The Colombia Trade Deal

Like Atrios, I was kind of curious as to what the actual content of the looming free trade agreement with Colombia is. As best I can tell (peruse the text if you're interested) this actually involves very little changes on the US side at all. In essence, Colombian goods already flow very freely into the United States except for in our more famously protected sectors (agriculture, etc.) and what we're offering Colombia here is a very solemn promise to keep it that way.

Colombia, meanwhile, is agreeing to implement a series of neoliberal reforms on a variety of issues, most of which don't have much to do with trade as it's traditionally understood. As has become typical in these deals, Colombia agrees to undertake various intellectual property reform measures, various investment rules, something having to do with their telecommunications sector, etc. I would be very surprised if the IP rules in question were actually a good idea for Colombia, and can't really evaluate the rest of it. Colombia's getting very little out of the deal per se, but its government does get a lot of military support from the US government, and many provisions in here are of interest to American businesses and may well be the sort of thing a right-of-center government would want to do anyway but likes to use the framework of a "deal" to help sell the measure.

All things considered, this seems to have almost no implications for American well-being, and if I were a member of congress I think I would consider this an excellent moment to let me vote be dictated by pure partisan politics or possibly corruption. If I were a blogger, I would say that lowering barriers to the importation of foreign goods on a unilateral basis would be good policy for the United States and that using bi- or multi-lateral trade negotiations to try to get other countries to adopt "pro-business" policies is a pretty dubious undertaking.

Comments

All things considered, this seems to have almost no implications for American well-being, and if I were a member of congress I think I would consider this an excellent moment to let me vote be dictated by pure partisan politics or possibly corruption.

I thought Democrats were the party who cared about America's standing in the world? But apparently jerking Colombia around for domestic political posturing is okay?

Posted by right | April 9, 2008 4:47 PM

"I would say that lowering barriers to the importation of foreign goods on a unilateral basis would be good policy for the United States"

(My bolding.)

Spoken like a true trust fund scumbag.

Funny how all the "professional Democrat" folks who don't give a shit about lower income Americans are in the Obama camp, ain't it?

It doesn't matter if the issue is trade, universal healthcare, or Social Security. Trust fund scumbags like Matthew Yglesias say the 50%+ of Democrats who've voted their economic interests by voting for Clinton are racists.

They know they're lying, but they don't care.

Posted by Petey | April 9, 2008 4:58 PM

Petey:

I half agree. Here is the thing, Matt is is not calling anyone a racist and neither is Obama. Get over it.

As to your substantive point, I basically agree. Americans don't like taxes, and it is really hard to pass universal social programs (it is worth tring though!), but Americans are pretty okay with trade barriers. Now, I don't think we should just cut ourselves off from world-trade, but at the margin, being such a huge market, we really can change our terms of trade with the world using some well-placed tariffs--and by doing this we could affect how much of the pie labor gets (see Stolper-Samuelson). So trade is an easier way to do this, politically speaking, and therefore a second-best option. In any case I think it is worth shifting to trade policy as a means of ameliorating growing inequality, because at a minimun it is a great bargaining chip. Big business knows that Americans do not like globalization, nafta, free-trade etc, and if we clubbed them over the head with it and then came to a "bargain" wherby we could raise taxes, implement universal social programs and keep America a free-trading country, I'd be okay with that.

Posted by David | April 9, 2008 5:07 PM

These kinds of trade deals are sometimes used by right-of-center governments to enshrine their preferred policies in a treaty because treaties are harder to change than laws. This was an important motivation for the PRI to support NAFTA in Mexico. I don't know about Colombian domestic politics but the same may be going on here.

Posted by DCreader | April 9, 2008 5:08 PM

right, I believe that was sarcasm. As a reading of the *very next sentence* suggests.

Petey, still sticking by your pledge to fight all-out for the Democratic nominee, whoever it turns out to be? When was the last time you attacked a Republican, by the way?

I suppose if I were a better person I'd feel sorry for you, and occasionally I do, but mostly I find your meltdown amusing.

Posted by Ryan | April 9, 2008 5:14 PM

Petey's a bit too harsh, and I disagree with him on Obama (though he has a pretty good point there, as well), but I am just infuriated to the point of craziness by Matt's imperial gaze. For instance:

"...would be very surprised if the IP rules in question were actually a good idea for Colombia, and can't really evaluate the rest of it. Colombia's getting very little out of the deal per se...."

Maybe that's something for the Colombians to decide!

