HEARING ON THE PENDING
TRADE AGREEMENT WITH COLOMBIA
SUBCOMMITTEE ON TRADE
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
March 17, 2011
COMMITTEE ON WAYS AND MEANS
GEOFF DAVIS, Kentucky
|JIM MCDERMOTT, Washington
RICHARD E. NEAL, Massachusetts
LLOYD DOGGETT, Texas
JOSEPH CROWLEY, New York
JOHN B. LARSON, Connecticut
JON TRAUB, Staff Director
C O N T E N T S
Ambassador Miriam Sapiro
Deputy U.S. Trade Representative, Office of the United States Trade Representative
The Honorable Robert D. Hormats
Under Secretary for Economic, Energy & Agricultural Affairs, U.S. Department of State
The Honorable Thomas C. Dorr
President & Chief Executive Officer, U.S. Grains Council
Former Under Secretary for Rural Development, U.S. Department of Agriculture
William D. Marsh
Vice President Legal, Western Hemisphere, Baker Hughes, Inc.
on behalf of Baker Hughes, Inc. and the National Association of Manufacturers
Ambassador Peter F. Romero
President and Chief Executive Officer, Experior Advisory LLC
Former Assistant Secretary for Western Hemisphere Affairs, U.S. Department of State
Former U.S. Ambassador to Ecuador
Director, Regional Security Policy Program, Washington Office on Latin America
General Barry R. McCaffrey, USA (Retired)
President, BR McCaffrey Associates, LLC
Former Director of the Office of National Drug Control Policy
Former Commander of the U.S. Southern Command
TRADE AGREEMENT WITH COLOMBIA
U.S. House of Representatives,
Committee on Ways and Means,
The subcommittee met, pursuant to notice, at 10:02 a.m., in Room B‑318, Rayburn House Office Building, Hon. Kevin Brady [chairman of the subcommittee] presiding.
[The advisory of the hearing follows:]
*Chairman Brady. Well, good morning. I would like to welcome all of you, especially Colombian Ambassador Silva, to our first Trade Subcommittee hearing of the 112th Congress. Today’s hearing is the first in a series of three hearings we will hold on the pending trade agreements with Colombia, Panama, and South Korea. This continues the examination the full committee began in its hearings on January 25th and February 9th.
In this first of our hearings, we examine the U.S.‑Colombia trade promotion agreement. It is important to understand today’s hearing in the context of the full series of hearings we will be holding. I strongly believe that we should consider all three agreements by July 1st. I hope that the President has heard the repeated bipartisan calls from Congress to move forward promptly with all three of these agreements, rather than leaving one or another to lag behind. These are all good agreements. The time to move forward with all three is now.
Why the sense of urgency? The answer is simple. America is being left behind. Take the case of Colombia. We concluded our trade agreement with Colombia in June 2007, going on 4 years ago. Other countries have taken advantage of our delay. They have moved aggressively to sign trade agreements with Colombia. And, as a result, many U.S. exporters now operate at a competitive disadvantage. They are forced to pay higher tariffs on exports to Colombia, and the exporters from some of our key competitors.
The U.S. share of Colombia’s ag imports plummeted from 71 percent to 27 percent in just the 2 years since the agricultural provisions of the Colombia Mercosur trade agreement went into effect. Direct cause of that dramatic decline is our failure to implement our trade agreement.
It will only get worse if we delay further. The Canada Colombia trade agreement is expected to enter into force by July 1st. Colombia’s agreement with the EU is also expected to enter into force this year. Colombia is rapidly concluding its negotiations with South Korea. Implementation of agreements by these other countries, and continued inaction on our agreement, will result in further missed opportunities to create U.S. jobs. In fact, it will result in a decline in existing U.S. jobs. We either move forward or we move backward; the choice is ours. Staying still is just not an option.
I have stressed repeatedly how troubled I am by the failure to advance a Latin trade agenda. I am holding out hope that the President’s departure this Saturday for Brazil, Chile, and El Salvador, his first trip to South and Central America as President, will mark the beginning of re‑engagement with the region.
But the key is, where is Colombia on this agenda, and where is Panama? We cannot afford foot‑dragging on these agreements, nor shabby treatment of these two important friends and trading partners. It is noticed by all our neighbors, threatens to undermine U.S. leadership in our hemisphere. And in the face of our inattention, our neighbors are forced to look elsewhere for dependable economic and geopolitical alliances.
The consequences of such a plunge in our influence would extend not only the economic losses, but also the national security. Colombia is a strategic ally in the war on drugs. It’s a steadfast democratic friend and a reason to include several increasingly undemocratic and anti‑American leaders, like Venezuela and President Hugo Chavez. We need to stand with our friends, and we should start by moving forward with the Colombia trade agreement and our other two pending trade agreements by July 1st.
I respect the views of our ranking member and the Administration about labor violence and labor rights, although I believe that Colombia’s dramatic improvements justify congressional consideration. However, to the extent that some believe that more progress is necessary, it’s only fair that they identify specifically what they would like to see, an action plan for achieving that goal, and a time table for completing it promptly. We need to do this to keep the ‑‑ rather than keep the agreement in limbo forever.
I would like to welcome all of our witnesses today, who ‑‑ I appreciate their leadership and their advice and efforts in this effort. I want to thank them for being with us. I look forward to hearing the testimony of both panels. And at this time I would like to yield to Ranking Member McDermott for the purpose of an opening statement.
*Mr. McDermott. Thank you, Mr. Chairman. And I am pleased to see the witnesses here today.
I have to admit I was a little disappointed when I heard about this hearing. I hoped this would be the mark‑up for the Korean free trade agreement. That agreement is done. The Korean free trade agreement creates incredible new export opportunities for American goods. It has the support of business, it has the support of labor. It has the support of Democrats, Republicans. The Administration says it is ready to submit the implementing legislation. Really, no obstacles remain. We should be moving on the Korea FTA now.
But, for whatever reason, House and Senate Republicans have decided they can’t do anything on trade until the Colombia FTA is ready. I simply don’t get that. For years, Republicans have cried that passing the Korea free trade agreement puts American workers in businesses at risk of falling behind their European counterparts. In a September 2009 letter, Republican leadership argued that unless we approve the U.S.‑Korea free trade agreement before the EU‑Korean pact goes into effect, “U.S. workers will lose $1.1 billion in exports to Korea, injuring industries vital to the U.S. economy, including machinery, auto parts, chemicals, plastic, food, meat, and the dairy sectors.”
Well, the Obama Administration fixed the Korea free trade agreement and the EU free trade agreement is going into effect on July 1st. So why are we not dealing with Korea? Why aren’t we working on the implementing legislation, is really my question today.
No one is saying we should forget about Colombia. Just the opposite. Colombia has been a strong and critical ally. This agreement will strengthen the U.S.‑Colombia relationship even further. But it makes no sense to hold up Korea while the concerns of the Colombian FTA are being addressed ‑‑ badly needed fixes that the Administration is working on very actively now.
We have a partner in this process, President Santos, who, unlike his predecessor, wants to work with us. In terms of what needs to be done in Colombia, here are some specifics that I believe we ought to be considering.
Basic human rights are a big problem. Workers and labor rights are killed every day by the dozen. The rampage goes on year after year, and there is no justice. Between 2005 and 2009, there were more union workers murdered in Colombia than in the rest of the world combined. And the workers who are not killed are intimidated to prevent them from exercising the basic human right to organize.
Let me give you a real world example taken from the Colombian flower sector. This is an export sector. Seventy‑nine percent of Colombian flowers come to the United States. Mothers Day is just around the corner and the flowers are coming. And almost all the flower workers are women. They are single moms. When flower section unions have attempted to assert their rights, they have been met with threats and violence.
