular telephones, and other devices.
Textiles and Apparel
In textiles and apparel, products that meet the agreement’s rules of origin requirements would
receive duty-free and quota-free treatment immediately. The United States and Colombia have
cooperation commitments under the agreement that would allow for verification of claims of
origin or preferential treatment, and denial of preferential treatment or entry if the claims cannot
be verified. The rules of origin requirements are generally based on the yarn-forward standard to
encourage production and economic integration. A “de minimis” provision would allow limited
amounts of specified third-country content to go into U.S. and Colombian apparel to provide
producers in both countries flexibility. A special textile safeguard would provide for temporary
tariff relief if imports prove to be damaging to domestic producers.
Government Procurement
In government procurement contracts, the two countries agreed to grant non-discriminatory rights
to bid on government contracts. These provisions would cover the purchases of Colombia’s
ministries and departments, as well as its legislature and courts. U.S. companies would also be
assured access to the purchases of a number of Colombia’s government enterprises, including its
oil company.
14 USTR, Trade Facts: Free Trade with Colombia, Summary of the United States-Colombia Trade Promotion
Agreement,” June 2007.
15 USITC Publication 3896, December 2006, p. 3-4.
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Proposed U.S.-Colombia Free Trade Agreement: Background and Issues
Services
In services trade, the two countries agreed to market access in most services sectors, with very
few exceptions. Colombia agreed to exceed commitments made in the WTO and to remove
significant services and investment barriers, such as requirements that U.S. firms hire nationals
rather than U.S. citizens to provide professional services. Colombia also agreed to eliminate
requirements to establish a branch in order to provide a service and unfair penalties imposed on
U.S. companies for terminating their relationships with local commercial agents. U.S. financial
service suppliers would have full rights to establish subsidiaries or branches for banks and
insurance companies. Portfolio managers would be able to provide portfolio management services
to both mutual funds and pension funds in the partner country, including to funds that manage
privatized social security accounts.
Investment
Investment provisions would establish a stable legal framework for foreign investors from the
partner country. All forms of investment would be protected, including enterprises, debt,
concessions and similar contracts, and intellectual property. U.S. investors would be treated as
Colombian investors with very few exceptions. U.S. investors in Colombia would have
substantive and procedural protections that foreign investors have under the U.S. legal system,
including due process protections and the right to receive fair market value for property in the
event of an expropriation. Protections for U.S. investments would be backed by a transparent,
binding international arbitration mechanism. In the preamble of the agreement, the United States
and Colombia agreed that foreign investors would not be accorded greater substantive rights with
respect to investment protections than domestic investors under domestic law.16
IPR Protection
The agreement would provide intellectual property rights (IPR) protections for U.S. and
Colombian companies. In all categories of IPR, U.S. companies would be treated no less
favorably than Colombian companies. In trademark protection the agreement would require the
two countries to have a system for resolving disputes about trademarks used in internet domain
names; to develop an on-line system for the registration and maintenance of trademarks and have
a searchable database; and to have transparent procedures for trademark registration.
In protection of copyrighted works, the agreement has a number of provisions for protection of
copyrighted works in a digital economy, including provisions that copyright owners would
maintain rights over temporary copies of their works on computers. Other agreement provisions
include rights for copyright owners for making their work available on-line; extended terms of
protection for copyrighted works; requirements for governments to use only legitimate computer
software; rules on encrypted satellite signals to prevent piracy of satellite television
programming; and rules for the liability of Internet service providers for copyright infringement.
16 USTR, Trade Facts: Free Trade with Colombia, Summary of the United States-Colombia Trade Promotion
Agreement, June 2007.
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In protection of patents and trade secrets, U.S. companies are concerned that the Colombian
government currently does not provide patent protection for new uses of previously known or
patented products. The pending CFTA would limit the grounds on which a country could revoke a
patent, thus protecting against arbitrary revocation. In protection of test data and trade secrets, the
agreement would protect products against unfair commercial use for a period of five years for
pharmaceuticals and 10 years for agricultural chemicals. In addition, the agreement would require
the establishment of procedures to prevent marketing of pharmaceutical products that infringe
patents, and provide protection for newly developed plant varieties. The parties expressed their
understanding that the intellectual property chapter would not prevent either party from taking
measures to protect public health by promoting access to medicines for all.
The United States is concerned with music and motion picture property piracy in Colombia. The
CFTA IPR provisions would include penalties for piracy and counterfeiting and criminalize end-
user piracy. It would require the parties to authorize the seizure, forfeiture, and destruction of
counterfeit and pirated goods and the equipment used to produce them. The agreement would
mandate both statutory and actual damages for copyright infringement and trademark piracy. This
would ensure that monetary damages could be awarded even if a monetary value to the violation
was difficult to assess.
Customs Procedures and Rules of Origin
The agreement includes comprehensive rules of origin provisions that would ensure that only
U.S. and Colombian goods could benefit from the agreement. The agreement also includes
customs procedures provisions, including requirements for transparency and efficiency,
procedural certainty and fairness, information sharing, and special procedures for the release of
express delivery shipments.
Labor Provisions
The labor and worker rights obligations are included in the core text of the agreement. The United
States and Colombia reaffirmed their obligations as members of the International Labor
Organization (ILO). The two countries agreed to adopt, maintain and enforce laws that
incorporate core internationally recognized labor rights, as stated in the 1998 ILO Declaration on
Fundamental Principles and Rights at Work, including a prohibition on the worst forms of child
labor. The parties also agreed to enforce labor laws with acceptable conditions of work, hours of
work, and occupational safety and health. All obligations of the CFTA chapter on labor would be
subject to the same dispute settlement procedures and enforcement mechanisms as other chapters
of the agreement.
The agreement includes procedural guarantees to ensure that workers and employers would have
fair, equitable, and transparent access to labor tribunals or courts. It has a cooperative mechanism
to promote respect for the principles embodied in the 1998 ILO Declaration, and compliance with
ILO Convention 182 on the Worst Forms of Child Labor. The United States and Colombia agreed
to cooperative activities on laws and practices related to ILO labor standards; the ILO convention
on the worst forms of child labor; methods to improve labor administration and enforcement of
labor laws; social dialogue and alternative dispute resolution; occupational safety and health
compliance; and mechanisms and best practices on protecting the rights of migrant workers.
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Proposed U.S.-Colombia Free Trade Agreement: Background and Issues
Environmental Provisions
The environmental obligations are included in the core text of the agreement. The agreement
would require the United States and Colombia to effectively enforce their own domestic
environmental laws and to adopt, maintain, and implement laws and all other measures to fulfill
obligations under covered multilateral environmental agreements (MEAs). Both countries
committed to pursue high levels of environmental protection and to not derogate from
environmental laws in a manner that would weaken or reduce protections. The agreement
includes procedural guarantees that would ensure fair, equitable, and transparent proceedings for
the administration and enforcement of environmental laws. In addition, the agreement includes
provisions to help promote voluntary, market-based mechanisms to protect the environment and
to ensure that views of civil society are appropriately considered through a public submissions
process. All obligations in the environmental chapter of the agreement would be subject to the
same dispute settlement procedures and enforcement mechanisms as obligations in other chapters
of the agreement.
Dispute Settlement
The core obligations of the agreement, including labor and environmental provisions, are subject
to dispute settlement provisions. The agreement’s provisions on dispute panel proceedings
include language to help promote openness and transparency through open public hearings;
public release of legal submissions by parties; and opportunities for interested third parties to
submit views. The provisions would require the parties to make every attempt, through
cooperation and consultations, to arrive at a mutually satisfactory resolution of a dispute. If the
parties are unable to settle the dispute through consultations, the complaining party would have
the right to request an independent arbitral panel to help resolve the dispute. Possible outcomes
could include monetary penalties or a suspension of trade benefits.
