[Senate Prints 112-4]
[From the U.S. Government Publishing Office]





112th Congress }                                              { S. Prt.
 1st Session   }            COMMITTEE PRINT                   {   112-4
_______________________________________________________________________

 
LOSING JOBS AND ALIENATING FRIENDS: THE CONSEQUENCES OF FALLING BEHIND 
                 ON FREE TRADE WITH COLOMBIA AND PANAMA

                               __________

                                A REPORT


                             TO THE MEMBERS


                                 OF THE


                     COMMITTEE ON FOREIGN RELATIONS

                          UNITED STATES SENATE

                      One Hundred Twelfth Congress

                             First Session

                            February 8, 2011

                                     


?

                COMMITTEE ON FOREIGN RELATIONS          

            JOHN F. KERRY, Massachusetts, Chairman          
BARBARA BOXER, California            RICHARD G. LUGAR, Indiana
ROBERT MENENDEZ, New Jersey          BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland         JAMES E. RISCH, Idaho
ROBERT P. CASEY, Jr., Pennsylvania   MARCO RUBIO, Florida
JIM WEBB, Virginia                   JAMES M. INHOFE, Oklahoma
JEANNE SHAHEEN, New Hampshire        JIM DeMINT, South Carolina
CHRISTOPHER A. COONS, Delaware       JOHNNY ISAKSON, Georgia
RICHARD J. DURBIN, New York          JOHN BARRASSO, Wyoming
TOM UDALL, New Mexico                MIKE LEE, Utah
             Frank G. Lowenstein, Staff Director          
       Kenneth A. Myers, Jr., Republican Staff Director          

                             (ii)          




                            C O N T E N T S

                              ----------                              
                                                                   Page
Letter of Transmittal............................................     v
Background.......................................................     1
Observations.....................................................     3
Conclusion.......................................................     7
Appendix I.......................................................     9
Appendix II......................................................    11
Appendix III.....................................................    17
Appendix IV......................................................    18

                                 (iii)
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                         LETTER OF TRANSMITTAL

                              ----------                              

                              United States Senate,
                            Committee on Foreign Relations,
                                  Washington, DC, February 8, 2011.
    Dear Colleagues: I directed my senior Senate Foreign 
Relations Committee staff member for Latin America and the 
Caribbean, Carl Meacham, to travel to Panama and Colombia from 
January 18 to 21, 2011, to assess the consequences of U.S. 
failure to ratify Free Trade Agreements (FTAs) with these 
countries.
    As Congress debates renewal of trade preferences for 
Colombia, which are due to expire on February 12, 2011, under 
the Andean Trade Preference Act (ATPA), it should also consider 
the importance of retaining U.S. competitiveness in Latin 
America through approval of the pending FTAs. During President 
Obama's recent State of the Union Address, he advocated for 
passage of the South Korea Free Trade Agreement and mentioned 
his interest in advancing the Panama and Colombia FTAs. This 
was an important development, but the President needs to do 
more to build support in Congress for the agreements with 
Panama and Colombia.
    I have been a strong supporter of the Panama-United States 
Trade Promotion Agreement (TPA) and the United States-Colombia 
Trade Promotion Agreement (CTPA) since their signing. Approval 
of these free trade agreements would eliminate trade barriers 
and facilitate access for U.S. exporters in these countries. 
Delay has already resulted in significant loss of market shares 
and jobs for U.S. businesses.
    In Panama, large-scale projects, such as the $5.25 billion 
Panama Canal Expansion, the $1.5 billion Panama City Metro, and 
hundreds of millions of dollars in highway expansion contracts, 
have been awarded to non-American firms. The United States 
recently lost its position as Colombia's number one 
agricultural supplier. Total U.S. agricultural exports to 
Colombia decreased from $1.8 billion in 2008 to $827 million in 
2010. Meanwhile Argentina's total agricultural exports to 
Colombia increased from $457 million in 2008 to $1 billion in 
2010. Ratification of the free trade agreements would help to 
reverse these trends and solidify market opportunities for U.S. 
goods and services.




                                  (v)

    The United States is being displaced in South America as 
the preferred and logical trading partner. U.S. market share is 
being lost to China, Brazil, and other countries in Latin 
America that benefit from trade accords with Colombia. When the 
Colombia-Canada FTA is implemented, as early as this summer, 
the immediate effect is likely to be the replacement of U.S. 
wheat in Colombia with lower-priced, duty-free Canadian wheat. 
FTA tariff reductions will also benefit Canadian heavy 
equipment and other capital good exports to Colombia at the 
expense of U.S.-manufactured products, which still face tariffs 
ranging from 5 to 20 percent. As non-U.S. goods and services 
effectively gain preferential access to these economies, the 
United States will lose significant opportunities.
    Beyond the compelling economic arguments, these FTAs are 
important to U.S. influence and standing in the region. 
Continued delay on a matter of such importance to our allies 
calls into question U.S. reliability. The FTAs are increasingly 
considered by Panamanians and Colombians as a crucible in the 
bilateral relationships. They serve as a symbolic litmus test 
of U.S. commitments to its friends in a neighborhood where 
various countries are taking sharply divergent paths.
    The United States not only enjoys a long-standing bilateral 
relationship with Panama but a particularly close partnership 
with Colombia. This Andean country promotes and adheres to 
representative democracy and open markets at a time when some 
of its neighbors ignore these principles. Without the FTA, we 
risk diminishing a constructive alliance with a country that 
has achieved so much in cooperation with the United States.
    For the first time, nations such as Chile, Mexico, Peru, 
and Colombia are promoting joint efforts to expand 
intraregional trade and business ties as well as commerce with 
Asia. Failure to conclude an FTA with Colombia, a nation that 
shares our democratic values and economic development 
priorities, would signal U.S. neglect for like-minded allies 
within an ideologically divided hemisphere.
    Mr. Meacham's report provides significant insight and 
important recommendations to advance U.S. interests in Latin 
America. I hope you find the report helpful. I look forward to 
working with you on these issues and welcome any comments you 
may have.
            Sincerely,
                                          Richard G. Lugar,
                                                    Ranking Member.
LOSING JOBS AND ALIENATING FRIENDS: THE CONSEQUENCES OF FALLING BEHIND 
                 ON FREE TRADE WITH COLOMBIA AND PANAMA