Look, I know it is your actual job to opine from on high at the capital of the world empire -- but it might help you intellectually if you took a break for even a week, got out into the provinces a bit, and ate a big dosing of humility and privation.

This is the kind of thing that makes even your allies angry, MY....

Posted by Ben Cronin | April 9, 2008 5:14 PM

Petey: I assume this means you're also on board with restrictionist immigration policies? After all, tightening the labor supply is the most direct route to raising the incomes of working Americans.

Matt: You're behind the curve on progressive thinking on trade. Even Krugman, who has built his academic career on trade theory, is coming around to the idea that unrestricted trade may not be such a good thing:
"Trade & Wages Reconsidered"
http://www.princeton.edu/~pkrugman/pk-bpea-draft.pdf

Posted by DCreader | April 9, 2008 5:17 PM

if I were a member of congress I think I would consider this an excellent moment to let me vote be dictated by pure partisan politics or possibly corruption.

Aye, an' if I were a leprechaun, I'd consider this a grand moment to let me vote be dictated by the luck o' the Irish! But if I were a blogger, I'd eat me Lucky Charms and do me proofreadin'.

Posted by Catch me Lucky Charms | April 9, 2008 5:21 PM

When did Al change his nickname to Petey?

Posted by neil | April 9, 2008 5:21 PM

if I were a member of congress I think I would consider this an excellent moment to let me vote be dictated by pure partisan politics or possibly corruption.

Aye, an' if I were a leprechaun, I'd consider this a grand moment to let me vote be dictated by the luck o' the Irish! But if I were a blogger, I'd eat me Lucky Charms and do me proofreadin'.

Posted by Catch me Lucky Charms | April 9, 2008 5:25 PM

When did Al change his nickname to Petey?

Nah, the Als would never claim to be sticking up for "lower income Americans".

Petey and Hillary: Saving the Democratic Party by destroying it, if necessary!

Posted by Ryan | April 9, 2008 5:27 PM

Maybe that's something for the Colombians to decide!

Hey, that's right! What the hell gives you the right to offer your opinion on politics and world affairs, Yglesias?

Posted by neil | April 9, 2008 5:29 PM

I think there's way too much heat and posturing on both sides about this issue. It really seems to be a fight over beliefs (free trade vs. restricted trade) rather than a fight over what the actual impact will be on the U.S. economy (probably landing somewhere between undetectable and negligible).

Posted by LFC | April 9, 2008 5:30 PM

Of course Matt is entitled to his opinion, Neil; he is paid well for it. What I meant is that there is something in his tone that just reeks of the condescension and privilege that comes from being on top of the stack all the time.

Posted by Ben Cronin | April 9, 2008 5:33 PM

One might think a liberal blogger would be interested in labor rights and environmental protection, but, if so, one would apparently be wrong. Labor rights and environmental protection appears to be of no interest to liberals.

The more humorous thing is seeing Nancy Pelosi change the rules of the House to prevent a vote. Too funny. What was it - two years ago - that the left-wing blogosphere and Democrats in the House were decrying how the Republicans changed the House rules to get their way. Democrats and left-wing bloggers howled when Republicans held the vote open longer than the normal 15 minutes in order to round up the votes. Then Pelosi did the exact same thing - she held the vote open for 31 minutes in order to round up the votes - in violation of the rule that Pelosi put in place to prevent that sort of thing. And, moreover, it was to pass the (inaptly titled) ethics bill! And now Pelosi is changing the House rules again in order to get her way.

And, of course, left-wing bloggers are utterly silent. Just like they were when Pelosi held the vote open.

Posted by Al | April 9, 2008 5:39 PM

the Als would never claim to be sticking up for "lower income Americans".

I think that would, if they claimed to be sticking up for them against the Democrats. Which appears to be what 'Petey' is doing.

Posted by neil | April 9, 2008 5:40 PM

Ben, I'm not sure I get your criticism. Is it that Matt shouldn't have written a post about the Colombia trade deal at all? That's what I take from "imperial gaze," but I don't think that's what you mean. But then I'm not sure what you think he should have been saying, or even what kinds of things he should have been saying.

Petey, can you start numbering the points in your comments? It'd be really helpful for reasons I shouldn't have to spell out.

Posted by washerdreyer | April 9, 2008 5:55 PM

Since Colombians are free to disagree about the desirability of the FTA / TLC, and they actually do, it seems also okay for people outside Colombia to discuss it, and even to disagree with some or all of it, especially given that another nation is involved. It's not like if a country's government decides something, even if it does so in some arguably democratic fashion, that dissenters are then instantly somehow traitors or imperialists.

