Bad Timing: Election Year not Kind to Trade Pacts

Many voters blame job losses on a trade agreement from 1994 that eliminated most tariffs among the United States, Canada, and Mexico. The trade pact, called the North American Free Trade Agreement (NAFTA), is unpopular enough to lessen the likelihood that Congress will pass a new trade pact in 2008, since it’s an election year.

Not to mention the federal government reported on March 7, 2008 that 63,000 jobs were lost in February, the fastest drop in five years. Although the losses are largely due to the housing slump (construction companies were responsible for many of the layoffs), the poor economic climate makes it difficult for Congress to open up trade.

The Bush administration wants a new trade agreement with Colombia, which is pending in Congress. Legislators need to weigh the potential risks and benefits - both short-term and long-term – and ask themselves what realistic possibilities exist for the future of American manufacturing in the global economy –and whether restricting trade is a realistic option.

Potential pact with Colombia

In his January 28, 2008, State of the Union speech, President Bush called on Congress to approve the agreement this year. Calling Colombia "a friend of America that is confronting violence and terror, and fighting drug traffickers," the president warned Congress that "if we fail to pass this agreement, we will embolden the purveyors of false populism in our hemisphere. So we must come together, pass this agreement, and show our neighbors in the region that democracy leads to a better life."

Those in favor of the trade pact want to strengthen relations with Colombia, an important ally in a region where left-leaning anti-American leaders are coming to power under populist agendas, like Venezuela’s Hugo Chavez

Even though an election year is less-than-opportune moment to pass a new -trade pact, the Colombia Free Trade Agreement is no NAFTA. Not only is it an agreement between two nations (a bilateral agreement) instead of among many (a unilateral pact), it does not threaten American jobs and is likely to strengthen American companies by making more than 80 percent of U.S. exports available duty-free to buyers in Colombia. 

For American farmers and food producers, the agreement would deliver immediate duty-free access to Colombia for high-quality beef, cotton, wheat, soybean meal, and major fruits and vegetables (including apples, pears, peaches, and cherries) and many processed foods, including French fries and cookies. It would also improve access for pork, beef, corn, poultry, rice, and dairy products.

Since U.S. tariffs are already low to non-existent on the large majority of imports from Colombia, the trade agreement isn’t much of a threat to American companies. More than half of our $9.3 billion in imports from Colombia in 2006 were petroleum and coal. Another sixth are agricultural products, with coffee beans and cut flowers dominating the trade.

However, Democrats who are against the trade agreement say that the Colombian government has not done enough to reduce violence against union leaders. Although the violence has much improved since President Alvaro Urribe’s election, Colombia is still the most dangerous place in the world to be a union member, according to the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO). In addition, the trade pact could wipe out millions of small family farms in Colombia, which could encourage many of these farmers to grow coca, the raw material for cocaine, in order to survive.

Nevertheless, the pervasive perception that trade pacts export American jobs is sure to color the debate over the Colombia Free Trade Agreement, and may keep the measure from passing.

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