For instance, last year, workers at the Guacari plantation struck over unpaid wages and benefits. The company brought in thugs who beat the workers and intimidated them into resigning. Then the company replaced them with temporary workers. Not one perpetrator was arrested.
The Republicans are obsessed with the Colombia FTA, but none of them would volunteer their wives or daughters to go to work for a Colombian flower company.
And even if workers survive the violence, they can’t exercise the basic right to organize, because of loopholes in Colombian labor law. One example is the use of cooperatives, which are shell entities employers use to hire workers precisely so that workers cannot form a union. And the use of cooperatives is rampant in export sectors like the ports, sugar cane industry, and the flower sector. For workers that can form a union, employers use another loophole, known as collective pacts, to effectively break the union.
If there is the political will, Colombia can address these issues in months, not years. They can change their laws to prevent union busting. They could implement a work plan to significantly increase the size of its labor inspection force, train the inspectors, and improve enforcement. Colombia can make concrete, measurable progress on investigating and prosecuting violence against union workers. Until Colombia makes concrete progress, the rest of the trade agenda that will get Americans the jobs they desperately need should move forward.
So, let’s move the Korea FTA. It is ten times more valuable to the American economy than the Colombian FTA. Let’s move the MTB. It’s worth two‑and‑a‑half Colombian FTAs. Let’s move China currency. Fixing that would be worth about 100 Colombian FTAs. And we can extend our expired preference program in GSP and ATP. There are a lot of things we should be doing.
There was broad bipartisan support for all these initiatives in the last congress. The question is, what happened? My fear is that it really isn’t about trade. My fear is that a decision has been taken that the whole trade agenda will be held hostage, and that millions of jobs that come with it, for purely political reasons, will be held up. They want the Administration to fail, no matter what the cost to the American people.
On Monday, the Senate Republicans announced they were blocking the nomination of the new Commerce Secretary and any other trade‑related nominees until Colombia FTA is passed. That’s throwing down the gauntlet. This is absurd at a time when we need jobs in this country. It is time for the Republicans to end their Colombia obsession, and for the first time since they took over the House 11 weeks ago, get to work creating jobs for the American people, starting with the Korean free trade agreement.
My friend, Mr. Brady, and I have discussed this already in private. And I think everybody knows it is ready to be sent up. What is necessary is for the House to say, “We are ready to have the mock‑up.” They will send it up, and they will start. And I hope that happens rather soon. Thank you.
*Chairman Brady. Thank you. For the Members in the audience, we expect to have votes called around 10:15. So right now we will move ahead with our witnesses. And then, if the votes are called, we will recess for a brief period.
And today we will have two panels of witnesses. The first is composed of two witnesses from the Administration whom we hope succeed in moving an aggressive trade agenda forward.
Our first witness will be Ambassador Miriam Sapiro, deputy U.S. trade representative from the Office of the U.S. Trade Representative. We will also hear from the Honorable Robert Hormats, under secretary for economic, energy, and agricultural affairs at the U.S. Department of State. And we welcome both of you, and we look forward to your testimony. I would also ask our witnesses to keep their testimony to five minutes.
Ambassador Sapiro, your written statement, like those of all the witnesses, will be made part of the record, and you are recognized for five minutes.
STATEMENT OF AMBASSADOR MIRIAM SAPIRO, DEPUTY U.S. TRADE REPRESENTATIVE, OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
*Ambassador Sapiro. Thank you. Thank you very much, Chairman Brady, Ranking Member McDermott, members of the committee. It is an honor and a pleasure to testify today about the U.S.‑Colombia trade promotion agreement.
The Obama Administration is committed to a comprehensive trade agenda that opens global markets, dismantles barriers, and vigorously enforces America’s trade rights. Central to these efforts are the three pending free trade agreements. Our goal is to have all three agreements, with their outstanding issues addressed, approved by Congress as soon as possible.
Last week we notified the Ways and Means Committee that we are ready to begin collaborative work on the text of the implementing bill for Korea. We are working hard so that we can also move the Panama and Colombia agreements forward with the broadest possible support.
With respect to Panama, our governments have agreed upon steps needed to resolve outstanding issues relating to labor laws and tax transparency that, when taken by Panama, will ready that agreement for congressional consideration.
Today I want to discuss the Colombia FTA and its importance to the United States. Colombia is a key trading partner. It has a dynamic and growing economy, which is the third largest in South America. Colombia is also a vital partner of the United States more broadly, both in the region and globally.
The Colombia FTA holds the prospect of substantial trade benefits for U.S. workers, businesses, farmers, and ranchers by eliminating tariffs on U.S. exports, in my cases, upon entry into force. The International Trade Commission has estimated that the FTA would expand exports of U.S. goods to Colombia by more than $1.1 billion, and increase U.S. GDP by $2.5 billion.
The agreement’s benefits go beyond elimination of tariffs on goods. It will also provide significant new access to Colombia’s services market, improve standards for intellectual property rights protection, open government procurement opportunities, and safeguard U.S. companies operating in Colombia against discriminatory or unlawful treatment.
This agreement will also help U.S. products remain competitive as Colombia forges new relationships with the EU, Canada, and other trading partners.
Finally, it will help strengthen the Colombian economy, bolstering a steadfast partner in the hemisphere.
As important as these benefits are, President Obama has made it clear that any trade agreement we send to Congress must be in the interest of Americans, and also be consistent with our values. The Administration has heard from a broad range of stakeholders, and has subsequently made clear to Colombia that three areas of concern must be addressed: first, the protection of internationally‑recognized labor rights; second, prevention of violence against labor leaders; and third, the prosecution of the perpetrators of such violence.
We understand these concerns are shared by the Santos Administration, and we are encouraged by their recent actions. But more needs to be done. We now have a window of opportunity to work on securing important improvements, and we are not losing a moment to do so. I am pleased to announce that shortly after my testimony today, I will meet with senior officials from the Colombian Government who have flown in to continue our discussions.
As you know, on February 9th, Ambassador Kirk announced that the President had directed him to intensify our engagement with Colombia to resolve the outstanding issues as quickly as possible this year, and submit the Colombia FTA to Congress immediately thereafter. Less than a week later, I met with Colombia Ambassador Silva. Shortly thereafter, during the week of February 14th, USTR led an interagency team composed of State Department, Labor Department, and White House officials to Bogota to obtain up‑to‑date information.
Last week, I met in Washington with a high‑level delegation from the Santos Administration to discuss how best to promote our shared goals of protecting worker rights and addressing violence and impunity.
We are also intensifying consultations with key stakeholders and Members of Congress, including House and Senate leadership. We are working quickly, but thoughtfully. The Obama Administration shares both the sense of urgency and the concern for worker rights that we have heard from many Members of Congress, as we seek to advance the Colombia FTA.
In the meantime, Congress can immediately support the United States’ economic and strategic partnership with Colombia by renewing the Andean Trade Preference Act for as long as possible. We also call on you to keep faith with America’s workers by renewing trade adjustment assistance as soon as possible.
We look forward to working with you on both the Colombia FTA and our broader trade agenda in a manner that builds bipartisan support. Thank you.
*Chairman Brady. Thank you, Ambassador.
Under Secretary Hormats, thank you for joining us today. And you are recognized.
STATEMENT OF THE HONORABLE ROBERT HORMATS, UNDER SECRETARY FOR ECONOMIC, ENERGY, AND AGRICULTURAL AFFAIRS, U.S. DEPARTMENT OF STATE
*Mr. Hormats. Thank you, Mr. Chairman, Ranking Member McDermott ‑‑ and Happy Saint Patrick’s Day ‑‑ and member of the committee. It’s a great honor for me to testify before you today. I have testified before this committee numerous times in the past, and always look forward to doing that. I do so today with particular enthusiasm, because of the importance of this topic for the American people, and for our strategic relations with Colombia and the hemisphere.