Labor and Environmental Provisions after May 10, 2007, Bipartisan
Trade Framework
In early 2007, a number of Members of Congress indicated that some of the provisions in pending
U.S. FTAs would have to be strengthened to gain their approval, particularly relating to core labor
standards. After several months of negotiation, Congress and the Bush Administration reached an
agreement on May 10, 2007, on a new bipartisan trade framework that calls for the inclusion of
core labor and environmental standards in the text of pending and future trade agreements. On
June 28, 2007, the United States reached an agreement with Colombia on legally binding
amendments to the CFTA on labor, the environment, and other matters to reflect the bipartisan
understanding of May 10.
The amendments to the FTA were based on the agreement reached between the Bush
Administration and Congress on May 10, 2007, and are similar to the amendments that were
made to the U.S.-Peru free trade agreement, which was approved by Congress in December 2008.
At the time they were announced, the Bush Administration stated that, because the new
commitments would have to be “legally binding,” they could not have been incorporated into the
agreement as side letters. Some of the key amendments include obligations related to five basic
ILO labor rights, multilateral environmental agreements (MEAs), and pharmaceutical intellectual
property rights (IPR). These provisions would be fully enforceable through the FTA’s dispute
settlement mechanism. The Colombian government has approved the amendments. On October
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Proposed U.S.-Colombia Free Trade Agreement: Background and Issues
30, 2007, the Colombian Senate “overwhelmingly” approved the labor and environmental
amendments to the CFTA, marking the end of the approval process for the agreement in
Colombia.17
Amendments on Basic Labor Standards
After the bipartisan agreement, the Administration reached an agreement with Colombia to
amend the CFTA to require the parties to “adopt, maintain and enforce in their own laws and in
practice” the five basic internationally recognized labor standards, as stated in the 1998 ILO
Declaration. The amendments to the agreement strengthened the earlier labor provisions which
only required the signatories to strive to ensure that their domestic laws would provide for labor
standards consistent with internationally recognized labor principles.
The amendments that resulted from the bipartisan trade framework were intended to enhance the
protection and promotion of worker rights by including enforceable ILO core labor standards in
the agreement. These include (1) freedom of association; (2) the effective recognition of the right
to collective bargaining; (3) the elimination of all forms of forced or compulsory labor; (4) the
effective abolition of child labor and a prohibition on the worst forms of child labor; and (5) the
elimination of discrimination in respect of employment and occupation. These obligations would
refer only to the 1998 ILO Declaration on the Fundamental Principles and Rights at Work.
Another change to the agreement relates to labor law enforcement. Any decision made by a
signatory on the distribution of enforcement resources would not be a reason for not complying
with the labor provisions. Under the amended provisions, parties would not be allowed to
derogate from labor obligations in a manner affecting trade or investment. Labor obligations
would be subject to the same dispute settlement, same enforcement mechanisms, and same
criteria for selection of enforcement mechanisms as all other obligations in the agreement.
Provisions on Environment
In the original text of the agreement, the parties would have been required to “effectively
enforce” their own domestic environmental laws; this was the only environmental provision that
would have been enforceable through the agreement’s dispute settlement procedures. Other
environmental provisions in the original text, that were not enforceable, included provisions on
environmental cooperation, procedural guarantees for enforcement of environmental laws, and
provisions for a public submissions process. Under the amended version of the proposed FTA, the
United States and Colombia agreed to effectively enforce their own domestic environmental laws,
and to adopt, maintain, and implement laws and all other measures to fulfill obligations under the
seven covered multilateral environmental agreements (MEAs). The amended agreement states
that all obligations in the environment chapter would be subject to the same dispute settlement
procedures and enforcement mechanisms as all other obligations in the agreement.
17 Bureau of National Affairs, Inc., International Trade Reporter, “Colombian Senate Overwhelmingly Approves
Labor-Related Amendments to FTA with U.S.,” November 1, 2007.
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Other Provisions
Other amendments to the proposed FTA include provisions on intellectual property, government
procurement, and port security. On intellectual property rights (IPR) protection, some Members
of Congress were concerned that the original commitments would have prevented the poor from
having access to medicines to treat AIDS or other infectious diseases. The amended agreement
was a way of trying to find a balance between the need for IPR protection for pharmaceutical
companies to foster innovation and the desire for promoting access to generic medicines to all
segments of the population. The amended text of the agreement maintains the five years of data
exclusivity for test data related to pharmaceuticals. However, if Colombia relies on U.S. Federal
Drug Administration (FDA) approval of a given drug, and meets certain conditions for
expeditious approval of that drug in Colombia, the data exclusivity period would expire at the
same time that the exclusivity expired in the United States. This could allow generic medicines to
enter more quickly into the market in Colombia.
In government procurement, the amended provisions would allow U.S. state and federal
governments to condition government contracts on the adherence to the core labor laws in the
country where the good is produced or the service is performed. Government agencies also would
be allowed to include environmental protection requirements in their procurements. Concerning
port security, a new provision would ensure that if a foreign-owned company were to provide
services at a U.S. port that would raise national security concerns, the CFTA would not be an
impediment for U.S. authorities in taking actions to address those concerns.18
U.S.-Colombia Trade
With a population of 47 million people, Colombia is the third-most populous country in Latin
America, after Brazil and Mexico. Colombia’s economy, the fourth-largest economy in Latin
America, after Brazil, Mexico, and Argentina, is small when compared to the U.S. economy.
Colombia’s gross domestic product (GDP) in 2010 was estimated at $235 billion, about 1.9% of
U.S. GDP of $14.7 trillion in 2010 (see Table 2). Colombia’s exports of goods and services
accounted for 16% of GDP in 2010, while imports of goods and services accounted for 18%.
The United States is Colombia’s dominant trading partner in both imports and exports.
Subsequently, any change in U.S. demand for Colombian products can have a noticeable effect on
Colombia’s economy. Colombia’s market opening measures over the past 10 years, however,
have resulted in changes to its direction of trade and the percentage of trade with the United
States has been declining. Colombia has regional trade agreements with most countries in Latin
America, including the Central America Northern Triangle (Guatemala, Honduras, and El
Salvador); Mexico; Mercosur (Brazil, Argentina, Paraguay, and Uruguay); and Chile. An FTA
with Canada, approved by both countries in 2010, is expected to enter into force in July 2011.
Colombia has also recently signed an FTA with the European Union, which is awaiting formal
approval by both partners.
18 Office of the United States Trade Representative, Trade Facts, “Bipartisan Trade Deal,” Bipartisan Agreement on
Trade Policy, May 2007, pp. 4-5.
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In 2010, the United States accounted for 26% of Colombia’s imports and 42% of Colombia’s
exports. China is the second-leading supplier of Colombia’s imports, after the United States,
accounting for 13% of total imports, followed by Mexico, which accounted for 9% of Colombia’s
imports in 2010. China also ranks second among Colombia’s export markets, accounting for 5.0%
of total Colombian exports in 2010. In agriculture, Argentina surpassed the United States as
Colombia’s leading supplier of agricultural imports in 2010. Argentina supplied 28% of
Colombia’s agricultural imports in 2010, up from 21% in 2009. In comparison, the United States
supplied 25% of Colombia’s agricultural imports in 2009 and 18% in 2010.