                              ----------                              

    From January 18 to 21, 2011, Senate Foreign Relations 
Committee minority staff traveled to Panama City, Panama, and 
Bogota, Colombia. During this official visit, staff met with 
senior government officials, U.S. Embassy officials, trade 
associations, think tanks, the local private sector, and 
representatives of U.S. industry. At the request of Senator 
Lugar, the Committee Ranking Member, the purpose of the trip 
was to assess the economic and political consequences of U.S. 
inaction on pending free trade agreements.

                               Background

    Both Colombia and Panama are awaiting U.S. congressional 
approval of free trade agreements (FTAs) that were signed in 
2006 and 2007, respectively. These comprehensive agreements 
would eliminate tariffs and other barriers on U.S. exports and 
services.


      the united states-colombia trade promotion agreement (ctpa)


    As the fifth-largest economy in Latin America with a 
population of 45 million, Colombia ranks 22nd among U.S. export 
markets and 27th in the world as a source of U.S. imports. U.S. 
exports to Colombia totaled $9.4 billion in 2009, while U.S. 
imports totaled $11.3 billion.\1\ Within Latin America, 
Colombia is the third-largest exporter of oil to the United 
States (after Mexico and Venezuela) and the third-largest 
destination for U.S. products (behind Mexico and Brazil). 
Colombia, which has the third-largest population in the region 
and a growing middle class, is an increasingly attractive 
foreign investment market.
---------------------------------------------------------------------------
    \1\ Villareal, M. Angeles. The Proposed U.S.-Colombia Free Trade 
Agreement. Congressional Research Service Report for Congress, October 
1, 2010.
---------------------------------------------------------------------------
    About 90 percent of U.S. imports from Colombia already 
enter the United States duty-free under the Andean Trade 
Preference Act (ATPA), a unilateral trade preference program 
designed to promote alternatives to illegal drug production as 
sources of economic growth. Many U.S. exports to Colombia, on 
the other hand, face duties as high as 35 percent, leading the 
U.S. business community to argue that an FTA with Colombia 
would level the playing field by providing U.S. producers equal 
access to the Colombian market.\2\
---------------------------------------------------------------------------
    \2\ For example, see witness testimony from the January 25, 2011, 
Hearing at the House Committee on Ways and Means on Hearing on the 
Pending Free Trade Agreements with Colombia, Panama, and South Korea 
and the Creation of U.S. Jobs: http://waysandmeans.house.gov/Calendar/
EventSingle.aspx?EventID=220430.
---------------------------------------------------------------------------
    The United States-Colombia Trade Promotion Agreement (CTPA) 
would immediately eliminate duties on 80 percent of U.S. 
exports of consumer and industrial products to Colombia. An 
additional 7 percent of U.S. exports would receive duty-free 
treatment within 5 years of implementation, and most remaining 
tariffs would be eliminated within 10 years of implementation. 
The agreement also contains provisions on customs 
administration and trade facilitation, technical barriers to 
trade, government procurement, investment, telecommunications, 
electronic commerce, intellectual property rights, and labor 
and environmental protection.
    Regarding agricultural trade, Colombia currently applies 
tariff protections on all agricultural products, including some 
that exceed 100 percent. The pending CTPA, upon implementation, 
would provide immediate duty-free access on 77 percent of all 
agricultural tariff lines, accounting for 52 percent of current 
U.S. exports to Colombia. Colombia would eliminate most other 
tariffs on agricultural products within 15 years, while the 
United States would make permanent the ATPA preferences for 
Colombia's agricultural exports.
    A congressionally mandated report by the United States 
International Trade Commission (USITC) concluded that the 
primary impact of a free trade agreement with Colombia would be 
increased U.S. exports to Colombia as a result of enhanced U.S. 
access to the Colombian market.\3\ The largest estimated 
increases in U.S. exports to Colombia, by value, would be in 
chemical, rubber, and plastic products; machinery and 
equipment; and motor vehicles and parts. In terms of percentage 
increases, the largest increases in U.S. exports would be in 
rice and dairy products.
---------------------------------------------------------------------------
    \3\ United States International Trade Commission (USITC), U.S.-
Colombia Trade Promotion Agreement: Potential Economy-wide and Selected 
Sectoral Effects, Publication 3896, December 2006.
---------------------------------------------------------------------------
    Some of the congressional debate surrounding the U.S.-
Colombia FTA has centered on concerns about violence against 
union members in Colombia. Members who support the CTPA argue 
that Colombia has made significant progress in recent years to 
curb violence and address the country's most pressing human 
rights issues. (See Appendix II for a detailed list of 
advancements in human rights and labor issues. This information 
was gathered by staff from multiple sources, including the 
Government of Colombia, Colombia's Vice Presidency, the 
Colombian Ministry of Interior and Justice, Office of the 
Prosecutor General, and the Ministry of Social Protection. The 
International Labor Organization served as an additional 
source.)


