The U.S.-Colombia Free Trade Agreement:
Background and Issues
M. Angeles Villarreal
Specialist in International Trade and Finance
December 20, 2011
Congressional Research Service
7-5700
www.crs.gov
RL34470
CRS Report for Congress
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epared for Members and Committees of Congress
The U.S.-Colombia Free Trade Agreement: Background and Issues
Summary
On October 3, 2011, President Barack Obama submitted draft legislation (H.R. 3078/S. 1641) to
both houses of Congress to implement the U.S.-Colombia Trade Promotion Agreement. On
October 12, 2011, the House passed H.R. 3078 (262-167) and sent it to the Senate. The Senate
passed the implementing legislation (66-33) on the same day. The agreement, which is most often
called the U.S.-Colombia Free Trade Agreement (CFTA), is a comprehensive free trade
agreement (FTA) between the United States and Colombia, which will eventually eliminate tariffs
and other barriers in bilateral trade in goods and services. The FTA was signed by both countries
almost five years earlier, on November 22, 2006. The Colombian Congress approved it in June
2007 and again in October 2007, after it was modified to include new provisions after the May
10, 2007 bipartisan understanding between congressional leadership and President George W.
Bush. Before the FTA enters into force, the two countries must demonstrate that they have laws in
place to meet their obligations under the agreement. Upon entry into force, the agreement will
immediately eliminate duties on 80% of U.S. exports of consumer and industrial products to
Colombia. Most remaining tariffs will be eliminated within 10 years of implementation.
The congressional debate surrounding the CFTA mostly centered on violence, labor, and human
rights issues in Colombia. Numerous Members of Congress opposed passage of the agreement
because of concerns about alleged violence against union members in Colombia, inadequate
efforts to bring perpetrators to justice, and weak protection of worker rights. However, other
Members of Congress supported the CFTA and took issue with these charges, stating that
Colombia had made great progress over the last ten years to curb violence and enhance security.
They also argued that U.S. exporters were losing market share of the Colombian market and that
the agreement would open the Colombian market for U.S. goods and services. For Colombia, an
FTA with the United States is part of its overall economic development strategy.
To address the concerns related to labor rights and violence in Colombia, the United States and
Colombia agreed upon an “Action Plan Related to Labor Rights” that includes specific and
concrete steps, with specific timelines, for the Colombian government. It contains numerous
commitments by the Colombian government to protect union members, end impunity, and
improve worker rights. The Colombian government has submitted documents to the United States
in time to meet various target dates listed in the Action Plan. The USTR has reviewed the
documents and has stated that Colombia has met most of its commitments to date.
The U.S. business community generally supports the FTA with Colombia because it sees it as an
opportunity to increase U.S. exports to Colombia. U.S. exporters urged U.S. policymakers to
move forward with the agreement, arguing that the United States was losing market share of the
Colombian market, especially in agriculture, as Colombia entered into FTAs with other countries.
Colombia’s FTA with Canada, which was implemented on August 15, 2011, was of particular
concern for U.S. agricultural producers.
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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The U.S.-Colombia Free Trade Agreement: Background and Issues
Contents
Introduction...................................................................................................................................... 1
Rationale for the Agreement ............................................................................................................ 1
Colombian Tariffs on Goods from the United States....................................................................... 2
Review of the Proposed U.S.-Colombia Free Trade Agreement ..................................................... 3
Key CFTA Provisions................................................................................................................ 3
Market Access ..................................................................................................................... 4
Tariff Elimination and Phase-Outs ...................................................................................... 4
Agricultural Provisions ....................................................................................................... 4
Information Technology ...................................................................................................... 5
Textiles and Apparel............................................................................................................ 5
Government Procurement ................................................................................................... 5
Services ............................................................................................................................... 5
Investment ........................................................................................................................... 6
IPR Protection ..................................................................................................................... 6
Customs Procedures and Rules of Origin............................................................................ 7
Labor Provisions ................................................................................................................. 7
Environmental Provisions ................................................................................................... 7
Dispute Settlement .............................................................................................................. 8
Labor and Environmental Provisions after May 10, 2007, Bipartisan Trade
Framework ............................................................................................................................. 8
Basic Labor Provisions........................................................................................................ 8
Provisions on Environment ................................................................................................. 9
Other Provisions.................................................................................................................. 9
U.S.-Colombia Trade Relations ..................................................................................................... 10
U.S.-Colombia Merchandise Trade ......................................................................................... 11
Andean Trade Preference Act.................................................................................................. 12
U.S.-Colombia Bilateral Foreign Direct Investment ............................................................... 14
Background on Colombia .............................................................................................................. 15
Internal Conflict....................................................................................................................... 15
Human Rights Issues ............................................................................................................... 16
U.S. Policy Toward Colombia................................................................................................. 17
Colombian Action Plan Related to Labor Rights........................................................................... 17
Details of the Action Plan........................................................................................................ 18
Creation of a Labor Ministry............................................................................................. 18
Criminal Code Reform...................................................................................................... 19
Cooperatives...................................................................................................................... 19
Temporary Service Agencies............................................................................................. 20
Collective Pacts................................................................................................................. 20
Essential Services.............................................................................................................. 20
ILO Office......................................................................................................................... 20
Protection Programs .......................................................................................................... 21
Criminal Justice Reform.................................................................................................... 21
Follow-Up Mechanism...................................................................................................... 22
Colombia’s Commitments and Cooperation with the United States ....................................... 22
Actions Taken by Colombia on Action Plan as Reported by USTR ....................................... 23
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The U.S.-Colombia Free Trade Agreement: Background and Issues
Actions Taken by April 22, 2011....................................................................................... 23
Actions Taken by June 15, 2011........................................................................................ 24
Actions Taken by September 15, 2011.............................................................................. 25
Remaining Action Plan Commitments .............................................................................. 26
Responses to the Action Plan in Colombia.............................................................................. 26
Issues for Congress ........................................................................................................................ 27
Economic Impact..................................................................................................................... 27
Study Findings on Economic Impact ................................................................................ 27
Possible Economic Impact on Agricultural Sector............................................................ 29
Market Access for U.S. Exporters ........................................................................................... 30
Colombia’s Free Trade Agreements with Other Countries...................................................... 30
Issues Related to Labor ........................................................................................................... 30
Issues Related to Colombia’s Labor Cooperatives .................................................................. 32
Violence Issues ........................................................................................................................ 33
Figures
Figure 1. U.S. Trade with Colombia: 1996-2010........................................................................... 12
Tables
Table 1. Colombian Tariff Rates on U.S. Exports............................................................................ 3
Table 2. Key Economic Indicators for Colombia and the United States........................................ 10
Table 3. U.S. Trade with Colombia in 2010 .................................................................................. 11
Table 4. U.S. Imports from Colombia............................................................................................ 13
Table 5. U.S. Imports from Colombia under ATPA ....................................................................... 14
Table 6. U.S. Direct Investment Position in Colombia.................................................................. 14
Contacts
Author Contact Information........................................................................................................... 34
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The U.S.-Colombia Free Trade Agreement: Background and Issues
Introduction
On October 3, 2011, President Barack Obama submitted draft legislation (H.R. 3078/S. 1641) to
both houses of Congress to implement the U.S.-Colombia Trade Promotion Agreement. On
October 12, 2011, the House passed H.R. 3078 (262-167) and sent it to the Senate. The Senate
passed the legislation (66-33) on the same day. The President signed the legislation on October
21, 2011 (P.L. 112-42). The agreement, which is often called the U.S.-Colombia Free Trade
Agreement (CFTA), is a bilateral free trade agreement between the United States and Colombia
which will eventually eliminate tariffs and other barriers in goods and services trade between the
two countries. The agreement will not enter into force until both countries demonstrate that they
have the laws in place to meet their obligations under the agreement.
