America’s free trade consensus

April 16, 2008

Free Market Foundation

The U.S.-Colombia Free Trade Agreement (FTA) is now ready to be considered by Congress. Not only are economic gains at stake; there are also important political and strategic interests to consider, says Kenneth Duberstein, a White House chief of staff for President Ronald Reagan; and Thomas F. McLarty, III, a White House chief of staff for President Bill Clinton.

On the trade front, it is important to understand that, as Under Secretary of Commerce Chris Padilla has said, the United States already has free trade with Colombia but it’s “one-way free trade.” Thanks to the Andean Trade Preferences Act, which Congress passed 16 years ago:

Colombian exporters pay tariffs on only 8 per cent of the goods they send to the United States.

Meanwhile, U.S. exporters currently pay tariffs some as high as 35 per cent on 97 per cent of the products they sell Colombia.

The U.S.-Colombia FTA would level this uneven playing field, eliminating the tariffs on U.S. goods and creating new market access for U.S. service suppliers; and it would do all of this with a major trading partner, says Duberstein and McLarty:

The U.S. exports more to Colombia than Russia, even though Russia has a population that is three times larger and an economy seven times that of Colombia.

Under the agreement now before Congress, U.S. exports to Colombia, from cars to chemicals to consumer products, would grow by an estimated $1 billion per year a direct benefit to U.S. workers and their families.

From Colombia’s perspective, the FTA would add a welcome dimension of certainty to the trading relationship, encouraging investors to commit to Colombia and help create jobs there.

In addition, the agreement would send an important signal of support to a close neighbour, friend and ally, say Duberstein and McLarty.

Source: Kenneth Duberstein and Thomas F. McLarty, III, Our Free-Trade Consensus, Wall Street Journal, April 4, 2008.

For text: http://online.wsj.com/article/SB120726799496088227.html

For more on Trade Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=42

FMF Policy Bulletin/ 08 April 2008