        the panama-united states trade promotion agreement (tpa)


    With a population of 3.5 million people, Panama represents 
a much smaller market for the U.S. than Colombia. Nevertheless, 
it maintains a stable economy and historically close ties to 
the United States, even following the transfer of the Canal to 
Panama in 1999. The United States is Panama's single largest 
source of imports, while Panama is one of the few Latin 
American countries with which the United States has a 
merchandise trade surplus.\4\
---------------------------------------------------------------------------
    \4\ Hornbeck, J.F. The Proposed U.S.-Panama Free Trade Agreement. 
Congressional Research Service Report for Congress, January 6, 2011.
---------------------------------------------------------------------------
    The U.S.-Panama TPA would result in significant 
liberalization of trade in goods and services, including 
financial services. Over 88 percent of U.S. exports of consumer 
and industrial goods to Panama would become duty-free 
immediately, with remaining tariffs to be phased out over 10 
years. Like the FTA with Colombia, it also includes provisions 
relating to customs administration and trade facilitation, 
technical barriers to trade, government procurement, 
investment, telecommunications, electronic commerce, 
intellectual property rights, and labor and environmental 
protection.
    A USITC study found that the likely main trade effect of 
the FTA would be to increase U.S. exports, given that 96 
percent of U.S. imports from Panama already enter duty-free. 
Detailed estimates suggest that when fully implemented, the 
largest growth will accrue to U.S. exports of rice, pork, beef, 
and passenger vehicles.\5\
---------------------------------------------------------------------------
    \5\ USITC, U.S.-Panama Trade Promotion Agreement: Potential 
Economy-wide and Selected Sectoral Effects, Publication 3948, September 
2007.
---------------------------------------------------------------------------
    Congressional concerns have focused on Panama's alleged 
status as a ``tax haven.'' This issue was addressed with the 
signing of a U.S.-Panama Tax Information and Exchange Agreement 
(TIEA) on November 30, 2010. The TIEA permits either country to 
request information on most types of federal (U.S.) or national 
(Panama) taxes. Its purpose is to enhance tax information 
transparency, an important element in combating illegal 
financial transactions, including those linked to drug 
smuggling and money laundering. The agreement does not enter 
into force until Panama changes its tax code, which it has 
committed to do by the end of 2011.\6\
---------------------------------------------------------------------------
    \6\ Hornbeck, J.F. The Proposed U.S.-Panama Free Trade Agreement. 
Congressional Research Service Report for Congress, January 6, 2011.
---------------------------------------------------------------------------

                              Observations

    Staff believes that three U.S. policy priorities will be 
affected if Congress does not ratify the U.S.-Colombia and 
U.S.-Panama Free Trade Agreements. First, in an ailing economy, 
our ability to create jobs depends largely on expanding 
domestic and international commerce. The FTAs would create 
jobs, while the failure to approve the FTAs would lead to a 
loss of U.S. jobs and market share. Second, if we fail to 
pursue ratification of the Colombia FTA, we will likely miss an 
opportunity to expand on gains achieved through Plan Colombia 
on issues of human rights and labor in Colombia. Lastly, 
without the FTAs, the U.S. loses credibility and diminishes its 
ability to influence countries in Latin America.


                       losing markets in colombia


    Colombia buys more U.S. products than many important U.S. 
trade partners, including Russia, Spain, and other mid-sized 
economies. In the past 2 years, however, the United States has 
lost $1 billion in agricultural exports to Colombia due to 
regional accords and international commercial competition.\7\ 
Staff believes that despite strong historical ties between our 
two countries, and with heightened demand for commodities 
produced in Colombia, other trading opportunities are 
presenting themselves. Colombia, like the rest of Latin 
America, has not waited for the U.S. to ratify trade agreements 
while other attractive options have become available.
---------------------------------------------------------------------------
    \7\ Information provided by U.S. Embassy in Colombia.
---------------------------------------------------------------------------
    Because of its own trade accord with Colombia, MERCOSUR 
(the Southern Common Market, made up of Argentina, Brazil, 
Paraguay, and Uruguay) continues to expand its exports and make 
significant market-share gains in Colombia's agricultural 
sector [see Appendix III for Colombia's agricultural import 
statistics]. For the first time in U.S.-Colombian agricultural 
trade history, the U.S. has lost its position as Colombia's 
number one agricultural supplier to Argentina. Total U.S. 
agricultural exports to Colombia decreased from $1.8 billion in 
2008 to $827 million in 2010, while Argentina's total 
agricultural exports to Colombia increased from $457 million in 
2008 to $1 billion in 2010.
    The dramatic loss of U.S. market share is primarily in 
grains (corn, wheat, and soybean meal) and is likely to 
continue as evidenced by agricultural trade gains made by most 
countries in the region (Brazil, Canada, Chile, Ecuador, 
Bolivia, Peru, and Mexico). According to senior officials at 
the U.S. Embassy in Bogota, MERCOSUR countries currently 
receive a 9-percent tariff discount for their grain exports, 
while U.S. grain exporters pay the full price under a price 
band system. The WTO-inconsistent price band system would be 
eliminated immediately upon implementation of the U.S.-Colombia 
FTA.
    Moreover, Colombia and Canada have approved a free trade 
agreement that will enter into force this year. According to 
the Government of Canada, the FTA with Colombia ``will 
stimulate the growth of our commercial relationship and help 
level the playing field for Canadian business vis-a-vis 
competitors who have or are seeking preferential market access 
in Colombia.'' \8\ In contrast, U.S. business will continue to 
lose market share. For example, in staff's meetings with 
representatives of Archer Daniels Midland Company (ADM) in 
Bogota, ADM representatives indicated that the United States 
could lose its entire wheat-market share in Colombia following 
implementation of the Canada-Colombia FTA--a scenario of great 
concern to the U.S. wheat industry.
---------------------------------------------------------------------------
    \8\ Foreign Affairs and International Trade Canada, http://
www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/
andean-andin/can-colombia-colombie.aspx
---------------------------------------------------------------------------
    The U.S.-Colombia trade relationship does not exist in a 
vacuum. In South America, China has replaced the United States 
as Brazil's largest trading partner. According to an analysis 
of trade statistics by the Private Sector Competitiveness 
Council, China has increased its exports to Colombia by 224 
percent during the first 9 months of 2010. Today, China is 
Colombia's second largest trading partner after the United 
States [see graph in Appendix IV of the projected market share 
gain of China in Colombia]. The Council predicts that China 
will supplant the United States as the leading trade partner 
within 10 years if current trends continue without a U.S.-
Colombia FTA. In addition, Canada, Chile, Mexico, and many 
European nations are expanding their presence in Colombian 
markets as a result of their own trade accords. According to 
Colombian Government officials, the U.S. is losing to Brazil in 
mega-construction projects both in Colombia and in neighboring 
countries. Colombia is currently negotiating trade deals with 
South Korea and Panama and has plans to conclude other trade 
agreements, including one with Japan.


