Although the U.S. and Colombia signed a free-trade agreement on Nov. 22, 2006, the U.S. Congress has not yet begun debate on implementing the legislation — even though the Colombian senate voted to approve the agreement by a margin of 55-3 in 2007 and the house by a margin of 85-10.
According to Iowa State University economist Dermot Hayes, when fully implemented the U.S.-Colombia F.T.A. would raise live U.S. hog prices $1.15 above what would otherwise be the case. With Canada’s action and with the failure of the U.S. government to implement the U.S.-Colombia F.T.A., trade benefits now will shift to Canadian pork producers.
If the U.S. does not implement its F.T.A. with Colombia, the U.S. will be completely out of the Colombian pork market within 10 years because of Canada’s F.T.A. tariff advantage, Mr. Hayes warned.
“It is unfortunate that our producers have to pay the price for U.S. inaction on trade,” said Sam Carney, president of the National Pork Producers Council (N.P.P.C.) and a pork producer from Adair, Iowa. “Canada will gain the inside track on future export opportunities in the sizeable and growing Colombian market.
“The sad truth is that the hardest market to gain access to is the one that is lost to competitors,” he added. “Business relationships between Canada and Colombia will become established, and when that happens, our only hope will be if we can offer a more competitively priced product. But that will be virtually impossible if Colombian tariffs on Canadian products remain lower than on ours for years to come.”
N.P.P.C. points out the U.S.-Colombia F.T.A. is one of three that are pending approval by Congress. Agreements with South Korea and Panama also have been awaiting action for more than three years. Panama also recently finalized an F.T.A. with Canada, and South Korea is nearing completion on a deal with the European Union, so those markets are also in jeopardy of being lost to competitors, according to N.P.P.C.
According to an analysis by Iowa State’s Mr. Hayes, the U.S. F.T.A. with South Korea alone would add $10 to the price of each U.S. hog sold.
For years now, N.P.P.C. has been calling for action on all three F.T.A.s, pointing out the enormous risk of letting other countries move forward first. Now that the risk is becoming reality, the U.S. must act quickly to at least keep its exports on a level playing field, the association concluded.