Our Weblog: Excerpts of Exports
Monday, March 10, 2008
Columbia Free Trade Agreement
Free Trade with Columbia has been in the news a lot lately. Passage of the agreement, and those to Panama and South Korea, is one of the big goals of the Bush Administration in the last days of his presidency. There are a lot of politics involved in this situation especially in a national election year.
We can all remember the “giant sucking sound” that Ross Perot put forth as a result of NAFTA. According to Perot, U.S. jobs would primarily go to Mexico.The giant sucking sound painted a great picture, but not true.From 2003-2006, U.S. exports grew at twice the rate of the economy and were 12% of GDP. And according to Fed-Ex, for every 40 new packages exported from the U.S., a new job is add to the economy. Free trade brings opportunities for U.S. companies and at this time of downturn, is another step in keeping our economy on track. (For additional information on NAFTA, check out our previous blogs, the Region of the Month and our March newsletter.)
Countries want trade agreements that are reciprocal, as is the case with the proposed agreement with Columbia. A free trade agreement with the U.S. provides greater stability and encourages foreign investment in Columbia.
But the agreement also benefits the U.S. and here’s how:
1. Most U.S. goods going to Columbia pay a duty of 12.5%. This results in U.S. products being less competitive. And most products coming from Columbia to the U.S. are duty free. So the U.S. needs a level playing field.
2. Strategically Columbia is very important to the U.S. We need a strong friend in a region since Hugo Chavez, the president of Venezuela is doing what he can to de-stabilize the area and become the driving force in South America.
3. With a treaty comes greater intellectual property protection and more transparency transactions.
So this makes great sense economically and strategically. And don’t believe all the things you hear about free trade. While there may be displacement of some jobs,typically lower paying jobs, there has been an increase in better paying jobs as a result of NAFTA. For additional information on any trade agreement.