(MintPress)—The United States and Colombia signed a trade agreement Sunday at the Summit of the Americas that lifts tariffs on U.S. exports — a move applauded by U.S. business leaders and shunned by labor unions.
The Colombia-U.S. Free Trade Agreement was drafted by George W. Bush and approved by Congress in 2011, pending Colombian efforts to improve its labor market. On Sunday, President Barack Obama said labor rights expectations in the agreement have been met, setting in motion the approval of the pact.
Colombian President Juan Manuel Santos praised the agreement as a job creator, stating Colombia could see a rise in as many as 250,000 jobs. With roughly 80 percent of tariffs lifted on U.S. exports, Obama said the agreement will open doors for U.S. business expansion in the Colombian market.
Effective May 15, tariffs will be drastically decreased on U.S. agriculture, auto parts, fertilizers, medical equipment and wood products, according to the Office of the United States Trade Representative (USTR), with plans for complete phase out over the next five years.
The effort comes at a time of growing free trade agreements among Colombia and countries throughout the world. Colombia has already formed trade agreements with Brazil and Canada, with plans in the works for a pact with the European Union. The USTR argues that, without implementing the trade agreement ahead of the EU, U.S. exporters have seen tariffs exceeding 9 percent, while other countries’ exports would be allowed to enter duty-free.
History of labor market, human rights in Colombia
American Union organization (AFL-CIO), supported by union members who pay monthly dues to an organization that lobbies on their behalf, is opposed to the agreement on the grounds that it allows U.S. companies to do business in a country considered “the most dangerous place in the world to be a trade unionist.”
Colombia is notorious for its dangerous working conditions and human rights violations. Twenty seven labor activists were killed between Jan. 1 and Dec. 2, 2011, according to the AFL-CIO. According to Trade Reform, four union members have been killed in the last four months, a reflection of the danger posed to those who join the union movement.
Communications Workers of America President Larry Cohen said during a 2011 press conference at the U.S. Capitol that nothing would change under the new trade agreement. Cohen said two major concerns need to be addressed in Colombia, including the murder of union workers and leaders, as well as loopholes which allow corporations to hire workers through contractors which often do not provide benefits.
Included in the trade agreement passed by Congress in 2011 were workers’ rights stipulations. Colombia has complied with portions of the agreement by allowing the presence of the International Labor Organization (ILO). It has also agreed to a review by the Prosecutor General’s Office into former union leader homicide cases, in order for the government to learn “how to improve the investigation and prosecution of future cases,” according to the Office of the United States Trade Representative.
But American labor leaders say implementation of this agreement will be hard to ensure. Considering the Labor Action Plan is not tied directly to the trade agreement, labor activists say it could be difficult to determine if Colombia is meeting its end of the deal.
The AFL-CIO has put pressure on the U.S. to work with the Colombian government on issues of alleged workers’ rights violations, especially when employees are in danger. In November, congressional leaders worked with the union organization to highlight issues in the palm oil sector of Colombia, where peaceful worker protests were in danger of violent government crackdowns.
“Although violence was averted and a plan to inspect the palm plantations for illegal employer behavior put in place, close monitoring will continue to be required to ensure that workers can safely organize and act collectively to achieve better wages and working conditions,” it’s stated on the AFL-CIO website.
U.S. Labor Secretary Hilda Solis said the U.S. would continue to work with Colombia to improve labor conditions.
Obama reaching out to business community
While unions have traditionally been Obama’s voter base, the new agreement with Colombia is seen as an effort to appease the business community and make strides in the president’s claims to double U.S. exports by 2015.
Agriculture exports from the U.S. to Colombia have dropped dramatically over the last two years, to the tune of nearly $850 million, according to the U.S. Colombian Consulate Embassy. The embassy points to Colombia’s option of purchasing goods from Brazil and Argentina at lower costs, putting the U.S. out of the race.
The tariff lift will enhance trade between the two countries, but arguments exist as to whether or not it will make a substantial impact in the U.S. economy.
Exports to Colombia are set to increase by $1.1 billion, dominated by the machinery and motor vehicle divisions, according to a report by the United States International Trade Commission (USITC). Imports from Colombia are set to rise by $487 million and will largely come in the form of sugar and dairy products. The enhanced trading system would bring the Gross Domestic Product (GDP) up $2.5 billion — less than a .05 percent increase.
But for those in the industries directly benefiting from the agreement, that’s good enough. Information released by the International Trade Administration indicates current Colombian automotive tariffs, without the agreement, average 17.4 percent. The aerospace sector, the largest industry trading partner, faces an average tariff of 6.6 percent.
The wheat industry is also pleased with the news, saying it will enhance its ability to compete with foreign markets.
“U.S. wheat producers need this FTA to compete in the Colombian market on the basis on quality and supply with wheat from our countries,” U.S. Wheat Associates Chairman Don Schieber said in a statement.
History of tariffs
The U.S. has fair trade agreements with 17 countries, aside from Colombia — not all of which meet standards for workers’ rights.
The AFL-CIO stated this month that Honduras, with which the U.S. has a free trade agreement, has failed to address violations of workers’ rights. The organization cites alleged child labor, along with the inability of workers to take part in collective bargaining. A formal complaint was filed in Washington D.C. by Joel Lopez Mejia of the Independent Federation of Workers in Honduras.
The complaint was heard by nearly 100 U.S. congressmen and women who signed a petition addressed to Secretary of State Hillary Clinton, requesting the State Department to look into allegations. The petition included allegations that the Honduran government had targeted union leaders, specifically teachers’ unions. In one specific case, the government was accused of releasing tear gas on a group of teachers protesting unpaid wages.