By Tyler Sheets
“… if you want to have an export industry in your country, don’t protect it; if you want to have a child that walks, don’t forbid it from walking; if you want to have a competitor, let it compete… there are protectionist interests in the US, but there is also protectionism in many of our countries…”
– Felipe Calderon, President of Mexico
There were distractions. There was scandalous sex. There were empty bottles of beer. The president had his hands full, and the media was frenzied. The signing of the Colombian Free Trade Agreement went largely ignored in the midst of the madness even though it could potentially alter the course of two nations’ economies, inter-hemispheric relations, and the likelihood that the President of the United States will be re-elected. However, the media focused its attention on Hillary Clinton’s late night beer with Colombia’s first lady and the procurement of prostitutes by a handful of Secret Service employees, requiring the president to field questions on these incidents instead of the landmark agreement. Since even the most enthusiastic consumer of international politics was given such minimal information from mainstream media, it’s worthwhile to review how we got to the Summit of the Americas in Cartagena and the signing of the Colombian Free Trade Agreement by Presidents Obama and Santos.
The conversation should start with the North American Free Trade Agreement (NAFTA). In January of 1994, NAFTA came into force and created the largest trade bloc in the world in terms of combined GDP. Then, as now, strong opposition from labor unions rallied against congressional and presidential approval. Then, as now, a Democrat originally supported by labor unions sat in the oval office. Then, as now, the influence wielded by owners of capital was strong in Washington. In fact the strong capital gains they enjoyed from NAFTA’s enactment persuaded them to encourage Washington, through heavy lobbying, to pursue a Free Trade Area of the Americas (FTAA), essentially expanding NAFTA from the Yukon Territory all the way to Tierra del Fuego. Though a rising leftist influence in Latin America combined with the unpopularity of the Bush administration’s foreign policy meant the death of the FTAA at Mar del Plata in 2005 with Hugo Chavez leading chants in the streets, it became immediately clear the United States would not relent in its pursuit of free trade in the hemisphere.
Colombia became an early and obvious candidate for an agreement as it pursued free trade with the U.S. while under President Alvaro Uribe. However, the agreement was put on the back burner in hopes that the creation of the FTAA would make it meaningless. Going back to the turn of the century, the Clinton administration built a very strong relationship with the Colombian government by developing a joint strategy to eradicate the drug trade, an effort that came to be known as Plan Colombia. This was the United States’ largest diplomatic mission before being replaced by the urgency of the War in Iraq. While the efforts began a uniquely intimate relationship between a Latin American country and the U.S., the relationship has been controversial in the view of the Colombian people from its inception. Drug eradication efforts included aerial fumigation, which devastated much of the country’s landscape and included the funding of excessively violent, right-wing radicals. Yet, current President Juan Manuel Santos recently said Plan Colombia brought the nation from the brink of becoming a failed state to the success it has recently enjoyed.
Efforts to eradicate the illicit drug trade began with the signing of the Andean Trade Preference Act, which was renamed the Andean Trade Preference and Drug Eradication Act in 2002. The law gave Colombian (and other Andean nations’) businesses preferential avoidance of duties on products the U.S. government believed would help Colombians build legitimate business and thereby eliminate the attraction of engaging in illicit business. The agreement became a regular topic of conversation over the past two months as Republican legislators encouraged Obama to sign the CFTA in order to ensure that the Colombians gave our businesses a similar deal there that Colombian businesses receive here.
The current administration in Washington has not taken a break from either the United States’ persistent support for free trade or its love affair with Bogota. The influence of those most likely to benefit from free trade, the top 1 percent of wealth owners and the agricultural community, became immediately evident when President Obama nominated Ron Kirk as the U.S. Trade Representative (USTR). Ben Smith, of POLITICO, described Kirk’s appointment as a sign of the weakness of organized labor in the United States. However, it could just as easily be seen as a sign of a strong pro-business lobby.
Obama knew the passage of another major free trade agreement from a supposedly pro-labor Democrat would not sit well with his base. In order to allay their concerns he promoted a stronger Trade Adjustment Assistance Act (TAA) in order to minimize the risks faced by laborers in the U.S. Ironically, this act had become law under another Democrat, former President John F. Kennedy, in his effort to increase trade without offending labor unions. TAA would create funds to aid those who could prove that they lost their jobs due to an increase in trade. IronicallySuspiciously, while pursuing assistance for those who might lose their jobs, the administration has consistently argued that CFTA would create jobs. The Labor Secretary Hilda Solis, USTR Ron Kirk and Commerce Secretary John Bryson reiterated this claim.
As much excitement as images of Hillary Clinton drinking beer and the long list of Secret Service sex scandals caused, the media has also settled into campaign mode. Until the day of the election, the media will assess the likelihood of the president’s re-election by overanalyzing every move. The Colombian Free Trade Agreement has not been an exception.