The CFTA negotiations grew out of a regional effort in 2004 to produce a U.S.-Andean free trade
agreement between the United States and the Andean countries of Colombia, Peru, and Ecuador.
After numerous rounds of talks, however, negotiators failed to reach an agreement, and Colombia
continued negotiations with the United States for a bilateral free trade agreement (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.
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. Since 2004, U.S.
trade policy in the Western Hemisphere 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).1 The U.S.-Panama FTA was approved by Congress shortly after the CFTA on
October 12, 2011 and signed into law on October 21, 2011 (P.L. 112-43).
A free trade agreement with Colombia will increase market access for U.S. goods and services in
the Colombian market, which is currently limited under the present trade arrangement with
Colombia. Under the Andean Trade Preference Act (ATPA), the United States extends unilateral
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.
1 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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The major expectation among proponents of the 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
will improve investor confidence and increase foreign direct investment in Colombia, which is
expected to 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, 2010.2
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.3 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.4
2 Office of the United States Trade Representative (USTR), 2010 National Trade Estimate Report on Foreign Trade
Barriers, March 2010.
3 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.
4 USTR, 2010 National Trade Estimate Report on Foreign Trade Barriers, March 2010.
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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 Provisions5
The comprehensive free trade agreement will eventually 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 include 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.6
5 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.
6 USTR, Trade Facts, “Free Trade with Colombia: Summary of the United States-Colombia Trade Promotion
Agreement,” June 2007.
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Market Access
The agreement will provide for the elimination of tariffs on bilateral trade in eligible goods. Upon
implementation, the agreement will eliminate 80% of duties on U.S. exports of consumer and
industrial products to Colombia. An additional 7% of U.S. exports will receive duty-free
treatment within five years of implementation and most remaining tariffs will be eliminated
within 10 years after implementation.
Tariff Elimination and Phase-Outs
Upon entry into force, the CFTA will eliminate most tariffs immediately and phase out the
remaining tariffs over periods of up to 19 years. Tariff elimination for major sectors include the
following:
• Upon implementation of the agreement, more than 99% of U.S. and almost 76%
of Colombian industrial and textile tariff lines will be free of duty. Virtually all
industrial and textile tariff lines will be duty free 10 years after implementation.7
• All tariffs in textiles and apparel that meet the agreement’s rules-of-origin
provisions will be eliminated immediately (see section on “Textiles and Apparel”
below).8
• Tariffs on agricultural products will be phased out over a period of time, ranging
from three to 19 years (see section on “Agricultural Provisions” below).
Colombia will eliminate quotas9 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.10
Agricultural Provisions
Colombia currently applies some tariff protection on all agricultural products. The CFTA will
provide duty-free access on 77% of all agricultural tariff lines, accounting for 52% of current U.S.
exports to Colombia, upon implementation. Colombia will eliminate most other tariffs on
agricultural products within 15 years.11 U.S. farm exports to Colombia that will 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. U.S. farm products that will receive improved market access include pork, beef,
corn, poultry, rice, fruits and vegetables, processed products, and dairy products. The agreement
will also provide duty-free tariff rate quotas on standard beef, chicken leg quarters, dairy
products, corn, sorghum, animal feeds, rice, and soybean oil.12
7 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.
8 Ibid.
9 Tariff rate quotas are limits on the quantity of imports that can enter a country duty-free before tariff-rates are applied.
10 United States Department of Agriculture (USDA), Foreign Agricultural Service, Fact Sheet: U.S.-Colombia Trade
Promotion Agreement Overall Agriculture Fact Sheet, August 2008.
11 Ibid.
12 USTR, Trade Facts: Free Trade with Colombia, Summary of the United States-Colombia Trade Promotion
(continued...)
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Colombia’s current price band system results in higher duties for certain U.S. exports to
Colombia, including corn, wheat, rice, soybeans, pork, poultry, cheeses, and powdered milk. The
CFTA will 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.13
Information Technology
Under the CFTA, Colombia agreed to join the World Trade Organization’s Information
Technology Agreement (ITA), and remove its tariff and non-tariff barriers to information
technology products. Colombia will allow trade in remanufactured goods under the agreement,
which is expected to 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 will
receive duty-free and quota-free treatment immediately upon entry into force of the agreement.
The United States and Colombia have cooperation commitments under the agreement that 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 will 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
will 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 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.
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 will have full rights to establish subsidiaries or branches for banks and insurance
(...continued)
Agreement,” June 2007.
13 USITC Publication 3896, December 2006, p. 3-4.
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companies. Portfolio managers will be allowed 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 will help establish a stable legal framework for foreign investors from the
partner country. All forms of investment are to be protected, including enterprises, debt,
concessions and similar contracts, and intellectual property. U.S. investors are to be treated as
Colombian investors with very few exceptions. U.S. investors in Colombia will 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 will 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.14
IPR Protection
The agreement will provide intellectual property rights (IPR) protections for U.S. and Colombian
companies. In all categories of IPR, U.S. companies are to be treated no less favorably than
Colombian companies. In trademark protection, the agreement will 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 will 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.
In protection of patents and trade secrets, the CFTA will 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 will protect products against unfair commercial use for a period of
five years for pharmaceuticals and 10 years for agricultural chemicals. In addition, the agreement
will 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.
