Three benefits of the FTA between USA and Colombia

THREE BENEFITS OF THE FTA BETWEEN UNITED STATES AND COLOMBIA

By Libardo Botero C.

1) FTA ECONOMIC BENEFITS

Trade Relations between USA and Colombia. After a very deep crisis at the end of the XX century and at the begging of this one, and despite the violence, Colombia has been improving its economic growth: the GDP of 2006 increased 6.8%, in 2005 5.23%, compared to the decrease of 4% of the GDP at the end of the XX century. Even though Colombia has social inequity problems, there have been some measures to reduce them: poverty, measured by level of income, was reduced from 56% of the population in 2002 to 45% in 2006. During the same period, extreme poverty decreased from 22% to 12%.

The FTA should help this process. The agreement its more significant to our country, since bilateral trade relations with the US represents up to 40% of our total, and only 0.5 % the United States’s. The APTDEA covers half of our exporting products (oil, flowers, apparel, leather and footwear) with an big impact in labor. But this is a temporal benefit that expires in mid-2007. Additionally, it only focuses in lowering tariffs, leaving aside the non-duty barriers, which are the main obstacles for many of our exporting products.

Industry. Colombia’s main import products (almost 90%) from USA are industrial (machinery, equipment, raw materials). They do not compete with the Colombian manufactured goods; instead they help in its growth. Through out the FTA Colombia give immediate free of duties access to 81.8% of the US exports to our country. 92.5% of those exports are raw materials and capital goods that are not produced in our country. The remaining 7.5% are products that compete directly with our production.

At the same time, the parties agreed in the FTA that 99,9% of the Colombian industrial goods could enter to the US without duties. These products are mainly from areas in which USA is insufficient (apparel, leather footwear). Some new goods, not covered with ATPDEA, have been included. The industry will also benefit with the participation in Government purchases in the US. Also, some benefits have been obtained for the small and medium enterprises in Colombia.

Agriculture. In a very irresponsible way some people have said that there are a lot of harms in the agricultural sector because of the FTA, and that it would become an incentive to illicit crops and the traffic of illegal drugs. Really is the other way a round. Despite is huge importance within the Colombian economy, it is important to highlight that agriculture represent just 12% of the GDP, about 15% of the employment, and no even 10% of Colombian foreign trade. It is also less than 10% in our trade with the US. As happens with the US, Colombia’s exports of agricultural products are almost twice of what it buys from foreign countries.

The products that will benefit from the FTA (coffee, banana, flowers, sugar, tobacco, fruits and vegetables), and the ones that would not face a negative impact (as potato) represent more than 80% of the production and the planted area throughout the country. An increase in new products is expected, which will give an important value to production and volume of more of 7,5 new cultivated hectares, in the next 12 years; thanks to the FTA: wood, African palm, banana, yucca, cocoa, and others. Products that could be at risk because of the FTA had a special treatment such as slower tariff reductions and long grace periods: se most representative cases are rice and chicken leg quarters. There are some goods which demand is bigger than the local production. With the FTA these goods would be imported from the US free of duties but with some especial requirements: wheat, barley, soy, corn, and others. Because of the increase in the ethanol demand and the internationally high prices of corn, the expectation is to have an increase in cultivation of it in Colombia. These products represent less than 20% of the value of production and the cultivated area.

It is important to highlight that the majority of the environmental harms, in Colombia, have been caused by drug trafficking with the deforestation of the jungles and the pollution that is produced by the excessive use of chemical precursors. The crops substitution program and the implementation of the FTA will contribute to the improvement of the environment.

2) LABOR IN THE FTA

At the beginning of this decade, Colombia almost reaches an unemployment rate of 20%. It’s being reduced since then, today it is less than 12%. Foreign trade has increased throughout the years, more than the GDP, and the activities that are related with exporting goods have generated much more employment that others in the country.

Obviously industrial employment is going to benefit with the FTA, as it has been with the ATPDEA. Additionally, employment in the small and medium companies is going to be stimulated. Due to the fact that the trade relations in the industrial sector between Colombia and the US is rather complementary than competitive, new jobs will be generated because the increasing in trade, and not as a result of job losses at the other country. Our main concern regarding industrial employment (as happens to the US) is the competition coming from countries that produce cheaper goods such as China and other Asian countries. In the same direction, if the FTA is not approved, Colombia would be in disadvantage in comparison with other countries such as Chile, Central America or Mexico, talking only of this side of the world. These countries already have FTAs signed with the United States and therefore they have a preferential access to its market.

The FTA will not damage or ruin agriculture forcing farmers to grow illicit crops, as some opponents of the agreement have said. The fact is that illicit crops such as cocaine and poppy succeed in Colombia before the FTA. These crops have been reduced in the last decade to less than half of the cultivated area, thanks to the Government and the solid support of the US. More over, as a result of the FTA this trend will continue and we foresee an increase in crops substitution, and in the creation of rural jobs.

As explained above, the most sensitive products such as corn would have a momentum to multiply its production towards the production of ethanol and bio fuels, and other exporting uses such as the African palm or banana. An estimated of 4 million jobs could be generated in the next 12 years in this area of production.

It is important to bear in mind the female employment will be benefited from the activities already mentioned. Industries such as flowers, fruits, vegetables and even in coffee, employ thousands of woman. As it is known, the income of the industries that export their products is higher than does that only produce for the local market. Because of this, it isn’t true that the promotion of these activities could hurt the salaries or the jobs of the workers, particularly woman. The vast majority of the women working in those activities come from the country side, from domestic activities, and small farms, where they earn low or no wages at all, with no rights and no access to social security. The new activities usually offer better wages and access to social security.

