Colombia-U.S. Trade

2 years later, U.S.-Colombia trade deal holds bitter lessons for some

 

After the implementation of a free-trade deal, hopes that it would usher in an era of labor reforms have largely gone unfulfilled.

 
Dionel Vargas, a coffee grower, is symbolically locked in chains in Bogota, Colombia. He’s one thousands of farmers on strike here. Among their concerns is that a US-Colombia free-trade agreement implemented two years ago has made local farmers uncompetitive.
Dionel Vargas, a coffee grower, is symbolically locked in chains in Bogota, Colombia. He’s one thousands of farmers on strike here. Among their concerns is that a US-Colombia free-trade agreement implemented two years ago has made local farmers uncompetitive.
By Jim Wyss / Miami Herald Staff



The United States and Colombia implemented a free trade agreement two years ago. While the deal has been a boon for U.S. exporters, Colombia is still struggling to make the most of the pact. KARA DAPENA/MIAMI HERALD STAFF

jwyss@MiamiHerald.com

When the United States and Colombia implemented a free-trade deal two years ago, it was supposed to usher in an era of commerce with a heart. The deal was intended to spur bilateral trade and also smooth out Colombia’s troubled labor landscape — one of the world’s harshest for union organizers.

The FTA has boosted commerce — at least for U.S. exporters — but hopes that it would be the dawn of a new age in labor rights have largely gone unfulfilled. And that broken promise might weigh on future U.S. trade deals, lawmakers said.

Congress signed off on the trade pact in 2012 only after years of debate and after both nations had agreed to a 37-point Labor Action Plan. The LAP, as it’s known, was designed to cut down on union busting and end impunity surrounding the murder of union organizers.

U.S. Rep. Jim McGovern, D-Mass., didn’t vote for the deal but said many of his colleagues were swayed by the LAP.

“Colombia is one of the most dangerous places in the world to be a trade unionist, and I think there were some who voted for it thinking they were advancing the cause of human rights,” he told the Miami Herald .

McGovern visited Colombia in October to see how the LAP was being implemented.

“I was shocked at how bad the daily reality for workers and labor activists is on the ground,” he said. “The LAP has completely lost its primary function, which was to improve workers’ abilities to exercise their rights.”

One of the most pressing problems is union busting through what is known as collective pacts. On paper, it’s illegal for companies to sign collective agreements when a union already exists. But the National Union School, or ENS, which tracks labor issues, says the reality is that more than 200 illicit collective pacts have been signed every year since 2011, and not a single one has been prosecuted — even though doing so was a key part of the LAP.

“What this does is strangle unions and doesn’t let them grow,” said Daniel Hawkins, the director of research at ENS. “Pretty much the union slides into nothingness.”

Union murders are also still troubling, with 26 assassinations and 13 attempts in 2013.

The Ministry of Labor, created as a result of the action plan, says progress has been made. More workers have been added to the formal labor force, on-site inspections have increased, and 100 police officers have been tasked to work exclusively on crimes against union leaders, the ministry said.

Looking at the deal in terms of trade alone, the results seem lopsided at best.

During 2013, the first full year the agreement was in effect, U.S. exports to Colombia were up 13.7 percent to $18.6 billion, according to U.S. Census figures. But Colombian exports to the United States were down 12.19 percent at $21.6 billion. And those trends continued during the first quarter of 2014.

Colombia says it’s unfair to judge the deal based on only two years during which the United States has been limping out of an economic crisis. In addition, because many Colombian products were already entering the United States tax free, the initial trade imbalance was expected.

And buried beneath the statistics are reasons for hope. The Ministry of Finance says at least 1,609 companies have become first-time exporters thanks to the deal. And exports of products that did see tariffs eliminated under the agreement were up 64 percent.

Even so, the perception that the trade deal has been one-sided irks many here.

Early this week, Dionel Vargas was sitting in Bogotá’s central plaza with a chain wrapped symbolically around his neck. A coffee farmer and city council member from the southwestern state of Huila, Vargas is one of thousands of farmers who have been on strike for more than two weeks protesting a range of issues, including the free-trade agreement.

He said it’s impossible to compete against U.S. agriculture. He said Colombian subsidies are meager compared to the $90 billion the United States is providing its farmers over the next decade through crop insurance. And gasoline in Colombia — one of the big costs of agriculture — is about 50 cents more per gallon than in the States.

“I’m not saying let’s end globalization because that’s impossible,” he said. “What we need are guarantees so that we can compete.”

Eduardo Muñoz, director of Colombia’s Center for Benefiting from Trade Agreements, admits that the country needs work to get the most out of the deal. Ports need cold storage and more quality control inspectors to keep agricultural goods moving smoothly. The fact that the bulk of Colombia’s farms are far removed from ports also drives up costs. But he said that in the long run, the trade agreement will create new industries and exporters.

“Whoever gets into exporting has to understand that it’s a long-term decision like a professional career. You have to invest energy and money and always innovate to make it in the international market,” he said. “If people are exporting because they think it’s easy money, then they’re in the wrong business.”

He said the true benefits of the deal wouldn’t materialize for five to six years.

In the United States, the trade deal might already be providing lessons, McGovern said.

“The history of trade agreements, not just in this administration, is that you make all these promises when it’s being negotiated and when those promises are not kept nobody wants to go back and revisit it,” he said. “It’s going to be harder to get future trade agreements when there were some people who voted for this who believe they were misled.”

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