THE U.S.-COLOMBIA FREE TRADE AGREEMENT: BACKGROUND AND ISSUES

MEMBERS: Juan Camilo Gordillo

Jeimy López Bermúdez

Sergio Mauricio Murcia

Diego Torres Santos

WHAT IS FREE TRADE?

The Trade Agreement between the US and Colombia went into effect on May 15, 2012, the agreement was signed by both countries in almost five years earlier, in November 22, 2006

For Colombia, the FTA with the United States has been part of its overall economic development strategy, have agreed on an "action plan on labor rights" that included specific and concrete measures by the Colombian government should be adopted to eliminate tariffs and other barriers to bilateral trade in goods and services.

COLOMBIAN TARIFFS ON GOODS FROM THE UNITED

STATES• the average US tariff on Colombian

goods was 3%, while the average tariff on US goods Colombia was 12.5%. In 2010, about 90% of US

• US exports were consolidated into three tariff levels: 0% to 5% in capital goods, industrial goods and raw materials not produced in Colombia; 10% of manufactured products, with some exceptions; and 15% to 20% in the "sensitive" consumer goods

MARKET ACCESS

• The agreement eliminates 80% of tariffs on US exports of consumer and industrial products to Colombia. An additional 7% of US exports will receive duty-free treatment within five years of entry into force and most remaining tariffs will be eliminated within 10 years after entry into force.

• free instant access tariffs on 77% of all agricultural tariff lines, accounting for 52% of current US exports to Colombia will eliminate most tariffs within the next 15 years

INFORMATION TECHNOLOGY

• Colombia agreed to join the Agreement on Information Technology in the World Trade Organization (ITA) and eliminate the non-tariff products of information technology and tariff barriers.

Textiles and clothing

• In textiles and apparel, products that comply with the rules of origin requirements agreement will receive free treatment and quota

• A special textile safeguard will provide for temporary tariff relief if imports prove to be harmful to domestic producers.

services• In services trade, the two countries

agreed market access in most service sectors, with very few exceptions

• Financial service providers of the United States shall have full right to establish subsidiaries or branches of banks and insurance companies. Portfolio managers will be allowed to provide portfolio management services for both mutual funds and pension funds in the partner country, including funds managed accounts of privatized social security.

INVESTMENT AND GOVERNMENT PURCHASES

• Provisions investment will help establish a stable legal framework for foreign investors in the partner country. All forms of investment should be protected, including enterprises, debt, concessions and similar contracts and intellectual property

• US companies must be guaranteed purchases of a number of companies government of Colombia, including oil company access.

IPR PROTECTIONThe agreement will provide (IPR) protections for US companies and Colombian trademark protection in

• In the protection of patents and trade secrets, the US-Colombia FTA limit the grounds on which a country may revoke a patent agreement protects products against unfair commercial use for a period of five years

• In music and motion picture property piracy, intellectual property provisions of the agreement include penalties for piracy and counterfeiting and piracy criminalizing end user.

PROCEDURES AND RULES OF ORIGIN, CUSTOMS

• The agreement also includes provisions customs procedures, including requirements for transparency and efficiency, certainty and procedural fairness, the exchange of information, and special procedures for the release of express shipments.

LABOR PROVISIONSOn October 30, 2007, the Senate of Colombia "overwhelmingly" approved the labor and environmental modifications for the CFTA, which marks the end of the approval process for the agreement in Colombia

The United States and Colombia agreed to adopt, maintain and enforce laws that incorporate internationally recognized core labor rights including prohibition of the worst forms of child labor

The agreement includes procedural safeguards to ensure that workers and employers have a fair, equitable and transparent labor tribunals or courts access.

Administration reached an agreement with Colombia to amend NAFTA to require the parties to "adopt, maintain and enforce their own laws and in practice," the five basic principles of work.

1. freedom of association

2. the effective recognition of the right to collective bargaining

3. the elimination of all forms of forced or compulsory labor

4. the effective abolition of child labor and the elimination of the worst forms of child labor

5. the elimination of discrimination in respect of employment and occupation.

