Colombia and the TLC : Just Who Benefits from ‘Free Trade’?

And we’re not talking “Tender Loving Care” here. Graffiti image from Parades Que Hablan (Talking Walls).
Colombia and the TLC:
Jobs, deficits, and keeping ‘free trade’ alive

The organizations that stand to benefit the most from this trade agreement — U.S. multinational corporations — have been involved in aiding and abetting [the] bloodshed [against trade unionists].

By Marion Delgado / The Rag Blog / March 27, 2010

AT LARGE IN COLOMBIA — On Thursday, February 18, U.S. Senator George LeMieux (R-FL), visited Colombia’s President Álvaro Uribe at his ranch. His pilgrimage promoted a proposed Colombian/U.S. Free Trade Agreement (FTA), known locally as the Tratado de Libre Comercio (TLC).

Sen. George

After their rural meeting, LeMieux released a statement in which he said, among other things,

Colombia is a strong ally and partner of the United States. In my meeting with President Uribe, I raised the issue of trade and committed to continue encouraging ratification of the [FTA/TLC]. I again call upon President Obama to send the free trade agreement with Colombia to the United States Congress. Bilateral trade produces clear benefits including jobs in Florida and throughout the United States.

For example, more than 95% of the flowers commercially grown in Colombia come through Miami for distribution throughout the nation. That creates thousands of jobs and opportunities in the United States. Free trade produces prosperity and strengthens democracies in Latin America as well.

He didn’t mention that those “thousands” of jobs and opportunities in the U.S. already exist without the TLC. It’s almost funny; he said that Free Trade produces prosperity; the facts, which Congresspeople never seem to work into their pro-free trade statements, show that just the opposite is true.

Take the original TLC: the North American Free Trade Agreement (NAFTA), between the U.S., Mexico, and Canada.

Prez George

Before leaving office, President George W. Bush of the Bush Crime Family claimed that, “From 1993 to 2007, trade among the NAFTA nations more than tripled, from $297 billion to $930 billion.”

Facts

Never one to rely on facts, Bush skipped over the reality that increased trade flow only benefits an economy as long as it doesn’t lead to unsustainable deficits. Much of the increased volume of trade under NAFTA was a massive surge in imports into the U.S.

A small pre-NAFTA U.S. trade surplus with Mexico in 1993 reversed into a $91 billion deficit in 2007, while a pre-NAFTA deficit with Canada grew exponentially. NAFTA foreign investor protections, which remove most of the risks otherwise associated with offshore production — coupled with the high dollar policies of the Clinton administration — acted as a subsidy for off-shoring U.S. jobs.

The result? A 691% increase in the U.S.’ combined trade deficit with Canada and Mexico, from $24 billion in 1993 to $190 billion in 2007. This artificially induced, distorted composition of trade flows — shaped by specific rules in NAFTA — puts the entire region at economic risk.

Senator LeMieux was big on job creation. He obviously knows nothing of which he speaks, and as with any politician cares less, he just says what he thinks sounds good. The real facts about job creation under NAFTA tell a different story.

More facts

Trade affects the composition of jobs, not the total number. Three million net U.S. manufacturing jobs have been lost under NAFTA.

The job creation claim is particularly sly, as economists know that total employment numbers and unemployment rates are not typically affected by trade policy, but by central bankers who set interest rates. In fact, they define labor force growth as simply income growth minus productivity growth.

Thus, if income growth were 2 percent and productivity growth were 1 percent, this would imply a labor force growth rate of 1 percent, or roughly 1.4 million jobs — irrespective of trade flows.

What trade policy affects is the composition of jobs in the economy, in particular tradable sectors like manufacturing. The original claim by NAFTA boosters in 1993 that the pact would lead to 170,000 annual U.S. job gains was premised on the projection that the U.S. would have a growing trade surplus with Mexico. We were supposed to be exporting U.S.-made goods to them.

Ever since NAFTA critics’ projection of increased trade deficits proved true, pro-NAFTA analysts have tried to move the discussion away from the pact’s damage to U.S. workers and to focus on the combined import-export volume of trade flows’ effect on overall U.S. employment rates.