On music and motion picture property piracy, the CFTA IPR provisions include penalties for
piracy and counterfeiting and criminalize end-user piracy. It requires the parties to authorize the
14 USTR, Trade Facts: Free Trade with Colombia, Summary of the United States-Colombia Trade Promotion
Agreement, June 2007.
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seizure, forfeiture, and destruction of counterfeit and pirated goods and the equipment used to
produce them. The agreement will mandate both statutory and actual damages for copyright
infringement and trademark piracy. This will ensure that monetary damages could be awarded
even if a monetary value to the violation is difficult to assess.
Customs Procedures and Rules of Origin
The agreement includes comprehensive rules of origin provisions to ensure that only U.S. and
Colombian goods 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 are
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 have fair,
equitable, and transparent access to labor tribunals or courts. It has a labor cooperative and
capacity building mechanism to pursue bilateral or regional cooperation activities, which may
include the principles embodied in the 1998 ILO Declaration and activities to promote
compliance with ILO Convention 182 on the Worst Forms of Child Labor. The United States and
Colombia agreed to cooperate on 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.
Environmental Provisions
The environmental obligations are included in the core text of the agreement. The agreement
requires 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 will weaken or reduce protections. The agreement includes procedural guarantees to
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
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environmental chapter of the agreement are 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 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 will 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, some 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, bipartisan Congressional leadership and the Bush
Administration reached an understanding on May 10, 2007, on a new bipartisan trade framework
that calls for the inclusion of internationally recognized labor rights and environmental provisions
in the text of pending free 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 are similar to the amendments that were made to the U.S.-Peru free
trade agreement, which was approved by Congress in December 2008. 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 enforceable through the FTA’s dispute settlement mechanism. On October 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.15
Basic Labor Provisions
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 principles, 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.
15 Rosella Brevetti, International Trade Reporter, “Colombian Senate Overwhelmingly Approves Labor-Related
Amendments to FTA with U.S.,” November 1, 2007.
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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 principles 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. A 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.
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 impeded the entry of
generic 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 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 will be allowed to
include environmental protection requirements in their procurements. Concerning port security,
an added provision ensures that if a foreign-owned company were to provide services at a U.S.
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The U.S.-Colombia Free Trade Agreement: Background and Issues
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.16
U.S.-Colombia Trade Relations
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 $14.7 trillion in 2010 (see Table 2). Colombia’s exports of goods and services
accounted for 16% of GDP in 2010, while imports of goods and services accounted for 18%.
Table 2. Key Economic Indicators for Colombia and the United States
Colombia
United States
2000 2010a 2000 2010a
Population (mil ions)
40
47
282
310
Nominal GDP ($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.
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
16 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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with Canada, approved by both countries in 2010, entered into force in August 2011. Colombia
has also recently signed an FTA with the European Union, which is awaiting formal approval by
both partners.
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.
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
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 Level)
Millions Share (NAIC 4 Digit Level)
Millions Share
Petroleum and coal products
2230.0
20%
Oil and gas
8,464.9
54%
Agriculture and construction
1,144.0 4%
Nonferrous
metal
1,494.8 10%
machinery
Basic chemicals
1,019.2
2%
Fruits and tree nuts
1,003.4
6%
Resin, synthetic rubber and products
498.2
2%
Petroleum and coal
932.4 6%
products
Other general purpose machinery
454.2
2%
Coal and petroleum gases
923.3
6%
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.
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U.S. imports from Colombia picked up 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 $10.6 billion (see Figure 1). Prior to 2003, U.S. imports from and exports to Colombia
fluctuated from year to year without very significant changes.
Figure 1. U.S. Trade with Colombia: 1996-2010
($ Billions)
20,000
15,000
10,000
$ Billions
5,000
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
Under the Andean Trade Preference Act, a regional trade preference program, the United States
extended duty-free treatment to imports from Colombia.17 Implementing legislation for the CFTA
would renewed trade preferences for Colombia until July 31, 2013 (P.L. 112-42). 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.
17 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, and Peru was not included in the most
recent extension of ATPA because the U.S.-Peru FTA has entered into force. 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.
In 2010, 93% of U.S. imports from Colombia received 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 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
Source: Compiled by CRS using USITC data
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 $6.6 billion in 2010
(see Table 6). The largest amount was in mining, which accounted for 39.7%, or $2.6 billion, of
total U.S. FDI in Colombia in 2010. The second-largest amount, $2.0 billion (31.0% of total), was
in manufacturing, followed by $551 million in finance and insurance.
Table 6. U.S. Direct Investment Position in Colombia
(Historical-cost Basis: 2010)
Industry Amount
% of Total
(U.S.$ Millions)
Mining 2,608
39.7%
Manufacturing
2,039
31.0%
Finance and
551 8.4%
Insurance
Total 6,574
Source: Bureau of Economic Analysis, International Economic Accounts.
The proposed U.S.-Colombia FTA is expected to improve investor confidence in Colombia and
will 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 2007.18
Background on Colombia19
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 since the Uribe Administration. 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 Uribe and in two prior
governments as finance minister and minister of trade. Santos was sworn into office on August 7,
2010. 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 U.S.-Colombia FTA and his desire to continue FTA negotiations
with other countries.20
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
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 2008.21 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.22
18 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.
19 This section is drawn from CRS Report RL32250, Colombia: Issues for Congress, by June S. Beittel.
20 Global Insight, “Colombian President Unveils Trade Strategy,” September 9, 2010.
21 United States Department of State, Office of the Coordinator for Counterterrorism, Country Reports on Terrorism
2008, April 2009, pp. 11 and 155.
22 Ibid, p. 164.
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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 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. 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 its certification issued in September 2010, 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 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.23
The February 2011 United Nations High Commissioner for Human Rights (UNHCHR) report
recognized the commitment to human rights expressed by the Santos Administration during its
first months in office and recognized several positive steps that the government of Colombia has
taken in the protection of human rights. It also recognized, however, that internal armed conflict
in Colombia, in particular that from guerrilla groups, continues to breach international
humanitarian law.24 The report from the previous year acknowledged the spirit of cooperation
between the Colombian government and UNHCHR-Colombia, and the commitment of the
government to address human rights challenges. As in previous reports, UNHCHR expressed
concerns about the activities and abuses committed by paramilitary forces that have rearmed, and
23 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.
24 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,” February 3, 2011.