                      losing influence in colombia


    Failure to gain approval of the FTA has broad implications. 
If the United States fails to ratify the FTA with Colombia, the 
U.S. Government is likely to lose an opportunity to further 
Colombia's progress in improving respect for human rights and 
lowering violence through enforceable commitments on trade-
union protection and reforms of existing labor legislation.
    While significant security gains were made during the 
administration of Alvaro Uribe, President Juan Manuel Santos 
has demonstrated with concrete measures that labor and human 
rights are top priorities of his government. In an 
unprecedented action, President Santos proposed legislation to 
offer reparations to victims of violence and land restitution 
to hundreds of thousands of Colombians who lost their land due 
to decades of armed conflict. Also, for the first time, the 
Colombian Government has committed to examine with human rights 
groups all labor homicides since 2000. Especially important to 
pro-labor groups in this country is President Santos's pending 
legislation to dissolve those Cooperative Work Associations 
(CTAs) that enable employers through sub-contract relationships 
to evade paying full benefits to workers.
    In addition, Colombia's private sector is changing for the 
better. The country's largest companies today have stronger 
trade-union relations, overseas investment, and expanding 
corporate-responsibility programs. As noted by Camilo Reyes, 
the Colombian American Chamber of Commerce Executive Director 
in Bogota, Colombian corporations have become advocates of 
labor and other regulations, consistent with the U.S.-Colombia 
FTA provisions. It is widely viewed that these reforms are 
improving employment conditions for Colombians. These same 
business enterprises are now regional multinationals and are 
investing hundreds of millions of dollars in the United States. 
Staff believes that it is an imperative to ratify the U.S.-
Colombia FTA in order to fortify these job-creating 
relationships.
    Absent the FTA, the U.S. Government will likely lose 
political leverage with Colombia apart from historical ties 
that count for less each day. Colombia--now a member of the 
United Nations Security Council--is increasingly looking 
outward for both new commercial relations and political 
support. As mentioned to staff by a senior Colombian Government 
official, ``where the money goes, the political influence seems 
to go as well.''