Here are the relevant numbers: U.S. manufacturing employment declined from 16.8 million people in 1993 to 13.9 million people in 2007, a decrease of nearly 3 million manufacturing jobs, nearly 20% of the total. Moreover, today’s $190 billion U.S. trade deficit with NAFTA countries — as a simple accounting matter — equals manufacturing jobs that could have been here. The Economic Policy Institute estimates that the U.S. could have had over 1 million additional manufacturing jobs had there been trade balance between NAFTA countries alone, or no NAFTA at all.

Sen. George LeMeiux, Republican of Florida. Photo from AP / Politico.

Other Congressional visits

President Uribe also met with a group of U.S. Congressmen on January 9, at a working breakfast at his ranch known as Fertile Farm in Monteria, Cordoba Department, 310km Northeast of Bogota.

Among them was Eliot Engel, a Democrat from New York’s 17th district (Westchester County), chairman of the Western Hemisphere subcommittee of the House.

The meeting marked the start of an offensive by the president to achieve, as soon as possible, ratification of the FTA/TLC by the U.S. Congress.

Uribe’s purpose became clear on December 31, 2009, when he asked the U.S. to “recognize the efforts” of Colombia in the fight against drug trafficking and terrorism. A week later, he reiterated to Democratic Reps. Engel; Lynn Woolsey from Marin County, CA; Shelley Berkley, Las Vegas, NV; and Republican Marsha Blackburn from Southwestern Tennessee, (a T-bagger favorite): “I said with all honesty and with all the solidarity that we need rapid adoption of this treaty.”

What the fight against drug trafficking and “terrorism” has to do with Free Trade is beyond me.

Pending congressional approval

The FTA/TLC was signed by Presidents Bush and Uribe on November 22, 2006. When it enters into force, Colombia will immediately eliminate most tariffs on U.S. exports, with all remaining tariffs phased out over defined time periods.

The FTA/TLC also includes important rules on customs administration and trade facilitation, technical barriers to trade, government procurement, investment, telecommunications, electronic commerce, intellectual property rights, and labor and environmental protection.

Labor Protection?

If labor needs protection anywhere, it is here in Colombia. Here is the situation:

Colombia today has some of the worst labor rights violations in the world. Trade unionists are routinely murdered, tortured, and threatened with death: since 1991, over 2200 have been assassinated. Many of these extrajudicial killings have been directly linked to the Colombian Military and the President’s own secret police, the Administrative Department for Security or Departamento Administrativo de Seguridad (DAS). Out of so many murders, there have been only 37 convictions. The FTA/TLC will only embolden anti-union attacks here.

The organizations that stand to benefit the most from this trade agreement — U.S. multinational corporations — have been involved in aiding and abetting this bloodshed. Cases have been brought against Coca-Cola, Drummond Mining Company, and Occidental Petroleum accusing them of employing paramilitaries that terrorized and killed union organizers.

Forty-three U.S. corporations have been named as having hired paracos to “protect” them from guerrillas and unions. More cases are expected to be made, and fines will be levied. (Not as cheap as the $2000 a head reportedly paid for U.S. Army/mercenary baby killing in Afghanistan, but cheap enough for the Wall Street gang.)

It should be noted that most Colombian workers and their unions are against the proposed FTA/TLC; unlike American investors, workers in Colombia have little to gain by further U.S. investment without real accountability for violence against unions and for multiple other human rights abuses.

U.S. firms will have better access to Colombia’s service sector than other World Trade Organization members under the pact’s General Agreement on Tariffs and Trade. All service sectors are covered by the FTA/TLC except where Colombia has made specific exceptions.

Colombia’s Congress approved the FTA/TLC and a protocol of amendment in 2007. Colombia’s Constitutional Court completed its review in July 2008, and concluded that the FTA/TLC conforms to Colombia’s Constitution.

Obama’s duplicity

In his January 27 State of the Union Speech, President Barack H. Obama said, “We have to seek new markets aggressively, just as our competitors are… And that is why we will continue to shape a… trade agreement that will open…markets…with key partners like Colombia.”

To flesh out what his boss meant, deputy U.S. Trade Representative Demetrios Marantis expounded on trade policy in a morning-after speech before a gathering sponsored by the Center for Strategic and International Studies.