With your permission, I will briefly summarize my remarks and submit a full statement for the record. Ambassador Sapiro has noted our concerns related to the protection of internationally recognized labor rights, violence against labor leaders, and the prosecution of perpetrators.
Congressional approval of our trade agreement with Colombia, once our concerns have been met, will be important for both the economic and the national security interests of the United States for several reasons.
Colombia has been a steadfast partner. This agreement, in addition to providing considerable economic benefits here at home, will strengthen our relationship with this key friend, and increase our influence in the entire region. This agreement will also enhance Colombia’s gains over the past decade in key areas, such as human rights and the rule of law. It will help consolidate and strengthen the Santos Administration’s labor rights reforms, and allow Colombia to make progress on the social inclusion issues that President Santos has identified as his principal challenge.
Finally, the agreement is key to regaining our competitive edge in an important market where we are increasingly losing market share, as you have indicated in your opening statement, Mr. Chairman. We believe strong bipartisan U.S. support has helped Colombia to make historic progress, improving security for its citizens, and stemming the flow of drugs to the United States.
Since 2002, homicides are down 45 percent, kidnapping is down 92 percent, and terrorist attacks down 71 percent. Since 2001, cocaine production potential has fallen 46 percent, and the area under cultivation has decreased by roughly 20 percent.
Since 2002, Colombia has extradited over 1,149 criminals, including major drug traffickers, to face justice in the United States. Columbia is a valued partner, sharing its expertise and confronting transnational crime throughout the hemisphere and beyond.
Since 2007, Colombia has trained approximately 6,000 Mexican police and judicial officials, and provided security assistance to Mexico, Haiti, Central America, Afghanistan, among others.
Colombia is also an emerging global leader. It sits on the UN Security Council and chairs the Iran and the Sudan sanctions committees. It participates in peacekeeping operations in many other parts of the world.
This is a decisive moment in our hemisphere. Moving ahead with the Colombia agreement is key to restoring our regional leadership and credibility. The agreement will help Colombia consolidate its success in putting its democracy and economy on a sound footing by adopting additional market reforms and strengthening effective social policies. It will silence critics who claim we are ceding leadership in the region and unable to deliver for our closest partners.
The Santos Administration has denounced threats to labor and human rights leaders, increased penalties for violence against human rights defenders, made it clear it respects the role of labor and human rights groups, and increased funding for its protection program, which now cover over 11,000 at‑risk individuals. Colombia’s prosecutor general’s office reports that it is investigating more than 1,300 labor‑related cases, and has obtained 344 convictions.
There is, of course, more to be done, and we are working with the Santos Administration to build on these achievements.
This winter Colombia also suffered major flooding. As a close friend and partner, Colombia deserves our assistance in that respect, as well.
I also join Ambassador Sapiro in urging Congress to re‑authorize the Andean Trade Preference Act, as well as GSP and TAA at the earliest opportunity and for the longest possible period. These programs will support U.S. jobs and promote economic development overseas and provide greater certainty for American businesses and investors.
Colombia is a growing market of 46 million customers. In 2010 Colombia bought $12 billion in U.S. goods, more than Russia, Spain, or Turkey. It plans to invest over $15 billion in infrastructure projects over the next 5 years. Without an agreement, U.S. exporters could miss out on these promising commercial possibilities, and that would cost us jobs at home. And therefore, that export element is particularly important to a lot of American workers in a lot of industries.
Colombia is currently pursuing FTAs with our toughest competitors, including the EU, Japan, and South Korea. China is now Colombia’s second‑largest trading partner, and we are losing market share to Brazil, Canada, and the EU. We are no longer Colombia’s leading agricultural supplier, either. The Colombia‑Canada FTA enters into force in July, further jeopardizing our wheat exports.
In closing, I would just like to emphasize that securing approval of a high‑standard agreement with Colombia is paramount for both our bilateral partnership and for our regional influence.
Thank you very much, Mr. Chairman and members of the committee.
*Chairman Brady. Thank you both. Ambassador Sapiro, I want to thank you about the timetable and the status of a concrete, workable action plan, and, Under Secretary Hormats, about China’s rising influence in Colombia.
Ambassador Sapiro, first, please let Ambassador Kirk know I appreciate the work, very good work, that was done to close out Korea. I understand technical discussions are underway on that agreement. And since Colombia and Panama will not have changes in text, I see no reason we shouldn’t move forward with those technical discussions on those two, either. And I appreciate Ambassador Kirk’s engagement in the Asia‑Pacific region, through the Trans‑Pacific partnership. I think that’s important, as well.
Part of the goal of moving these three pending agreements is not just new sales for U.S. businesses and workers, but also to clear the way for further trade engagement throughout the world.
Ambassador Sapiro, when Ambassador Kirk appeared here before the committee and before the Senate committee, he talked about the intensifying efforts on closing out these pending trade agreements. And he heard at the time a lot of frustration on both sides of the aisle about how long the agreement has taken place.
So, at this point, have you now given the Colombians a workable, concrete action plan, and schedule for resolving any outstanding concerns?
*Ambassador Sapiro. Thank you, Mr. Chairman, for that question, and also for your kind words that I will certainly relay to Ambassador Kirk. He is fully engaged, as we all are, in moving ahead on multiple fronts, including TPP and other important trade issues that we believe have market opening opportunities for American workers, farmers, and ranchers.
Just as we took the time to get a good Korea agreement, we are taking our time, although moving fairly rapidly, as I indicated, to ensure that we are in a position to advance the Colombia agreement to you. To do that, we have sat down intensively with the Colombian Government to discuss our concerns and develop what are clearly shared goals.
The Colombian Government is now considering what initiatives they can take in order to show clearly that we are advancing towards our shared goals. We have an opportunity, a terrific opportunity, working closely with the Santos Government, to achieve these goals. As Ambassador Kirk has said, we are pushing on an open door. The government is dedicated and ready to work with us, and we are working intensively. We are working quickly, and we are working thoughtfully.
*Chairman Brady. Thank you. Let me reiterate the need for that concrete, workable plan. Colombia has responded positively to every request we have made. Now, we promised a working team and benchmarks 18 months ago, and didn’t provide it. It’s critical that they understand what is expected of them, so that they can respond accordingly.
So, again, reiterate the need to tell them what is expected of them, to work together with them to create those benchmarks now, in days ‑‑ in your meeting this afternoon, for example ‑‑ in order to be in the close‑out stage of this agreement.
And, Under Secretary Hormats, a couple of weeks ago, 11 former assistant secretaries of state who served both Democratic and Republican presidents, strongly endorse this trade agreement and our other two pending agreements, calling on the present congress to work together to ensure passage by July 1st of this year. In this letter they express serious concerns about the harm caused by our delay, both economically and with regard to our influence in the hemisphere. And I very much share that concern, and would like to ask you about whether you do, too.
And, specifically, I would appreciate your views on China’s rising influence in Latin America. I am concerned that China may step in and assert its own leadership in our own hemisphere, because of the vacuum created by the inability to lead on trade and other issues in Latin America. Would you comment?
*Mr. Hormats. Sure. First, just let me underscore what Ambassador Sapiro said. That is, they are working very hard to put together a good agreement. And I can tell you she has been working, and Ambassador Kirk, and their colleagues have been working very hard, and with as much speed as they possibly can to move forward. This is a very high priority for them, for USTR, and for everyone in the government associated with this.