                         frustration in panama


    Senior Panamanian Government officials are feeling 
frustrated and betrayed after the publication of statements 
attributed to the U.S. Trade Representative indicating that a 
push to ratify the Panama FTA at the same time as South Korea's 
would be a ``huge mistake.'' Senior government and private-
sector officials informed staff that Panama has done everything 
asked of it, and they expressed their disbelief about the 
perceived unwillingness of the Obama administration to expand, 
or even maintain, a commercial relationship that grants the 
United States a $4 billion trade surplus.
    In a conversation with staff, Foreign Minister Juan Carlos 
Varela expressed the view that Panama would be ``very 
frustrated'' if the FTA is not moved in the next 3 months. 
Noting that Panama had addressed FTA-related requests and has 
been a strong partner on security issues, he said Panama ``has 
done everything you asked.''
    Moreover, Minister of the President Jimmy Papadimitriu 
(third-highest government official) told staff that President 
Martinelli's administration remains committed to resolving all 
of the issues that have been cited as reasons not to send the 
FTA to Congress. In this regard, legislation to implement the 
Tax Information Exchange Agreement (TIEA) was approved by the 
Cabinet on January 18, 2011. Staff was told by other senior 
Panamanian Government officials that it is expected to be 
passed by the National Assembly by mid-February, 2011.
    The Martinelli administration has sent to Panama's National 
Assembly legislation focusing on the importance of ``knowing 
your client'' (partially addressing tax-haven concerns), the 
right to collective bargaining in economic processing zones 
(addressing one of three labor concerns), and the right for 
unions to strike in companies less than 2 years old. Regarding 
the remaining labor concern, senior Panamanian Government 
officials reiterated that the Martinelli administration 
(supported by Panama's business and labor movement) would not 
introduce legislation which would reduce the number of members 
needed to start a union from 40 to 20.
    U.S. officials at the U.S. Embassy in Panama City explained 
that the Martinelli administration made a policy decision to 
extricate Panama from the tax haven notice process of the 
Organization for Economic Co-operation and Development (OECD) 
as part of its efforts to create an environment conducive to 
the passage of the FTA by the U.S. Congress. It has pursued 
with OECD members signature of 13 double-taxation treaties, 
which include fiscal information exchange clauses, and it 
signed on November 30, 2010, a Tax Information Exchange 
Agreement (TIEA) with the United States. According to 
Panamanian Government officials, the Martinelli 
administration's interest in the country's extrication from the 
notice process was necessary not only to remove a stigma from 
Panama's financial sector, but also to build confidence and 
transparency in the banking sector.
    Given the lack of movement on the FTA after Panama signed 
the TIEA, Panamanian officials were outraged. Minister 
Papadimitriu and Minister of Commerce and Industry Roberto 
Henriquez both explained that they had been given a list of 
conditions relating to the FTA, which were delivered by Dan 
Restrepo, President Obama's senior aide for the Western 
Hemisphere, in June 2009. In reaction, Minister Henriquez said 
that ``Panama has given what was requested and has received 
nothing in return.'' He further noted that U.S. inaction on the 
FTA was ``pushing Panama away'' and that the current course 
would damage commercial relations. He also referenced the 
agreements with Canada and the European Union as potentially 
reducing U.S. sales in the short term.
    Asking rhetorically, ``where is the U.S.?'', Henriquez 
highlighted the mega projects that have been awarded to non-
American firms. Henriquez also pointed to Panama's growing 
economy (34 consecutive quarters of economic growth) and its 
increasing regional links (such as aviation expansion that led 
Copa Airlines to purchase over $2 billion of Boeing aircraft), 
and asked why the United States is isolating itself from this 
economic opportunity. He said that exports from Panama ``will 
not take a single job'' from the United States since virtually 
all of its exports already receive duty-free treatment, and 
that U.S. exports to Panama will only increase with the tariff 
reduction contained in the FTA.

                               Conclusion

    In the 2011 State of the Union address, President Obama 
affirmed his support for free trade agreements as tools to 
improve U.S. competitiveness and to create jobs. Yet he 
neglected to offer a timetable for the long-delayed 
ratification of the accords with Colombia and Panama, in 
contrast to his call for approving the South Korea deal ``as 
soon as possible.'' Nor has the President made an effective 
push in the U.S. Congress to persuade skeptical Members of the 
benefits of these accords. In an era of divided government, 
however, these two agreements provide an opportunity for 
bipartisan cooperation on the administration's stated goal of 
doubling exports in 5 years.
    At stake are U.S. commercial and political interests in the 
Western Hemisphere. While many analysts have framed the FTAs in 
terms of benefits for the United States, the agreements are now 
vitally important for preventing further losses--in market 
share, jobs, and influence. Staff, therefore, strongly 
encourages the administration to invest the political capital 
needed to gain their ratification in the House of 
Representatives and the Senate.
    Central to this effort will be addressing criticisms of 
Colombia's human rights record, which linger despite the 
dramatic improvements achieved over the past decade. When staff 
asked senior Colombian trade officials if they would consider 
meeting additional conditions, especially given that some of 
the opposition to ratifying the FTA is regarding human rights, 
they answered flatly, ``Maybe before we would have. But the 
context has changed. Today, everybody wants this market, as 
is.'' Further delays on the FTA only reduce U.S. relevance 
regarding Colombia's labor reforms and other human rights 
issues. Even following congressional ratification, the U.S. 
Government will continue to maintain leverage during the 
implementation phase, when Colombia would be required to change 
its laws to comply with the FTA provisions. In the case of the 
U.S-Peru Free Trade Agreement, this implementation process took 
nearly 1 year.
    The political implications of losing influence in Colombia 
are real--losing Colombia means losing an important ally who 
has demonstrated steadfast support for critically important 
U.S. policies in the region and around the world. With Canada 
and the European Union's economic interests in Colombia set for 
``take-off,'' and with MERCOSUR and China's growing economic 
and political interests looming, our delay on the FTA is 
helping to accelerate a broader realignment in regional 
affairs, one not necessarily in the U.S. interest.
    While Colombia and Panama implement agreements with other 
trade partners, inaction leaves the United States at a 
competitive disadvantage precisely when our economy requires 
solutions that promote job creation and growth without deficit 
spending. Because the U.S. market is already largely open to 
both countries' imports due to unilateral trade preference 
programs, continued delay only hurts U.S. exports and services. 
It is not too late to reverse market-share losses, rescue 
relations with key allies, and regain our status in Latin 
America, but the clock is ticking. We must act now.


                          A P P E N D I X E S

                              ----------                              


                               Appendix I

Contributor
    Kezia McKeague, Legislative Assistant, Committee on Foreign 
Relations, United States Senate

                 Meetings With Individuals in Colombia

U.S. Diplomats

    P. Michael McKinley, Ambassador to Colombia

    Joe Lopez, Counselor for Agricultural Affairs

    Margaret Hanson-Muse, Senior Commercial Officer, Foreign 
Commercial Service 

    Tim Stater, Economic Counselor
Colombian Government Officials

    Paula Caballero Gomez, Foreign Ministry Director of 
Economic, Social, and Environmental Affairs

    Santiago Pardo, Chief FTA Negotiator at the Trade Ministry

    Juan Carlos Pinzon, Chief of Staff to the President

    Juan Mauricio Ramirez, Deputy Director General, National 
Planning Department (DNP)
Other Individuals and Groups

