The Hagstrom Report

Agriculture News As It Happens

Colombian agreement reached; some conditions remain


The Obama administration announced today that U.S. negotiators have reached agreement with the Colombian government on a free trade agreement that should boost farm exports, but there are still questions about the conditions under which the administration will send it to Congress for approval.

The Bush administration signed the agreement with Colombia in 2006, but concerns about labor issues in the South American country have held it up.

“We are now in the position where we can have a conversation with Congress about when would be the best time to move forward with Colombia and Korea, and very soon we hope to be in that position with Panama,” U.S. Trade Representative Ron Kirk told reporters, according to a National Journal report.

Senate Finance Committee Chairman Max Baucus, D-Mont., who had vigorously urged the administration to finish the Colombia agreement, hailed the announcement as a victory for farmers, ranchers and manufacturers. “Moving forward with the Colombia Free Trade Agreement will reverse the steady loss of market share that U.S. agricultural products and manufactured goods have suffered while this agreement languished,” Baucus said in a news release.

Senate Finance Committee ranking member Orrin Hatch, R-Utah, said in a conference call with reporters that Kirk told him the administration wants to get the Colombia agreement approved by August. Although other Republicans have said that the Korea, Colombia and Panama agreements should be brought up together, Hatch said he thought each agreement should be considered separately but expeditiously on its merits.

Hatch said he would resist any attempts to tie approval of the agreements to granting Russia permanent normal trade status as part of that country’s attempt to join the World Trade Organization or reauthorization of trade adjustment assistance or other trade measures. Hatch said that although trade adjustment assistance is a priority for the Democrats, the version passed as part of the economic stimulus package was expensive, and that it is more important to get Americans back to work than to provide assistance to a few groups of workers.

Sen. Rob Portman, R-Ohio, a former U.S. trade representative, urged Obama to send the agreement to Capitol Hill quickly.

To address violence against workers and union organizers, the Colombian government has agreed to an “Action Plan Related to Labor Rights” that will lead to greatly enhanced labor rights and clear the way for the U.S.-Colombia Trade Agreement to move forward to Congress, the White House said.

Obama administration officials did not commit themselves to a timetable today, but said Colombia would have to comply with the labor provisions before the president would send the agreement to Congress. But in a signal that there will be an attempt at quick action, Obama will meet with Colombian President Juan Manuel Santos on Thursday to discuss the agreement, including the labor rights section.

Farm groups have been pushing hard for approval of the agreement because U.S. agriculture has been losing market share in Colombia, and because a free trade agreement between Colombia and Canada, expected to go into effect on July 1, would make U.S. exports to Colombia more expensive than Canadian products.

Many agricultural commodities will benefit from the agreement, as more than half of current U.S. farm exports to Colombia will become duty-free immediately, and virtually all remaining tariffs will be eliminated within 15 years, according to a White House fact sheet.

[See links to fact sheets below]

Colombia will immediately eliminate duties on wheat, barley, soybeans, soybean meal and flour, high-quality beef, bacon, almost all fruit and vegetable products, wheat, peanuts, whey, cotton, and the vast majority of processed products, the White House said. The agreement also provides duty-free tariff rate quotas on standard beef, chicken leg quarters, dairy products, corn, sorghum, animal feeds, rice, and soybean oil, and fertilizers would be tariff free, according to the fact sheet.

The National Association of Wheat Growers and U.S. Wheat Associates, which markets U.S. wheat overseas, said they were very pleased by the agreement.

“U.S. wheat producers need this FTA to compete in the Colombian market on the basis on quality and supply with wheat from other countries. Argentine wheat enjoys trade preferences under the Mercosur Trade Center agreement," the two groups said.

“Canada and Colombia have ratified a separate FTA that will eliminate import tariffs on Canadian wheat and most other agricultural goods likely by July of this year,” the wheat groups said. “When that happens, the existing tariff and price band system applied to U.S. wheat imports will, in effect, make Canadian wheat significantly cheaper than U.S. wheat. As a result, Colombian millers who want to keep buying U.S. wheat would be forced buy more wheat from Canada because of the significant tariff disadvantage alone. The U.S.-Colombia FTA would remove that barrier.”

In 2010, the United States exported $832 million of agricultural products to Colombia, the second highest export total in South America, according to government statistics. Top U.S. exports include wheat, corn, cotton, soybeans, and corn gluten feed.