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Tuesday, April 26, 2011

Proposed U.S.-Colombia Free Trade Agreement: Labor Issues


Mary Jane Bolle
Specialist in International Trade and Finance

This report examines three labor issues and arguments related to the pending proposed U.S.- Colombia Free Trade Agreement (CFTA): violence against trade unionists; impunity (accountability for or punishment of the perpetrators); and worker rights protections for Colombians. For general issues relating to the CFTA, see CRS Report RL34470, Proposed U.S.- Colombia Free Trade Agreement: Background and Issues, by M. Angeles Villarreal. For background on Colombia and its political situation and context for the agreement, see CRS Report RL32250, Colombia: Issues for Congress, by June S. Beittel.

Opponents of the pending U.S.-Colombia free trade agreement (CFTA) argue against it on three points: (1) the high rate of violence against trade unionists in Colombia; (2) the lack of adequate punishment for the perpetrators of that violence; and (3) weak Colombian enforcement of International Labor Organization (ILO) core labor standards and Colombia’s labor laws.

Proponents of the agreement argue primarily for the proposed Colombia FTA on the basis of economic and national security benefits. Accordingly, they argue, the CFTA would support increased exports, expand economic growth, create jobs, and open up investment opportunities for the United States. They also argue that it would reinforce the rule of law, spread values of capitalism in Colombia, and anchor hemispheric stability.

Proponents specifically respond to labor complaints of the opponents, that (1) violence against trade unionists has declined dramatically since former President Álvaro Uribe took office in 2002; (2) substantial progress is being made on the impunity issue as the government has undertaken great efforts to find perpetrators and bring them to justice; and (3) the Colombian government is taking steps to improve conditions for workers. The most recent steps are outlined in the “Colombian Action Plan Related to Labor Rights,” released and jointly endorsed by President Obama and Colombian President Juan Manual Santos, on April 7, 2011.

If Congress were to approve the Colombia FTA, it would be the second FTA (after Peru) to have some labor enforcement “teeth.” Labor provisions including the four basic ILO core labor principles would be enforceable through the same dispute settlement procedures as for all other provisions (i.e., primarily those for commercial interests.) Opponents argue that under CFTA, only the concepts of core labor principles, and not the details of the ILO conventions behind them, would be enforceable.

Proponents point to recent Colombian progress in protecting workers on many fronts. They argue that approval of the FTA and the economic growth in Colombia that would result is the best way to protect Colombia’s trade unionists. They also argue that not passing the agreement would not resolve Colombia’s labor issues. In addition, they argue, the United States could lose jobs through trade diversion as Colombia continues to enter into regional trade agreements with other countries.

Opponents argue that delaying approval of the proposed CFTA further would give Colombia more time to keep improving protections for its workers.



Date of Report: April 14, 2011
Number of Pages: 18
Order Number: RL34759
Price: $29.95

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Proposed U.S.-Colombia Free Trade Agreement: Background and Issues


M. Angeles Villarreal
Specialist in International Trade and Finance

The proposed U.S.-Colombia Trade Promotion Agreement, also called the U.S.-Colombia Free Trade Agreement (CFTA), was signed by the United States and Colombia on November 22, 2006. The agreement must be approved by the U.S. Congress before it can enter into force. The Colombian Congress approved the agreement in June 2007 and again in October 2007, after it was modified to meet labor and environmental concerns. Upon congressional approval, it would immediately eliminate duties on 80% of U.S. exports of consumer and industrial products to Colombia. Most remaining tariffs would be eliminated within 10 years of implementation. The agreement also contains other provisions in services, investment, intellectual property rights protection, labor, and the environment. About 90% of U.S. imports from Colombia enter the United States duty-free under trade preference programs or through normal trade relations, while U.S. exports to Colombia face duties of up to 20%, and even higher for certain products.