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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.25
U.S. Policy Toward Colombia
The focus of U.S. foreign policy toward Colombia has been to assist in curbing 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.26
Colombian Action Plan Related to Labor Rights
The United States and Colombia negotiated to develop an “Action Plan Related to Labor Rights”
(the Action Plan) to help resolve the following U.S. concerns related to labor-related issues in
Colombia: alleged violence against Colombian labor union members; inadequate efforts to bring
perpetrators of violence to justice; and insufficient protection of workers’ rights in Colombia. The
governments of the United States and Colombia announced the plan on April 7, 2011. It includes
numerous specific commitments from Colombian government to address U.S. concerns. 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 agreement to enter into force.27 The plan
lists several obligations with several target dates throughout 2011, and with a final target date of
2014 for the completion of hiring extra labor inspectors. The most significant target dates were
April 22, 2011 and June 15, 2011. The Office of the United States Trade Representative, which
25 Ibid.
26 For more information on Plan Colombia and U.S. foreign assistance, see CRS Report RL32250, Colombia: Issues for
Congress, by June S. Beittel.
27 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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reviewed the documents, stated in press releases that the Colombian government had met its
obligations for both the April 22 and June 15 deadlines.28
Details of the Action Plan
This section summarizes the details of the Action Plan, which can be found on the website of the
Office of the United States Trade Representative (USTR).29
Creation of a Labor Ministry
One of Colombia’s commitments under the Action Plan was to create a new Labor Ministry. On
October 31, 2011, President Santos announced the appointment of Liberal Party leader Rafael
Pardo to lead the country’s newly formed Labor Ministry, with the goal of implementing a
broader and more effective regime to protect labor rights. The Colombian government expects
that the Labor Ministry will provide the framework to mobilize resources and strengthen
enforcement of labor laws. During the Uribe Administration, Colombia’s labor-related functions
were managed under the Ministry of Social Protection (MSP), which was created in 2002 by
President Alvaro Uribe. The MSP combined Colombia’s Ministry of Health and Ministry of
Labor into one central agency.
The Action Plan includes target dates for the measures related to the labor ministry, beginning on
April 22, 2011, and ending on December 15, 2011.30 The Action Plan lists the following as part of
the Colombian government’s commitments:
• Plan and budget for the hiring of 480 new labor inspectors over a four-year period, which
will include the hiring of at least 100 new labor inspectors during 2011 and budgeting for
an additional 100 new inspectors in the 2012 budget.
• Improve the system for citizens to file complaints concerning labor rights violations. The
system includes a toll-free telephone hotline and a new web-based mechanism for
registering complaints. The MSP will conduct outreach to promote awareness of the
complaint mechanisms.
• Improve the MSP’s mediation and conflict resolution system in all 32 departments
(Colombian states) by assigning specialized resources to the MSP’s regional offices,
training workers and employers in conflict resolution, and conducting outreach. The MSP
will also conduct outreach to the public, employers, and workers through TV programs
and printed material.
28 Inside U.S. Trade, “USTR Seeks to Clarify Colombian Commitments under Labor Action Plan,” April 28, 2011.
29 Colombian Action Plan Related to Labor Rights, April 7, 2011, available at http://www.ustr.gov.
30 On April 6, 2011, the Colombian Congress overwhelmingly approved to split three fused ministries and grant
President Juan Manuel Santos extraordinary powers over the following six months to restructure parts of the
Colombian government. President Santos has six months to divide the three ministries and reconstruct certain
departments. The new ministries will be: Interior, Justice and the Law, Health and Social Protection, Labor,
Environment and Sustainable Development, and Housing, Cities, and Territory.
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Criminal Code Reform
The Colombian government submitted legislation to the Colombian Congress to reform the
country’s criminal code by establishing criminal penalties for employers that undermine the right
to organize and bargain collectively. The new article in the criminal code encompasses a wide
range of practices that adversely affect fundamental labor rights and would penalize violators
with up to five years of imprisonment. The Colombian government committed to have the
legislation enacted by the Colombian Congress by June 15, 2011.
Cooperatives
The Colombian government agreed to accelerate the effective date of the provisions of Article 63
of the 2010 Law of Formalization and First Employment, passed in December 2010. This
provision of the law prohibits the misuse of cooperatives or any other kind of labor relationship
that affects labor rights, and imposes significant fines for violations. The government submitted
legislation to the Colombian Congress to move the effective date from July 1, 2013 to June 15,
2011. The Colombian congress approved the bill.
The Labor Ministry will direct 50 of the 100 new labor inspectors referenced above to be
assigned exclusively to cases involving cooperatives. The hiring and training of these inspectors
was to be completed by December 15, 2011. Most of these inspectors had been hired as of early
December 2011. A second group of 50 labor inspectors specializing in cooperatives will be hired
during 2012. The priority sectors for labor inspections will be the palm oil, sugar, mines, ports,
and flower sectors. The Colombian government agreed to confirm to the U.S. government by
April 22, 2011, that these inspections had begun.
The Colombian government agreed to issue regulations implementing the 2010 cooperatives law
by June 15, 2011. The regulations are expected to:
• clarify earlier cooperatives laws;
• ensure coherence among these laws and the new cooperatives law;
• increase inspections of cooperatives;
• increase sanctions for labor law violators;
• strictly apply and enforce the requirements that cooperatives be autonomous and
self-governing; and
• develop and conduct an outreach program to inform and advise workers of the
following: their rights under Colombian law; remedies and courses of action
available to them through the courts in order to enforce recognition of a direct
employment relationship; and the existence of criminal penalties for employers
who are responsible for undermining the right to organize and bargain
collectively (upon congressional approval of the criminal code reforms in
Colombia).
The Colombian government agreed to work with the U.S. government to ensure that the agreed
objectives are addressed and provide quarterly reports on the enforcement results to all interested
parties.
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Temporary Service Agencies
The Colombian government committed to implement a regime to prevent the use of temporary
service agencies to circumvent labor rights. This was to be done through actions such as
improving the inspection process, designing a new training program for labor inspectors, and
building databases to identify regions and sectors where there have been abuses. The enforcement
regime was also to include a monitoring and reporting mechanism in which all interested parties
could verify progress and compliance with labor laws. As a first step, the Labor Ministry was to
issue quarterly reports for interested parties that include the results of preventive inspections,
penalties, fines, the cancellation of licenses and permits, and the list of those agencies found to be
in violation. The Colombian government agreed that the Labor Ministry would: share a draft of
the enforcement plan with the U.S. government by April 22, 2011; work with the U.S.
government to ensure that the agreed upon objectives are addressed; conduct a series of
preventive inspections by June 15, 2011; and fully implement the enforcement plan by December
15, 2011.
