On April 7 President Bush sent to Congress a letter with legislation to implement the U.S.-Colombia Free Trade Agreement (FTA). House Democratic leaders have responded by suspending action indefinitely through a 224-195 vote to change House rules. The unique situation in U.S-Colombia trade relations warrants another look at the potential for the agreement.

The U.S.-Colombia FTA balances out market access for the two countries and provides the trade policy certainty needed for Colombia to attract more outside investment capital. Over 90 percent of total imports from Colombia to the U.S. enter tariff-free, with over 99 percent of food and agricultural products entering tariff-free. Colombia receives this preferential access to U.S. markets under the Andean Trade Preference Act (ATPA). Since 1991, the Congress has provided duty-free access for products from Colombia, Peru, Ecuador and Bolivia under the ATPA to help fight illegal drug production and trafficking by creating other economic opportunities. ATPA was reauthorized through the end of 2008 by Congress in June of 2007 with 365 members of the House voting for the legislation. An U.S.-Peru FTA similar to the U.S.-Colombia FTA was approved by Congress in late 2007. The U.S. has provided strategic assistance to Colombia beyond just trade access. Under Plan Colombia started by the Clinton Administration the U.S. has provided more than $5 billion to help defeat narco terrorists and reduce violence and crime and provided developmental and humanitarian assistance.

The U.S.-Colombia FTA was first completed in February 2006. In August of that year President Bush informed the Congress under Trade Promotion Authority (TPA) procedures that he intended to sign the FTA, which he did in November of 2006. The Colombian Congress approved the agreement in June 2007. It was then revised to include labor and environmental provisions agreed to by the Bush Administration and Democratic leaders in the House and Senate in May of 2007. The revisions were approved by the Colombian Congress in October of 2007.

The President waited as long as possible to submit the legislation. Once Congress has received implementation language from the President under TPA rules, the House and Senate have 90 legislative working days to act on the legislation. The House Ways and Means Committee has a maximum of 45 legislative days to send the bill to the full House; the full House must then vote within 15 legislative days. The Senate Finance Committee has a maximum of 15 legislative days to act, and the full Senate has another 15 days. Based on the current calendar that could have taken until late September when the Congress plans to adjourn for the November elections. The Congress could have adjourned without giving consideration to the agreement. The TPA clock has now been turned off.

The agreement opens the Colombia market to U.S. products in return for making permanent the market access currently provide by the ATPA. Permanent access to the U.S. market will make Colombia a more attractive place for investments to serve the U.S. market and other markets in Latin America and Europe. U.S. industrial and consumer exports to Colombia currently face tariffs up to 35 percent with some agricultural products facing tariffs of over 80 percent. Most applied agricultural tariffs range from 5 percent to 20 percent, but under current WTO rules Colombia could raise tariffs to 15 percent up to 388 percent. The FTA will immediately eliminate tariffs on more than 80 percent of U.S. exports of industrial and consumer goods. Over 77 percent of U.S. agricultural tariff lines accounting for 52 percent of the current value of exports will immediately receive duty-free treatment with the remaining tariffs eliminated within 19 years.

Total merchandise trade between the two countries in 2007 was $18 billion, with U.S. exports of $8.6 billion and imports of $9.4 billion. Exports were lead by machinery at $2.0 billion and organic chemicals at $900 million. Imports were led by petroleum at $5.3 billion and coffee at $700 million.

Colombia was the largest market for U.S. agriculture exports in South America in 2007 with exports at a record $1.2 billion. Bulk commodity exports were $886 million, 73 percent of total exports, led by coarse grains, mostly corn, at $516 million, wheat at $209 million, soybeans at $91 million and cotton at $59 million. The leading intermediate products were soybean meal at $77 million and feeds and fodders at $63 million. The consumer-oriented products market is largely untapped with exports of only $108 million led by snack foods at $19 million and fresh fruit at $14 million.

Products receiving immediate duty-free treatment include high quality prime and choice beef, cotton, wheat, soybeans, apples, pears, cherries and many processed food products like frozen French fries and cookies. Pork tariffs are phased out over 5-10 years. Yellow and white corn will have tariff rate quotas (TRQ) with 12 year tariff phase-outs. Rice will have a TRQ with a phase-out of tariffs over 19 years and a safeguard for import surges. Chicken leg-quarter tariffs are phased out over 18 years with a TRQ. Dairy products will have TRQs with 11-15 year tariff phase-outs. Most vegetables have immediate tariff free access with the others free in five years. No agricultural products are excluded from tariff reductions. Colombia has also agreed to recognize the equivalence of our meat and poultry inspection systems and to adopt full OIE (World Organization for Animal Health) standards.

The U.S.-Colombia FTA is advantageous to the U.S. compared to the current one-way market access that favors Colombia.