    Imelda Restrepo, Economic Studies Director at the National 
Industry Association (ANDI)

    Rosario Cordoba, President of the Private Sector 
Competitiveness Council

    Ricardo Duarte, attorney and former Vice Minister of Trade

     Rafael Mejia, President of the National Agriculture 
Association

    Mauricio Lopez and Eduardo Lopez, Partners with Archer 
Daniels Midland (ADM)

    Santiago Lopez Jaramillo, Legal Affairs Director at the 
National Association of Foreign Trade (ANALDEX) 

    Camilo Reyes, Executive Director of the Colombian-American 
Chamber of Commerce 

    Ricardo Triana, Council for American Enterprises (CEA) 
Executive Director

    Juan Pablo Jimeno, Chicago, Bridge and Iron Country Manager 


    Antonio Gomez, Caterpillar Representative 

    Sergio Clavijo, President of financial think tank, ANIF

                  Meetings With Individuals in Panama

U.S. Diplomats

    Andrew Plowman, Counselor for Economic Affairs

    William Muntean, Economic Officer
Panamanian Government Officials

    Juan Carlos Varela, Vice President and Foreign Minister

    Jimmy Papadimitriu, Minister of the President 

    Roberto Henriquez, Minister of Commerce and Industry 

    Francisco Alvarez de Soto, Vice Minister of Commerce for 
International Trade
Other Groups and Individuals

    Mario Jaramillo, Chairman of Concertacion Nacional para 
Desarollo and Ambassador-designate to the U.S.

    Roberto Troncoso, Chairman of APEDE's Committee on 
International Trade

    American Chamber of Commerce Board of Directors including 
President Juan Carlos Arias and Executive Director Maurice 
Belanger
                              Appendix II

          Recent Advances in Labor & Human Rights in Colombia

          UNDER SANTOS ADMINISTRATION (SINCE AUGUST 7, 2010):

   President Santos selected Angelino Garzon, a long-time 
        labor leader, as Vice President, tasked with human 
        rights and labor issues, including oversight of land 
        restitution. The VP is working tirelessly to inculcate 
        the importance of respect for human and labor rights in 
        all levels of government.

