U.S. Concludes Free Trade Agreements with Colombia and Peru

After resolving some tough agricultural issues, the U.S. last week concluded a free trade agreement with Colombia that will allow U.S. dairy exports to receive increased duty-free access to the Andean nation. In addition, Colombian sugar producers will be allowed to ship an extra 50,000 metric tons of sugar to the United States in the first year of the agreement, and that amount will grow by 750 metric tons each year thereafter.

"We haven't yet seen the details of the agreement, but we're pleased that the deal was comprehensive and that our dairy exports will have increased market access to Colombia," said IDFA Senior Vice President and General Counsel Clay Hough.

Colombia is the second largest agricultural market in Latin America for the United States; in 2005, Colombia and the United States had $14.3 billion in two-way trade. With regards to dairy, U.S. exports to the region were just under $5 million last year.

"Given that the World Trade Organization Doha Development Agenda negotiations are proceeding slowly, we see free trade agreements as the second-best method to liberalize dairy commerce," said Hough.

In December, the United States completed a free trade agreement with Peru, which will also improve market access for U.S. dairy exports to that country and will allow an additional 11,000 metric tons of sugar into the U.S. market. A similar trade pact is currently being negotiated with Ecuador.

All three Andean nations have duty-free access to the United States for most of their goods because of the Andean Trade Preference Act. That legislation was enacted in 1991 in an effort to combat drug production and trafficking in those nations. The preference system is due to expire this year, which may be one reason Colombia and Peru were ready to finish the trade talks.

It is uncertain when President Bush will send the Colombia and Peru free trade agreements to Congress for approval. Senate Agriculture Committee Chairman Saxby Chambliss (R-GA) has offered support for the Colombia pact, but it is unclear how labor will react to the trade deals, though textile issues are not as sensitive as they were on CAFTA. The sugar growers have already expressed that they will not oppose the Peru deal.

For information about the Colombia and Peru Free Trade Agreements, contact Helen Medina at hmedina@idfa.org or at (202) 220 3507. To view USDA's press release on the Colombia FTA, click here

Posted March 6, 2006