3) HUMAN RIGHTS AND UNION FREEDOM

FTA’S LABOR CHAPTER

It’s been said that our labor laws are not in compliance with the ILO standards and that the FTA will increase such fault. Those comments are baseless. First, rather than getting a part from the ILO standards, our labor legislation is getting close to it. Examples of such trend are the measures adopted to eliminate child labor in Colombia, and banning workers cooperatives from engaging in labor intermediation. (Decree 4588 del 2006). Additionally, to make the labor jurisdiction more expedite, the Congress is debating a bill to implement the oral system and some other improvements. Needles to say, the labor justice in Colombia is an independent branch within the Judicial System.

Regarding the FTA’s negative effect, a simple review of the Chapter 17 would lead us to a very different conclusion. Both parties reassure their obligations as ILO members, and their commitment to honor all signed Conventions, and to respect internationally recognized labor rights and principles. They are respectful of their own Constitutions and the right of each other to adopt or modify their labor laws, always in compliance with the internationally recognized labor rights. To make things clearer about their commitment on preventing the parties from undermine labor rights following economic interests, the chapter establishes: “The Parties recognize that it is inappropriate to encourage trade or investment by weakening or reducing the protections afforded in domestic labor laws”.

We should expect clear benefits to workers with the approval of the FTA, since a close monitoring would be in place not only nationally both internationally, regarding the observance of labor rights.

HUMAN RIGHTS AND PROTECTION TO UNIONIZED WORKERS

The human rights issue has been raised during the negotiations of the FTA. Labor organizations in both countries have been making inaccurate statements regarding this issue, saying that government and employers are responsible for the acts of violence targeting unions, and the restrictions on their rights, either by action or by inaction.

Colombia unfortunately has one of the highest rates in the world of homicides and threats to union members. But this phenomenon must be considered within the context of violence in our country, and not as a special case of crusades against trade unions. Last year, 60 homicides of union workers were reported, 12 of them were leaders. A considerable number due to circumstances unrelated with their unionized condition or by unknown reasons. It is a worrisome situation to repudiate. Nevertheless, homicides of union members are low compared to other sectors of the Colombian society: while unionized workers represent up to 2% of Colombian population, homicide of union members represent only 0,3% of the total homicides in the country. In addition, homicides of union members have declined: almost 200 in 2002 to 25 in 2005 and 60 last year.

Illegal armed groups such as guerrillas, paramilitaries and others are responsible for the majority of threats and homicides of union members. Statistics from both the NGOs, (Escuela Nacional Sindical -ENS of Medellín), and the Ministry of Social Protection can prove it. Even the figures from the ENS indicates that for the past 15 years, the homicides attributed to Government officials represent only 1% of the total, and are caused by individual actions and not as a Government policy. Besides, even though there is much to accomplish, such criminal acts are being reduced dramatically in our country thank to the Government’s policy against illegal groups and to the demobilization and reintegration program. The Government offers a protection program to threatened unionized leaders, 1600 leaders make part of this special program. Approximately 40% of the funds destined for the protection of Colombian citizens are used for the protection of unionized leaders, more than $ 70.000 million in total.

As well as the government has fought against the guerrillas and the paramilitaries; it has offered reinsertion alternatives to all the armed groups. In that regard, the government is now developing an important demobilization and reintegration process that until now has demobilized more than 30.000 people and turned down 15.000 weapons. The leaders and those responsible of crime have been prosecuted, the reparation for the victims of the violence has stated on the part of victimizers, at the same time the discloser of the committed crimes begins. This is a unique fact in any peace process in our country, and an example to the world. This demonstrates the interest of the government on dismantle the faithless machinery of violence, and it also shows the soundness of our democratic institutions, and it has deny the statements of some people about the government sponsoring the paramilitary phenomenon. In the same way, peace dialogues with the guerrilla group ELN have been moving forward with the objective of pursuing their demobilization and disarm. Colombia needs the support of the international community to achieve this goals, through aid programs like Plan Colombia, as well as trade agreements that favor the country’s economic and social progress, like the one signed with U.S.

Another problem that affect our country is impunity. There is impunity not only regarding the crimes against unionists. With the purpose of contribute to fight violence, and mainly the prevailing impunity, the Colombia’s union’s leadership, the national government and the employers, have agree since last year to work together. For this, a permanent ILO office has been established so it can help the 3 parties to work closely. On its first tasks has been a take 100 emblematic cases of union leaders assassinations so they can be clarified and the responsible can be punished. La office of the attorney general has been working since 2005 to solve several assassination, attacks and threats cases against union leaders. Due to the tripartite agreement, the office of the attorney general has intensified its job. It has been created a subunit only to make progress on these investigations; it counts with 13 prosecutors and 77 investigators. In the last months several convictions judgments have been enacted, all this related to 37 unionist assassinations and with more than 60 convicts. Furthermore, the attorney general has said that “We have more than 200 cases, 20 formal investigations, 40 people linked and 20 called to trial”. With the implementation of the Peace and Justice Law, several of those crimes have been clarified. This shows that there has been serious progress in the fight against long-term crime and impunity. It is not responsible to get commitment with these purposes and at the same time discredit or disregard the agreed mechanisms or the volition of the parties, like some ones do.

Colombia faces several economical, social and political difficulties. We are aware of that and we are not trying to deny it. But the government, and most of the workers and employers are making serious efforts to overcome these difficulties. The country is working to consolidate and strengthen its institutions, and its democratic regime, to defeating violence, following a growth path and confronting social inequities. To keep this path means a great deal of sacrifices. It’s true that the FTA in not a magical solution. But it’s a historic opportunity that the country cannot afford to let it pass by. It’s on all of us to make the best of it.

Bogotá, Colombia. May 2007.