The United States House of Representatives Ways and Means Committee Chairman Dave Camp and the Senate Finance Committee Chairman Max Baucus have expressed bipartisan concern at the effect on American exporters of the entry into force of the Canada-Colombia free trade agreement (FTA) on August 15.

It has been pointed out that, as of that date, Canadian wheat and wheat flour exports can enter Colombia duty-free. In contrast, similar exports from the US to Colombia must pay a 13% tariff, while the pending US-Colombia FTA would eliminate that duty immediately upon entry into force.

US exporters in many other sectors, it is said, are now also at a disadvantage in competing with Canada for a share of Colombia’s import market. For example, the US is now the largest exporter of paper and forest products to Colombia, while Canada is second. The latter’s exporters, however, now have duty-free treatment, but US exporters must continue to pay 15% duties on many paper product exports.

In addition, US exporters of motors, engines, chemicals and fertilizers are seen to be at a similar disadvantage, because those are sectors in which Canada is also a strong competitor.

In a statement, Republican Camp said that the entry into force of the Canada–Colombia FTA “means that – for no good reason – US workers and exporters are now disadvantaged in Colombia, a key export market for American-made goods and services. Our trade agreement with Colombia was signed in 2006, years before Canada and Colombia even began their negotiations. In the meantime, our share of Colombia’s imports of key grains fell, and the trend will only accelerate as Canada and other countries deepen their trade ties with Colombia.”

Democrat Baucus also believes that the effectiveness of the Canada-Colombia FTA gives Canadian exporters an advantage over US exporters in Colombia’s lucrative market, and confirmed that he “has been fighting for months to move the US-Colombia FTA forward to level the playing field for US ranchers, farmers and businesses and create more US jobs through increased exports to Colombia”.

In fact, it is hoped that the agreement reached between the two parties before the Congressional recess over how to move forward on all three of the pending FTAs with South Korea, Panama and Colombia, will mean that the agreements can be progressed in September after Congress returns.

Despite the resolution of previous problems with approving the FTAs, including action taken by Colombia in June this year to meet US requirements on the rights of labor, the FTAs have been further delayed by President Obama's attempt to link them to an extension of lapsed legislation providing benefits to US workers who lose their jobs as a result of freer trade.

August 18, 2011

Source: Tax News

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