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James Bacchus

James Bacchus

Posted: April 14, 2010 11:41 AM

US Risks Becoming Economic Afterthought in Latin America

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The United States risks becoming an afterthought in much that is unfolding commercially in Latin America.

This was all too evident last week in Colombia, where Colombian President Alvaro Uribe Velez spoke about the economic future of his country for nearly an hour to a global business gathering in Cartagena -- without once mentioning the United States.

Sometimes the most important words are those that are not said. Few even among our friends in Colombia and elsewhere in Latin America are saying much about the enormous economic opportunities the United States is missing because of our self-defeating retreat from national engagement in the continuing economic development of much of our own hemisphere.

Where Colombia is concerned, this is seen most tellingly in the continuing reluctance of the Congress of the United States to approve the long-delayed free trade agreement between the two countries -- and the refusal thus far of the Obama Administration to force the Congress to face the issue by formally submitting the agreement to the Congress and scheduling a vote. But the American economic retreat from Latin America is seen throughout the region in the way in which the United States continues to turn away from opportunities to enhance American and Latin growth alike by lowering barriers to trade and speeding flows of foreign direct investment.

During his nearly eight years in office, President Uribe has transformed Colombia from a failed state into an increasingly functioning democracy with improving security and a growing economy. Recently, he punctuated the progress of Colombia under his leadership in the best possible way when he accepted, immediately and without question, the decision of the Constitutional Court of Colombia that he could not seek a third term. Nothing is more important to either democratic or economic growth than automatic respect for the rule of law.

Certainly extraordinary challenges requiring extraordinary political courage continue to face Colombia. The new president who will be elected to succeed Uribe later this year will continue a Hobbesian struggle to secure a monopoly of force for Colombia's democratic government in a country still much afflicted by FARC guerrillas on the left, paramilitary vigilantes on the right, and armed gangs of drug thugs in the darker interstices of the Colombian body politic.

But since 2002, when Uribe became President, kidnappings in Colombia have declined by 88 percent, the homicide rate has been cut in half, and, increasingly, Colombians have come to feel safer in their homes, in their streets, and in their commerce. Nowadays, outside the picturesque colonial walls of Cartagena, Colombians stroll the Caribbean beach in the early morning sun much as my former constituents do every morning on the Atlantic beach of Cape Canaveral, Florida, in my former Congressional district.

As Uribe and others readily acknowledge, the United States has done much in the past decade to help make the recent progress in Colombia possible. Yet the United States seems somehow incapable politically of consolidating, and expanding on, these recent gains, for the benefit of both Colombians and Americans, by approving the long-delayed free trade agreement.

The potential economic gains for the United States from increased trade with Colombia are considerable. Almost twice the size of Texas, Colombia has a $250 billion economy that is the second largest in South America, after Brazil. Under Uribe, the purchasing power of Colombians has been vastly increased as their per capita GDP has more than doubled (to almost $5,000).

Colombia is, already, our fourth largest trading partner in South America, and the largest importer of US agricultural products in the continent. If we approved the pending FTA, the chances of Colombia sustaining and adding to its recent progress would be enhanced -- and so too would the likelihood that Colombia would become an even more important market for US goods, services, and investment.

As it is, more than 90 percent of US imports from Colombia already enter our country duty-free. At the same time, tariffs are imposed on virtually all US exports to Colombia. The FTA would eliminate those tariffs, and provide US companies, workers, and farmers with duty-free access to the growing Colombian market. The agreement would immediately eliminate tariffs on more than 80 percent of American exports of industrial and consumer goods to Colombia, and it would provide significant new duty-free access to Colombian markets for American agricultural goods.

Given all this, what is the commercial objection to the Colombian FTA in the US Congress? There really is none.

The principal objection voiced by my former Democratic colleagues in the Congress is a continuing concern about violence against unions in Colombia. This concern seems to be the only remaining obstacle to Congressional approval of the FTA.

No one would argue that the human rights situation in Colombia -- for unions or for others -- is ideal. But are the human rights of labor organizers and others in that embattled country more likely to be respected if we trade more with Colombia or less? The recent progress there suggests that additional advances are more likely to be made for human rights in Colombia if there are additional advances economically, and additional advances economically are more likely to result from more trade and investment, and not less.

Our continuing refusal to approve the FTA undermines our many friends and allies in Colombia in their efforts to advance the cause of human rights in their country, and it plays into the hands of those among their Latin neighbors who are anything but friends of human rights or the United States.

Traditionally, Venezuela, next door, has been Colombia's second biggest trading partner. Last year, Venezuelan President Hugo Chavez imposed a trade embargo on Colombia, in part to punish the Colombians for their steadfast friendship and cooperation with the United States.

The Venezuelan trade embargo is costing Colombia $7 billion annually in lost trade. How long can we expect the Colombian government to withstand domestic political pressures resulting from those losses if we continue to refuse to move forward with the FTA?

Privately, Colombian officials profess utter bewilderment at the American reluctance to move forward. Publically, they continue to subscribe to "the audacity of hope." Colombian trade officials will soon be making yet another pilgrimage to Washington to confer with their American counterparts in hopes of hearing that the President will soon be sending the FTA to the Congress with his recommendation for approval by an early date.

For his part, Obama seems to have decided that he is in favor of the Colombia FTA. But this is not the same thing as deciding to spend some of his limited political capital on the issue. In the myopic mire of a midterm election year, the Colombian FTA is, for the President, one part of a much larger political puzzle.

Meanwhile, the Colombians, like others in Latin America, have grown weary of waiting for the United States to see beyond its myopia. Increasingly, they are moving forward without us.

In striking contrast to the United States, Canada is moving forward rapidly to conclude a free trade agreement with Colombia by yearend. Colombia is also exploring FTA's with Europe and South Korea. And Colombia -- along with Mexico, Chile, Peru, Panama, and other Latin countries bordering on the Pacific Ocean -- is hard at work on an ambitious "convergence" of their hodgepodge of existing bilateral FTA's.

The aim of this convergence is a regional integration in the "Pacific Arc" as a prelude to approaching China and other Asian countries as a regional trading bloc. Chinese, Indian, and other Asian businesses seeking trade and investment opportunities in the region were represented in impressive numbers at the conference in Cartagena.

More broadly in the region , Latin countries generally are looking less and less to the North economically. Mexico and Brazil are negotiating what they call a "strategic integration agreement." Several other Latin countries, in addition to Colombia, are also pursuing bilateral deals with Europe.

China is everywhere in the region, in search especially of raw materials to fuel the hungry Chinese growth machine. Chinese President Hu Jintao is visiting several South American countries this week. Secretary of State Hillary Clinton has visited South America, but President Obama has not.

If not yet an afterthought, the United States is, relatively speaking, becoming less and less of an omnipresence in Latin American economies. Colombians and others in the region talk increasingly about "decoupling" economically from the United States. Realistic or not, this kind of talk suggests that, in their eyes, we Americans are no longer indispensable to their future.

Confronted as they are by the spectacle of our inaction and our indecision on so many pressing economic issues relating to Latin America, and by the apprehension that, once again, under yet another new administration, Latin America is only an afterthought for the United States, who can blame them?

One way we could begin to improve this spectacle, ease this apprehension, and restore our rightful role as a valued partner to Latin America, would be by approving the Colombian free trade agreement.