The 112
th Congress may consider implementing legislation for the proposed CFTA. Negotiations for the agreement were conducted under the trade promotion authority (TPA). Implementing legislation for the CFTA (H.R. 5724/S. 2830) was introduced in the 110th Congress on April 8, 2008, under TPA. The House leadership, however, took the position that the President had submitted the implementing legislation without adequately fulfilling the TPA requirement for consultation with Congress. On April 10, 2008, the House voted 224-195 to make the provisions establishing expedited procedures inapplicable to the CFTA implementing legislation (H.Res. 1092).

The congressional debate surrounding the agreement has mostly centered on the violence and human rights issues in Colombia. Numerous Members of Congress oppose the agreement because of concerns about violence against union members and other terrorist activity in Colombia. However, other Members of Congress support the CFTA and take issue with these charges, stating that Colombia has made progress in recent years to curb the violence in the country. They also contend that the agreement would open the Colombian market for U.S. exporters. Other policymakers argue that Colombia is a crucial ally of the United States in Latin America and that if the trade agreement is not passed, it may lead to further violence in the region. For Colombia, a free trade agreement with the United States is part of its overall economic development strategy.

President Barack Obama has expressed the importance of strengthening U.S. trade relations with Colombia. On April 6, 2011, the Obama Administration announced an agreement between the United States and Colombia that resolves the concerns related to labor rights and violence in Colombia. The announcement states that the agreement would “clear the way” for the U.S.- Colombia FTA to move forward to Congress. The agreed upon “Action Plan Related to Labor Rights” includes a number of specific and concrete steps that the Colombian government agreed upon to address issues related to violence against union members, impunity, and worker rights. The Obama Administration’s announcement states that the successful implementation of key elements of the plan will be a precondition for the agreement to enter into force.

The United States is Colombia’s leading trade partner. Colombia accounts for a very small percentage of U.S. trade (0.9% in 2010), ranking 20
th among U.S. export markets and 25th as a source of U.S. imports. Economic studies on the impact of a U.S.-Colombia free trade agreement (FTA) have found that, upon full implementation of an agreement, the impact on the United States would be positive but very small due to the small size of the Colombian economy when compared to that of the United States (about 1.9%).


Date of Report: April 12, 2011
Number of Pages: 33
Order Number: RL34470
Price: $29.95

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Monday, April 25, 2011

Proposed U.S.-Colombia Free Trade Agreement: Background and Issues


M. Angeles Villarreal
Specialist in International Trade and Finance

The proposed U.S.-Colombia Trade Promotion Agreement, also called the U.S.-Colombia Free Trade Agreement (CFTA), was signed by the United States and Colombia on November 22, 2006. The agreement must be approved by the U.S. Congress before it can enter into force. The Colombian Congress approved the agreement in June 2007 and again in October 2007, after it was modified to meet labor and environmental concerns. Upon congressional approval, it would immediately eliminate duties on 80% of U.S. exports of consumer and industrial products to Colombia. Most remaining tariffs would be eliminated within 10 years of implementation. The agreement also contains other provisions in services, investment, intellectual property rights protection, labor, and the environment. About 90% of U.S. imports from Colombia enter the United States duty-free under trade preference programs or through normal trade relations, while U.S. exports to Colombia face duties of up to 20%, and even higher for certain products.

The 112
th Congress may consider implementing legislation for the proposed CFTA. Negotiations for the agreement were conducted under the trade promotion authority (TPA). Implementing legislation for the CFTA (H.R. 5724/S. 2830) was introduced in the 110th Congress on April 8, 2008, under TPA. The House leadership, however, took the position that the President had submitted the implementing legislation without adequately fulfilling the TPA requirement for consultation with Congress. On April 10, 2008, the House voted 224-195 to make the provisions establishing expedited procedures inapplicable to the CFTA implementing legislation (H.Res. 1092).

