“I’ve got a flag on my lapel, not a maple leaf,” U.S. Trade Representative Ron Kirk exclaimed at a Senate Finance Committee hearing in March. Today, as Canada’s free-trade agreement (FTA) with Colombia enters into force, it is the maple leaf that represents competitive pressures on U.S. market share and the political influence that goes with it.
Canada and Colombia are two of our closest friends in the Western Hemisphere, and their strengthened commercial ties clearly benefit their mutual interests as well as Washington’s broader goal of promoting open markets and economic development. Yet U.S. businesses and their congressional advocates are keenly aware that Canada has beat us to the punch, leaving U.S. exporters to an important emerging market at a competitive disadvantage.
The implications of delayed ratification of the U.S.-Colombia FTA are not lost on either Colombia or Canada. As Colombian President Juan Manuel Santos bluntly put it in a recent interview with Americas Quarterly, “American products are being replaced in the Colombian market because other countries have free-trade agreements. If the FTA is not approved shortly, the U.S. will continue losing market share.” Those losses will be particularly acute in the agricultural sector, where duty-free Canadian wheat will likely replace U.S. imports.
Similarly, on a visit to Bogotá last week, Canadian Prime Minister Stephen Harper lauded the leveling of the playing field for Canadian business vis-à-vis competitors who have or are seeking preferential access to the burgeoning Colombian economy. For Canadian wheat exporters, for example, this will mean the opportunity to catch up with Argentina, which has surpassed the United States as Colombia’s number one agricultural supplier. Tellingly, the president of the Canadian Wheat Board noted that the U.S. has yet to ratify its own agreement as he welcomed the competitive edge gained by Canadian grain exporters.
For both Ottawa and Bogotá, a strengthened trade relationship is also geopolitically attractive. As Harper stated on his official visit to Colombia, “diversifying trade and economic activity like this is the focal point of Canada’s renewed outreach to its hemispheric neighbors.” As in the United States, securing parliamentary approval of the FTA with Colombia was not an easy lift, given domestic opposition from labor unions and human rights groups. Nevertheless, the trade agreement was viewed an important tool in a comprehensive strategy to engage with Latin America.
It is no surprise that the agreement also sends a message to Washington. President Santos (and President Uribe before him) understands that Colombia’s diversification of its trading relations heightens pressure on the United States to approve the long-pending FTA.
The U.S. Congress has caught on. Even as China remains the most commonly perceived threat to U.S. commercial and political interests in the hemisphere, the Canada-Colombia FTA has become a standard talking point. As Ways and Means Committee Chairman Dave Camp (R-MI) stated in a press release today, the entry into force of Canada’s agreement with Colombia leaves U.S. workers and exporters at a significant disadvantage. Such warnings are particularly dire given current pessimism over the sluggish economic recovery and disappointing employment figures.
The silver lining of competition is that it may spur Congress and the Obama Administration to finally finish the job on the Colombia and Panama agreements this fall. Though his focus is on the rise of China and India, Fareed Zakaria’s questions in The Post-American World are just as applicable here: “Can Washington adjust and adapt to a world in which others have moved up? Can it respond to shifts in economic and political power?”
Let’s hope that the U.S. Capitol is up to the test.
*Kezia McKeague is a guest blogger to AQ Online. She is director of government relations at the Council of the Americas in Washington DC.