The incoming government of President Gustavo Petro has clearly indicated that the renegotiation of the FTA with the United States is one of its priorities for this new chapter that begins with Washington. From his perspective, the agreement, which was signed a decade ago, ended up being harmful to the Colombian countryside and the agricultural industry.
A US delegation that recently traveled to the country to meet with President Petro signaled its willingness to discuss possible changes to the agreement. It is, however, an extremely complex issue that carries both risks and benefits.
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To understand it, EL TIEMPO spoke with Antonio Ortiz-Mena, Senior Vice President at the Albright Stonebridge Group, a Washington consulting firm that focuses on, among other things, trade issues. Of Mexican origin, Ortiz-Mena was part of the negotiations of this country with the United States and Canada prior to the signing of the North American Free Trade Agreement (NAFTA, or Nafta) and was head of the Economic Affairs office of the Mexican embassy in the US capital for 8 years.
According to Ortiz-Mena, although the current FTA with Colombia allows for a series of minor adjustments, a renegotiation that includes access to markets would imply its passage through the United States legislature, something that in the current political climate in this country would be virtually impossible to achieve. And, if achieved, it would probably result in very serious losses for the country.
How viable do you see the renegotiation or changes to the FTA with the US that the new government of Gustavo Petro intends?
I would say, first of all, that adjustments can be made to free trade agreements that do not require legislative approval. In the case of the North American Free Trade Agreement (NAFTA, or Nafta, for its acronym in English), some adjustments were made to the rules of origin, aspects were made more flexible. For them, the agreements have an instrument that is the free trade commission, which also exists in the case of the Colombian.
This commission must meet annually to review this type of adjustments or improvements. But they are about issues that I would call minor, marginal or operational. But there is a possibility. In addition, in the FTA with Colombia, a series of working groups were established to review issues and it would be necessary to see if they have been meeting and issuing recommendations. If not, make sure they are doing it. These kinds of things are negotiated between governments and there is no legislative approval.
But if it is about major adjustments that change the commitments regarding market access, then that does require legislative approval. And for that I do not see conditions. The chances that right now renegotiate an FTA with Colombiaor any other country, that can be approved by Congress are close to zero.
(You may be interested in: The key issues in Petro’s meeting with delegates from the Biden government)
What do you mean when you talk about minor adjustments?
Because there is room to make minor adjustments to better take advantage of trade-facilitating FTAs that are rarely fully used. Before renegotiating, first look at what adjustments are politically and technically feasible to make from the free trade commission without requiring a renegotiation. I am also obsessed with these workgroups because they are not used well. You can take advantage of these mechanisms intelligently.
But what is the risk of renegotiating major issues, such as market access?
Which is like opening a Pandora’s box. In fact, when the T-MEC was approved (the treaty that was negotiated between Mexico, Canada and the United States as a replacement for Nafta during the presidency of Donald Trump), Mexico ended up with more restrictions for the automotive industry. In addition to the fact that the probability of renegotiating is almost zero, if it were to happen, you run the risk of losing what you have won.
For it to be satisfactory in the face of the new political forces of the United States government –and approved by Congress–, Colombia would have to sacrifice many of the gains in market access. And that is not advisable.
And why do you say that the chances of a successful renegotiation are close to zero?
Because there is no appetite in America to do it. Ecuador has said that it wants an FTA with the United States and they have already been told no. From a geopolitical perspective, the United States might be interested in reviving the TPP (Trans-Pacific Trade Agreement), but there are no (domestic political) conditions to do so.
In addition to the fact that the probability of renegotiating is almost zero, if it were to happen, you run the risk of losing what you have won.
If you look, the US recently talked about an agreement with East Asian countries, but it was not raised in terms of market access but rather regulatory issues. Moreover, at the recent Summit of the Americas, the chapter that was approved on a new economic alliance does not contain anything about markets. The USMCA’s name alone does not include the word “free” or trade, only the word ‘agreement’. The United States is simply not opening its market for agricultural products.
(Also: The first steps of the new relationship between Colombia and the US.)
But, the United States was a very open country for trade a few years ago. Why is there no weather to continue on that path today?
In the last 15 or 20 years, the United States has become a more unequal society in terms of income concentration. And, albeit unduly, international trade is blamed.
This inequality is due, rather, to technological change and the very modest support that exists compared to other countries, such as in Europe in terms of unemployment insurance and retraining for people displaced by trade. But that is the perception.
In the case of T-MEC, the United States removed many of the protections for foreign investment. They don’t want people to invest outside. We are facing a paradigm shift. In addition, in the event of renegotiating, which I still think is impossible, these new generation agreements, such as the T-MEC, are more about managed trade and not free trade and this benefits the United States more than the countries of Latin America because the United States has more market power. That is, it can be much worse than what you already have.
To that I would add two more things. A renegotiation would take at least one or two years and that is going to stop investment because nobody is going to want to invest until the new rules are known. The other thing is that a year ago the TPA expired (Authority to Promote Trade, or fast track, which Congress gives the President to be able to negotiate treaties without the intervention of the legislature except to approve or reject it at the end). Not only would it be very difficult to negotiate without TPA, but there is also no appetite to give that power back to the administration.
And so what do you recommend given this context?
First, as I told you, favorably exploit the existing agreements through the trade commission and working groups. Second, and if what it is about is helping the Colombian countryside, there are other ways to do it.
USAID will continue to be interested in supporting the country now that Petro arrives. There is another US agency called the Development Finance Corporation (bank for the development of the United States) that many countries cannot access, but Colombia can and that can be used. The IDB is looking for opportunities both for the public sector and from its private sector (IDB Invest) and if the certainty is granted that the rules of the game will not change, that will contribute to more investment in the Colombian countryside. .
(In other news: Who is Samantha Power, the one sent by Biden for the possession of Petro?)
I think that in that sense we have to learn from Mexico. The current government has approved a series of measures, especially in the energy field, which have generated uncertainty and hindered investment in general because it sows doubts about domestic economic policy.
What I would respectfully say to Colombians, as a Mexican, is that try to grant the greatest certainty without surprises regarding international rules and commitments. And, within the same agreements, to see how the affected regions and sectors can be favored more. Do not confuse means with ends. The goal is how to provide the greatest support to the poorest or least favored segments of the countryside. But the way is not to renegotiate the FTA, but to take better advantage of it.
SERGIO GOMEZ MASERI
Correspondent of THE TIME
Washington
On Twitter @sergom68
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