With respect to the China issue, I’m very glad you underscored this. It does illustrate a point that I mentioned in my testimony, and that is we are in a more competitive world than we were 5 or 10 years ago. And the competition is coming from places not just within our hemisphere, and not just Europe, but we are getting competition from countries in Asia ‑‑ like China, as you have mentioned, Mr. Chairman.
And, therefore, one of the reasons that USTR is working so hard on this is to put together a really good agreement that does defend America’s trading interests, that advances America’s trading interests, so that we will be able to be more competitive, and we will not lose competitive share to countries such as China.
China is making a move throughout the hemisphere. They’re a big trading partner with Brazil. They are big trading partners with other countries in the region. And one of the reasons we consider progress on this agreement, and coming up with a really good agreement to be so important to strengthen our ability to compete vis a vis the Chinese in Colombia. And we aim to do that in as many ways as we possibly can.
As I also pointed out, it’s not just from China. An agreement like this will help us to compete on wheat sales with Canada, for instance. So we are very cognizant of the fact that there is competition. President Obama said that this was a Sputnik moment. We are seeing Sputniks coming from all over the world, which means we are seeing more competitive pressures from all over the world, which is why we regard progress on this as so important, and why so much work is being done to make progress as quickly as possible.
*Chairman Brady. Thank you, sir. Appreciate it. Ranking Member McDermott is recognized.
*Mr. McDermott. Thank you. To both of you I have a question. And I understand that you are in negotiation ‑‑
*Chairman Brady. If I may, we have about two minutes left in the vote. I would like Mr. McDermott to lead off the questioning when we return. We will recess until just immediately after the last vote is taken. Thanks.
*Chairman Brady. The subcommittee will reconvene. Again, I apologize to Mr. McDermott for the interruption of votes, and yield to lead off questioning.
*Mr. McDermott. Thank you, Mr. Chairman. I realize, Ambassador, that you do not want to negotiate in public, or talk about the specifics of what is on the table with the Colombians at this point, but I would appreciate anything you can do to help us understand a time line. I know the Chairman has asked for a time line, and you do not want to give a time line, because with negotiations, it is over when it is over. But I would like to hear from you if there are any issues that you think are particularly problematic in the process.
I hear the question about whether we get it done or we are going to fall behind. And I notice from your testimony that, actually, exports have increased by 27 percent to Colombia in the last year. So I would like to understand What we are falling behind on. Explain to me how that develops, or why people say that. They can say it but I want to know if there is any basis for it.
*Ambassador Sapiro. Thank you, Congressman. I am pleased to be able to report to you that exports are increasing. Our concern about competitiveness is that our share of the market in many key sectors is shrinking. And, as both I mentioned and Under Secretary Hormats, Colombia is understandably forging ahead to develop new trading partnerships with the European Union, with Canada, with Japan, with Korea, and with other partners.
So, we do not want to be in the position of ceding market share, if we can help it. And so, for that reason, we would like to advance this agreement, provided that the core concerns that we have identified are addressed. And we believe that the Santos Government shares the goals that we have set forth on labor rights and on violence and on impunity. And, together, we are working as quickly and thoughtfully as possible to finish this process and to be able to submit the agreement immediately thereafter to the congress for its consideration.
*Mr. McDermott. Could you give us a little bit of details about how quickly it’s worked? Because I understand that you went down there and they came back and there has been almost a continuous flow of people between here and Bogota around this agreement. So it sounds like you are working a little bit faster than bureaucracies sometimes move on things.
*Ambassador Sapiro. We are working faster than intensively, perhaps. We are being response to those that have asked us to work more quickly, and we’re also being responsive to those who have asked us to be sure to identify concrete steps that the Colombian Government can take to address the serious concerns that we have identified.
*Mr. McDermott. Do you see anything that cannot be resolved?
*Ambassador Sapiro. I am optimistic that we will be able to reach a good resolution fairly quickly. And that is why we have worked so intensively over the past several weeks, both in Washington and in Bogota, to try and achieve such a result.
*Mr. McDermott. One of the things that is a question for me in thinking about these agreements is that trade is good. I mean, okay, we will accept that. Then we get to the question of why people are working for $1 an hour, and why poverty still exists and has not changed in these countries. It seems to me that that is the seed bed for the Hugo Chavezes and others to spring up, if there is no advancement for the ordinary citizen.
And I would like to hear either of you. It seems to me that it is counterproductive just to have trade if you, in fact, are continuing the repression of workers and so forth.
*Ambassador Sapiro. We believe that trade is one way that we can help develop a growing middle class in our trading partners.
I had the good fortunate of representing the United States at the CAFTA‑DR ministerial in San Salvador last month. And that agreement, for example, is one where we have seen tremendous growth in our partner countries, and we continue to see such growth, which serves both their economies, as well as ours, and stability in the region.
*Mr. McDermott. Thank you, Mr. Chairman.
*Mr. Hormats. May I just comment very briefly on that, just to underscore what Ambassador Sapiro has said. And that is your point about trade and its link to development is a very important one. One of the things we find when we look around the world is that trade does open up new opportunities for what one might call inclusive growth. And the more opportunities there are for trade, the more opportunities there are for growth in these countries.
And one of the things that the Santos Administration has been focusing on very directly, and is a very high priority of the president and his vice president, who, as you know, is a former labor union leader, is to expand opportunities in Colombia for more and more people to participate productively in the economy, for just the reasons you’ve mentioned. Because, as you know, the country has a history of difficulties with FARC and other groups.
They are not focusing entirely on trade, but they’re using a lot of internal measures, as well, to strengthen their development programs, and to give more people opportunities to participate in productive sectors of the economy. And we think that this agreement can complement and reinforce and help them to consolidate some of those broader efforts that they are making to give more people more opportunity. So, it’s a very important element of this overall equation.
*Chairman Brady. Thank you, Under Secretary. Mr. Davis is recognized.
*Mr. Davis. Thank you, Mr. Chairman. I find it ironic that Ambassador Sapiro is citing the Central America free trade agreement as an example of lifting people up, economically, when, in fact, the same opponents of the Colombia free trade agreement were using the exact same false arguments during the CAFTA negotiations, and moving to pass that through the House, which ‑‑ Mr. Brady and I were actively working behind the scenes to move that bill.
What we see is economic opportunity opening up if this agreement which the Colombians desperately want to see pass passed, and it has languished for four years now. This is not a question of getting more information, it is a question of domestic politics, and one party intruding upon what is not only good for the country economically, but more importantly, from a security standpoint, which leads to my question.
Under Secretary Hormats, our economic relationship with Colombia is, in fact, very important in its own right in so many ways. We gain a dramatic amount of benefit by that agreement passing. However, it is also a key ally in South America.
You mentioned FARC. Hugo Chavez is actively helping them. He is helping them to destabilize this democracy. More than that, he is working with narcoterrorists. He has ties all over the world with, frankly, evil groups that stand against every value that we have when we talk about propagating American values. Colombia has been a light in its movement towards liberty down there.
And I see our interests being sorely hurt, not only by this four‑year delay over domestic politics that, really, are going to hurt the very workers that say they want this in the long run, but it is also a key link in the inter‑American drug trade, north and south. If we do not implement the agreement, I think we are allowing people in Latin America to question our commitment to the region. We have lagged. The EU, China, other areas are moving in. We are seeing a drop off in our exports significantly, a drop off in our trade, a drop off in our influence. And the security concern is growing.
I am not alone in this belief. In fact, in May of 2008, 5 former commanders in chief of the U.S. Southern Command, Generals James Hill, Peter Pace, George Wilhelm, George Jowan, and Barry McCaffrey, who we are going to hear from later, who is here today, he wrote an open letter to Congress, urging the support for the Colombia free trade agreement.