Collective Pacts
The Colombian government committed to include in the bill on criminal code reform a provision
stating it is a crime, subject to imprisonment, to use collective pacts to undermine the right to
organize and bargain collectively. The provision would prohibit collective pacts from extending
better conditions to non-union workers. The MSP, or the Labor Ministry, once it was created,
would conduct a public outreach campaign to promote awareness, after approval of the criminal
code reform in June 2011. The campaign is to run through 2011 and the Colombian government
committed to budget additional resources for 2012. Colombia’s Labor Ministry will enforce the
reforms through preventive inspections and the new labor complaint mechanisms to detect and
prosecute violations. The Colombian government also will request technical assistance from the
International Labor Organization (ILO) to monitor the use of collective pacts and will work with
the U.S. government to ensure that the agreed objectives are addressed.
Essential Services
Colombia agreed that the MSP, or the Labor Ministry, will collect the body of Colombian
doctrine, case law, and jurisprudence that has narrowed the definition of essential services. The
MSP was disseminated this information and relevant guidelines to labor inspectors, the judicial
branch, unions, and employers by the target date of April 22, 2011.31
ILO Office
The Colombian government stated that it would request cooperation, advice, and technical
assistance from the ILO to help in the implementation measures in the Action Plan. The
Colombian government committed to work with the ILO to strengthen the presence and expand
the capacity and role of the ILO in Colombia. The U.S. and Colombian governments committed
to working together to identify the necessary resources and sources of support. The Colombian
government’s formal request to the ILO was accomplished by the target date of September 15,
2011.
31 These documents are under review by the Office of the United States Trade Representative.
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Protection Programs
Colombia’s Ministry of Interior and Justice issued a Ministerial Resolution, by the target date of
April 22, 2011, to broaden the scope of the definition of who is covered by its protection
program. The broader definition includes: 1) labor activists; 2) persons who are engaged in active
efforts to form a union; and 3) former unionists who are under threat because of their past
activities. The Colombian government planned and budgeted for necessary additional resources
for this expansion by increasing the FY2011 allocation by 50% (approximately US $6 million) to
provide adequate support for the expansion in the protection program. For FY2012, the
Colombian government assessed the level of funding necessary to support the program and
presented the requested budget to the Colombian Congress before the target date of July 30, 2011.
The Ministry of Interior and Justice committed to eliminate the backlog of risk assessments on
union member applications for protection, by July 30, 2011, through an emergency plan that had
begun earlier. After the backlog elimination, the Colombian government committed to a national
policy on conducting risk assessments to comply with the law to process all risk assessments
within a 30-day period. On May 1, 2011, the Colombian government committed to providing
monthly updates to interested parties.
The Colombian government committed to issue a decree to reform the scope and functioning of
the interagency committee that reviews risk assessments by September 15, 2011. The new
committee was to include representatives from the Inspector General’s Office and the Public
Defender’s Office to enhance objectivity in the assessment process. The Colombian government
agreed to share with the U.S. government the relevant parts of the draft decree by April 22, 2011,
and agreed to work with the U.S. government to ensure that the agreed objectives are addressed.
The Colombian government also committed to strengthen the existing protection system by
immediately implementing administrative measures.
Colombia agreed to amend its teacher relocation and protection program, contained in Resolution
1240 (Resolución 1240) of 2010, to ensure that meritorious requests are granted to teachers and to
eliminate sanctions against teachers not found to be under extraordinary risk. The Colombian
government agreed to work with the U.S. government to ensure that the program is achieving the
objective of effectively protecting those covered by it and to ensure that the agreed objectives are
addressed. Colombia began the sharing of quarterly reports on the program with interested parties
beginning July 1, 2011.
Criminal Justice Reform
The Colombian government agreed to assign 95 additional full-time judicial police investigators
to exclusively support prosecutors investigating criminal cases involving union members and
activists. The first 50 of these judicial police were assigned by June 30, 2011, and the remaining
45 were assigned by December 15, 2011. The government stated that it would respond favorably
to a budget request from the Prosecutor General’s office to increase funding for necessary
resources to reduce impunity and for implementing the Action Plan. The Prosecutor General
agreed to submit the budget request by May 20, 2011.
The Prosecutor General’s Office of Colombia informed the Colombian government of numerous
actions it had taken or plans to take to combat impunity in cases involving union members and
labor activists:
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• Issued a directive requiring criminal investigators to determine whether a victim
was a union member or labor activist in the initial phase of the investigation;
• Issued a directive to the chiefs of the Unit of Justice and Peace and the Unit of
Human Rights to share evidence and information about criminal cases involving
union members, labor activists, teachers, journalists, and human rights activists;
• Developed a plan and identified budgetary needs for training judicial police
investigators and prosecutors on crime scene management, and in investigative
techniques with specific reference to the issues involved in labor cases; worked
with the U.S. government in developing a detailed training program;
• Developed a plan and specified budgetary needs by May 20, 2011, to strengthen
the institutional capacity, number of prosecutors and number of judicial police
investigators;
• Finalized an analysis by July 15, 2011, on closed cases of homicides of union
members and activists, in order to extract lessons that could improve
investigations and prosecutions in future cases; the results of this analysis were
widely publicized to help reduce impunity and deter future crimes;
• Developed a plan and identified specific budgetary needs for victims’ assistance
centers specialized in human rights cases, including labor cases; the Prosecutor
General’s Office agreed to staff the centers with professionals with expertise on
human rights and labor issues; Colombia agreed to share the plans and budgetary
allocations for this project to the U.S. government by June 15, 2011;
• Developed a program by the Prosecutor General’s Office to address the backlog
of unionist homicide cases that included: a) meeting with representatives of the
union confederations and the National Labor School, Escuela Nacional Sindical
(ENS), an independent labor rights monitoring body, in order to try to reconcile
discrepancies; and b) internal guidance to prosecutors to accelerate action on
cases with leads, with a special focus on “priority labor cases”, and to
provisionally close cold cases by June 15, 2011; and
• Improved public reporting of completed criminal cases involving labor violence
by the Prosecutor General’s Office through the following: a) publication by April
22, 2011, of cases decided as of January 1, 2011, and thereafter; and b)
identification of methods by June 15, 2011, for posting information regarding all
completed cases on the Prosecutor General’s Office website.
Follow-Up Mechanism
The U.S. and Colombian governments agreed to assess progress in implementing the Action Plan
and agreed to meet on a periodic basis through 2013 at the technical level and at the senior
officials level.
Colombia’s Commitments and Cooperation with the United States
The Action Plan includes numerous commitments on the part of the Colombian government that
are part of its ongoing efforts to increase security and protection of union members, labor
activists, and human rights defenders. It also includes new commitments to address U.S. concerns
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about the proposed FTA. For example, since 2004, Colombia had been taking numerous measures
to address the issue of worker rights abuses in the work arrangements known as cooperatives, but
it also agreed to a new commitment under the Action Plan to accelerate the implementation date
by two years of the cooperatives law passed in December 2010 under the Santos Administration.
