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Business Supports Colombia FTA

U.S. and even European business leaders favor the U.S.-Colombia free trade agreement.


Ali Moshiri, the president for Africa and Latin America exploration and production for U.S.-based oil company Chevron, has no doubts about the benefits of the U.S.-Colombia free trade agreement.

"Chevron views free trade and free trade agreements, as extremely positive for countries throughout the world, including Colombia and the United States of America," he says. "These agreements lower the cost of doing business and provide greater access to more goods and materials."


Much of the specialized equipment required for oilfield development is manufactured in the United States, and FTA provisions would lower their barriers on the U.S. side for their export, Moshiri adds. "This would add efficiencies and cut costs for development, favorably influencing challenges in today’s global energy market," he points out. "Further, by enhancing US exports, it strengthens the currently most solid leg of a difficult domestic economy."

The U.S.-Colombia free trade agreement will reinforce the investment trend in areas such as logistics and services, food and energy production, argues Pablo Londoño, partner, Colombia office of US-based executive search firm CTPartners. "It will attract new investments that are already coming, demanding due local talent benefiting a very healthy growth of our business," he says.

Even non-US multinationals see the advantages of a U.S.-Colombia FTA. "The FTA in Colombia ...will allow the country to compete with practices of other countries ..., promote investment in infrastructure of all kinds [and] generate international demand that can be supplied by local products or services," says Fernando Rubio, Managing Director in Colombia for German software giant SAP. "It will bring more and better employment opportunities and the consequent poverty reduction."


Oil and software aren't the only sectors expected to benefit from the Colombia FTA. "The proposed US-Colombia FTA should bring significant changes to the structure of Colombia's pharmaceutical market," research firm BMI said in a recent report. "The US is already the largest source of imports for Colombia's pharmaceutical market. Meanwhile, many Colombian firms continue to struggle to meet the quality standards required to win export orders in the US. The FTA is likely to involve short term pain for many local drug makers as they are forced to increase manufacturing standards and take greater steps to improve the bioequivalence of their products. However, the longer term benefits of greater foreign investment should make these goals easier to achieve."

Colombia's pharmaceutical market is expected to grow from $2.4 billion last year to $3.4 billion by 2012. "Our forecast has been marginally downgraded due to slow progress on the ratification of the US-Colombia Free Trade Agreement," BMI said. 


The U.S.-Colombia FTA will help boost U.S. exports since it eliminates 80 percent of all tariffs on U.S. exports of industrial and consumer products and over half of the tariffs on  agriculture exports, former U.S. Trade Representative Carla Hills told a Senate Finance Committee hearing last week. "Over time, all Colombian tariffs are eliminated, creating substantial new economic opportunity for our exporters," she said. "Equally important, this agreement will significantly advance our security interests in a region beset with instability and anti-Americanism."

Charlene Barshefsky, a USTR under President Bill Clinton,  also supports the Colombia FTA. "We need a fresh start with Latin America," she told the same Senate hearing "Looking ahead, I do think we should begin by passing the Colombia and Panama agreements."


However, it is still unclear if the Colombia FTA will be approved this year. There are no indications that Speaker Nancy Pelosi will allow a vote on the agreement, which was signed more than two years ago - in February 2006 - and submitted to Congress for approval in April - or more than three months ago.  Senator Barack Obama - the presumptive Democratic presidential candidate - opposes the Colombia FTA, but may be forced to support some congressional passage if he becomes president, some experts predict.

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