Congressional Update: Colombia and Panama FTAs Win Congressional Approval

By Kezia McKeague

The U.S. House and Senate passage of bilateral free trade agreements with Colombia and Panama on October 12 clears the way for long-delayed implementation.

Following sequential votes in the U.S. House of Representatives and Senate on October 12, the long-pending trio of trade pacts with Colombia, Panama, and South Korea became the first trade deals to pass the U.S. Congress since 2007. The free trade agreements (FTAs) now await President Barack Obama’s signature into law, though implementation may require several additional months.

The Colombia FTA proved the most controversial, but nevertheless earned bipartisan support, with a vote of 262 to 167 in the House and 66 to 33 in the Senate. Panama passed 300 to 129 in the House and 77 to 22 in the Senate. In addition, the House approved legislation already passed by the Senate to reauthorize the Generalized System of Preferences and Trade Adjustment Assistance.

The U.S.-Colombia implementation bill included renewal of the Andean Trade Preferences Act through July 2013, benefitting Colombian exporters until the FTA enters into force. The program will provide retroactive reimbursement of tariff costs incurred by the two current beneficiary countries, Colombia and Ecuador, since preferences lapsed in February 2011.

After almost five years of delay, passage of the trade package quickly followed the Obama administration’s submission of the three deals to Congress on October 3. The House Ways and Means Committee gave its stamp of approval two days later, and the Senate Finance Committee followed suit on Tuesday, clearing the way for the October 11 and 12 floor debate in both chambers. Under Trade Promotion Authority already granted by Congress, the legislation for the trade agreements could not be amended and required up-or-down votes to secure passage.

Many Democrats opposed the Colombia FTA due to concerns about violence against labor unions in that country, though the deal ultimately received the votes of 31 Democrats in the House and 20 in the Senate. These legislators defended Colombia’s progress in reducing homicide rates and endorsed the government’s commitment to enhancing protections through the Labor Action Plan signed by President Obama and Colombian President Juan Manuel Santos in April 2011.

Proponents of the Colombia and Panama FTAs emphasized their impact on domestic job creation and export growth. In the case of Colombia—the region’s third largest economy—the agreement will immediately eliminate tariffs on over 80 percent of U.S. exports of consumer and industrial products, with remaining tariffs phased out over 10 years. According to the International Trade Commission, duty-free access will expand exports of U.S. goods by more than $1.1 billion, while supporting U.S. jobs in sectors ranging from agriculture to construction equipment to information technology.

Congressional advocates also expressed a keen awareness of competitive pressures on U.S. economic and geopolitical interests in the Western Hemisphere. They acknowledged that Canada, China, and other countries increased exports to Colombia, while U.S. market share declined in the years between the FTA’s signature and ratification. Moreover, they recognized that even as Colombia has diversified its commercial and political relations, it remains a strong U.S. ally that deserves the institutional relationship afforded by a bilateral trade deal. In short, both Latin American FTAs were perceived as a symbolic litmus test of U.S. commitment to its friends in a strategically important region.

Looking ahead, the agreements’ supporters in both the House and Senate stressed that passage of the deals is significant for U.S. credibility in advancing the next chapter of its trade agenda. As Ways and Means Trade Subcommittee Chairman Kevin Brady (R-TX) put it: “With strong bipartisan support in Congress, today we signal to the world that America is back on the global trading field.”