President Santos had promised to dismantle the role of cooperatives as labor intermediaries and
increase protection of worker rights within the cooperatives during his campaign for president.32
The Colombian government has been committed to improving the security situation in Colombia
since the Pastrana Administration (1998-2002) when Plan Colombia started. Some observers may
view Colombia’s commitments under the Action Plan as a continuation of Colombia’s
commitment to improve security and protection of its citizens with more of an emphasis on labor
and human rights. Former Colombian President Alvaro Uribe (2002 to 2010) took numerous
measures to increase the security situation in Colombia under Plan Colombia. This included close
cooperation with the United States in providing security assistance in the form of equipment and
training for the Colombian security forces or Colombian National Police and military as well as
efforts to promote development and rule of law programs. Colombia’s current President Juan
Manuel Santos, who was inaugurated on August 7, 2010, pledged to continue the successful
security strategies of his predecessor while pursuing democratic, economic, and social reforms.
President Santos and his Vice President Angelino Garzón have promoted a more rigorous
protection of human rights and have placed a greater emphases on denouncing threats against
human rights defenders than previous governments.33
Actions Taken by Colombia on Action Plan as Reported by USTR34
The United States Trade Representative has reported that Colombia had taken the following
actions to meet its commitments as of September 2011:
Actions Taken by April 22, 2011
• Began hiring 100 additional labor inspectors and budgeted for the hiring of 100 more
labor inspectors in 2012. Fifty of the new inspectors will be assigned exclusively to cases
involving labor cooperatives and 35 of the remaining 50 will be assigned to cases in the
priority sectors of palm oil, sugar, mines, ports, and flower industries.
• Improved its systems for citizens to file labor-related complaints via phone or internet.
• Implemented an inspection system to detect improper use of temporary service agencies
to circumvent labor rights and developed an enforcement plan to prevent abuses.
• Established an enforcement regime to detect and prosecute the use of collective pacts to
undermine worker rights. This will include preventive inspections of all companies in
32 Escuela Nacional Sindica (ENS), “Trade Unions Comment on Government Proposal to Dismantle Associated-Work
Cooperatives (Cooperativas de trabajo asociado), November 26, 2010.
33 CRS Report RL32250, Colombia: Issues for Congress, by June S. Beittel.
34 Office of the United States Trade Representative, Colombia Action Plan Related to Labor Rights: Accomplishments
to Date, at http://www.ustr.gov/uscolombiatpa/labor.
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which both union-negotiated collective bargaining agreements and collective pacts are
present.
• Began workshops to train labor inspectors and other government personnel in conflict
resolution and launched a related outreach program to the public, employers, and
workers.
• Expanded the government protection program for union leaders to also provide protection
for labor activists, workers who are trying to organize or join a union, and former union
activists who are under threat because of past activities.
• Increased funding for the expanded protection program.
• Strengthened the teacher relocation and protection program.
• Mandated early identification in all new homicide cases of whether the victim was a
union member or activist.
• Developed a plan for training judicial police investigators and prosecutors on cases
involving union activity.
• Improved public reporting of completed criminal cases by posting labor violence cases
decided as of January 1, 2011, on the Prosecutor General’s website.
• Began periodic meetings with labor stakeholders to reconcile the list of outstanding
unionist homicide cases compiled by the National Labor School with that of the
Prosecutor General’s Office.
Actions Taken by June 15, 2011
• Obtained congressional approval of legislation establishing a new Labor Ministry, as part
of a larger executive reorganization to split three fused ministries into six.
• Obtained congressional approval of legislation to establish criminal penalties for
employers that undermine worker rights. The new law includes a provision making it a
crime to offer a collective pact to non-union workers that has better terms to those offered
to union workers.
• Accelerated the effective date from July 2013 to June 2011 of Article 63 of the 2010 Law
of Formalization and First Employment. This law prohibits the misuse of cooperatives or
any other kind of labor relationship that affects labor rights, and imposes significant fines
for violations.
• Issued regulations implementing the 2010 cooperatives law, which include provisions to
clarify earlier cooperatives laws, ensure coherence among these laws, impose significant
fines for companies violating these laws, and create tools for the government to promote
the establishment and maintenance of direct employment relationships between
companies and affected workers.
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• Launched a public outreach program to inform workers of their labor rights, with a focus
on the new laws governing cooperatives; criminal anti-union conduct and abuse of
collective pacts; and the remedies and courses of action available to workers.
• Developed and began disseminating relevant Colombian laws and jurisprudence on
essential services. This includes guidance on how to challenge the constitutionality of any
law establishing a public service as essential and therefore exempt from the right to
strike.
• Reduced by 75% the backlog of risk assessments for those unionists applying for
protection under the government protection program.
• Issued internal guidance to prosecutors to accelerate action on cases with leads, with a
special focus on priority labor cases and labor violence cases from recent years.
• Developed a plan to strengthen the institutional capacity, number of prosecutors, and
number of judicial police investigators in regional offices of the Prosecutor General.
• Developed a plan and identified budgetary needs for victims’ assistance centers,
including labor cases.
• Submitted a budget request to increase funding for the necessary resources for the
Prosecutor General’s office to reduce impunity and implement the Action Plan.
• Developed a methodology for posting aggregate information regarding completed
criminal cases involving labor violence on the website of the Prosecutor General’s office.
Actions Taken by September 15, 2011
• Completed an analysis by the Prosecutor General’s Office of closed homicide cases of
unionists for the purpose of extracting lessons to improve the investigation and
prosecution of future cases.
• Formally submitted a request for technical assistance to the ILO for help in the
implementation of Action Plan measures related to labor rights and to help foster the
tripartite process among workers, employers, and the government.
• Issued a decree reforming the scope and functioning of the interagency committee that
reviews risk assessments for the government protection program.
• Eliminated the backlog of risk assessments for applicants to the government protection
program for threatened union members and activists.
• Completed the reassignment of 50 judicial police investigators to criminal cases
involving unionists.
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Remaining Action Plan Commitments
• October 31, 2011. The Santos Administration obtained final approval of the 2012 budget,
including funding for 100 additional labor inspectors.
• December 15, 2011. The Santos Administration completed hiring of 100 new labor
inspectors and of assignment of the remaining new judicial police investigators. It also
completed the first round of training for inspectors in alternative dispute resolution and
fully implemented the temporary service agency enforcement plan.35
• By 2014. The Santos Administration is to complete hiring of an additional 380 labor
inspectors.