Table 2. Key Economic Indicators for Colombia and the United States
Colombia
United States
2000 2010a 2000 2010a
Population (millions)
40 47 282 310
Nominal GDP ($US billions)b 100 285
9,952
14,723
GDP, PPPc Basis ($US billions) 236 426 9,952
14,723
Per Capita GDP ($US)
2,470
6,080
35,265
47,560
Per Capita GDP in $PPPc
5,824 9,070 35,265 47,560
Exports of goods and services (US$
16
45 1,093 1,838
billions)
Exports as % of GDPd
16% 16% 11% 13%
Imports of goods and services (US$
17
51 1,475 2,385
billions)
Imports as % of GDPd
17% 18% 15% 16%
Source: Compiled by CRS based on data from the Economist Intelligence Unit (EIU) on-line database.
a. Most figures for 2010 are estimates.
b. Nominal GDP is calculated by EIU based on figures from World Bank and World Development Indicators.
c. PPP refers to purchasing power parity, which attempts to factor in price differences across countries when
estimating the size of a foreign economy in U.S. dollars.
d. Exports and Imports as % of GDP are derived by the EIU and include trade in both goods and services.
U.S.-Colombia Merchandise Trade
In 2010, the United States accounted for 42% of Colombia’s total merchandise exports, compared
to 39% in 2009 and 37% in 2008. In imports, the United States accounted for 26% of Colombia’s
imports, down from 29% in 2009 and 2008. Colombia accounts for a very small percentage of
U.S. total trade (0.9% in 2010). Colombia ranks 20th among U.S. export markets and 25th among
foreign exporters to the United States. U.S. exports to Colombia totaled $11.0 billion in 2010,
while U.S. imports totaled $15.7 billion. As shown in Table 3, the dominant U.S. import category
from Colombia in 2010 was oil and gas (54%); followed by nonferrous metal (10%); fruits and
tree nuts (6%); petroleum and coal products (6%); and coal and petroleum gases (6%). The
leading U.S. export category to Colombia was petroleum and coal products (20%); agriculture
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and construction machinery (4%); basic chemicals (2%); resin, synthetic rubber and products
(2%); and general purpose machinery (2%).
Table 3. U.S. Trade with Colombia in 2010
U.S. Exports
U.S. Imports
Leading Items
Leading Items
(NAIC 4 Digit
(NAIC 4 Digit
Level)
$ Millions
Share
Level)
$ Millions
Share
Petroleum and
2230.0
20%
Oil and gas
8,464.9
54%
coal products
Agriculture and
1,144.0 4%
Nonferrous 1,494.8 10%
construction
metal
machinery
Basic chemicals
1,019.2
2%
Fruits and tree
1,003.4 6%
nuts
Resin, synthetic
498.2 2%
Petroleum
and
932.4 6%
rubber and
coal products
products
Other general
454.2 2%
Coal
and
923.3 6%
purpose
petroleum gases
machinery
Al other
5,654.0
51%
Al other
2,853.8
18%
Total exportsa 10,990.6
—
Total
importsa 15,672.6
—
Source: Compiled by CRS using USITC Interactive Tariff and Trade DataWeb at http://dataweb.usitc.gov: U.S.
domestic exports and imports for consumption; NAIC 4-digit level.
a. Totals may not add up due to rounding.
U.S. imports from Colombia picked up again in 2010 to $15.7 billion, after declining 14% in
2009 from $13.1 billion in 2008 to $11.2 billion. In the five-year period prior to 2008, imports
had been increasing steadily, from $6.3 billion to $13.1 billion in 2008. U.S. exports to Colombia
also increased in 2010, from $8.8 billion in 2009 to $11.0 billion. In 2009, following international
trends in global trade after the financial crisis, exports to Colombia decreased from $10.7 billion
in 2008 to $8.8 billion. Between 2003 and 2008, U.S. exports to Colombia increased from $3.5
billion to $10.6 billion (see Figure 1). Prior to 2003, U.S. imports from and exports to Colombia
fluctuated from year to year without very significant changes.
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Figure 1. U.S. Trade with Colombia: 1996-2010
($ Billions)
20,000
15,000
10,000
s
on
lli
5,000
Bi
$
0
-5,000
-10,000
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
U.S. Exports
U.S. Imports
Trade Balance
Source: Compiled by CRS using USITC Interactive Tariff and Trade DataWeb at http://dataweb.usitc.gov.
Andean Trade Preference Act
The United States currently extends duty-free treatment to imports from Colombia under the
Andean Trade Preference Act (ATPA), a regional trade preference program.19 ATPA was enacted
on December 4, 1991 (Title II of P.L. 102-182), and was renewed and modified under the Andean
Trade Promotion and Drug Eradication Act (ATPDEA; Title XXXI of P.L. 107-210) on August 6,
2002. Additional products receiving preferential duty treatment under ATPDEA included certain
items in the following categories: petroleum and petroleum products, textiles and apparel
products, footwear, tuna in flexible containers, and others. Since the enactment of ATPDEA,
Congress extended ATPA preferences several times for Colombia and other Andean countries for
short periods of time. The most recent extension of ATPA (P.L. 111-344) extended preferences for
Colombia and Ecuador until February 12, 2011. ATPA trade preferences are currently expired.
19 For more information see CRS Report RS22548, ATPA Renewal: Background and Issues, by M. Angeles Villarreal.
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ATPA, as amended by ATPDEA, is part of a broader U.S. initiative with Andean countries to
address the drug trade problem with Latin America. It authorized the President to grant duty-free
treatment or reduced tariffs to certain products from the list of beneficiary countries (Bolivia,
Colombia, Ecuador, and Peru ) that met domestic content and other requirements, as long as the
country meets specific eligibility requirements. Bolivia is no longer a designated beneficiary
country because it failed to meet the eligibility criteria. The act (as a complement to crop
eradication, interdiction, military training, and other counter-narcotics efforts) was intended to
promote economic growth in the Andean region and to encourage a shift away from dependence
on illegal drugs by supporting legitimate economic activities. Increased access to the U.S. market
was expected to help create jobs and expand legitimate opportunities for workers in the Andean
countries in alternative export sectors.
Over 90% of U.S. imports from Colombia receive duty-free treatment through preference
programs or normal trade relations (see Table 4). In 2010, 60% of U.S. imports from Colombia
received preferential duty treatment under ATPA. Of those, the leading imports were oil and gas;
mushrooms, nursery and related products (including cut flowers); petroleum and coal products;
apparel; and plastics products. The trade preference program contributed to a rapid increase in
ATPA imports from Colombia. The rapid increase in import value was partially due to an increase
in the volume of imports, but prices of oil and energy-related imports were also a major factor.
Oil and gas products accounted for 84% of ATPA imports from Colombia in 2010 (see Table 5).
Those products in the top five ATPA import categories that were not energy-related accounted for
only 9% of ATPA imports from Colombia.
Table 4. U.S. Imports from Colombia
($ Millions)
2003 2004 2005 2006 2007 2008 2009 2010
Total
6,346.2 7,360.6 8,770.3 9,239.8 9,251.2 13,058.8 11,209.4 15,672.6
Imports
All Duty-
4,109.2 6557.8 7,892.5 8,531.5 8,447.1 12,044.1 9,962.9 14,536.6
Free
%
of
Total 65% 89% 90% 92% 91% 92% 89% 93%
ATPAa
2,908.7 3,888.9 4,653.2 4,791.2 4,527.7 7,339.2 5,589.5 9,472.6
%
of
Total 46% 53% 53% 52% 49% 56% 50% 60%
Source: Compiled by CRS using USITC data.
a. Includes imports under ATPA and ATPDEA.
