Colombia and Ecuador hit by U.S. tariffs
The U.S. Congress has decided not to renew a free trade agreement with Colombia and Ecuador, as a result of internal conflict between the Republican and Democrat parties.
Bananas and mangoes are just two of the major agricultural goods affected by the decision not to renew the Andean Trade Promotion and Drug Eradication Act (ATPDEA), with tariffs now applied to hundreds of products that were previously tariff-free.
The Washington Post reported the Democrats had threatened not to extend the act unless the Republicans agreed to pass Trade Adjustment Assistance (TAA) Program extensions, which would have involved assistance financing to local workers affected by international competition.
Informador.mx reported the Republicans opposed the TAA program as it would have strengthened unions in the lead up to the 2012 presidential election, while the New York Times said the Democrats also opposed the ATPDEA based on alleged violence towards union organizers in Colombia.
In the wake of the decision Ecuadorian exporters are already making contact with U.S importers to negotiate interest co-payment arrangements, reported Confirmado.net. Under the ATPDEA around 72% of Ecuadorian products that arrived in the U.S. were tariff-free.
“Our situation is grave, because not only do we have to pay tariffs for products we recently sent, but those that have already left 15 days ago,” said Alfredo Zeller from Ecuadorian company Provefrut, reported Confirmado.
A Mango Ecuador Foundation (Blix S.A) representative told the website that the congress tariff move would lead to price changes.
In Colombia, agriculture minister Juan Camilo Restrepo Salazar told newspaper La Republica that the agricultural sector would be the most disadvantaged from the decision. Around 90% of Colombian products exported to the U.S. were previously tariff-free, including major exports of coffee.
The Andean Trade Promotion and Drug Eradication Act was passed under the government of George Bush Snr in 1991, and as the name suggests its objective was not just the promotion of legitimate commerce but to create fewer incentives for drug trafficking.
On Dec. 1 human rights organization the Carter Center sent a letter to key Washington figures recommending that the congress renew the act, on behalf of former president Jimmy Carter and former representative Jim Kolbe.
“The recommendations are driven from the results of the program, which allowed Andean exports to increase between two and ten-fold in the last decade, depending on the country,” said the center in a press release.
“Carter and Kolbe also noted that poverty has significantly declined and small farmers in rural areas have fewer incentives to engage in drug trafficking for a livelihood.
“The letter also states that the ATPDEA has been equally important to the United States; in 2009, the Andean market was $19 billion for U.S. exporters and $16 billion for American investors.”
ATPDEA also initially included Bolivia and Peru, but former U.S. president George W. Bush cut back trade benefits for Bolivia on the grounds it was not cooperating in drug-eradication efforts.
Peru has its own FTA with the U.S.