Responses to the Action Plan in Colombia
Since the announcement of the Action Plan, at least two of Colombia’s labor confederations
responded favorably to working with the Santos Administration and with business representatives
to come to an agreement on labor issues. Labor unions in Colombia have responded favorably to
at least some elements that were included in the Action Plan, especially those related to work
cooperatives. The Secretary General of Colombia’s National Labor Confederation, Julio Roberto
Gómez, remarked in November 2010 that President Santos’ proposal under the 2010 labor
cooperatives law was a “great achievement” for the trade union movement in Colombia.36
Initial responses to the Action Plan from Colombian unions were mostly favorable, but some
labor unions continue to oppose the FTA with the United States. The ENS stated that the Action
Plan was the most significant advance for the labor movement in Colombia in twenty years, but
has also stated that it has gaps, such as not going far enough to address the labor abuses that are
occurring in labor cooperatives.37 The Solidarity Center in the Andean Region contends that
Colombia has not met its full commitment in the Action Plan to implement the 2010 Cooperatives
Law because the decree that was signed in June 2011 is only a “partial decree”. The Center argues
that the decree leaves out other forms of contracting, other than cooperatives, that are included in
the original decree.38 Some unions continue to oppose the FTA with the United States. Public
sector unionists, in particular, protested plans of the Colombian and U.S. governments to enter
into the FTA, even while the two presidents met in Washington, DC, on April 7, 2011, to
announce the agreement on the Action Plan.
On May 26, 2011, a tripartite labor agreement was reached among representatives of the
Colombian government, the private sector, and some labor representatives. The agreement, which
is the first concluded since June 2006, includes a consensus to request the ILO to provide
cooperation, advice, and technical assistance on the implementation of the Action Plan measures.
Two of Colombia’s major labor confederations, however, the Confederation of Workers of
Colombia (CTC) and the Central Union of Workers (CUT), did not sign the agreement because
35 This information was provided by the U.S. Embassy in Colombia.
36 ENS, “Trade Unions Comment on Government Proposal to Dismantle Associated-Work Cooperatives (Cooperativas
de trabajo asociado), November 26, 2010.
37 In-person interview with ENS on June 1, 2011.
38 Solidarity Center for Andean Region, June 16, 2011.
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they felt they did not have sufficient time to analyze the agreement or to put forth their own
proposals in the agreement. Two other confederations, the General Labor Confederation (CGT)
and the Colombian Pensioners Confederation (CPC) signed the agreement and stated that it was
one of the most significant advances in many years in strengthening labor movement in
Colombia.39
Issues for Congress
Economic Impact
Upon full implementation, the U.S.-Colombia FTA will likely have a small, but positive, net
economic effect on the United States. The net effect is expected to be minimal because
Colombia’s economy is very small when 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 will likely 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 will 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.40 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:41
• 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.
39 ENS, “Labor Agreement: CGT and CPC signed it, the CTC and the CUT did not sign it but presented proposals,”
June 1, 2011.
40 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).
41 USITC, December 2006, pp. 2-1 and 2-2.
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• 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.
The USITC reviewed seven studies that it found on the probable economic effects of a U.S.-
Colombia FTA.42 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.43
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.44 The study
found that a 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%.45 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.46
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.47 Trade diversion results when a
country enters into an FTA and then shifts the purchase of goods or services (imports) from a
42 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.
43 USITC, December 2006, pp. 7-1 to 7-4.
44 Jeffrey J. Schott, editor, Institute for International Economics (IIE), Trade Relations Between Colombia and the
United States, August 2006. (Hereinafter IIE, August 2006).
45 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.
46 Ibid, p. 112.
47 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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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
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%.48
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.49 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.50
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.51
48 IIE, August 2006, pp. 88-89.
49 USITC Publication 3896, p. xv.
50 Ibid, pp. xvi-xvii.
51 IIE, August, 2006.
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Market Access for U.S. Exporters
Proponents of the agreement contend that it will improve market access for U.S. exporters. Much
of the U.S. business community supports the FTA. They view it as an opportunity for U.S.
businesses and for increasing exports of U.S. products, especially in agriculture. The National
Pork Producers Council, for example, argues that a trade agreement will provide significant new
export opportunities for U.S. pork producers.52 The business community often states that an FTA
with Colombia will “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.
U.S. exporters are concerned that they are losing market share in the Colombian market as a
result of passage of free trade agreements that Colombia has negotiated with other countries.
Some U.S. exporters are especially concerned about the Colombia-Canada free trade agreement
that recently entered into force. U.S. wheat producers estimate that the falling U.S. share of the
Colombian wheat import market will decline even further as a result of the implementation of
Colombia’s FTA with Canada.53
Colombia’s Free Trade Agreements with Other Countries
Numerous policymakers voiced concern about the United States losing market share of the
Colombian market if Congress did not approve the U.S.-Colombia FTA. Over the past ten years,
Colombia has been actively negotiating free trade agreements with other countries. Colombia has
five FTAs with 12 countries in Latin America. In addition, the Colombia-Canada FTA entered
into force on August 15, 2011. Colombia has signed FTAs with the European Union, and the
EFTA (Iceland, Liechtenstein, Norway, and Switzerland). Colombia has also joined an effort to
create a regional trade integration agreement with Chile, Mexico, and Peru by signing a
declaration for this effort on April 28, 2011.
The United States is Colombia’s leading trading partner and the leading supplier of Colombia’s
imports, but its market share has been declining since 2000. Between 2000 and 2010, the share of
Colombia’s imports supplied from the United States declined from 34% to 26%. In agriculture
goods, Argentina replaced the United States as the leading supplier of Colombia’s agriculture
imports in 2010, likely due to a preferential trade arrangement with the region. In 2000, the
United States supplied 31% of Colombian imports of agricultural products, while Argentina
supplied only 5%. By 2010, Argentina’s share had risen to 26% while the United States’ share had
declined to 13%. Policymakers are concerned that the U.S. market share of Colombian imports
will fall even further once the Colombia-Canada FTA enters into force.
