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• National Agricultural Law Center

Summary

In November 2003, the Administration notified Congress that it intended to begin negotiations on a free-trade agreement (FTA) with Colombia, Peru, Ecuador, and Bolivia. The notification said that an FTA would reduce and eliminate foreign barriers to trade and investment and would support democracy and fight drug activity in the Andean region. The Andean governments wanted to ensure access to the U.S. market, especially since their current trade preferences will terminate at the end of 2006. In the United States, the business community strongly supports the trade agreement, labor opposes it, and agriculture is split. The first round of negotiations was held with Colombia, Peru, and Ecuador (with Bolivia participating as an observer) in Cartagena, Colombia, in May 2004. Twelve rounds have been held thus far. The latest round was held in Cartagena, Colombia on September 19-23, 2005. Reports suggest that progress was made and that negotiators expect to conclude the agreement by the end of 2005. The next round, scheduled in mid-October in Washington, D.C., is expected to be the final round of negotiations and the final agreement is expected to be concluded in November. The Cartagena talks drew an estimated 7,000 protestors while Ecuador and Peru also faced strong protests. Of note, after the negotiations Ecuador announced that its entry into the agreement would be delayed. In the last few months, Ecuador and Bolivia have had sudden changes in their presidencies. The United States currently extends duty-free treatment to imports from the four Andean countries under a regional preference program. The Andean Trade Preference Act (ATPA) authorized the President to grant duty-free treatment to certain products, and the Andean Trade Promotion and Drug Eradication Act (ATPDEA) reauthorized the ATPA program and added products that had been previously excluded. Over half of all U.S. imports in 2004 from the Andean countries entered under these preferences. In 2004, the United States imported $15.5 billion from the four Andean countries and exported $7.7 billion. Colombia accounted for about half of U.S. trade with the region. Peru and Ecuador almost evenly split the other half, and Bolivia represented a very small share. The leading U.S. import from the region in 2004 was crude petroleum oil, which accounted for 37% of imports. Leading U.S. exports to the region were mining equipment, wheat, broadcasting equipment, and maize. There are several important issues in the FTA negotiations. The trade negotiators have stated that the main obstacles to concluding an agreement are in agriculture and intellectual property rights. Another major concern is the treatment of trade unionists, especially in Colombia, where union leaders are targeted by death squads. If an FTA is concluded, it is uncertain when an implementing bill might be considered in Congress. Legislation to implement the U.S.-Central AmericanDominican Republic FTA (CAFTA-DR) was enacted on August 2, 2005 (P.L. 10953). Given that CAFTA-DR passed only by a small margin, it is unclear how much support the U.S.-Andean FTA will have.

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