Posted by El Cid | April 9, 2008 6:06 PM

And if I didn't care one way or another about products imported (legally) from Colombia, I would simply say that Bill Clinton and Mark Penn are for it, while Hillary Clinton's been against it since she started running for President (which is when time beings, btw). So, I'd leverage that simply to attack her ethics. But this seems like one of the two times a day Penn's right about something. I mean, seems like a bad deal for Colombia, but their government's the one that's pushing this. Anyway, Clinton = liar who cannot be trusted.

Posted by David B. | April 9, 2008 6:18 PM

"All things considered, this seems to have almost no implications for American well-being"

Perhaps not for Harvard-educated bloggers, but what about the blue collar workers who make Caterpillar tractors? As today's WSJ notes ("Colombia and Cat"):

But by quashing the Colombia FTA, Mr. Sweeney [AFL-CIO President John Sweeney] would weaken the competitiveness of American manufacturing and put some of America's best-paying union jobs at risk. These are jobs that exist today but could well be gone if Congress rejects this market opening in South America.

Exhibit A are 8,600 jobs at two Caterpillar Inc. factories in Illinois. Caterpillar exports more to Peru and Colombia than it does to Germany, Japan or the United Kingdom. So keeping and growing market share in both countries is important to union members in both plants. Not all are union jobs but both facilities are United Auto Worker shops.

Consider exports of the off-highway truck, made in Decatur. Customers in Colombia now pay a 15% tariff – equal to $200,000 – on the import of these vehicles. If the FTA goes through, that import tariff goes to zero immediately. Conversely, if the deal dies and Colombia, which is trying to expand its world trade, strikes an agreement with another country where similar vehicles are made, U.S. exports will immediately be at a 15% price disadvantage.

Colombia also has a large mining industry, and there are more Cat D-11 bulldozers in Colombian coal mines today than in any other country in the world. Those bulldozers are made in East Peoria. Colombian customers pay a 5% duty to import Cat bulldozers, which compete against Komatsu bulldozers made in Japan. Union members might ask Mr. Sweeney why he wants to spurn an offer that would give U.S. products a 5% price edge against Japanese competition.

Caterpillar – which has a total U.S. work force of 50,545 – faces an even more imminent threat in the case of its motor graders, a piece of heavy equipment used to level the playing field, literally. A company called Champion also makes motor graders in Canada, and Colombia is also negotiating an FTA with Canada. If Canada seals a deal with Colombia while the U.S. walks away from its Colombia pact, graders made in the U.S. will cost more than those made in Canada. Once again, Mr. Sweeney's agenda makes the U.S. work force less competitive.

Posted by Fred | April 9, 2008 6:20 PM

Unrestricted free trade might not be good, losing control of our ports to a foreign country's operations may not be good.

Unfortunately, America ignorantly lets the worst free trade and stevedore deals through (Competing in high skill finished goods business with 9 dollar a day Chinese with no union or environmental protection provisions, high tech services against India with 3.5o an hour employees, leaving China shipping in control of both sides of the Panama Canal and most of the West Coast shipping.....

Then screaming and deciding to draw a line with a Democratic country in a trade deal that is almost all to America's advantage, and rebelling against having the safest and best shipping company, Dubai Ports - doing business here.

Or letting China and Pakistan gut our textiles industry of 85% of our former production and shutting down 90% of our factories - then saying THAT was OK, but the threat to our market from African fabrics from desperately poor nations is unacceptable because it will lose 3% of what used to be a 95% American market??

It teaches us that the Israel lobby is strong, the China Lobby is strong. The tech firms and the India lobby love suppressing US tech worker wages. But the Ruling Elites do not see Columbia, Dubai, or subsaharan Africa as good for Israel or as good for destroying US jobs for higher Ruling Elite profits, as bending over backwards to favor China...

Posted by chris ford | April 9, 2008 7:05 PM

THIS IS EXCELLENT NEWS!! FOR HILLARY!!!
!!!HILLMENTUM™!!!!

Posted by idiotic | April 9, 2008 8:55 PM

"...Colombia agrees to undertake various intellectual property reform measures..."

In other words, it's not a free trade deal at all. It's a "free trade" deal.

So-called "intellectual property" plays the same protectionist role in the global corporate economy that tariffs played in the old national industrial economies. It's the direct antithesis of real free trade.

Posted by Kevin Carson | April 9, 2008 10:54 PM

Yowza . . . twenty-something comments, and not one about what _I_ thought the issue was.