ENVIRONMENTAL PROVISIONS

• Both countries agreed to pursue a high level of environmental protection and to keep in line with environmental laws in a manner that weakens or reduces the protections. The agreement includes procedural safeguards to ensure fair, equitable and transparent procedures for the administration and enforcement of environmental laws procedures.

• US and Colombia agreed to effectively enforce their own domestic environmental laws and adopt, maintain and enforce laws and all other measures to fulfill its obligations under the seven multilateral environmental agreements (MEAs) covered

U.S.-COLOMBIA TRADE RELATIONS

Colombia is the third most populous country in Latin America, after Brazil and Mexico country. Colombia's economy is the fourth largest economy in Latin America after Brazil, Mexico

U.S.-COLOMBIA MERCHANDISE TRADE

• Colombia represents a very small percentage of the total trade of the United States (1% in 2013).

• Merchandise exports to the United States to Colombia totaled $ 16.5 billion in 2013, while imports amounted to US $ 21.4 billion

ANDEAN TRADE PREFERENCE ACT

• Under the Andean Trade Preference Act, a program of regional trade preference which expired on July 31, 2013, the United States extended the duty-free treatment to imports from Colombia and other countries in the region

• Additional products that receive preferential tariff treatment under the ATPDEA included certain items in the following categories: petroleum and petroleum products, textiles and clothing, footwear, tuna in flexible packaging, and others. Since the enactment of ATPDEA, Congress extended ATPA preferences several times to Colombia and other Andean countries for short periods of time.

US FOREIGN DIRECT INVESTMENT IN COLOMBIA

• Foreign direct investment in Colombia on a historical cost basis we totaled $ 8.4 billion in 2012, up from $ 6.5 billion in 2011 and $ 6.2 billion in 2010. In 2011, the largest amount was in mining, which accounted for 40.7%, or $ 2.8 billion, of total US FDI in Colombia

POTENTIAL ECONOMIC IMPACT ON AGRICULTURE

• The USITC study found that one of the impacts of a free trade agreement between the US and Colombia US agricultural exports to Colombia would increase:

• • The elimination of tariff and non-tariff barriers would likely result in a higher level of US beef exports to Colombia. US beef imports from Colombia

• • removing barriers to trade and certain measures to support the Government of Colombia under a CFTA would likely result in an increase in US exports to Colombia grain. Rice would explain most of the increase, with yellow corn and wheat accounting for the remaining balance.

• • US exports to Colombia in soybeans, soy products, and animal feed is likely to increase under CFTA.

REFORM OF THE CRIMINAL CODE

• New article in the Criminal Code covers a wide range of practices that negatively affect the fundamental labor rights and penalize violators up to five years in prison. The Colombian government has pledged to have legislation enacted by the Congress of Colombia on June 15, 2011.

COOPERATIVES

• The Colombian government agreed to issue regulations implementing the law 2,010 cooperatives to June 15, 2011. The purpose of this regulation is

• clarify earlier cooperatives laws

• ensure consistency between the old laws and the new cooperative law

• Increase inspections of cooperatives

• increase penalties for violators of labor laws

• implement and strictly enforce the requirements that cooperatives are autonomous and self-governing

TEMPORARY AGENCIES

• The Colombian government agreed to implement a scheme to prevent the use of temporary service agencies to circumvent labor rights. This would include measures such as improving the inspection process, the design of a new training program for labor inspectors, and create databases to identify regions and sectors where there has been abuse. The rate of application is to include a mechanism for monitoring and reporting on all stakeholders to monitor progress and compliance with labor laws.

COLLECTIVE AGREEMENTS

• The Colombian government has agreed to include in the bill on amendments to the Criminal Code a provision that is a crime, subject to imprisonment, to use collective pacts to undermine the right to organize and bargain collectively. The adoption of the penal code reform was carried out in June 2011. The provision prohibits collective agreements to extend best conditions to non-union workers.

Essential Services

• Colombia agreed that the MOH would collect the body of Colombian doctrine, case law, and case law has narrowed the definition of essential services. The MSP spread this information and guidelines for labor inspectors, judiciary, trade unions and employers on schedule for April 22, 2011

ILO Office

• The Colombian government agreed to request the cooperation, advice and technical assistance from the ILO to assist in the implementation measures of the Action Plan. It is committed to working with the ILO to strengthen the presence and expand the capacity and role of the ILO in Colombia. The US and Colombian governments committed to work together to identify resources and sources of support needed.