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Table 5. U.S. Imports from Colombia under ATPA
($ Millions)
Import Itema 2003 2004 2005 2006 2007 2008 2009 2010
Oil
and
gas
1,692.9 2,299.7 2,897.1 3,183.7 3,152.6 5,813.9 4,318.2 7,914.3
Mushrooms,
343.3 415.0 418.5 449.3 506.2 499.3 506.0 549.0
nursery and
related products
Petroleum and
321.2 405.5 454.6 202.5 141.2 375.3 249.0 363.4
coal products
Apparel
240.8 412.2 441.1 405.5 294.1 269.0 182.4 217.2
Plastics
products 15.8 20.0 32.1 39.6 49.7 33.5 31.0 60.0
Other ATPA
294.7 336.5 409.8 510.6 383.9 348.2 302.9 368.7
imports
Total ATPAb
2,908.7 3,888.9 4,653.2 4,791.2 4,527.7 7,339.2 5,589.5 9,472.6
Source: Compiled by CRS using USITC data
Notes:
a. HTS 4-digt level.
b. Includes imports under ATPA and ATPDEA.
U.S.-Colombia Bilateral Foreign Direct Investment
U.S. foreign direct investment in Colombia on a historical-cost basis totaled $6.7 billion in 2009
(see Table 6). The largest amount was in mining, which accounted for 46.9%, or $3.2 billion, of
total U.S. FDI in Colombia in 2009. The second-largest amount, $1.7 billion (25.0% of total), was
in manufacturing, followed by $485 million in wholesale trade.
Table 6. U.S. Direct Investment Position in Colombia
(Historical-cost Basis: 2009)
Industry Amount
% of Total
(U.S.$ Millions)
Mining 3,153
46.9%
Manufacturing
1,683
25.0%
Finance and
485 7.2%
Insurance
Total 6,728
Source: Bureau of Economic Analysis, International Economic Accounts.
The proposed U.S.-Colombia FTA is expected to improve investor confidence in Colombia and
would likely increase the amount of U.S. FDI in the country. Investors from other countries
would also be expected to increase investment in Colombia as the FDI environment improves.
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According to one study, FDI in Colombia would have increased by more than $2 billion from
2007 through 2010 had the proposed CFTA been implemented in 2007.20
Background on Colombia21
Colombia is a democratic nation with a bicameral legislature. In spite of its democratic tradition,
Colombia has suffered from internal conflict for over 40 years. This conflict and drug violence
present unique challenges to Colombia’s institutions and threaten the human rights of Colombian
citizens. An independent candidate, Alvaro Uribe, won the 2002 presidential elections, largely
because of his aggressive plan to reduce violence in Colombia. President Uribe, who served two
terms in office, retained widespread support throughout his presidency. Colombia continues to
face serious challenges despite the progress it has made in recent years.
Presidential Elections in 2010
In the presidential election of June 2010, Juan Manuel Santos of the Partido de Unidad Nacional
(Partido de la U) was elected president of Colombia with 69% of the vote. President Santos
previously served as defense minister (2006-2009) under former President Alvaro Uribe and in
two prior governments as finance minister and minister of trade. Santos was sworn into office on
August 7, 2010, under an optimistic mood in the country, but the new government has significant
foreign policy and domestic challenges ahead. The country’s main foreign policy challenges will
be to improve relations with Venezuela and Ecuador. In addition, President Santos is planning to
move forward with a series of reforms involving oil and mining royalties, healthcare, the justice
system, and land.22 On September 9, 2010, President Santos unveiled a new ambitious trade
strategy aimed at increasing the value of Colombian exports by improving competitiveness,
increasing market access to new markets, and providing more government support. The new
strategy reflects President Santos’ support of the pending U.S.-Colombia FTA and his desire to
complete FTA negotiations with a number of countries.23
Internal Conflict
Colombia has a long tradition of civilian, democratic rule, yet has been plagued by violence
throughout its history. The three major armed groups today are the Revolutionary Armed Forces
of Colombia (FARC), the National Liberation Army (ELN), and the United Self-Defense Forces
of Colombia (AUC). Although the AUC disbanded in 2006, it remains a designated foreign
terrorist organization. The Colombian government has made significant achievements against
terrorist leadership targets in Colombia. A 2009 report by the State Department states that
20 United States International Trade Commission (USITC), U.S.-Colombia Trade Promotion Agreement: Potential
Economy-wide and Selected Sectoral Effects, Investigation No. TA-2104-023, USITC Publication 3896, December
2006, p. 7-3.
21 This section is drawn from CRS Report RL32250, Colombia: Issues for Congress, by June S. Beittel.
22 EIU, “Optimism for New Government but Challenges Remain,” August 12, 2010.
23 Global Insight, “Colombian President Unveils Trade Strategy,” September 9, 2010.
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Colombia has maintained and strengthened its “Democratic Security” strategy, which combines
military, intelligence, police operations, and efforts to demobilize combatants. It also provides
public services in rural areas previously dominated by armed groups. Kidnappings in Colombia
by criminal groups significantly decreased in 2008.24 The threat of extradition to the United States
has been a strong weapon against drug traffickers and terrorists. In 2008, Colombia extradited a
record 208 defendants to the United States for prosecution, most of which were Colombian
nationals.25
Violence in Colombia has its roots in a lack of state control over much of Colombian territory,
and a long history of poverty and inequality. The shift of cocaine production from Peru and
Bolivia to Colombia in the 1980s increased drug violence, and provided a source of revenue for
both guerrillas and paramilitaries. Conflicts between the Conservative and Liberal parties have
existed for more than 100 years and have killed hundreds of thousands of Colombians. While a
power-sharing agreement between the Liberal and Conservative parties ended a civil war in 1957,
it did not address the root causes of the violence. Numerous leftist guerrilla groups inspired by the
Cuban Revolution formed in the 1960s as a response to state neglect and poverty. Rightwing
paramilitaries were formed in the 1980s to defend landowners, many of them drug traffickers,
against guerrillas. Most of the rightist paramilitary groups were coordinated by the AUC, which
disbanded in 2006 after more than 30,000 of its members demobilized. The AUC has been
accused of gross human rights abuses and collusion with the Colombian Armed Forces in their
fight against the FARC and ELN. The AUC also participated in narcotics trafficking.
Human Rights Issues
The debate on U.S. policy toward Colombia and on the proposed free trade agreement with
Colombia has brought attention to allegations of human rights abuses by the FARC and ELN,
paramilitary groups, and the Colombian Armed Forces. The State Department’s February 2010
human rights report states that the Prosecutor General’s Office in Colombia has been assigned
1,302 cases concerning extrajudicial killings by the armed forces allegedly taking place between
1985 and 2009.26 Progress in addressing the backlog of cases concerning extrajudicial killings has
proceeded slowly.
Congress has annually required that the Secretary of State certify to Congress that the Colombian
military and policy forces are severing their links to the paramilitaries, investigating complaints
of abuses, and prosecuting those who have had credible charges made against them. In the
September 2010 report, the State Department determined and certified to Congress that the
Colombian government and armed forces are meeting statutory criteria related to human rights.
The report states that though there continues to be a need for improvement, the Colombian
government has taken positive steps to improve respect for human rights in the country.
According to the report, the Colombian government’s firm resolve on not tolerating extrajudicial
killings has led to a rapid reversal in this trend. The report also acknowledges the significant steps
24 United States Department of State, Office of the Coordinator for Counterterrorism, Country Reports on Terrorism
2008, April 2009, pp. 11 and 155.