I thought the issue was holding this as a carrot until the government stopped acting like despots: murders of trade unionists, invading Ecuador, falsely claiming that the union-sponsored public protests were the work of FARC (a terrorist group), etc.

Now, perhaps I am wrong, and the above is just a fig-leaf for those who are simply anti-free trade.

Can someone fill me in? Am I that off base?

(Note: none of this comment is meant sarcastically)

Posted by A DC Wonk | April 10, 2008 12:20 AM

Interesting that no one even raised the Democrats smokescreen of violence against union organizers. That's good, because if you ask the unions in Colombia, many of which oppose the FTA for their own reasons, they'll tell you it's not the issue. (They're still happy to lets the Dems shill on it, regardless.)

The FTA assures cotinued access to U.S. markets that is now available under the Andean agreements designed to promote drug control. Should drug policy change, that would end.

Clearly no one on this blog gives a rat's ass about the 43 million people of Colombia, but they have suffered through 44 years of guerrilla war, drug violence, a vicious paramilitary reaction to the reaction of the guerrillas, who are now just bandits in Marxist drag. Colombia's economy is now growing at the fastest pace in 20 years, violence is down more than 80 percent. The president is supported by 85 percent of voters. This is a deal liberals should support.

Posted by Fredje | April 10, 2008 12:30 AM

"So-called "intellectual property" plays the same protectionist role in the global corporate economy that tariffs played in the old national industrial economies. It's the direct antithesis of real free trade.

Posted by Kevin Carson | April 9, 2008 10:54 PM"

Can we start actually writing actual free trade deals? Saying to poor countries that rely a lot on agriculture "we'll protect our agricultural subsidies while you adopt our IP laws" isn't a free trade deal.

Posted by Reality Man | April 10, 2008 1:22 AM

Colombia's getting very little out of the deal per se, but its government does get a lot of military support from the US government.

Having just returned from a trip to Colombia, I can say with certainty that security is the most important factor in recent growth. Expansion of the secure areas of Colombia must continue, and American assistance in training and materials is key.

Posted by Josh Weinberg | April 10, 2008 1:40 AM

Clearly no one on this blog gives a rat's ass about the 43 million people of Colombia, but they have suffered through 44 years of guerrilla war, drug violence, a vicious paramilitary reaction to the reaction of the guerrillas, who are now just bandits in Marxist drag

Or maybe some people don't necessarily feel that FTA is to the net benefit of Colombia, just like they feel NAFTA hasn't been a net benefit for Mexico.

Posted by Peter H | April 10, 2008 7:04 AM

Colombia has preferential tarrifs for exporting their goods to the USA, but only temporarily. It's called ATPDEA and it has to be renewed almost every year by U.S Congress.

The new trade would make that preferential treatment permanent, so allowing more investment in Colombia.

That's what Colombia wants.

Posted by Carlos | April 10, 2008 7:43 AM

Of course Democrats don't care about the people of Colombia, or the blue collar workers in those Caterpillar plants whose jobs are supported by sales to Colombia, for that matter. All they care about is that in their current race to the left, they are posing as protectionists, and voting for a free trade deal right now would interfere with that. That not passing this deal might undermine a government that has vastly improved the quality of life for most Colombians over the last several years is immaterial.

Posted by Fred | April 10, 2008 9:10 AM

Carlos:

That is what COLOMBIAN leaders and rulling elites want. Most people in Colombia don´t know or care about what the free trade is or implies.

On the other side, I reject the treaty, as a Colombian. Not only for the fiasco of "intelectual property rights", but more importantly, cause it will force colombian agriculture to compete against US massively subsidiazed agriculture. In other words, it will force Colombia to produce whatever agricultural products the US wants this country to produce, and consume the products US want us to consume. That is not free trade, that is mercantilism.

Posted by Sergio Méndez | April 10, 2008 9:34 AM

I agree with Fred that the most powerful Democratic Party elected officials don't particularly care about the people of Colombia or the workers of Caterpillar.

I would take the argument further, in that Republicans care even less.

No one particularly cared in the past decades in which paramilitaries were slaughtering civilians and massacring entire villages, nor do they care whether or not a trade deal will bring more or fewer jobs to either Colombians or to U.S. workers.

Thankfully, I don't look up to elected politicians in terms of where their souls are, and instead concentrate on their policies. Fred has made his arguments about the effects of the FTA, as have the traditional punditocracy about each and every "free" trade deal.