The congressional debate surrounding the agreement has mostly centered on the violence and human rights issues in Colombia. Numerous Members of Congress oppose the agreement because of concerns about violence against union members and other terrorist activity in Colombia. However, other Members of Congress support the CFTA and take issue with these charges, stating that Colombia has made progress in recent years to curb the violence in the country. They also contend that the agreement would open the Colombian market for U.S. exporters. Other policymakers argue that Colombia is a crucial ally of the United States in Latin America and that if the trade agreement is not passed, it may lead to further violence in the region. For Colombia, a free trade agreement with the United States is part of its overall economic development strategy.

President Barack Obama has expressed the importance of strengthening U.S. trade relations with Colombia. On April 6, 2011, the Obama Administration announced an agreement between the United States and Colombia that resolves the concerns related to labor rights and violence in Colombia. The announcement states that the agreement would “clear the way” for the U.S.- Colombia FTA to move forward to Congress. The agreed upon “Action Plan Related to Labor Rights” includes a number of specific and concrete steps that the Colombian government agreed upon to address issues related to violence against union members, impunity, and worker rights. The Obama Administration’s announcement states that the successful implementation of key elements of the plan will be a precondition for the agreement to enter into force.

The United States is Colombia’s leading trade partner. Colombia accounts for a very small percentage of U.S. trade (0.9% in 2010), ranking 20
th among U.S. export markets and 25th as a source of U.S. imports. Economic studies on the impact of a U.S.-Colombia free trade agreement (FTA) have found that, upon full implementation of an agreement, the impact on the United States would be positive but very small due to the small size of the Colombian economy when compared to that of the United States (about 1.9%).


Date of Report: April 12, 2011
Number of Pages: 33
Order Number: RL34470
Price: $29.95

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Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy


J. F. Hornbeck
Specialist in International Trade and Finance

William H. Cooper
Specialist in International Trade and Finance


On July 1, 2007, Trade Promotion Authority (TPA—previously fast track), expired. TPA is the authority Congress grants to the President to enter into certain reciprocal (free) trade agreements (FTAs), and to have their implementing bills considered under expedited legislative procedures, provided he observes certain statutory obligations in negotiating them. TPA defines how Congress has chosen to exercise its constitutional authority over a particular aspect of trade policy, while presumably giving the President added leverage to exercise his authority to negotiate trade agreements by effectively assuring U.S. trade partners that final agreements will be given swift and unamended consideration.

TPA reflects years of debate, cooperation, and compromise between Congress and the Executive Branch in finding a pragmatic accommodation to the exercise of each branch’s respective authorities over trade policy. The core provisions of the fast track legislative procedures have not changed since first enacted in 1974, although Congress has expanded trade negotiation objectives, oversight, and presidential notification requirements. While early versions of fast track/TPA received broad bipartisan support, renewal efforts have become increasingly controversial as fears have grown over the negative effects of trade, and as the trade debate has become more partisan and constituent driven, culminating in a party-line vote on the 2002 renewal. Debate on TPA renewal may center on clarifying key aspects of: the congressional role in making trade policy; Congress’s oversight of trade negotiations; trade agreement enforcement; and further refinement of trade negotiation objectives on labor, environment, and public health issues, among others.

A congressional decision on TPA renewal could affect multiple trade negotiations and pending agreements. The 112
th Congress has inherited agreements with Colombia, Panama, and South Korea that were signed in time to be considered under the 2002 TPA. In the cases of Panama and South Korea, it appears that implementing legislation, should it be introduced, would still be eligible for fast-track expedited procedures. Colombia, however, presents a different scenario because implementing legislation was introduced in the House during the 110th Congress, only to be denied such expedited procedures by a House-passed resolution. Because subsequent Parliamentarian rulings in the House and the Senate differed on the possible future use of fast track for the Colombia FTA, an initial debate may involve clarifying the rules under which an implementing bill might be considered. In addition, the status of TPA renewal could affect or be influenced by progress made toward the Trans-Pacific Partnership (TPP) Agreement or the World Trade Organization (WTO) Doha Round of multilateral negotiations.