   Santos & VP have opened regular dialogue with labor and 
        human rights groups, repairing the poisoned 
        relationship under the previous administration. They 
        and other GOC officials have already hosted or 
        participated in dozens of meetings on human rights or 
        labor.
Labor-Specific Advances under Santos Administration:
   Santos will soon receive congressional approval to create a 
        separate Ministry of Labor (currently fused with 
        Health). The VP said the separate Ministry would be 
        better able to address critical labor issues such as 
        inspection programs, pensions, gender equality, better 
        salaries and working conditions, and improved social 
        dialogue.
   The VP has been outspoken on combating violence against 
        labor leaders and abuses in the workplace.
   The GOC committed for the first time ever to work with 
        human rights groups and unions to review all labor 
        homicides since 2000, and to conduct jointly a first-
        ever census of all Colombian trade unions.
   VP announced a plan to better protect teachers, based on a 
        proposal from the national teachers' union. The plan 
        would make schools safe havens against violence.
   Thanks to Santos administration efforts, a new law includes 
        a dissolution mechanism for cooperative worker 
        associations (CTAs, a top union concern because they 
        allowed some employers to escape responsibilities to 
        workers through informal subcontracting arrangements) 
        that fail to adhere to labor law, and higher fines (up 
        to $1.4 million) for CTAs and all methods of third-
        party contracting that violate the labor code. The law 
        also provides a sanction mechanism for public officials 
        that enter into a third-party contracting agreement 
        with a company that does not adhere to labor law.
   The GOC has recognized it needs to triple the number of 
        labor inspectors to 1,200.
   The GOC is aggressively building on important gains in 
        reducing child labor in Colombia. In November, it 
        announced an increase in government support to 
        complement the 2008 national strategy to prevent and 
        eradicate child labor. The plan utilizes interagency 
        coordination to promote the overall welfare of 
        children--including access to education and health 
        services. The GOC also supports the Families in Action 
        program, which provides $360 per year to each of 2.6 
        million families that enroll their children in school 
        rather than permit them to work illegally.
   The VP is in preliminary discussions with the Courts to 
        assign about 30 judges to focus exclusively on a range 
        of human rights and labor issues.
   Reducing informality (about 60 percent of the workforce) is 
        a top Santos priority, and the GOC aims to formalize at 
        least 500,000 jobs by 2014. The GOC has already 
        submitted several initiatives, such as the ``First Job 
        Law,'' to this end.
   Despite private sector objections, Santos increased the 
        minimum wage for 2011 by 4 percent and augmented 
        transportation allotments for workers.
Other Human Rights-Related Advances Under Santos Administration:
   Santos moved quickly to repair the Executive's broken 
        relationship with the Courts, meeting with all of the 
        high justices on his first day in office and treating 
        them with respect since.
   Santos expended significant political capital in convincing 
        the Supreme Court to fill the 18-month vacancy at the 
        helm of the independent Prosecutor General's Office by 
        replacing former President Uribe's nominees with a new 
        slate.
   Viviane Morales took office on January 13 as Colombia's 
        first female Prosecutor General, and the new Deputy 
        Prosecutor General and Director of Prosecutors are in 
        place. This restores leadership to the most crucial 
        independent institution for ending impunity in 
        Colombia.
   Santos's legislative agenda has focused on human rights, 
        and has included bold legislation that seeks to get at 
        the core of Colombia's most problematic issues.
   Santos's proposed Victims' and Land Restitution Law offers 
        reparations for the first time to millions of 
        Colombians who have suffered from decades of violence, 
        and aims to facilitate the return of lands to more than 
        400,000 families who lost their land to conflict, 
        illegal armed groups and displacement. Santos overcame 
        political opposition to include victims of state 
        security forces in the definition of those who will 
        receive reparations. The GOC has initially budgeted $22 
        billion for implementation of this law, and has 
        programmed consultations with indigenous and Afro-
        Colombian communities over the first half of 2011 to 
        ensure their concerns are addressed in implementation.
   In addition to the separate Ministry of Labor, Santos will 
        soon receive congressional approval to create separate 
        Ministries of Justice, Environment, and Housing, in 
        order to increase focus on these issues.
   Santos has also requested congressional permission to 
        dismantle the scandal-ridden Department of 
        Administrative Security (DAS), and replace it with a 
        more focused and disciplined intelligence-only agency.
   Congress approved a Santos-supported law to increase the 
        jail sentence to 30 years for killing human rights 
        defenders or journalists.
   The GOC presented an integral anticorruption law to 
        Congress (approved by Senate, pending in House), which 
        includes administrative, penal and disciplinary 
        penalties, and creates two national committees.
   The GOC presented a royalties reform law, which will share 
        the royalty income from extractive industries with all 
        of Colombia's departments, focusing on the poorest 
        regions. The funds will be geared toward economic 
        development, social, infrastructure, and other 
        projects.
   Santos and VP have demonstrated their commitment to human 
        rights defenders by improving their access to 
        government institutions, expanding the program that 
        provides them with physical protection, condemning 
        threats against them, and publicly extolling their 
        importance.
   The Ministry of Interior & Justice increased the annual 
        budget for its protection program by $11 million to $72 
        million. The program protects about 10,000 journalists, 
        labor leaders, human rights defenders, and opposition 
        figures; and no one who has participated in the program 
        has ever been killed.
   Following up on a commitment between Presidents Obama and 
        Santos to broaden our relationship, Deputy Secretary of 
        State Steinberg launched the High-Level Partnership 
        Dialogue with Foreign Minister Holguin in October. The 
        launch included the first meeting of the bilateral 
        interagency working group on human rights, which 
        discussed the Land and Victims' Law, fighting impunity, 
        better protecting human rights defenders, intelligence 
        reform, and other issues. The VP led the GOC's 
        delegation, which included senior officials from the 
        Foreign, Defense and Interior & Justice ministries, the 
        Presidential Program on Human Rights, and the 
        Prosecutor General's Office. The group will next meet 
        in Washington in March.
   The VP promoted and signed in November a joint human rights 
        declaration with civil society, independent state 
        entities, and the international community. The 
        declaration convokes the parties to prepare a Human 
        Rights Conference for December 2011, which will 
        establish a permanent multisector National Human Rights 
        Commission to work on consensus human rights issues.
   For the first time ever, the GOC included a chapter on 
        human rights in its 4-year agenda and budget-setting 
        National Development Plan. In consultation with Afro-
        Colombian communities, the GOC also developed a chapter 
        on Afro-Colombian issues in the Plan.
   Santos created new Presidential programs for Indigenous and 
        Afro-Colombian affairs.
   The GOC will be supporting a number of events in 2011 to 
        increase awareness of Afro-Colombian issues, such as: 
        March 21 Conference against Racism and Racial 
        Discrimination, May 21 Day of the Afro-Colombian, 
        October 12 Celebration of the U.N. Year of African 
        Descendents, October 21 Day of the Afro-Colombian 
        Woman.
   The GOC is developing a specific law to address the unique 
        social, economic, environmental, and security needs of 
        Afro-Colombians in San Andres.
   The GOC is designing a new ambitious program to address the 
        issues faced by displaced Afro-Colombian women, 
        promoting their leadership and access to equal 
        opportunity.
   Santos has called for the prosecution of sensitive cases 
        involving security forces.
   Santos signed into law the new Military Penal Code, which 
        will transition military justice to the oral accusatory 
        system and increase transparency.
   The Ministry of Defense established a commission to revamp 
        the Military Justice System, including streamlining 
        case transfers to civilian courts and ensuring military 
        judges are better trained and more independent.
   In December, the Ministry of Defense announced a new gender 
        training and equality program, a significant step for 
        the male-dominated armed forces.
   The Ministry of Interior & Justice meets regularly with 
        human rights NGOs. The agenda for February's meeting is 
        for the NGOs to present a list of priority cases 
        involving impunity for GOC followup.
   In November, the GOC launched a new program against 
        domestic violence.
   The Prosecutor General's Office created a Forced 
        Displacement and Disappearance Unit in November, with 
        22 prosecutors and 85 judicial police (to be increased 
        to 120 police in February).
   According to NGO CODHES, displacements in Colombia 
        decreased by 8 percent in 2010 compared to 2009.
   In December, Colombia became the 20th country to join the 
        International Convention against Forced Disappearance.
   The Santos administration in 2010 proposed several 
        legislative initiatives to combat violent criminal 
        bands (BACRIM) and bolster law enforcement:

     Increase penalties for illegal possession of firearms
     Criminalize gang membership and stiffen sentences for 
            minors
     Repeal the law that allows possession of small amounts of 
            drugs
     Allow search warrants to be executed at any time of day
     Lengthen warrants to monitor communications