25 Ibid, p. 164.
26 U.S. Department of State, 2009 Country Reports on Human Rights Practices: Colombia, March 11, 2010.
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that the Santos Administration has taken to demonstrate it is taking human rights seriously and its
actions on a the establishment of a roundtable on labor, meetings with NGOs and civil society
groups, increasing engagement with these groups, and outreach to Colombia’s courts to repair
relations with the judicial system.27
The March 2010 United Nations High Commissioner for Human Rights (UNHCHR) report
credited the Colombian government with making significant progress in the situation regarding
human rights and international humanitarian law. The UNHCHR acknowledged the significant
progress the government has made in the drastic reduction in the number of complaints of extra-
judicial executions and prosecutions of government officials for alleged links with paramilitary
organizations. The report recognized the government’s openness to international scrutiny with
regard to human rights issues in Colombia. The report also acknowledged the spirit of
cooperation between the Colombian government and UNHCHR-Colombia, and the commitment
of the government to address human rights challenges.28 As in previous reports, UNHCHR
expressed concerns about the activities and abuses committed by paramilitary forces that have
rearmed, and by the FARC. The report described the continued vulnerability of groups like
women, children, Afro-Colombians, the indigenous, journalists, union leaders, and human rights
workers.29
U.S. Policy Toward Colombia
The focus of U.S. foreign policy toward Colombia has been to curb narcotics production and
trafficking. The United States also seeks to promote democracy and economic development in
order to strengthen regional security. The country is known for a long tradition of democracy but
has had to contend with continuing violence from leftist guerrilla insurgencies dating from the
1960s and persistent drug trafficking activity. Plan Colombia, a multi-year effort to address
Colombia’s key challenges, has been the centerpiece of U.S. policy toward Colombia since 2000.
The United States has made a significant commitment of funds and material support to help
Colombia and the Andean region fight drug trafficking since the development of Plan Colombia
in 1999. In support of the plan, Congress passed legislation providing $1.3 billion in assistance
for FY2000 (P.L. 106-246) and has provided more than $7 billion to support Plan Colombia from
FY2000 through FY2010 in both State Department and Defense Department accounts. Since
2002, Congress has granted the State Department expanded authority to use counternarcotics
funds for a unified campaign to fight both drug trafficking and terrorist organizations in
Colombia. In 2004, Congress raised the statutory cap on U.S. personnel allowed to be deployed to
Colombia in support of Plan Colombia. The three main illegally armed groups in Colombia
participate in drug production and trafficking and have been designated foreign terrorist
organizations by the State Department.30
27 U.S. State Department, Office of the Spokesman, Determination and Certification of the Colombian Government and
Armed Forces with Respect to Human Rights Related Conditions, September 15, 2010.
28 United Nations General Assembly-Human Rights Council, “Report of the United Nations High Commissioner for
Human Rights on the situation of human rights in Colombia,” March 4, 2010.
29 Ibid.
30 For more information on Plan Colombia and U.S. foreign assistance, see CRS Report RL32250, Colombia: Issues for
(continued...)
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The Proposed CFTA: Issues for Congress
Economic Impact
If and when fully implemented, the U.S.-Colombia FTA would likely have a have a small, but
positive, net economic effect on the United States. Colombia’s economy is small compared to the
U.S. economy (1.6%) and the value of U.S. trade with Colombia is a very small percentage of
overall U.S. trade. Most of the economy-wide trade effects of trade liberalization from the FTA
would arise from Colombia’s removal of tariff barriers and other trade restrictions.
Approximately 90% of U.S. imports from Colombia enter the United States duty-free, either
unconditionally or under the ATPA or other U.S. provisions; hence, the marginal effects of the
FTA on the U.S. economy likely would not be significant.
Study Findings on Economic Impact
A study by the United States International Trade Commission (USITC) assessed the potential
effects of a U.S.-Colombia FTA on the U.S. economy. The study found that, in general, the
primary impact of an FTA with Colombia would be increased U.S. exports to Colombia as a
result of enhanced U.S. access to the Colombian market.31 Major findings of the USITC study on
the likely effects of a U.S.-Colombia FTA on the U.S. economy, should the agreement be fully
implemented, include the following:32
• U.S. exports to Colombia would increase by $1.1 billion (13.7%) and U.S.
imports from Colombia would increase by $487 million (5.5%). U.S. GDP would
increase by over $2.5 billion (less than 0.05%).
• The largest estimated increases in U.S. exports to Colombia, by value, would be
in chemical, rubber, and plastic products; machinery and equipment; and motor
vehicles and parts. In terms of percentage increases, the largest increases in U.S.
exports would be in rice and dairy products.
• The largest estimated increases in U.S. imports from Colombia, by value, would
be in sugar and crops not elsewhere classified. The largest estimated increases in
U.S. imports, by percent, would be in dairy products and sugar.
• On an industry level, the FTA would result in minimal to no effect on output or
employment for most sectors of the U.S. economy. The U.S. sugar sector would
be the only sector with an estimated decline of more than 0.1% in output or
employment. The largest increases in U.S. output and employment would be in
the processed rice, cereal grains, and wheat sectors.
(...continued)
Congress, by June S. Beittel.
31 United States International Trade Commission (USITC), U.S.-Colombia Trade Promotion Agreement: Potential
Economy-wide and Selected Sectoral Effects, Investigation No. TA-2104-023, USITC Publication 3896, December
2006. (Hereinafter USITC, December 2006).
32 USITC, December 2006, pp. 2-1 and 2-2.
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The USITC reviewed seven studies that it found on the probable economic effects of a U.S.-
Colombia FTA.33 The results of the studies reviewed by USITC varied. One study found that U.S.
exports to Colombia would increase by 2.4% to 8.3%, while another study assessed that the
expected increase would be 44%. Two studies found that the largest increases in U.S. exports
would be in agriculture products, metal and wood, and food products. In assessing the impact on
U.S. imports from Colombia, the results of the studies also varied. One study found that U.S.
imports from Colombia would increase by 2.0% to 6.2%, while another found that U.S. imports
would increase by 37%. The largest increases would be in apparel and leather goods, textile
products, and metal and wood. The studies also assessed that an FTA would result in small overall
welfare gains for both the United States and Colombia and a positive impact on the U.S.
agricultural sector despite an increase in U.S. sugar imports.34
The non-governmental Institute for International Economics (IIE) also has a study assessing the
possible impact of a U.S.-Colombia FTA on both the U.S. and Colombian economies.35 The study
found that the proposed U.S.-Colombia FTA would be expected to result in an increase in total
trade between the two countries. The total value of U.S. imports from Colombia would increase
by an estimated 37% while the value of U.S. exports to Colombia would increase by an estimated
44%.36 In terms of welfare gains, the study assessed that a U.S.-Colombia FTA would result in
small welfare benefits for both partners, though the gains would be larger for Colombia. On a
sectoral level, the study found that an agreement would have a minor sectoral effect on the U.S.
economy, but the effect would be more significant for Colombia because it is the smaller partner.
The study indicated that Colombia would face certain structural adjustment issues with a
displacement of low-skilled workers in some sectors, but that these workers would all be able to
find job possibilities in the expanding sectors.37
One of the drawbacks to a bilateral free trade agreement is that it may result in trade diversion
because it is not fully inclusive of all regional trading partners.38 Trade diversion results when a
country enters into an FTA and then shifts the purchase of goods or services (imports) from a
country that is not an FTA partner to a country that is an FTA partner even though it may be a
higher cost producer. In the case of the United States and Colombia, for example, goods from the
United States may replace Colombia’s lower-priced imports from other countries in Latin
33 In its review of the seven economic studies, the USITC noted that these studies analyzed a proposed, possible, or
hypothetical U.S.-Colombia free trade agreement (FTA) and not the final text of the actual FTA that was the subject of
its investigation. Therefore, the underlying assumptions made in the reviewed studies may be different than those of the
USITC’s analysis.
34 USITC, December 2006, pp. 7-1 to 7-4.
35 Jeffrey J. Schott, editor, Institute for International Economics (IIE), Trade Relations Between Colombia and the
United States, August 2006. (Hereinafter IIE, August 2006).