The prospects for renewing TPA are unclear and depend on one’s perspective as to whether having TPA in place benefits the U.S. negotiation position. Technically, TPA is not necessary to begin or even conclude trade negotiations, but it is widely understood to be a key element of getting a trade implementing bill passed in Congress, and so its renewal can be construed as signaling U.S. support for moving ahead with trade negotiations. When Congress decides to consider the issue, it has many options including: take no action; extend temporarily; revise and renew; grant permanent authority; or devise some hybrid solution. How this issue plays out depends on a host of political and economic variables, including congressional action on restoring a “political compact” that sits at the center of a well functioning TPA process.



Date of Report: April 7, 2011
Number of Pages: 24
Order Number: RL33743
Price: $29.95

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The Proposed U.S.-Panama Free Trade Agreement


J. F. Hornbeck
Specialist in International Trade and Finance

On June 28, 2007, the United States and Panama signed a reciprocal free trade agreement (FTA). Negotiations were formally concluded on December 16, 2006, with an understanding that further changes to labor, environment, investment, and intellectual property rights (IPR) chapters would be made pursuant to future detailed congressional input. These changes were agreed to in late June 2007, in time for the FTA to be considered under Trade Promotion Authority (TPA) legislation before it expired on July 1, 2007. TPA allows Congress to consider trade implementing bills under expedited procedures. Panama’s legislature approved the FTA 58 to 4 on July 11, 2007. Neither the 110th nor the 111th Congress took up the agreement.

The proposed U.S.-Panama FTA is a comprehensive agreement. Some 88% of U.S. commercial and industrial exports would become duty-free upon implementation, with remaining tariffs phased out over a 10-year period. Over 60% of U.S. farm exports to Panama also would achieve immediate duty-free status, with tariffs and tariff rate quotas (TRQs) on select farm products to be phased out by year 17 of the agreement (year 20 for rice). Panama and the United States signed a separate bilateral agreement on sanitary and phytosanitary (SPS) issues that would recognize U.S. food safety inspection as equivalent to Panamanian standards, which will expedite entry of U.S. meat and poultry exports. The FTA also consummates understandings on telecommunications, services trade, government procurement, investment, and intellectual property rights.

The circumstances framing the proposed U.S.-Panama FTA differ considerably from those of two other signed FTAs that have yet to be considered by Congress. The deep concerns that Congress has expressed over Colombia’s violence have not been an issue in the Panama FTA debate, which is framed more by the positive image of a long-standing strategic bilateral relationship based on Panama’s canal. Nor does Panama compare well with the continuing debate over the proposed FTA with South Korea, which as a major U.S. trading partner, can affect key industries such as automobile and beef production. To the contrary, Panama trades little with the United States, even by Latin American standards, and most exports already enter the United States duty free, so although particular industries could be affected to some degree, and U.S. investment is relatively important in Panama, the FTA cannot have a major effect on the U.S. economy as a whole.

The final text of the proposed U.S.-Panama FTA incorporates amendments based on the May 10, 2007, bipartisan agreement crafted by the Bush Administration and leadership in the 110
th Congress. These include adoption of enforceable labor standards, compulsory membership in multilateral environmental agreements, and an easing of restrictions on developing country access to generic drugs, provisions that go beyond those in existing bilateral FTAs and multilateral trade rules. Two issues remain: labor and tax transparency. All but one labor concern was addressed with passage of legislation in Panama on March 30, 2011. The minimum workers needed to form a union has not been addressed for the lack of support even among labor groups in Panama. Congress has also required that Panama incorporate changes to its laws necessary to implement the recently signed Tax Information and Exchange Agreement (TIEA), which would provide greater transparency in support of curbing money laundering activities related to drug trafficking. Much of the legislation has been completed, but the National Assembly has not taken a final vote on ratifying the TIEA. It remains to be seen if these final changes will be sufficient for the FTA to be approved by a majority in the U.S. Congress.

For more on Panama, see CRS Report RL30981, Panama: Political and Economic Conditions and U.S. Relations, by Mark P. Sullivan.



Date of Report: April 13, 2011
Number of Pages: 36
Order Number: RL32540
Price: $29.95

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