Thus far the narrative shows that Obama remains strong on foreign policy and is well-liked internationally, as he ordered the mission that killed Osama bin Laden and ended the War in Iraq. Romney, given his success at Bain Capital as a management consultant and his work with the Salt Lake Olympics, has been viewed as strong on the economy. It is intuitive then that President Obama would use his strengths to encroach on the role that many see as Romney’s; the pro-business candidate.
Given that Obama does not need to secure his party’s nomination through the primary process, he can rely on the liberal base without competition from another liberal. This has allowed him to move further to the right to grab centrists’ attention. For example, in 2008 Obama explicitly stated that he would not support free trade agreements in either Central America or in Colombia. In fact, while in the Senate, both he and his secretary of state voted against the Central American Free Trade Agreement. The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the largest federation of unions in the United States, rewarded Obama’s disapproval of free trade agreements in the Americas with fervent support. In fact, labor unions contributed a record $450 million toward Obama’s 2008 election.
Obama hasn’t made much effort to reach out to these unions this election period. In fact, those singing Obama’s praises for signing the CFTA include typical enemies of the liberal left. Republicans Paul Ryan, Kevin Brady, and others on the right gave speeches applauding the agreement, with Rep. Dave Camp even calling it a “cause to celebrate”. On the other hand, the AFL-CIO has been highly critical of the agreement as an assault on labor in both Colombia and the United States, and in spite of their unanimous decision to endorse Obama’s current campaign, it is unclear how deep their support will go. Obama’s attempt to strengthen the Trade Adjustment Act didn’t do much to allay their concerns. Yet with a near guarantee that labor unions will continue to prefer Obama to Romney, and with the business lobby undecided or leaning to the right, Obama made a rather rational choice.
Yet the CFTA was not caused by the election and is not primarily about the election. In 2008 a Gallup poll revealed that 58 percent of South Americans didn’t know who they wanted to see elected president of the United States later that year. While Colombia’s percentage was 12 percentage points lower, it can be accepted that a large percentage of South Americans believe the U.S. policy will not drastically change regardless of who is elected. In fact, the same poll revealed that 68 percent of South Americans believed it either did not matter who was elected the president of the United States, or they did not know. Meanwhile, as Obama has enjoyed foreign policy success in high profile areas like Afghanistan and Iraq, his tenure in office has suffered the election of five leftist executives in Latin America. This continues a trend away from U.S. influence and a rejection of the Washington Consensus, known as the “pink tide,” in reference to the executives’ quasi-communist tendencies. Early in the Republican primary, Rick Santorum questioned Obama’s commitment to the region by noting the lack of a free trade agreement with Colombia.
Global Structural Factors
Last July, in an attempt to stem the rising pink tide, Republican lawmakers voted to defund the Organization of American States (OAS), with some calling it an enemy of democracy. They have been particularly critical of support for the Castros and Hugo Chavez that was emerging from the group. Rep. David Rivera, in a clear attempt to appeal to anti-Castro voters in Florida, went so far as to call the OAS an enemy of the United States. In an era when the United States has run low on friendships, the Obama administration and Congressional Democrats have made efforts to repair relationships in Latin America. Support on both sides of the aisle can be viewed as an attempt to solidify friendship in one of the few Latin American nations openly receptive to U.S. foreign policy.
As U.S. influence waned in Latin America during the Bush years, Colombia made significant progress and increased its importance in all the right ways. It gained a temporary seat on the UN Security Council and played a significant role in the reintegration of Honduras into the OAS through a deal brokered by the governments of Colombia and Venezuela. Last month, President Juan Manuel Santos was honored as one of Time Magazine’s 100 most influential people in the world in a very flattering piece written by Shakira. Furthermore, Obama even indicated that the United States would eventually support a Colombian bid to join the Organization for Economic Cooperation and Development (OECD). These are major strides for a state that was only recently on the brink of losing its monopoly on the use of legitimate force. The U.S. could use an influential ally in a region that is currently distancing itself from our preferences.
However, the U.S. was not the first to sign a free trade deal with Colombia. In fact, more critics than Rick Santorum could consider the U.S. deal late. Mercosur (the common market spanning the borders of Brazil, Uruguay, Argentina, and Paraguay) gave Colombia preferential access to its market of some 230 million people in a deal signed by former President Alvaro Uribe in 2005. In addition, the Canadians have a deal with the Colombian government. Lastly, Colombia is an associate member of the common market and many U.S. Multinational Corporations (MNCs) have been anxious for a deal; using Colombian labor presents an advantage given its quicker turnaround times when compared to the long journey from South East Asia. Congressional Republicans have been quick to point out that the Andean Trade Promotion Act has given Colombian business preferential access to the U.S. market without reciprocation by the Colombian government for over a decade. Thus, for some the deal came late.
For some the deal should not have come at all. Rep. Jim McGovern of Massachussets was quick to criticize Obama’s signature on the deal, saying, “I am disappointed in the President’s decision to bring the FTA into force so quickly. At a time when threats and murders of human rights and land rights leaders are escalating, and threats and violence against labor activists continue unabated, this premature decision sends the wrong signal at the wrong time.” Labor Unions in the United States have also been opposed to the deal since its conception, partly because Colombia has often been termed the most dangerous nation in the world for labor activists. The signing of the CFTA by Santos and Obama could be viewed as a testament to the weakness of labor’s influence in both countries.
