Colombia sees big gain from U.S. trade pact

BOGOTA, (Reuters) – Relieved after five years of  waiting, Colombia celebrated U.S. approval of a free trade  agreement the government said should boost the Andean nation’s  investment pros-pects, cut violence against union leaders and  create jobs.

Sergio Diaz-Granados

The pact — which was stuck in the U.S. Congress since 2006  before passage on Wednesday — may help triple Colombian  exports to the United States to $50 billion over five years and  create 300,000 jobs, Trade Minister Sergio Diaz-Granados said.

“It’s backing for what Colombia has done over the last 10  years to improve the country,” he told Reuters, referring to  the South American nation’s economic stabilization and pushing  back of left-wing rebels in recent times.

As well as financial gain, the pact is intended to help  curb violence against union leaders as it may help boost  leverage to enforce human rights.

The U.S. Congress also approved pacts with South Korea and  Panama that are expected to lift American exports by about $13  billion a year. Shipments to Colombia could increase $1.1 billion from $12  billion in 2010, according to the U.S. government.

Though some are concerned Colombian farmers could be  overwhelmed by duty-free U.S. imports, analysts broadly view  the deal as the latest sign of foreign confidence in Colombia  in its efforts to fully quell five decades of guerrilla  violence and tackle the illegal drugs trade.  “This is a huge deal for Colombia,” said Eric Farnsworth,  vice president of the Council of the Americas in Washington.

“Unquestionably it’s another important step to raising  Colombia in the global investor consciousness, in changing the  narrative.”

‘NEW ERA’

The agreement would fix duty-free access for most of  Colombia’s exports to the United States.

Colombia, which has received about $6 billion in U.S.  anti-narcotics aid since 2000, will now offer more investor  certainty by fixing trade privileges that had been subject to  renewal by the U.S. Congress, said Farnsworth, a specialist in  Latin American trade.

The pact, which may take more than a year to kick in, will  serve as an “antidote” to shield Colombia from the impact of a  global slowdown and help add as much as 1 percent to economic  growth, already forecast to expand at least 5 percent in 2011,  trade minister Granados-Diaz said.

His boss, President Juan Manuel Santos, described the  approval as “historic” and marking a “new era” in U.S. ties.

“The free trade agreement ends the uncertainty that has  been discouraging long-term investment and it now guarantees to  all investors stability in the rules of the game,” he said.

While it’s a “win-win” for both countries in the long term,  commodity-rich Colombia may not benefit for several years, said  Javier Diaz, head of the exporters’ association Analdex.

Colombia received $10.77 billion in foreign direct  investment through September, 84 percent of which came from  oil, gas and mining. Now it is likely to benefit from  investments in other goods and services.

“Of course there are sectors that are highly sensitive  because they are going to have competition they didn’t have  before, which is true of the rice and poultry sectors. But it’s  not like they are going to be wiped away because it’s going to  take 18 years to gradually remove an 80 percent duty,” Diaz  said.

Tarsicio Mora, president of the Colombia United Workers  Federation (CUT), rejected the accord and said it would hurt  workers and some companies.    “This will impact small and medium-sized companies, the  agriculture sector and many workers, it will assure in one way  or another that multinationals are able to place their  products,” he told Reuters.

For years U.S. Democratic lawmakers opposed the pact on  grounds Colombia offered lax protection against violence for  union leaders.

“Colombia’s at war. We don’t have the right conditions for  a free trade accord,” said Colombian opposition lawmaker Ivan  Cepeda, whose father, also a congressman, was killed by a  paramilitary hit squad in 1994.

While 282 unionists were killed in Colombia between 2002  and 2010, the number of labor murders dropped steadily over  that time.

“With the FTA in place you have more leverage to enforce  human rights,” said Susan Aaronson, a professor of trade policy  at George Washington University in Washington.

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