Report warns backlash if FTAs aren?t ratified

Report warns backlash if FTAs arenÆt ratified    A Senate Finance Committee report released this week warned that failure to ratify U.S. free trade agreements with Colombia and Panama could have damaging consequences to long-term political and economic relations with these countries, as well as result in detrimental export losses to U.S. businesses.
   'The United States is being displaced in South America as the preferred and logical trading partner,' wrote Sen. Richard Lugar, R-Ind., the committee's ranking member, in the report, Losing Jobs and Alienating Friends: The Consequences of Falling Behind on Free Trade With Colombia and Panama. 'U.S. market share is being lost to China, Brazil and other countries in Latin America that benefit from trade accords with Colombia.

Lugar

   'When the Colombia-Canada FTA is implemented, as early as this summer, the immediate effect is likely to be the replacement of U.S. wheat in Colombia with lower-priced, duty-free Canadian wheat. FTA tariff reductions will also benefit Canadian heavy equipment and other capital good exports to Colombia at the expense of U.S. manufactured products, which still face tariffs ranging from 5 to 20 percent,' he said.
   When implemented, the U.S.-Colombia Trade Promotion Agreement (CTPA) would immediately eliminate duties on 80 percent of U.S. consumer and industrial product exports to Colombia. An additional 7 percent of U.S. exports would receive duty-free treatment within 5 years of implementation, and most remaining tariffs would end within 10 years of implementation.
   The agreement also contains provisions on customs administration and trade facilitation, technical barriers to trade, government procurement, investment, telecommunications, electronic commerce, intellectual property rights, and labor and environmental protection.
   The report noted that Colombia buys more U.S. products than many important U.S. trade partners, including Russia, Spain, and other mid-sized economies. However, in the past 2 years, the United States has lost $1 billion in agricultural exports to Colombia due to regional accords and international commercial competition.

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   'For the first time, nations such as Chile, Mexico, Peru and Colombia are promoting joint efforts to expand intraregional trade and business ties as well as commerce with Asia,' Lugar wrote. 'Failure to conclude an FTA with Colombia, a nation that shares our democratic values and economic development priorities, would signal U.S. neglect for like-minded allies within an ideologically divided hemisphere.'
   The report said the U.S.-Panama Trade Promotion Agreement would result in 'significant liberalization of trade in goods and services, including financial services.' More than 88 percent of U.S. exports of consumer and industrial goods to Panama would become duty-free immediately, with remaining tariffs to be phased out over 10 years.
   A U.S. International Trade Commission study found that the likely main trade effect of the U.S.-Panama FTA would be to increase U.S. exports, since 96 percent of U.S. imports from Panama already enter duty-free. Estimates suggest that when fully implemented, the largest growth would occur to U.S. exports of rice, pork, beef and passenger vehicles.
   The Senate committee report was immediately praised by industry proponents of free trade.
   'If we continue to kick the can down the road, we stand to continue losing market share in both Colombia and Panama, to the detriment of key U.S. industries — from agriculture to equipment manufacturing,' said Chuck Dittrich, vice president for regional trade issues at the National Foreign Trade Council.
   'Approval of these FTAs will create goodwill and demonstrate that the U.S. is serious about being a committed economic and diplomatic partner in the Western Hemisphere,' he added. ' Chris Gillis