Posted by El Cid | April 10, 2008 9:36 AM

@Wonk - the government has "stopped acting like despots". Violence is way down. The street demonstrations are now against FARC, not the government. The raid in Ecuador revealed heavy support of the FARC gangs by Chavez, which alone is worth the price of admission.

@Peter H - the Colombians think it's a benefit to them, or they wouldn't have
agreed to it.

Matt, while admirably standing up for the excellent notion of unilaterally dumping US trade barriers, left out the bit about Columbia's agreement to reduce its tariffs on American goods. I.e., this deal is great for American workers (more exports) and Columbian consumers (cheaper stuff.)

Nor does he note that Columbia agreed to some 250 changes to the treaty to address US labor and environmental concerns.

Posted by Larry | April 10, 2008 11:46 AM

Larry: There was, in fact, a nation-wide march for victims of paramilitary and other state-related violence just one week after the march for victims of the guerrillas. The one for the victims of the guerrillas (who of course do deserve the attention and commemoration) was heavily promoted and encouraged by the national and local governments.

The march for victims of paramilitaries and state-linked violence -- who vastly outnumber victims of the guerrillas in number if not in social standing -- not only lacked government support, but in fact was slandered by Uribe's adviser Jose Obdulio Gaviria as having been "organized by the FARC", giving the all-clear which the government wanted to give to the right wing death squads -- which dutifully followed his comments by issuing statements in agreement with Obdulio Garcia from their jail cells and against the organizers, and Uribe's adviser's call was fulfilled when 4 of the MOVICE march's organizers were killed by the death squads a week after the march.

So, yeah, apart from that, your statement is very close to reality.

Interestingly enough, the raid on the Ecuadoran FARC camp did produce laptops which contained documents, but did not yet reveal any support by Chavez of the FARC -- and most spectacularly not the bogus claims of $300 million dollars as falsely printed by U.S. sources who relayed Colombian government official claims. On the other hand, InterPol is now investigating, so if such evidence arises, maybe we'll see it then.

Posted by El Cid | April 10, 2008 12:13 PM

@El Cid - It's nice to have a debate on factual grounds for once.

Do you disagree that violence has dramatically declined from the worst years?

Do you disagree that FARC has lost any pretensions to act as anything more than a gang?

Do you disagree that Colombia lowering its tariffs would be a good thing for US workers and Colombian consumers?

I have no sympathies for the paramilitaries, death squads, etc. Haven't they become much less of a problem since Uribe?

Posted by Larry | April 10, 2008 3:53 PM

I agree that violence has dramatically declined since the worst years.

I do not disagree that FARC is pretty much akin to bands of enormously powerful mafiosi.

I do disagree that simplistic lowerings of tariffs and concomitant other neoliberal economic lock-in's would prove positive for Colombian and U.S. workers and consumers. Often the opposite is the case.

Finally, it is true that the paramilitaries have become less of a force slaughtering civilians under Uribe's presidency, although their command of narco-trafficking is still unchallenged. However, it is completely untrue to say that in general they declined "under Uribe," since he also was the one who launched their modern incarnation when he was Governor of Antioquia.

So Uribe has been responsible for launching the paramilitary death squads (i.e., Convivir and more) who slaughtered far, far more civilians than the leftist guerrillas (who certainly murdered an awful lot themselves) and for trimming their influence back somewhat.

In return the paramilitaries helped extort the political power which allowed Uribe the power to push through his projects. So it's a really, really weird thing that people forget his role in the rise of the problem in arguing that hey, look, he's helped start maybe pushing toward a solution.

Posted by El Cid | April 10, 2008 7:29 PM

In essence, Colombian goods already flow very freely into the United States except for in our more famously protected sectors (agriculture, etc.) and what we're offering Colombia here is a very solemn promise to keep it that way.

So what you're saying, Matt, is that since the US can be trusted to make the right decisions unilaterally now and in the future, there's no point in signing this treaty with Colombia whereby Colombia will lower their tariffs and we'll promise to continue to do the right thing (outside of the famous sectors.)

Really? You don't think that signing such a treaty would be a good thing because it would help cement our current policy towards Colombia and make it harder to reverse it in a future protectionist wave? The current free flow of most goods from Colombia only dates from the 90s.

There are a ton of bilateral and multilateral treaties that the US signs that are essentially nothing more than promises to continue doing our current behavior. Do you agree that failure to ratify them is no big deal as well? If a Republican President fails to sign or submit such treaties, do you wave it off, or think that it sends the wrong signal to our allies and the rest of the world that our behavior might change?

Posted by John Thacker | April 11, 2008 10:48 AM