36 IIE August 2006, Chapter 4, “Potential Benefits of a U.S.-Colombia FTA,” by Dean A. DeRosa and John P. Gilbert.
This chapter uses empirical and applied methods of economic analysis to examine the potential quantitative impact of a
U.S.-Colombia FTA and is one of the studies reviewed by the USITC in its assessment of a U.S.-Colombia FTA.
37 Ibid, p. 112.
38 When a trade agreement lowers trade barriers on a good, production may shift from domestic producers to lower cost
foreign producers and result in substituting an imported good for the domestic good. This process is called trade
creation. Trade creation provides economic benefits as consumers have a wider choice of goods and services available
at lower costs. Trade creation also results in adjustment costs, however, usually in the form of domestic job losses as
production shifts to another country.
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America. If this were to happen, the United States would now be the producer of that item, not
because it produces the good more efficiently, but because it is receiving preferential access to the
Colombian market. The IIE study assessed that a CFTA probably would not cause trade diversion
in the United States, but that it could cause some trade diversion in Colombia. The IIE study
estimated that an FTA with the United States would result in a decrease in Colombia’s imports
from other countries of approximately 9%.39
Possible Economic Impact on Agricultural Sector
The USITC study found that one of the impacts of a U.S.-Colombia FTA would be increased U.S.
agriculture exports to Colombia as a result of enhanced U.S. access to the Colombian market.40 In
the agricultural sector, key findings of the study include the following:
• The removal of tariff and nontariff barriers would likely result in a higher level of
U.S. exports of meat (beef and pork) to Colombia. U.S. imports of meat from
Colombia would eventually increase, but are currently restricted by Colombia’s
lack of certification to export fresh, chilled, or frozen beef or pork to the United
States.
• Colombia’s elimination of trade barriers and certain government support
measures under a CFTA would likely result in increased U.S. grain exports to
Colombia. Rice would account for most of the increase, with yellow corn and
wheat accounting for the remaining balance.
• U.S. exports to Colombia in soybeans, soybean products, and animal feeds would
likely increase under a CFTA.41
According to the IIE study, the main gains to Colombia in agricultural trade would likely be more
secure and preferential market access to the U.S. market. U.S. agricultural exports would gain a
small but not insignificant preference in the Colombian market for temperate-zone agricultural
produce. The study’s authors state that the long time periods for phasing out tariffs for sensitive
products and safeguard provisions that would replace Colombia’s price band system would lessen
the impact of increased imports from the United States. One section of the study describes the
results of a global applied general equilibrium model on the pending FTA. In terms of the overall
effects on Colombia’s economy, the results of the study imply that, in the medium term,
Colombia would lose a net amount of $63 million, or about 0.06% of GDP. In the longer term,
however, Colombia would gain $550 million each year, or about a 0.5% permanent increase to
GDP.42
39 IIE, August 2006, pp. 88-89.
40 USITC Publication 3896, p. xv.
41 Ibid, pp. xvi-xvii.
42 IIE, August, 2006.
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Issues Related to Labor
The proposed CFTA includes the new trade-labor policy priorities that were established under the
May 10, 2007, “New Trade Policy for America”.43 This agreement incorporated key Democratic
priorities relating to labor and other issues on U.S. trade policy. Key concepts in the new trade-
labor policy include fully enforceable provisions that (1) incorporate ILO core labor standards as
stated in the 1998 ILO Declaration on Fundamental Principles and Rights at Work (henceforth
referred to as the ILO Declaration);44 and (2) prohibit partner countries from weakening laws
relating to ILO core labor standards in order to attract trade or investment.
A number of U.S. labor groups oppose the idea of a free trade agreement with Colombia. They
maintain that Colombia’s labor movement is under attack through violence, intimidation, and
harassment, as well as legal channels. The American Federation of Labor and Congress of
Industrial Organizations (AFL-CIO), which is strongly opposed to the agreement, contends that
Colombian labor union members face daily legal challenges to their rights to organize and
bargain collectively and that these challenges threaten the existence of the Colombian labor
movement. While the AFL-CIO acknowledges that Colombia has made progress in protecting
union members, it continues to have concerns regarding the government’s commitment to protect
fundamental worker rights.45 The AFL-CIO has stated that it remains opposed to the pending FTA
even after the Action Plan negotiated by the Obama Administration and the Colombian
government was announced on April 6, 2011 (see “U.S.-Colombia Agreement on Action Plan
Related to Labor Rights,” below).46
Colombian labor unions on the U.S.-Colombia FTA are officially opposed to the agreement, but
the feelings among labor unionists are mixed. In May 2007, 17 Colombian unionists representing
the textiles, flower, mining, and other Colombian industries visited the U.S. Congress to speak
out in favor of the agreement. Their main argument was that an FTA would provide jobs for
Colombia. However, another group of Colombian unions, consisting mostly of government
employees, have spoken out against the agreement, saying a CFTA would interfere with the
Colombian government’s right to govern the country, and would have a negative effect on
Colombia’s agriculture sector and the economy in general.47
In the ILO’s 2010 Report of the Committee of Experts on the Application of Conventions and
Recommendations (CEACR), it expressed satisfaction regarding the measures the Colombian
government had taken in improving protection of freedom of association and collective
43 For more information on labor issues related to the agreement, see CRS Report RL34759, Proposed U.S.-Colombia
Free Trade Agreement: Labor Issues, by Mary Jane Bolle.
44 These are: “(a) the freedom of association and the effective recognition of the right to collective bargaining; (b) the
elimination of all forms of forced or compulsory labor; (c) the effective abolition of child labor; and (d) the elimination
of discrimination in respect of employment and occupation.” The ILO Declaration does not include in (c) the “worst
forms of child labor,” but the new text of the CFTA adds them to this list “for purposes of this agreement.”
45 Colombia Reports, “Colombia too far behind on labor and human rights: U.S. union,” March 21, 2010.
46 AFL-CIO Now Blog, AFL-CIO Remains Opposed to Colombia Trade Deal, April 7, 2011.
47 Confederación General del Trabajo, letter to House Speaker Nancy Pelosi and House Ways and Means Committee
Chairman Charles Rangel, January 30, 2006. Central Unitaria de Trabajadores de Colombia (CUT), Rechazamos el
TLC Por Ello, Desautorizamos toda Opinión Sindical que Contrarie la Postura Institucional, April 12, 2007. CUT,
TLC: Todos Limosnearemos Comida, April 2008.
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bargaining.48 The 2010 ILO report on the application of labor standards removed Colombia from
the 25 countries it examined for failure to comply with international labor standards. However,
the report noted that Colombia was taken off the list after a lengthy debate and that it had been
taken off the list so as to break a gridlock in that particular year.49
In response to U.S. concerns regarding worker rights in Colombia, the Embassy of Colombia in
the United States has been reporting the progress that Colombia has made since 2001 in
strengthening the rights, benefits, and security of unions in Colombia. According to progress
reports issued by the embassy, government reforms in Colombia since 2002 have helped protect
Colombian worker rights to form unions, bargain collectively, and strike. These include enhanced
efforts to open dialogue with union members, including meetings with the president and vice
president of Colombia.50 The 2010 report issued by the embassy provides data indicating that
homicides dropped by 45% between 2002 and 2009. It also states that a protection program aimed
at vulnerable groups, including union members, and the creation of the special unit at the
Prosecutor General’s Office have led to an 86% reduction in the level of homicides of union
members. The report acknowledges that any homicide is one too many, but also states that it is
important to recognize that Colombia has made significant process in protecting labor and human
rights.51
Issues Related to Colombia’s Labor Cooperatives
Many Members of Congress have expressed concerns about labor cooperatives in Colombia.