The Obama administration claims there is little to worry about and has indicated that progress has been made. Hilda Solis, Obama’s labor secretary, has announced her belief that the labor situation in Colombia has improved. She has also stated that the U.S. Department of Labor will be supporting its Colombian counterpart. Kirk was also quick to pronounce the Labor Action Plan a success in securing labor organizers.
After arresting the former head of the intelligence agency, Jorge Noguera, and the president’s own chief of staff in connection with phone tapping and providing lists of union leader names to paramilitary organizations who were murdering those on the list, the president abolished the 58-year-old agency. Then in 2006, a subunit of the prosecutor general’s office was created to pursue murderers of union activists. The unit has professed significant changes in its methodology that will increase the successful prosecution of murderers, including the early acknowledgement of union membership in murder cases. So why is there still fuss?
The majority of the subunits supposed progress has come in the form of confessions under the poorly named “Justice and Peace Law”, which significantly reduced prison sentences for members of Columbian paramilitaries in order to create an incentive for them to turn themselves in. The law expired in 2006. Most of the confessions have turned in bogus motives, and very few confessions have led to the arrests of those who plan and pay for these murders. Less than ten percent of union member murders committed since 1986 have been prosecuted. Since the expiration of the Justice and Peace Law, the subunit made little progress. It is difficult to call the restructuring of the Attorney General’s office anything other than sugar-coating a dire situation for labor activists that persist in Colombia.
As with NAFTA, the agriculture lobby stands to benefit the most, while requiring the least amount of investment. Generous crop subsidies from the federal government have been a primary factor in convincing many that a free trade agreement unfairly favors the United States since owners of agricultural operations can no longer compete with wheat, soy beans, corn, and other products coming from the U.S. The Department of Commerce claims that a win for agriculture is also a win for labor – by their measure, every $1 billion increase in agricultural exports creates 8,000 jobs in the U.S. However, it is primarily the owners of these operations that have celebrated the deal, not the AFL-CIO. With Colombia stabilizing, it is also becoming an extremely attractive market for U.S. MNC’s looking to make investments overseas. Ironically, the weakness of organized labor and the low likelihood that corporations will be nationalized is also attractive to U.S. investors. With the agriculture lobby and the big business community benefitting, Obama could win major campaign contributions from unlikely sources.
The agreement may also benefit the Colombian GDP as it creates a competitive market for investors. Foreign direct investment in Colombia has increased substantially since Santos was elected in 2010. According to Bloomberg reporter Blake Schmidt, these investments have effectively stabilized the Colombian currency. The U.S., being Colombia’s largest trading partner, could make a very significant impact on the Colombian economy with trade barriers falling. M. Angeles Villarreal, a specialist in International Trade and Finance writing for the Congressional Research Service, has claimed that without the increased investment from CFTA, the Colombian security situation could regress due to strains on the economy. He claims that CFTA is an essential element of Colombia’s economic development strategy. It is difficult to say that he is correct taking into account the precarious security of labor organizers, but his view is quite mainstream in the offices of both Washington and Bogota.
Finally, there are two proclaimed winners in the CFTA. The healthcare industry gained intellectual property rights, which will increase their revenue. At the same time it is difficult to call this a victory for anybody considering that healthcare prices will increase, meaning that healthcare itself will likely decrease. Another suspicious claim to victory by those supporting the agreement is the one by environmental groups. Obama has claimed (as has Mr. Villareal) that the CFTA includes strong protections for the environment. This is of particular concern in an area with unique natural beauty and significant tribal populations dependent on these resources. Yet, the agreement only states that the signatories will observe environmental laws already in place in either country. With a free trade agreement there is bound to be increased economic activity and with that activity often comes increased environmental damage. True commitment to environmental protections would have included a reassessment and enhancement of laws already on the books.
While the globe was not significantly altered by Hillary Clinton’s beer-drinking, the sins of the Secret Service in Cartagena, or Obama’s response to questions on these topics, it would serve the political viewer well to keep track of how the CFTA will affect the course of international politics. How does the agreement affect Obama’s campaign finances and re-election chances? In spite of Obama’s claim that Cartagena was not about the Cold War battle over left-right ideology, one might wonder how the agreement will be received by a Latin America that is simultaneously shifting to the left while the left’s most vivid promoters, Hugo Chavez and the Castros, are weakening. How will the agreement affect the already tense labor situation in the U.S.? Does this strengthen or weaken public angst manifested in the Occupy movements? Will economic development in Colombia lead to a safer environment for laborers? The answers to these questions are not readily available. The only conclusion I have come to is that in a competitive international economy and a competitive election season, Barack Obama’s options were limited. The timing made his choice a near necessity, yet the risks remain high.
Images Courtesy Of Public Citizen, mar is sea Y, Globovisión, and momentcaptured1
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