We will be hearing General McCaffrey’s testimony a little later. But in light of the significant U.S. strategic interest in this area, what is the importance of this agreement in avoiding a setback in U.S. influence?
As we have been dallying through the years with the back‑and‑forth same‑old political arguments that were used against the Centra America free trade agreement, I know there is a great concern in the military that if Chavez can completely destabilize the region, as I have heard from other chiefs of staff in Latin American countries ‑‑ CAFTA country military chiefs of staff have asked me very candidly, “What have you not gotten this agreement ratified?” It is so important to us in dealing with our security threats?” Could you comment on that?
*Mr. Hormats. Yes, I would be glad to. As I mentioned in my testimony in a very short sentence ‑‑ but I think it makes the point ‑‑ one of the reasons we want to have a good agreement, one of the reasons that Ambassador Sapiro and her colleagues are working so hard to get one ‑‑
*Mr. Davis. Why does it take four years to get a good agreement?
*Mr. Hormats. Well, I cannot comment on the past, but all I can tell you is that they are working very hard at the moment to get a good agreement as soon as they possible can.
And one of the reasons is the fact that we think it will help promote jobs and growth in the United States. But another reason is exactly the reason that you have mentioned, and that is as I said in my statement, that we want to demonstrate in the region that we can deliver for our closest partners. And Colombia is a very close partner in dealing with issues that you have mentioned. While others in the region who are intent on destabilizing, rather than stabilizing the region.
*Mr. Davis. Wouldn’t it be in our compelling interest to expedite this agreement, rather than a game going on for years?
*Mr. Hormats. I think that is what the USTR is trying to do. They are trying to make as much progress as they can to get a good agreement, and ‑‑ as soon as they can. And one of the reasons is we recognize fully your point on the security element.
They are a very important security partner for the United States, both in terms of dealing with their neighbors, and they have been very helpful in a lot of UN peacekeeping operations. And as a provider of assistance, technical assistance, they are helping other countries ‑‑ including Mexico ‑‑ to deal with drug issues ‑‑
*Mr. Davis. If I could reclaim my time, sir.
*Mr. Hormats. Sure.
*Mr. Davis. I appreciate that. I served with the Colombian military in the Middle East, running flight operations in an international peacekeeping force. As a soldier, I have an intimate interest in seeing the changes that have taken in place from when we were providing direct technical military assistance just to maintain law and order.
*Mr. Hormats. Right.
*Mr. Davis. When I see where we are now, and the dallying over ‑‑ yes, we are expediting. Expedite means to move quickly. Again, it is four years. The Speaker of the House dropped this down. Then, when the new Administration came in, the ambassador said that this issue was in our court here. We are continuing to delay. It needs to move. And frankly, I believe we are rubbing the Colombian Government in the mud if we do not move this agreement in an expedited fashion.
*Chairman Brady. Thank you. Mr. Reichert is recognized.
*Mr. Reichert. Thank you, Mr. Chairman. Welcome to both of you. And I want to add to the chairman’s comments, earlier comments. I appreciate all the hard work that you both have done, and Ambassador Kirk included, and the President, on the Korean agreement. And it is a privilege to serve with you both on the economic council, as we look for ways to double our exports.
And I think all of us in the room recognize that one of the ways that we do that is to pass trade agreements. And one of the figures that keeps being repeated, especially by myself lately, is the fact that the last time we did double exports was from 1995 to 2007, when we passed 9 trade agreements.
So, I think all of us recognize how critical this is, and that we are all working for the same purpose, and that is really to create jobs here in the United States and turn this economy around.
So, you are right to push for a swift movement on Korea. But the questions remain, certainly, around Colombia. It has been sitting here since 2007, as has been mentioned. So we are looking at July 1st? At least that has been the date that has been given to us, as a possible arrival date of a Korean agreement for consideration by the House. But there are some similarities, I think, in these agreements as we look at Korea and Colombia. And so I think some of us get a little confused as to the delay, the reasons for the delay.
So, I really like yes or no answers, it speeds the process up a little bit. So, Mr. Secretary, like Korea, doesn’t the same argument hold true for Colombia, when you look at the loss of market share? That is a true statement. We are losing market share ‑‑ I think you just mentioned that in your testimony ‑‑ in both Korea and Colombia, correct?
*Mr. Hormats. Yes, we are losing market share.
*Mr. Reichert. Especially concerned about Canada, because they are moving forward with a July 1st date also.
*Mr. Hormats. Yes, and that will cause us to lose market share in wheat, in particular.
*Mr. Reichert. Especially important to the eastern side of Washington State.
Also, like Korea, doesn’t the Colombian agreement contain some of the same strong language surrounding labor protections?
*Mr. Hormats. I will leave the details of the agreement to Ambassador Sapiro.
*Mr. Reichert. But essentially it is the same language, is it not, Ambassador?
*Ambassador Sapiro. Thank you, Congressman. We do have a strong labor chapter in our FTA with Colombia. We want to make sure that the provisions in that agreement with respect to internationally recognized labor rights ‑‑
*Mr. Reichert. Could I interrupt, just for a second? I am sorry.
*Ambassador Sapiro. Certainly.
*Mr. Reichert. But isn’t the language in the Korean agreement and the Colombian agreement essentially the same? We are looking at passing Korea. It is essentially the same language, right? So the Korean agreement must meet the same standard, internationally, as the Colombian language does. Yes or no?
*Ambassador Sapiro. Congressman, our goal is to present to you high‑standard agreements ‑‑
*Mr. Reichert. Yes, ma’am. No, I understand that. But isn’t ‑‑ and my question is, isn’t the language the same in the ‑‑
*Ambassador Sapiro. There are strong ‑‑
*Mr. Reichert. In the Korean agreement and the Colombian agreement, when it comes to labor? And, matter of fact, we can throw in the environmental language also. Is that not the same as the Korean agreement?
*Ambassador Sapiro. There are strong ‑‑
*Mr. Reichert. Yes or no, ma’am, please. I hate to ‑‑ you know, I know you are trying to answer in a politically correct way, but we all have ‑‑ we know what the language says. So is it the same language, or not?
*Ambassador Sapiro. There are strong provisions in the Colombia agreement and there are strong provisions in the Korean agreement ‑‑
*Mr. Reichert. Does the Korean agreement meet the international standards on labor and the environment?
*Ambassador Sapiro. The Korea agreement? Yes.
*Mr. Reichert. Yes. So, if the same language exists in the Colombian agreement, then does that not also meet the international standards?
*Ambassador Sapiro. I have not had an opportunity to do a side‑by‑side comparison. So what I can say is that we have high standards in both agreements. There are, however, serious concerns with respect to the situation on the ground in Colombia that does not exist with respect to Korea. We did ‑‑
*Mr. Reichert. Okay. I would like to just say that my time is about to expire ‑‑ excuse me for interrupting again ‑‑ but we know that the arguments are the same. We have got to bring the Colombian agreement, along with the Panama agreement and the Korean agreement. Hopefully, looking for that July 1st. And there is no reason, really, to delay any further. I yield back.
*Chairman Brady. Thank you. Mr. Herger is recognized.
*Mr. Herger. Thank you, Mr. Chairman. Ambassador Sapiro, you stated in your testimony that the Obama Administration shares our sense of urgency to advance the Colombia free trade agreement and that “it is this sense of urgency that we are bringing to our intensified efforts to resolve outstanding issues.”
I must say that I am, frankly, disappointed that it took the Administration over two years to develop this newfound sense of urgency, since the Administration has been saying all along, starting with the President’s first trade agenda in 2009, that it was in the process of developing a plan of action and establishing benchmarks for progress on Colombia.