PROTECTION PROGRAMSThe Colombian government planned and budgeted for the additional resources needed for this expansion through increased allocation fiscal 2011 by 50% (approximately US $ 6 million) to provide adequate support to the expansion in the protection program. For fiscal 2012, the Colombian government assessed the level of funding necessary to support the program and the budget request submitted to Congress before the deadline of July 30, 2011.

PLAN OF ACTION MECHANISM

• Partner governments that have a bilateral agreement reached the decision to assess progress in implementing the action plan so it discuss the progress of the action plan commitments

RESPONSES TO ACTION PLAN COLOMBIA

• When it unveiled the new labor system Colombia and research was favorable for saints and their representatives from major companies as it came to labor issues.

• The ENS stated that the Plan of Action was filed for the plan as significant for the labor movement in Colombia. But the Andean region maintains that Colombia has not complied with its commitment to the action plan to implement the cooperative, many people from different sectors were affected by NAFTA with the United States which is unfavorable for the country as states states is always monopolize.

OPINIONS ON THE AGREEMENT

• For united states is very important to be in different markets with different countries and generate more exports becoming beneficiary always with a treaty and that Colombia has not been the best for the United States if as imports from Colombia to United States increased by 45% to change united states had imported from Colombia to or remained at 5%, which is well proven not been the best decision to have trade agreements with United States

THE CONCERNS OF COLOMBIAN FARMERS

• Farmers are those who have been most affected and are most concerned with the CAFTA because united states Colombia have flooded agricultural products from their country which directly affected the economy of Colombia mostly non-agricultural small halos have the ability to stay in a very competitive and demanding market. As with NAFTA is easier to import than to produce agricultural products with the agreement because the tariff and other taxes were very low

VIEWS LABOR 

• Numerous US business groups strongly oppose the free trade agreement with Colombia. They argue that the labor movement in Colombia are being targeted by violence, and the government's commitment was to give workers greater halos both economic and social security and always protecting your rights when

• Union members in support of a free trade agreement argue that an FTA would provide jobs in coffee, flower, textile and other industries in Colombia. They argue that the Uribe administration made much progress in protecting workers' rights and the Santos Administration is doing these more concrete positive changes.

IMPLEMENTING THE LABOR ACTION PLAN

•  The United States and Colombia continue to cooperate on issues related to Labor Action Plan. Colombian Labor Minister Rafael Pardo Rueda said he had agreed to continue bilateral meetings at least until 2014 in the Action Plan commitments.

• Colombia is committed to the full implementation of the Action Plan and that both governments hope to work together "to make these promises a reality for workers

• Some members of Congress on labor rights in Colombia recognizes that the government has taken significant steps to protect the rights of workers and is working at the highest levels of government to implement the Action Plan and to improve conditions work in Colombia.

ACTIONS OF THE GOVERNMENT OF COLOMBIA IN RESPONSE TO THE CONCERNS OF THE US LABOR

• In response to the concerns of the United States with respect to labor rights in Colombia, the Embassy of Colombia in the United States has been reporting the progress that Colombia has made since 2001 in strengthening the rights, benefits and security of trade unions in Colombia.

• Some Colombian government officials believe that the United States and Colombia FTAs Labor Action Plan demonstrates an unprecedented level of cooperation between the two countries in labor and can be a model for other FTAs in the workplace. For example, thousands of workers have been added to the formal labor force that exceeded the size of the informal labor force in 2013.

• The government has also made considerable efforts to increase the number of labor inspectors in order to meet its commitments under the Action Plan. In late January 2014, Colombia achieved all of its commitments under the Action Plan, completing the recruitment of 480 new labor inspectors before the deadline of December 2014.

ADVANTAGE• Development of the economy• Access to higher quality

products and lower prices• Contact with technological

and scientific advances• Increased employment• Expansion of markets

DESADVANTAGE• We open up to a new market with

higher purchasing power to our

• increased competition and production capacity in some sectors

• Loss of opportunity for economic development through the sale of products at market prices

• exploitation of our natural resources