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Gary Shapiro

Gary Shapiro

Posted: March 10, 2010 10:10 AM

President Obama, Free the Panama and Colombia Trade Agreements!

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President Obama announced a worthy goal during his January State of the Union address: double exports in five years. The goal is clear, specific, has a time frame and is a challenge. It's exactly how a business leader sets goals.

In the same speech, President Obama gave the goal an assist by focusing on the value of trade: "We have to seek new markets aggressively, just as our competitors are. If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores . . . . .And that's . . . why we will strengthen our trade relations in Asia and with key partners like South Korea and Panama and Colombia."

I commend the President for setting the goal and recognizing a major strategy to achieve the goal.

But despite these glowing words, it appears that the White House is stonewalling on the Panama and Colombia free trade agreements. For one thing, despite these agreements having been signed three years ago and then blocked by Speaker Nancy Pelosi when President Bush transmitted them to Congress, President Obama has yet to even send them to Congress. Nearly 14 months in office and no action!

Our failure to act on these agreements has been humiliating to our nation's friends in Panama and Colombia. With this rejection by inaction for three years, both countries have turned to Europe, Canada and Argentina and quickly entered into and benefitted from trade agreements.

President Obama is correct: we have been sitting on the sidelines, and we are being left behind. In 2009, U.S. exports of corn to Colombia dropped 54 percent over 2008, while in the same timeframe Argentinean corn exports to Colombia grew 173 percent and Brazilian corn exports to Colombia grew 200 percent. The results are similar for a range of U.S. commodities and products. Why? Because 97 percent of U.S. exports to Colombia are subject to duties as high as 50 percent. American exporters are at a competitive disadvantage, as they must pay these tariffs while our competitors do not.

In Panama, the United States has been locked out of the biggest construction project in the Americas: the expansion of the Panama Canal. Panama has no manufacturing and cannot be considered a competitor, but it does want to buy U.S. products. Yet U.S. exports to Panama are subject to tariffs of up to 81 percent on a range of products, making them more expensive than those of other nations. Upon passage of the Panama free trade agreement, 88 percent of U.S. exports will be able to enter Panama duty free. How is it good for the U.S. economy, American stockholders and U.S. workers to be paying unnecessary tariffs of hundreds of millions of dollars to one country?

Every major newspaper in America has written editorials supporting the Colombia and Panama agreements. There is strong bipartisan support in Congress to pass them. Senate Finance Committee Democrats and Republicans have recently lamented our failure to pass these agreements. These agreements make economic sense and have zero downside. In Washington, we call this a no-brainer. By removing tariffs on U.S. products we will increase exports and create jobs. More, products entering the U.S. from both Panama and Colombia are already duty free so we are not even creating competitive imports.

The agreements not only make economic sense; they make strategic sense. In Latin America, we battle the Communist Cuban Castro brothers and Venezuela's Chavez for the hearts and minds of Latin American countries. By humiliating our friends in Colombia and Panama, we are pushing them away. Latinos are proud, hard-working people and this abhorrent lack of respect for the deal we entered into with them is shortsighted, foolish and arrogant.

Failure to approve these agreements is bad for American business and jobs, bad diplomacy, and bad for our future as a nation.

So what's holding them up? Why won't the Obama administration send the agreements to Congress? Only one reason: big American unions want them as a bargaining chip and have told the Democrats that these agreements may not pass. There is no substance behind this -- just pure power politics and the union-boss belief that nothing should ever be conceded.

The previous claims of union violence in Colombia have faded, as the facts simply do not support the assertions in this increasingly peaceful country where homicides are down 45 percent since 2002. In Panama, where the vast majority of union workers are government employees, the U.S. unions are now insisting that the minimum number of workers to form a union be dropped from 40 to 20 workers. The veneer of this argument is thin at best. In any case, just what right the U.S. has to dictate union-organizing rules in Colombia is perplexing to me. But then again, I did not understand the White House sweetheart deal allowing union Cadillac health-care plans to be exempted from a tax every other American was being asked to pay.

In Panama, there is no serious objection. A contrived tax haven claim is easily fixable by the Panamanian government. But the Panamanian government does not dare be further humiliated by an administration that keeps playing Lucy pulling the football agreement from the Panamanian Charlie Brown.

The Obama administration and Speaker Pelosi's failure to act has hurt American businesses and cost American jobs. It has marred our diplomacy with two countries that have become South American beacons for education, democracy and economic growth. Moreover, it is destroying our reputation as a nation that used to keep its commitments and be interested in trade as a powerful tool of growth and peace.

Nations that trade do not go to war with each other. Yet, we appear to have entered the most protectionist American period of the modern era.

My career in Washington began with President Reagan and has included the Bushes and Clinton. Each administration was led by a chief executive who recognized that trade is an aid to diplomacy and a precondition for economic growth. If we can't pass the easy trade agreements of Panama and Colombia - we have truly entered an era of isolation and, sadly, declining exports.

President Obama, I implore you. We will not double our exports in five years if you continue to sit on these agreements. Rather, the world will not trust us. The world will trade without us, and we will be at a disadvantage. Our exports and our jobs will continue to shrink. Our economy is in trouble, and our failure to act on these easy trade agreements is only making a difficult situation worse.

Gary Shapiro is the president and CEO of the Consumer Electronics Association, which represents more than 2,000 U.S. technology companies.

 
 
 

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