Yet all this time we have been waiting for this leadership from the Administration. We have seen our agricultural exports to Colombia plummet as the Mercosur agreement went into effect, and watched Argentina’s share of the Colombian market climb from 7 percent to 30 percent, taking away exports from American farmers and ranchers.
The Administration has made clear that it wants to see the agreement passed by Congress by July 1, demonstrating a sense of urgency because that is the date of implementation of the EU‑Korea free trade agreement, which the Administration recognizes as a threat to U.S. exports.
Yet there has been no sense of urgency demonstrated by the Administration to Colombia, despite the fact that we are already facing the competitive disadvantage in that market, which will only worsen as Canada, one of our strong competitors, will implement a new free trade agreement with Colombia on the exact same date, July 1st. This will further decimate our agricultural exports to what has traditionally been our number one agricultural market in Latin America.
Ambassador Sapiro, I hope that this new sense of urgency you are expressing turns out to be more than the rhetoric coming out of the Administration in the last two years, because Americans deserve better. They deserve action on this important agreement, and all the benefits to our economy that comes with it.
Now, Secretary Hormats, in your testimony, you state that the agreement with Colombia will consolidate and strengthen Colombia’s gains in such areas as human rights, the rule of law, and labor rights reforms. Would you expand on how the implementation of the Colombia FTA will help the U.S. further engage Colombia in these areas, and build on the progress that has been made thus far, Mr. Hormats?
*Mr. Hormats. Well, yes. Very briefly, I think that the kind of points that Ambassador Sapiro was making in her testimony and in her comments to the committee underscore the fact that we are asking for a number of measures in the areas that you have just described that will be included in the agreement. And we cannot go into detail at this point, because it is under negotiation. But the fact is that, by including particularly important areas in the agreement that she is working on, it will help to consolidate the progress that is already made.
Moreover, to the extent that we can strengthen ties between our two countries, it will strengthen the dialogue between Washington and Bogota. And we have a number of ongoing discussions with the Colombians on a variety of issues, human rights being one of them, and a number of the others, as well. So, to the extent a good agreement can be reached, it will, within the agreement, contain areas that will help them to consolidate their gains. But it will also strengthen the relationship which will broaden the dialogue about the kind of issues that you and others are concerned about.
So, it is a double benefit within the agreement and also strengthening the dialogue in a broader sense.
*Mr. Herger. Well, Mr. Ambassador [sic] and Mr. Secretary, let me express to you the overwhelming frustration that the constituents I represent ‑‑ which is one of the largest agricultural areas in the world, the northern Sacramento Valley ‑‑ have with ‑‑ that we have fallen from number one exporter to number two, because this agreement has not gone through. And I yield back.
*Chairman Brady. Thank you, Gentleman. Mr. Smith is recognized.
*Mr. Smith. Thank you, Mr. Chairman, and thank you to our witnesses today. You may already know that this week is National Agriculture Week. And a lot of my constituents in rural Nebraska are very anxious to see this trade agreement passed.
Ambassador Sapiro, I understand that Colombia maintains what is known as a price band system, which imposes additional duties on top of the regular tariffs on U.S. ag imports, based on price. Could you tell us if the Colombia agreement addresses this barrier?
*Ambassador Sapiro. I can tell you, Congressman, that the agreement would reduce a great deal of both tariff and non‑tariff barriers. I am happy to look into that specific question. I know that the agreement, once in force, will provide great relief to our farmers, our ranchers, as well as our manufacturers and our service providers.
I would also like to say that it is ‑‑ we do share the sense of urgency behind your question, and that is precisely why we are working so intensively and so thoughtfully to address the serious concerns that we have identified in the right way, and to be able to move ahead as soon as we have done so.
*Mr. Smith. Okay, thank you. And I appreciate your getting back to me. If you could perhaps advise what I should tell constituents when they inquire what a time line is, can you give us any sort of a time line?
*Ambassador Sapiro. Let me go back to last summer, when we started working intensively on the Korea agreement, and we were able, through hard work, close consultation with Congress and our stakeholders, particularly those with a vested interest in that agreement, to improve the agreement, and to be able to advance it in a way that is very consistent with American interests and American values.
We are working very, very hard with that same template in mind to approach this issue, so that the serious concerns that we have on the labor code, to be able to ensure that the labor laws and their enforcement protect and promote worker rights, so that they are not undermined, and they are not denied, that we can reach those goals together, so we are working quickly and.
And, as I mentioned, we are going to be fortunate to resume our high‑level discussions with senior officials from the Santos Government when we conclude our testimony here today. To show you just how concerned we are, and that we do share the sense of urgency, we are working rapidly in a thoughtful way in the right direction.
Given the fact that we share common goals ‑‑ it is clear to me that we do share common goals with the Santos Administration. Under Secretary Hormats indicated they are already doing a lot on their own initiative to address the labor concerns, as well as broader human rights concerns. So I am confident that we will be able to report back to you in the near future on progress.
*Mr. Smith. Okay. Would you agree that perhaps our ag producers, among other producers here in our country, remain at a competitive disadvantage, as long as the agreement languishes?
*Ambassador Sapiro. We do not want to see any export opportunity or any job left on the table.
*Mr. Smith. Yes.
*Ambassador Sapiro. So we will work very hard to ensure that that does not happen.
*Mr. Smith. Thank you very much. I yield back the balance of my time.
*Chairman Brady. Thank you. The chair recognizes Ms. Jenkins.
*Ms. Jenkins. Thank you, Mr. Chair, and thank you all for joining us.
Ambassador Sapiro, with near six‑and‑a‑half million cattle on ranches and in feed yards in my home state of Kansas, we rank second in the nation in beef production. At home, the cattle outnumber the people by more than two‑to‑one. And the beef industry generated more than $5.5 billion in cash receipts in 2009. And with all due respect to the chairman, I think in Kansas we have the best beef in the world, we just cannot eat it all ourselves.
There is no doubt that lowering Colombian tariffs on U.S. agriculture products will greatly help our farmers and ranchers. However, the Colombian agreement would also address sanitary and phytosanitary barriers to agriculture trade. So it appears that this will make it easier to sell Kansas beef to our friends in Colombia.
But could you please explain for us, first, how the agreement addresses these barriers, and second, how resolving these barriers in other agreements have helped America’s farmers and ranchers? And then, finally, do you expect similar results in this case?
*Ambassador Sapiro. Thank you, Congresswoman. The simple answer is yes. We are confident that this agreement will be of great value to our farmers and our ranchers. It does address SPS issues. It does address the tariff question.
And just as our other trade agreements have benefitted U.S. exporters across the board, including agricultural commodities, and especially beef, we do believe that this agreement, once it is in force ‑‑ in other words, once we have been able to address the issues that I outlined earlier, and ‑‑ we will be able to present it to you immediately thereafter, and look forward to your positive consideration of it.
*Ms. Jenkins. Okay. Thank you, Mr. Chairman. I would yield back.
*Chairman Brady. Thank you. The Chair recognizes Mr. Crowley.
*Mr. Crowley. Thank you, Mr. Chairman, and Happy Saint Patrick’s Day to you, my friend from Texas. No Saint Patrick’s Day back to me?
*Chairman Brady. Absolutely.
*Mr. Crowley. Thank you very much. I was, like, a little concerned here.
*Chairman Brady. Singing out of my heart, Mr. Crowley.
*Mr. Crowley. What has happened to comedy around here?
*Mr. Crowley. Let me thank you, the witnesses, for being here today.