Colombian cooperatives are work arrangements in which an organization acts as a subcontracting
agency for employers in certain industries. They are mostly found in the sugar cane, palm oil,
flower, mining, and port industries. The organizations take the lead in negotiating the contracts
between the employers and the workers. Critics of the programs contend that this type of work
arrangement leads to a lack of protection of worker rights, wages below the minimum wage, and
lower health and pension benefits.52 The Colombian government states that the cooperatives were
established to generate employment, but that it recognized they could lead to an erosion of worker
rights. In response, the government has undertaken a series of reforms since 2004. The most
recent law, Ley 1429, passed in December 2010, has a number of new and stronger measures to
help ensure that worker rights are not being violated and to impose sanctions on businesses that
are violating Colombian laws.53 The major changes in this law are increased sanctions on
companies for violations of the law from about $25,000 to $1.5 million; accountability for
inspectors if they do not enforce the law; and enhanced bargaining rights for workers belonging
48 ILO, 2010 Report of the Committee of Experts on the Application of Conventions and Recommendations, February
2010, at http://www.ilo.org/ilolex/gbe/ceacr2010.htm.
49 ILO, Conference Committee on the Application of Standards: Extracts from the Record of Proceedings (ILC 2010),
at http://www.ilo.org/global.
50 Embassy of Colombia, Washington, D.C., Colombia: A Progress Report: Strengthening the Rights, Benefits, and
Security of Unions, October 2007.
51 Embassy of Colombia, Washington, D.C., Ensuring Justice and Protecting Labor and Human Rights in Colombia,
2010.
52 Mark Gruenberg, “Colombian labor leader seeks trade pact delay,” People’s World, January 21, 2011.
53 In-person interview with Colombian Embassy staff in Washington, D.C. and a Vice Minister on labor issues from the
Colombian government on March 10, 2011.
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Proposed U.S.-Colombia Free Trade Agreement: Background and Issues
to a cooperative. The law was to be implemented over a period of time ending in July 2013, but
the Colombian government agreed with the Obama Administration that it would accelerate its
implementation so that the law would be fully in effect as of June 2011.54
Critics of the cooperative work arrangements contend that the arrangements lead to worker
oppression, prevent workers from joining unions, and result in a denial of basic benefits; critics
also contend that certain marginalized groups, especially the Afro-Colombian population, are
particularly vulnerable to unfair treatment. Colombian labor representatives have urged Congress
to delay passage of the pending FTA until Colombia improves its labor laws.55 According to the
Colombian government, cooperatives are required to provide health benefits, worker rights
protections, and pension benefits. However, there have been many cases of non-compliance.
Documents obtained from the Colombian government show that, between 2007 and January
2011, inspectors made 4,787 visits to work areas, conducted 4,052 investigations, and imposed
sanctions 816 times. The documents also show that the number of workers participating in
cooperatives decreased from 2 million in 2007 to 600,000 in 2010, and that the number of
cooperatives decreased from 12,317 to 4,555 between 2007 and 2010.56
Violence Issues
Numerous Members of Congress oppose the FTA with Colombia because of concerns about the
violence in Colombia against labor union members and other human rights defenders.
Policymakers who have voiced opposition to the agreement generally are concerned about the
impunity issue in Colombia, the lack of investigations and prosecutions, and the role of the
paramilitary. Some Members have said that the high rate of violence in Colombia made it an
“unfit free trade agreement partner for the United States.”57 The Obama Administration also
expressed concerns about the level of violence in Colombia and negotiated action steps for the
Colombian government to resolve these issues. The “Action Plan Related to Labor Rights”
discussed below includes a number of commitments made by the Santos Administration related to
concerns about victims of violence in Colombia.
Republican and some Democratic supporters of the FTA take issue with some charges against the
Colombian government and contend that Colombia has made progress in recent years to curb the
violence. Certain Members have stated that Colombia is a crucial ally of the United States in
Latin America and that if the FTA with Colombia is not passed, it may lead to further problems in
the region. In a report issued by USTR, a number of quotes by Members of Congress in support
of a trade agreement with Colombia were compiled. They were generally quoted as saying that
the agreement had implications for the security interests of the United States in Colombia and that
Colombia had made significant progress in cutting down on the number of murders and other
54 The White House, Office of the Press Secretary, “Leveling the Playing Field: Labor Protections and the U.S.-
Colombia Trade Promotion Agreement,” April 6, 2011, available at http://www.whitehouse.gov/the-press-
office/2011/04/06/fact-sheets-us-colombia-trade-agreement-and-action-plan.
55 Mark Gruenberg, “Colombian labor leader seeks trade pact delay,” People’s World, January 21, 2011.
56 Data obtain from an in-person interview with a Vice-Minister from the Colombian government’s Ministerio de la
Protección Social on March 10, 2011.
57 BNA, International Trade Reporter, “Five Democratic Lawmakers Blast Proposed Colombia FTA Due to Violence,”
June 14, 2007.
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Proposed U.S.-Colombia Free Trade Agreement: Background and Issues
criminal activities.58 The Bush Administration’s position regarding this issue was that Colombia
had made significant advances to combat violence and instability under the Uribe Administration.
A March 2008 fact sheet stated that President Uribe had demobilized tens of thousands of
members of paramilitary fighters; established an independent prosecutor’s unit; created a special
program to protect labor activists; and revised the pending FTA to include more rigorous labor
protections. 59
The Colombian government has responded to U.S. concerns and acknowledged that, while there
continued to be killings in Colombia, the situation had improved significantly since the Uribe
Administration. Government reports indicate that over 50,000 guerrilla members were
demobilized as a result of the government’s recovery of control over territory and the
implementation of a peace process with paramilitary groups. In addition, Colombian government
reports state that confessions obtained from former paramilitaries and guerillas have provided
important information in the investigation of past violence, including that against union
members.60 Data provided by the Colombian government indicate that assassinations of labor
union activists and teachers decreased by 86% between 2001 and 2009, from 205 in 2001 to 28 in
2008. Total homicides in Colombia decreased from 26,540 in 2001 to 15,817 in 2009 (a 68%
decrease). Homicides of labor union members account for a very small percentage of total
homicides in Colombia: 0.2% of total homicides in 2009.61
There is a lack of evidence regarding whether or not labor activists were killed because of their
union activity because few investigations have been completed. According to the State
Department’s human rights report covering 2009, the Colombian Prosecutor General’s office has
obtained 234 convictions (209 for murders) of 334 perpetrators of violent crimes against trade
unionists since 2000. However, a vast majority of the cases are either under investigation or in
preliminary phases of the prosecutorial process.62
U.S.-Colombia Agreement on Action Plan Related to
Labor Rights
The United States and Colombia negotiated to develop an “Action Plan Related to Labor Rights”
that would help resolve the outstanding U.S. concerns related to human rights and labor issues in
Colombia. The plan includes a number of “major, swift and concrete steps” the Colombian
government agreed to address. The Obama Administration’s announcement of the plan states that
the successful implementation of key elements of the plan will be a precondition for the
58 Office of the United States Trade Representative, Broad Support for U.S.-Colombia Free Trade Agreement: What
They’re Saying, March 2008.
59 The White House, Office of the Press Secretary, Fact Sheet: U.S.-Colombia Free Trade Agreement Essential To Our
National Security,” March 12, 2008.