Issues Related to Labor
Numerous U.S. labor groups oppose the pending free trade agreement with Colombia. They
maintain that Colombia’s labor movement is under attack through violence, intimidation, and
52 National Pork Producers Council, NPCC Applauds President for Sending Trade Deal to Congress, April 7, 2008.
53 National Association of Wheat Growers, Fact Sheet: U.S.-Colombia Free Trade Agreement, April 2011.
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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.54 The AFL-CIO remains opposed to the FTA even after the Action
Plan negotiated by the Obama Administration and the Colombian government was announced on
April 6, 2011.55 On September 26, 2011, AFL-CIO President Richard Trumka urged President
Obama not to send the U.S.-Colombia FTA implementing legislation to Congress until Colombia
establishes a “proven track record” of protecting fundamental worker rights.56
The position of Colombian labor unions on the U.S.-Colombia FTA is mixed, with some unions
in favor of the agreement and others opposed. 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. They represented the General Labor Confederation of Colombia
(CGT), which has acknowledged progress in protecting worker rights by the Colombian
government. Union members in support of an FTA argue that an FTA would provide jobs in the
coffee, flower, textiles, and other industries in Colombia. They contend that the Uribe
Administration made much progress in protecting worker rights and that the Santos
Administration is making these positive changes “more concrete”. Some CGT representatives do
not believe that union workers are being targeted for their labor activities and believe that the
violence is due to the ongoing conflict in Colombia caused by guerillas and paramilitaries.57
Other Colombian union representatives, however, many of whom are government employees,
have spoken out against the agreement. They argue that an FTA would interfere with the
Colombian government’s right to govern the country, and that it would have a negative effect on
Colombia’s agriculture sector and the economy in general.58 A major labor confederation in
Colombia, the Central Union of Workers (CUT) is strongly opposed to the FTA with the United
States and argues that an FTA with the United States would not be effective in protecting worker
rights in Colombia because the labor chapter in the agreement does not go far enough to protect
worker rights. The CUT also contends that the Action Plan Related to Labor Rights would not be
effective in ending the impunity of crimes against unionists in Colombia. According to a CUT
representative, the main problem in Colombia is the high levels of impunity and the lack of
justice in the legal system.59
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
54 Colombia Reports, “Colombia too far behind on labor and human rights: U.S. union,” March 21, 2010.
55 AFL-CIO Now Blog, AFL-CIO Remains Opposed to Colombia Trade Deal, April 7, 2011.
56 World Trade Online, “Trumka Urges Obama to Hold Off on Colombia, House Members Step Up Fight,” September
30, 2011.
57 In-person interview with representatives of the General Labor Confederation (CGT) of Colombia on June 2, 2011.
58 Central Union of Workers of 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.
59 In-person interview with CUT representatives on June 1, 2011.
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The U.S.-Colombia Free Trade Agreement: Background and Issues
bargaining.60 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 to break a gridlock in that particular year.61
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.62 A September 2011 report issued by the embassy provides data indicating
that homicides dropped by 45% since 2000 and that homicides of union members decreased 81%
during the same period. Another report 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. Regarding
allegations that Colombia is the world’s most dangerous country for union members, the
Colombian government responds that because other countries do not track this data, the data
cannot be compared with different countries. The government argues that union membership in
certain professions in Colombia is almost universal, including teachers and judicial branch
employees, and that when someone in these professions is murdered, it is often a union member.
The government believes that many of victims of violence happen to be union members, but that
does not necessarily mean that they were targeted because of their union activities.63
Issues Related to Colombia’s Labor Cooperatives
Many Members of Congress have expressed concerns about labor cooperatives in Colombia.
Colombian cooperatives are work arrangements mostly found in the sugar cane, palm oil, flower,
mining, and port industries. 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.64 The Colombian government established these work
arrangements to help generate employment, but it later recognized these pacts could lead to an
erosion of worker rights. Subsequently, it has undertaken a series of reforms since 2004. The most
recent law was passed by Colombia’s Congress on December 12, 2010. Article 63 of Ley 1429, a
law for formalizing the labor force and generating employment, has 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.65 The major changes in this law are increased sanctions on
60 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.
61 ILO, Conference Committee on the Application of Standards: Extracts from the Record of Proceedings (ILC 2010),
at http://www.ilo.org/global.
62 Embassy of Colombia, Washington, D.C., Colombia: A Progress Report: Strengthening the Rights, Benefits, and
Security of Unions, October 2007.
63 Embassy of Colombia, Washington, D.C., Answers to Frequent Allegations about Colombia and Labor Violence,
September 2011.
64 Mark Gruenberg, “Colombian labor leader seeks trade pact delay,” People’s World, January 21, 2011.
65 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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The U.S.-Colombia Free Trade Agreement: Background and Issues
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
to a cooperative. The law was to have a transition period and not enter into effect until July 2013.
However, in an agreement with the United States under the Action Plan Related to Labor Rights,
the Colombian government agreed to accelerate implementation of the law to June 2011.66
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 urged Congress to
delay passage of the FTA until Colombia improved its labor laws.67
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 2010.68
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 argued that the high rate of violence in Colombia made it an “unfit
free trade agreement partner for the United States.”69 The Obama Administration also expressed
concerns about the level of violence in Colombia and negotiated the “Action Plan Related to
Labor Rights” discussed earlier in this report.
Republican and some Democratic supporters of the FTA take issue with some charges against the
Colombian government and contend that Colombia has made significant progress in recent years
to curb the violence. Certain Members stated that Colombia is a crucial ally of the United States
in Latin America and that if the FTA with Colombia was not passed, it would have led 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
66 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.
67 Mark Gruenberg, “Colombian labor leader seeks trade pact delay,” People’s World, January 21, 2011.
68 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.
69 BNA, International Trade Reporter, “Five Democratic Lawmakers Blast Proposed Colombia FTA Due to Violence,”
June 14, 2007.
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The U.S.-Colombia Free Trade Agreement: Background and Issues
Colombia and that Colombia had made significant progress in cutting down on the number of
murders and other criminal activities.70
The Colombian government has responded to U.S. concerns and acknowledged that, while there
continue to be killings in Colombia, the situation has 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.71 Government data indicate that assassinations of labor union activists and teachers
decreased by 86% between 2002 and 2009, from 196 in 2002 to 28 in 2009. In 2010, however,
this number increased to 37. Total homicides in Colombia decreased from 28,837 in 2002 to
15,459 in 2010 (a 46% decrease).72 Homicides of labor union members account for a small
percentage of total homicides in Colombia: 0.2% of total homicides in 2010.
Author Contact Information
M. Angeles Villarreal
Specialist in International Trade and Finance
avillarreal@crs.loc.gov, 7-0321
70 Office of the United States Trade Representative, Broad Support for U.S.-Colombia Free Trade Agreement: What
They’re Saying, March 2008.
71 Embassy of Colombia, Ensuring Justice and Protecting Labor and Human Rights in Colombia, 2010.
72 Embassy of Colombia, Answers to Frequent Allegations about Colombia and Labor Violence, September 2011. Data
on homicides in Colombia is from Colombia’s Ministry of Defense and the Ministry of Social Protection.
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