Let me just go back to what my friend and colleague, Mr. Reichert, was alluding to. Ambassador Sapiro, is it ‑‑ the language is virtually the same, in terms of the agreement between the U.S. and Colombia and the U.S. and Korea as it pertains to labor, human rights, and the environment. Correct?
*Ambassador Sapiro. I ‑‑
*Mr. Crowley. The language.
*Ambassador Sapiro. I have not done a side comparison.
*Mr. Crowley. Virtually.
*Ambassador Sapiro. But I believe that they are similar.
*Mr. Crowley. But the real question here is whether or not the parties have met the standards of the agreement, in terms of labor.
I point that out because the ILO has indicated on a recent mission to Colombia the need for the Colombians to still address the issue of reforms, as it pertains to the abuse of cooperatives, as well as the use of collective pacts to prevent, in essence, the ability of workers to organize within Colombia.
Is that correct, in terms of what the ILO is saying? Not what you are saying, what the ILO is saying. Is that correct?
*Ambassador Sapiro. I know that there are concerns regarding the situation in Colombia, in terms of the enforcement and the full protection of worker rights. And those concerns include ways to avoid creating a direct employment relationship. Those are concerns that we have, and that I know the Colombian Government shares. And they are looking at different ways to address them in a concrete way ‑‑
*Mr. Crowley. So would you agree that there is a difference between the standards that are set within the agreement and maybe the country’s having fulfilled those standards?
*Ambassador Sapiro. There are certainly different situations on the ground in both countries. With respect to Colombia, we do have serious concerns about the question of worker rights and their full enforcement, the question of violence against workers for exercising those rights, and the question of impunity, and the importance to punish those perpetrators of such violence. We did not have those concerns with respect to ‑‑
*Mr. Crowley. Korea.
*Ambassador Sapiro. ‑‑ Korea.
*Mr. Crowley. I thank you for your comments on that, just to clarify that point of my friend, Mr. Reichert.
Given that the Korean agreement is completed, and there is some level of concern that we are waiting too long to move, could this disadvantage ‑‑ for either one of you ‑‑ could this disadvantage our service industries?
And I am interested to hear, because I hear a lot from my friends on the other side of the aisle about the need for speed on two deals which we are still working on which have not yet fully been completed by this Administration, make the argument that the former Administration had finished the deal. The new president and our new Administration are still working on these deals. And while I do have some sympathy, and I do have ‑‑ Kevin, you know this sympathy that I have about these concerns ‑‑ I think we have also lost the sense of urgency about Korea.
And I just want to point out on beef and cattle, my in‑laws are from Montana. And I would only question whether or not the beef in Montana may be a little bit better than the beef from Kansas. But having said that, under this provision with Korea, 775 million, compared to 12.5 million with Colombia, the difference is in terms of the scale of these agreements.
I mean it has been compared that the Korean deal is 10 times the Colombia deal. Is there some concern here, in terms of ‑‑ I mean you talk about the impact of waiting. Are you concerned that Korea is being held hostage by Colombia at this point? Is there any concern here by either one of you?
*Ambassador Sapiro. We notified the full committee earlier this week that we are ready to proceed to discuss the implementing legislation for Korea. We worked very hard last year to improve the Korea agreement, to make sure that it met U.S. interests. And it does. And so we are indeed ready, Congressman, to move on that agreement as soon as the committee can schedule a session.
*Mr. Crowley. Well, I thank you very much, and I yield back the balance of my time.
*Chairman Brady. Thanks to my Irish friend. And let me weigh in that Texas beef, indeed, is the greatest in the world.
*Mr. Crowley. I have a beef with that.
*Chairman Brady. It actually makes you smarter and better looking.
*Chairman Brady. Let me just say that for the record.
*Mr. Crowley. And since I am looking more and more like you, I tend to agree with you.
*Chairman Brady. I may need to eat more.
Mr. Buchanan is recognized.
*Mr. Buchanan. Thank you, Mr. Chairman. Ambassador, I wanted just to ‑‑ being a Member here for four years, and many of my colleagues have been here four years or less ‑‑ but being here for four years ‑‑ and the gentleman said the need for speed ‑‑ this has been an issue that we have been dealing with for four years. Where is the good faith negotiation?
I represent Florida, happen to be the only member of Ways and Means in Florida. This is a big issue to Florida. And it is just ‑‑ it just seems like a complete lack of good faith, in terms of its negotiation. It is one hoop after another, moving the goal post constantly. I have been in business for 30‑some years. At some point, just ‑‑ if you are not going to do it, tell me you are not going to do it, and we will give the business to China.
But the bottom line, enough is enough. It has just gone on way too long. And I think the gentleman mentioned ‑‑ the Secretary mentioned $15 billion in exports. Is that right, Secretary, is that what you mentioned, the U.S. exports into Colombia?
*Mr. Hormats. Something like that, yes.
*Mr. Buchanan. Yes. So I am looking at what has been the lost opportunities, the lost jobs in the U.S., and what is the lost opportunities going forward if we do not deal with this?
Because you have other countries ‑‑ you mentioned you are losing market share ‑‑ but after four years, if we do not get this done, in my opinion, in the next three or four months, you end up in the political season after the summer. It is not going to get done. And there is always issues for not doing a deal.
I mean, again, if we do not want to do the deal, the Administration or someone else, then we should just tell our friends in Colombia that we do not want to do the deal.
So I guess I bring that up to you in my frustration, what I hear from constituents all over Florida. Enough is enough. That is why we are trying to get a time line on this. I am excited about Korea, but we would like to see these other trade agreements get done.
And I will say just the same thing about Panama. It has just gone on and on and on.
So, I guess I would like to ask the Secretary, was that your number, the $15 billion? I think that was what you quoted, that exports ‑‑ we export into Colombia. Is that your figure?
*Mr. Hormats. I will check ‑‑
*Mr. Buchanan. I think that was in your opening statement.
*Mr. Hormats. $12 billion.
*Mr. Buchanan. $12 billion.
*Mr. Hormats. Colombia bought $12 billion in U.S. goods.
*Mr. Buchanan. Do you have any estimate of what, in the last four years we have been negotiating this and not having an agreement, what does that cost us in exports? Or maybe, going forward, what is this going to cost us as China and other folks are coming in there and ‑‑
*Mr. Hormats. I do not have a precise estimate on that. It would be hard to make an estimate ‑‑
*Mr. Buchanan. Do you have some thoughts on it?
*Mr. Hormats. ‑‑ that would be credible. Well, let me just make one broad point in answer to the point you have made on this, and that is I have worked for Republican administrations and Democratic administrations. And I am a strong believer ‑‑ as I mentioned in my testimony ‑‑ in the strategic importance of our relationship with Colombia for a variety of reasons that I have indicated.
And I just want to say that I have had a chance to work very closely with Ambassador Sapiro, Ambassador Kirk, and the people who are working on this. And I can assure you they are working very hard, as expeditiously as possible, to make real progress on this, because they regard it as important, as well.
And I understand the points that have been made about the past. But if we are talking about the present, and we are talking about the level of commitment, and we are talking about the level of expedition that is going in to fulfilling this commitment, they are working very, very hard to come up with something that serves the interests of the American people, that is a good agreement, and that can be done as quickly as possible, bearing in mind the kind of results that Ambassador Sapiro and Ambassador Kirk have indicated.
And I can assure you this is given enormously high priority at all levels of the Administration, and they are working very expeditiously. When she gets out of this meeting she is going to meet with Colombians right away. These are senior, credible Colombians. There will be a very senior ‑‑
*Mr. Buchanan. Mr. Secretary, let me just ‑‑ I want to ‑‑ because we got a limited time ‑‑ what ‑‑ how long, best to your knowledge, have we been working on this agreement?