Key pillars of Obama’s trade policy, Marantis said, will include pursuing the Transpacific Partnership (TPP) — while also pushing ratification of already-negotiated free trade agreements with South Korea, Panama, and Colombia. The trade agreements were each presented to Congress at least three years ago but have not been acted upon.

One big question is why Obama is pursuing free trade in the first place. As a candidate, Obama argued that the American public had been oversold on the benefits of free trade and specifically came out against the Colombia FTA. What happened?

Mitch

Mitch McConnell (R-KY), the Senate Minority Clown-in-Chief, was quick to jump on the FTA/TLC band wagon the day after BHO’s speech. “Republicans agree with the need to increase trade and with the need to ratify trade agreements with Colombia and other important trading partners that so far have met resistance on the other side of the aisle,” he declared.

Mitch was referring to the reluctance of some Democrats to address the FTA/TLC created by their awareness of the thousands of murders of trade unionists since 1991. Many other union members were threatened, tortured, and driven out of their country.

For proponents, the FTA/TLC is tied as much to hemispheric politics as it is to trade. The U.S. and Colombia are strategic partners, having signed a Defense Cooperation Agreement on October 30, 2009, which gives the U.S. access to Colombian bases from which to carry out “counter-drug” surveillance flights. Colombia has proved a bulwark against the two countries’ mutual antagonist, the Bolivarian Revolutionary country of Venezuela.

Some Congressional Democrats have spoken out stridently against the FTA/TLC, criticizing the Colombian government for not doing enough to curb violence against union organizers and members.

Harry

Senate majority leader Harry Reid (D-NV), has argued that “it is a major mistake to set up the Colombia [FTA/TLC] legislation as the proxy for support for Colombia… An FTA is not a foreign-aid package. It is neither a favor for friendly governments, nor a substitute for sensible and sustained foreign-policy engagement in the hemisphere.”

Obama may well see the FTA/TLC in strategic terms, but some think Congress is unlikely to follow that lead. One reason is that opponents — most notably, organized labor — comprise part of the Democrats’ political base. In addition, polls show that most Americans have turned away from free trade. A 2009 Rasmussen poll found that 73% of Americans believe that free-trade agreements have had a negative effect on their families, while only 14% say they have benefited.

With those kinds of numbers and congressional elections approaching, it is doubtful members of Congress will want to stick their necks out for free trade, at least this year.

Cartoon from Witness for Peace.

Down but not out

Does that mean the FTA/TLC is dead? Hardly. It lingers ready to go to Congress, an Obama bargaining chip to appease Republicans or to trade for their votes on some other crazy Democratic scheme.

Ron

Colombia’s Trade Minister, Luis Guillermo Plata, asked the U.S. on March 9 to “be sincere and tell us if the [FTA/TLC] is going to go ahead or not.” A response from the White House came the next day when U.S. Trade Representative Ron Kirk, testifying before the Senate Finance Committee, said, “we are hopeful we can come to some resolution with members of Congress over the next several months, if not weeks… so that we can then go back to Colombia with a finite list of what we’d like to see get done.”

Kirk said that passing the agreement with Colombia is a priority of the Obama administration. The U.S. plans to give Colombia a “workable list” of legislative and judicial reforms that the administration would like to see the South American nation execute.

Chuck

Senator Charles “Chuck” Grassley (R-IA), ranking member of the Senate Committee on Finance, whined about the “apparent lack of urgency” in resolving issues surrounding the trade accord. “This delay in implementation hurts U.S. credibility around the world, not just economically but geopolitically as well.” He didn’t elaborate on how that is so, or what credibility he was referring to or what was so urgent about it.

Hillary

U.S. Secretary of State Hillary Clinton, who bypassed Colombia on her recent South American tour, met privately with Uribe in Montevideo, Uruguay, on Monday, Mar. 1, and confirmed Washington’s plans to push the FTA/TLC.

Both were there for the inauguration of President Jose Mujica, a co-founder of the Tupamaro guerrillas who spent 15 years in prison, enduring torture at the hands of the brutal, U.S. backed, military dictatorship that ruled Uruguay from 1973-1985.

A midnight vote on an unrelated bill wherein the FTA/TLC is a silent partner may be more likely than open passage. Transparency, honesty, and giving a shit about the lives of the Colombian working class (or any other workers) are never on the Capitalist agenda. It’s always about the false value of Profit.

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