Colombia trade benefits seen at risk without US deal

By Doug Palmer

WASHINGTON (Reuters) – Colombia could lose current trade
benefits with the United States if the two countries are unable
to finish talks on a free trade agreement, U.S. industry and
congressional sources said on Wednesday.

The warning came as U.S. and Colombian negotiators began
their 14th round of talks this week and next in Washington.

Colombia, Peru and Ecuador all started free trade talks
with the United States in May 2004, and at the time hoped to
finish by early 2005. Peru finally wrapped up a deal in
December, but Colombia and Ecuador have balked at some of
Washington’s demands for agricultural market openings.

The three countries, along with Bolivia, currently have
duty-free access to the U.S. market for many goods under U.S.
legislation dating back to the early 1990s.

The program has helped the four countries double their
exports to the United States over the past 15 years to more
than $15 billion annually. Leading Colombian exports have been
petroleum-related products, clothing and cut flowers.

The latest extension expires at the end of this year, and
the idea of making those trade benefits permanent was one
reason Colombia, Peru and Ecuador have been eager for a free
trade pact with the United States.

Now, if Colombia and Ecuador are unable to finish talks
with the United States, there is a risk that Congress will not
renew those trade benefits, said Frank Vargo, vice president
for international affairs at the National Association of
Manufacturers.

“Colombia has to recognize that the clock is running,”
Vargo said. That applies not only to the trade benefits, but to
the short window Congress is expected to have to consider trade
agreements this year, he said.

U.S. law requires the Bush administration to notify
Congress 90 days before signing any trade agreement. At the
same time, lawmakers in the House of Representatives who face
reelection in November are unlikely to want to vote on any
trade pacts in September and October, he said.

A Republican aide on the Senate Finance Committee agreed
Colombia and Ecuador could lose current trade benefits if they
are unable to finish talks with the United States.

“The issue of renewal is certainly being pondered here in
Congress … It’s not a foregone conclusion,” the aide said,
speaking on condition he not be identified out of deference to
lawmakers who will make the actual policy decision.

Senate Finance Committee Chairman Charles Grassley, an Iowa
Republican, also has warned that agricultural market access
terms of the Colombia agreement must be at least as good as the
U.S.-Central American Free Trade Agreement, or CAFTA, that
Congress approved last year, the committee aide said.

If Colombia can’t agree to those terms, “there’s really not
much point in continuing negotiations” because the agreement
would not come to the floor for a Senate vote, the aide said.

A spokesman for the U.S. Trade Representative’s office
would not comment on whether Colombia could lose trade benefits
if it fails to reach a deal with the United States.

She focused instead on chances for the two countries to
finish their talks. “We are making good progress in narrowing
differences,” USTR spokeswoman Neena Moorjani said.