60 Embassy of Colombia, Ensuring Justice and Protecting Labor and Human Rights in Colombia, 2010.
61 Ibid.
62 U.S. Department of State, 2009 Country Reports on Human Rights Practices: Colombia, March 11, 2010.
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agreement to enter into force.63 The steps that the Colombian government agreed to include the
following:
• A series of steps to be taken by December 2011 to prevent violence and prosecute
the perpetrators. These steps include expanding the protection program for labor
activists; eliminating the backlog of risk assessments for union members
requesting protection; revising the Colombian teacher relocation and protection
program; enacting a reform of the criminal code to criminalize actions against
workers and unionists; and directing the Colombian National Police to assign 95
full-time judicial police investigators to support prosecutors and speed up
prosecutions.
• Commitments by the Prosecutor General of Colombia to improve the handling of
crimes against union members; undertake an analysis of past homicide cases to
improve future prosecution efforts; develop an improved training program for
police and prosecutors with the assistance of the U.S. Departments of Justice and
Labor; hold monthly meetings with unions and the National Union School (ENS)
to address outstanding violence cases; and develop by May 20, 2011, a plan to
strengthen capacity and increase the number of prosecutions and investigations.
• Commitments by the Colombian government regarding labor cooperatives. These
include steps to accelerate the effective date, from July 2013 to June 2011, the
legal provisions pertaining to labor cooperatives under Colombia’s Ley 1429
passed in 2010; issue regulations by June 15 2011 that implement Ley 1429 and
clarify earlier laws regarding the cooperatives; double the labor inspectorate by
hiring 480 new inspectors over four years; dedicate 100 labor inspectors
exclusively to cooperatives in the palm oil, sugar, mines, ports, and flower
industries; conduct an outreach program to inform workers of the relevant laws
and remedies available to them; improve by June 15, 2011, inspection and
enforcement to prevent labor cooperative violations of worker rights; launch by
June 15, 2011, an enforcement regime to detect and prosecute the use of
collective pacts that undermine worker rights and to conduct a public awareness
campaign; and seek the advice and assistance of the ILO to implement and
enforce these measures.
Outlook
President Barack Obama has emphasized the importance of strengthening U.S. trade relations
with Colombia, Panama, and South Korea. The Administration made a case for pursuing FTAs as
part of the National Export Initiative and also as part of the 2010 National Security Strategy of
the United States. In the April 2011 announcement regarding the Colombian Action Plan for the
proposed U.S.-Colombia FTA, the Obama Administration stated that it had worked closely with
the Colombian government to address the concerns related to labor rights and violence issues and
63 The White House, Office of the Press Secretary, “Leveling the Playing Field: Labor Protections and the U.S.-
Colombia Trade Promotion Agreement,” April 6, 2011, available at http://www.whitehouse.gov/the-press-
office/2011/04/06/fact-sheets-us-colombia-trade-agreement-and-action-plan.
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that the Action Plan on which the two countries agreed would “clear the way” for the U.S.-
Colombia FTA to move forward to Congress. The statement issued by the White House says that
Colombia’s implementation of these key elements would be a precondition for the agreement to
enter into force.64
Proponents of the agreement contend that it would improve market access for U.S. businesses and
also see the proposed FTA as having important political implications for Colombia and U.S.
interests in the region. They believe that an FTA with Colombia would go beyond the U.S.-
Colombia economic relationship because it would also strengthen the political ties between the
two countries. Some policymakers who have voiced support for the agreement believe that the
United States needs to support its ally in the region and that if Congress does not pass the trade
agreement, it could be used by Venezuela or Ecuador to turn Colombia against the United States.
The leaders of several countries in Latin America have voiced support for the pending free trade
agreements with Colombia and Panama, stating that the passage of these agreements would bring
economic benefits to these countries and improve the overall U.S. relationship with Latin
America.65 In contrast, the President of Venezuela has criticized FTAs with the United States and
launched his own idea for trade policy through a socially oriented trade block that would include
mechanisms for poverty reduction.66
In the United States, opponents of an agreement with Colombia argue that passing an FTA would
be rewarding the government for its shortcomings in its struggle against drug trafficking, illegally
armed groups, protecting worker rights, and the history of violence in the country. Some argue
that the pending agreement would increase drug production and violence in the country and that it
could increase Colombia’s ongoing civil conflict because it would result in rural displacement.
They argue that trade liberalization would drive down the prices of agricultural products in
Colombia and put many farmers out of business.67 They maintain that small farmers would have
no choice but to migrate to urban areas, work in the drug cultivation zones, or affiliate with
illegally armed groups.68 Some opponents of a CFTA believe that trade agreements have negative
socioeconomic impacts. They argue that agreements such as NAFTA and CAFTA-DR, upon
which the CFTA is based, are failed models and have jeopardized the environment, undermined
worker rights, and caused job losses in the United States.
Much of the U.S. business community supports a free trade agreement with Colombia. They view
the pending agreement as a big opportunity for U.S. businesses and for exports of U.S.
agricultural products. The National Pork Producers Council, for example, argues that a trade
agreement would provide significant new export opportunities for U.S. pork producers and is
64 The White House, Office of the Press Secretary, “Fact Sheets: U.S.-Colombia Trade Agreement and Action Plan,”
April 6, 2011, available at http://www.whitehouse.gov/the-press-office/2011/04/06/fact-sheets-us-colombia-trade-
agreement-and-action-plan.
65 Letters from the Presidents of Costa Rica, El Salvador, Honduras, Nicaragua, and Mexico to the leadership of the
House of Representatives, October 2007.
66 See CRS Report RL32488, Venezuela: Political Conditions and U.S. Policy, by Mark P. Sullivan.
67 Public Citizen and the Washington Office on Latin America, Peru and Colombia FTAs Projected to Increase Drug
Trafficking, Violence, and Instability in the Andes, undated.
68 Ibid.
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leading a coalition of U.S. agricultural organizations in support of the trade agreement.69 The
business community often states that an FTA with Colombia would “level the playing field” with
Colombia by providing U.S. producers of goods and services the same access to the Colombian
market that Colombian businesses currently have in the U.S. market. They also believe that a
trade agreement would give U.S. businesses a competitive edge in Colombia over other foreign-
owned businesses. A U.S. Chamber of Commerce representative said that an agreement would
help Colombia fight narco-trafficking and violence “by developing sustainable economic
alternatives to the drug trade.”70
U.S. exporters have urged congressional leaders and the Obama Administration to resolve issues
that are preventing the stalled free trade agreements with Colombia, Panama, and South Korea
from being implemented. In a July 2010 letter to House and Senate congressional leaders, 42
agricultural and food organizations urged Congress to move forward with the FTAs, arguing that
other countries throughout the world are negotiating and implementing free trade agreements and
that U.S. exporters are losing market share as a result.71 They argue that Colombia has been the
largest market in South America for U.S. agricultural exports over the past five years and that the
U.S.-Colombia FTA would result in U.S. agricultural export gains of more than $815 million per
year after full implementation. They are concerned that the FTA between Colombia and Canada
that is expected to be implemented in July 2011 will cause U.S. agricultural exports to Colombia
to fall. U.S. wheat producers estimate that the U.S. share of the Colombian wheat import market
could fall from about 70% to 30% if Colombia’s FTA with Canada is implemented.72
Author Contact Information
M. Angeles Villarreal
Specialist in International Trade and Finance
avillarreal@crs.loc.gov, 7-0321
69 National Pork Producers Council, NPCC Applauds President for Sending Trade Deal to Congress, April 7, 2008.
70 U.S. Chamber of Commerce, U.S. Chamber Hails U.S.-Colombia Trade Deal, February 27, 2006.
71 Rosella Brevetti, “Agricultural Groups Call for Rapid Implementation of Stalled FTAs,” International Trade
Reporter, July 15, 2010.
72 Ibid.
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