   The Colombian National Police will grow by 20,000 officers 
        over the next 4 years, and the GOC has dedicated nearly 
        $90 million for neighborhood policing programs.
   The Prosecutor General's Office has created a dedicated 
        BACRIM unit with 28 prosecutors located throughout the 
        country. The Santos Government and courts have 
        designated 30 judges that will move around the country 
        to adjudicate BACRIM cases, thereby reducing the 
        prospects of corrupting local judges.
Recent Advances Preceding the Santos Administration:
   The security situation in Colombia has improved drastically 
        over the past decade, with the homicide rate falling by 
        half from 2002 (69.8 per 100,000 persons) to 2010 (33.5 
        per 100,000). Even with these improvements, Colombia 
        remains a violent place, with 15,238 total murders in 
        2010.
   Homicides of unionists have decreased significantly: from 
        194 in 2001 to about 48 in 2010 according to the 
        National Union School (ENS), or from 205 in 2001 to 27 
        (38 if nonunionized teachers are included) through 
        November 2010 according to the GOC. Information is 
        scarce as to how many of these homicides were due to 
        the victims' labor affiliation and how many were not 
        related to union activities.
   According to the major labor confederations, approximately 
        820,000 workers are currently union members. So the 
        homicide rate for union members in Colombia in 2010 
        (5.8 per 100,000, using ENS figures) is almost six 
        times lower than the national average for all 
        Colombians (33.5 per 100,000). The homicide rate for 
        union members in Colombia in 2010 (5.8 per 100,000) is 
        also comparable to the overall homicide rate in the 
        United States (5 per 100,000)
   The Prosecutor General's Office expanded its Human Rights 
        Office in 2006 to include a labor sub-unit to 
        investigate and prosecute cases involving crimes 
        against union members. The subunit currently employs 19 
        prosecutors, 19 assistant lawyers, and 76 investigators 
        who work with local prosecutors around the country.
   Since 2000, the Prosecutor General's Office has received 
        1,344 total cases and obtained 271 convictions 
        involving 350 individuals in crimes against unionists, 
        with 221 (81.5 percent) of these convictions since the 
        initiation of the labor subunit. 177 additional cases 
        are currently under investigation.
   Since 2008, three specialized judges have been assigned 
        exclusively to hear 185 labor violence cases that were 
        chosen by a tripartite agreement at the International 
        Labor Organization (ILO). The current VP is working to 
        increase the number of judges dedicated to labor 
        violence cases.
   In 2009, Congress passed a law to increase prison sentences 
        and the statute of limitations for homicides against 
        union members.
   From 2008 to 2010, based on International Labor 
        Organization (ILO) recommendations, the GOC doubled the 
        number of labor inspectors to 423.
   The ILO's high-level mission (October 2009) reported some 
        progress on violence issues as well as certain labor 
        code reforms. An ILO Committee of Experts' 2010 report 
        noted some continuing violations of labor standards, 
        but recognized Colombia's efforts to combat violence in 
        general and the decrease in violent acts against trade 
        unionists. The ILO also commended Colombia for 
        strengthening criminal penalties and prison sentences 
        for perpetrators of violence against union members.
   In June 2010, the ILO announced its list of countries under 
        observation by the Committee on the Application of 
        Standards, and Colombia was not included. Colombia's 
        exclusion is exceptional considering that it had been 
        included almost every year since 1989.
   The National Administrative Department of Statistics 
        reported an overall decrease in agricultural child 
        labor from 17 percent in 2003 to 10.9 percent in 2007.
   In 2004 the Ministry of Interior & Justice created the 
        Preventive Security Program to train unionists in self-
        protection and risk reduction.
   Colombia has ratified all eight of the core International 
        Labor Organization (ILO) conventions. Unions are free 
        to affiliate with international labor confederations. 
        Forced or compulsory labor is prohibited by law.
   The dismantling of drug cartels and demobilization of 
        paramilitaries created a void in drug and crime 
        businesses that is being filled by new, violent 
        criminal bands (BACRIM). The GOC has captured over 
        10,000 BACRIM members and detained several senior 
        leaders since 2006, and created an Integrated 
        Intelligence Center against BACRIM in 2009.

                              Appendix III

                                     Colombia Agricultural Import Statistics
                                         Year To date: January-September
----------------------------------------------------------------------------------------------------------------
                                                United States dollars             Percent share          Percent
                                           ------------------------------------------------------------  change
              Partner country                                                                          ---------
                                              2008      2009      2010      2008      2009      2010      2010/
                                                                                                          2008
----------------------------------------------------------------------------------------------------------------
World.....................................   3,997.3   3,643.4   3,891.4     100.0     100.0     100.0      -2.6
United States.............................   1,879.0   1,032.4     827.5      47.0      28.3      21.3     -56.0
Argentina.................................     456.8     736.2   1,011.2      11.4      20.2      26.0     121.3
Brazil....................................     170.2     305.3     311.4       4.3       8.4       8.0      83.0
Canada....................................     223.9     215.5     240.8       5.6       5.9       6.2       7.6
Chile.....................................     224.9     221.2     259.3       5.6       6.1       6.7      15.3
Ecuador...................................     228.3     267.9     277.8       5.7       7.4       7.1      21.7
Bolivia...................................     218.8     200.7     254.9       5.5       5.5       6.5      16.5
Peru......................................      92.7     159.4     150.3       2.3       4.4       3.9      62.2
Mexico....................................      75.8      87.8      91.5       1.9       2.4       2.4      20.8
  Others..................................     426.8     417.0     466.6      10.7      11.4      12.0       9.3
----------------------------------------------------------------------------------------------------------------
Source : Global Trade Atlas

                              Appendix IV






                                  
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