Economy

Colombia advances China trade pact

posted by Adriaan Alsema

Colombia China

Colombian lawmakers passed legislation they hope will open the floodgates of trade with China, where the government plans two high-level trade missions over the next three months, as a long-delayed U.S. trade deal with the South American nation stalls in Congress.

Colombia Trade Minister Sergio Díaz-Granados said Tuesday’s passage of the “Chinese Trade Promotion and Protection” bill—which affords China certain legal guarantees on its investments in Colombia—could also propel talks with China to build a railway that would link Colombia’s Caribbean and Pacific coasts, and would serve as an alternative to the Panama Canal.

Trade officials in Bogotá expressed frustration with the slow pace of progress in Washington, which they say contrasts with Chinese eagerness to invest in Colombia, Washington’s closest ally in South America.

In an interview, Mr. Díaz-Granados said he remained hopeful a free-trade pact with the U.S. would be passed before year’s end, but that Colombia can no longer “sit with its arms crossed, waiting.”

“We’ve been talking about a U.S.-Colombia free trade deal for 20 years, and it’s certainly the trade deal we want more than any other,” Mr. Díaz-Granados said. “But in the meantime, we have to continue working in other directions. Our business leaders need to pursue other markets and diversify.”

Mr. Díaz-Granados said it was too early to begin formal trade talks with China, although the bill, which is expected to become law within two months, is Colombia’s most important trade-related act with China to date.

Pending U.S. trade-opening agreements with South Korea, Colombia and Panama have been stalled for weeks as Republican lawmakers and the White House lock horns over renewing Trade Adjustment Assistance, a program that compensates workers displaced by trade deals.

The White House and many congressional Democrats say the deals cannot pass without a “robust” renewal of the 50 year-old program, which costs about $1 billion annually, and offers training and other benefits to workers idled by trade-related job shifts. Republicans, who are engaged in a broader budget fight, say the program must be scaled back. Administration officials and members of Congress worked through last weekend to craft a compromise, but have yet to reach an agreement.

Meanwhile, Washington’s would-be partners in the agreements point out that U.S. exporters will miss out: on a trade pact between Korea and the European Union that comes into effect July 1, as does a Colombia-Canada pact.

Last week, a delegation of South Korean lawmakers met with members of Congress and the administration to press for immediate passage of the Korea deal. Unless Congress ratifies the agreement this summer, Korean government officials say, it risks falling by the wayside, as Korean lawmakers avoid controversial legislation in the run-up to April parliamentary elections.

Mr. Díaz-Granados said he would travel to China next month for trade talks in various cities, and Colombian President Juan Manuel Santos will visit there in September to discuss trade and other issues.

China has been making inroads in Latin America for some time. In 2009, it supplanted the U.S. as Brazil’s largest trading partner, and Venezuela’s President Hugo Chávez has for years allowed Chinese companies to set up shop in oil fields and factories once owned by U.S. firms before they were expropriated.

About 40% of Colombia’s exports go to the U.S. and only 3% to China, while 28% of Colombia’s imports come from the U.S., compared with 13% from China.

Continued delays in implementing a free-trade deal with the U.S. could deepen China’s influence in Colombia. U.S. goods exports to Colombia in 2009, the most recent year available, were $9.5 billion, down 17.3% from 2008. U.S. goods imports from Colombia totaled $11.3 billion in 2009, a 13.5% decrease from 2008.

If U.S. lawmakers don’t ratify trade pacts soon, they will be delayed indefinitely, as politicians avoid passing controversial legislation in the 2012 election year.

The U.S.-Colombia trade pact was approved by both governments in 2007, but Democrats in Washington haven’t ratified the deal amid opposition from labor groups such as the AFL-CIO, which argues it would cost U.S. jobs and criticizes Colombia’s alleged human-rights violations.

This year the Obama administration addressed some of those concerns by reaching an agreement with Bogotá designed to improve legal protections for labor organizers and members, and stiffen penalties for those who threaten Colombian workers’ rights.

Meanwhile, Colombia began trade talks with South Korea and Turkey. Talks with Japan could begin soon, officials said. Mr. Díaz-Granados said the pact could provide a framework for more serious talks to begin on China building the railroad across northwestern Colombia. “The idea of building a railroad linking the Caribbean and the Pacific has been around for decades,” he said. “The difference is that 50 years ago there was no China. Now there is, and it’s a country with massive infrastructure and transportation needs.”

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