*Mr. Hormats. We have been working ‑‑
*Mr. Buchanan. I mean when did this agreement ‑‑ and it is not just this Administration. A couple of years, but ‑‑ I mean, how many years ‑‑ because I remember in the last two years of the Bush administration, there must have been 50 Members of Congress that went down to Colombia in a good faith effort to try to get something done. Have we been working on this for six years? I have been here four, and I know it has been front and center for four years. I mean how long does something like this take? I think they are good partners. There is a lot of issues. We need to do something about it.
*Ambassador Sapiro. Congressman?
*Chairman Brady. All time has expired in this witness, and I would encourage you to answer in writing, if you would.
*Mr. Hormats. Thank you.
*Chairman Brady. Thank you. The Chair recognizes Mr. Kind.
*Mr. Kind. Thank you, Mr. Chairman. And I want to thank you for holding this hearing today. I think it is very important that we, as a committee, explore what remaining obstacles remain to move these three bilaterals forward. But, obviously, the focus is on Colombia today.
Madam Ambassador and Mr. Secretary, I want to thank you for the intense focus that you have placed on this issue.
Obviously, if we are going to meet the President’s goal of doubling exports in the next five years, these bilaterals are going to be an important step to achieving that. And they are important in their own right for geopolitical considerations, for economic considerations. I mean we are celebrating National Agriculture Week back home in Wisconsin this week.
And I am just looking at some of the analysis done with South Korea: 6.5 billion in additional ag exports to the South Korean market, when we can finalize that agreement. And we are looking at roughly 2.2 billion, just in the Colombia market alone. That is nothing to sneeze at.
But, having said that, there are some legitimate concerns that are ongoing with Colombia. I commend the Obama Administration for hitting the pause button when it related to South Korea, because I thought there was a better deal to be had. And, quite frankly, given the additional time that they went and negotiated some of the remaining items dealing with auto, making progress on beef, we were able to achieve a better deal with South Korea, one that I think will garner greater bipartisan support now in congress, once it is submitted for our consideration.
But in Colombia specifically, there are still some lingering concerns about worker rights and the violence against labor in that country. The previous Administration, either they chose to ignore it or didn’t press this issue, but I am glad to see that this Administration has renewed focus on that.
And the question I have for you now ‑‑ and to help us analyze whether progress is being made on that ‑‑ are the obstacles in Colombia that many people are raising in regards to the ILO, worker rights, the violence against labor, in particular, is it a question of will in the country, or is it a question of institutional capacity or capability of doing something significant to crack down on some of these measures? Maybe we can start with you, Madam Ambassador.
*Ambassador Sapiro. Thank you, Congressman. I think those questions are related. We have a terrific opportunity here. Since the Santos Administration came in last August, they have been clear about their own commitment to making progress.
In our discussions with them over the last couple of months more publicly, and I would say before that more privately, they have made clear that they want to address these concerns. They share our goals. And so, we are now in the process of determining what specific concrete initiatives could be clear indication that these issues are being and will be addressed.
Just as we took the time last year to get the Korea right, with a lot of support from Chairman Camp, Ranking Member Levin, and many others, we are taking the time to get this right. But we share the sense of urgency that we have heard from all of you. And so we are doing it expeditiously, we are doing it intensively, we are doing it thoughtfully. We want to be in a position where we can advance this agreement; I am optimistic that we will get there, and we will get there in the near future with your continued support from all of you.
*Mr. Kind. Let me ask you ‑‑ and to get back to my friend from Florida’s concern in regards to moving the goal post sense that some folks have around here ‑‑ is there a way that we can proceed with the agreement with Colombia by establishing some metrics that will not end just at the signing of the agreement, but will require or call for a remaining engagement on our part to help them with the institution‑building or the capacity in order to make progress, especially in the area of the ILO provisions and worker rights in that country?
*Ambassador Sapiro. I would add that it is good indication of the Santos Administration’s commitment to these questions that it has invited the ILO back into Colombia. I think that is a very positive step ‑‑ again, one of many that they are taking, and one of many reasons why we see eye to eye, and it is truly a joint partnership, in terms of addressing these serious problems, so that we can immediately thereafter advance this agreement to you for your consideration.
We do share the sense of urgency that has been expressed here today.
*Mr. Kind. Mr. Secretary, let me ask you. Has there been a sense of moving of the goal posts in our negotiations with Colombia, or have we been up front with them from the beginning, as far as what we are hoping to see in any final agreement?
*Mr. Hormats. I think the Administration and USTR have clearly laid out a number of very specific points. I think the Colombians are very clear on those points, and the points that we have laid out are under discussion as we speak. And I think there is a lot of clarity in this current environment that enables us and the Colombians to focus on the same issues, and to make progress on those issues.
A lot of work went into making sure that there was clarity. There were interagency meetings to discuss this, to be sure that we were giving clear signals to them, and that we were getting clear signals from them. And I think that has proved to be the basis for the kind of potential for progress that Ambassador Sapiro has laid out.
And let me also address, while I am speaking, the agricultural issue. You know, the people of Chico and the people of Nebraska, and many other parts of the country, I think do have a very strong interest in the agricultural aspects of this agreement. And those are one of the very important elements that USTR is pursuing. And that will, to the extent that they can make progress in the areas that they are now working on, will be very beneficial to the kinds of constituencies that you represent.
So, we look at this as a broad agreement that has a lot of things in it. And we have met ‑‑ I have met, Ambassador Sapiro has met, Ambassador Kirk has met ‑‑ with representatives of the farm community ‑‑
*Chairman Brady. Thank you, Mr. Secretary.
*Mr. Hormats. ‑‑ and we understand these points very well, and the interest ‑‑
*Chairman Brady. Thank you, Under Secretary. Appreciate it. Mr. Schock is recognized.
*Mr. Schock. Thank you, Mr. Chairman. Well, there seems to be some confusion over the amount of clarity. So let me review some history.
Last June at the G‑20 summit in Toronto, the President announced his intention to resolve the outstanding issues with the South Korea trade agreement by the time the G‑20 met in Seoul less than 6 months later. The Administration promptly identified a finite set of issues that were made public: improved market access for U.S. exports of autos and beef, and a clear and achievable time frame.
In setting the deadline, the Administration did not say that it would conclude the deal on that date, no matter what. Instead, the Administration took an extra couple of weeks to, in their words, “cut the right deal.”
I think that was the right approach. And I commend them for being open and transparent about it. We should not be afraid of deadlines. In fact, they are action‑forcing events. And they do not give away our leverage, as evidenced by the South Korean agreement. The Administration used a deadline and an action plan successfully in the Korea deal. I believe we need this type of leadership now for the Colombia agreement.
Yet, despite committing, as was evidenced by the remarks by my colleagues to “established benchmarks for progress,” as the Administration has said more than two years ago, the Administration still has not identified clear and definite issues, and also identified an achievable time line for resolution.
It is clear, however, we must recognize that the President can lead on trade when he wants to.
So, my first question would be: When will the President lay out a specific time table, specific action steps, as he did successfully to achieve an agreement with South Korea, but this time with Colombia? Ambassador?
*Ambassador Sapiro. Thank you, Congressman, for that question. We have laid out very clear concerns that we have. With respect to the labor code, we want to ensure that those labor laws are fully protecting worker rights and implementing those rights. With respect to violence, we want to ensure that the government is taking adequate steps to prevent violence against those Colombians seeking to exercise their worker rights. And on the question of impunity from justice, we want to ensure that sufficient efforts are being made to prosecute perpetrators of such violence.
These are very clear goals. We are happy that the Colombian Government shares them and understands the seriousness of them. We are not moving any goal posts. These have been our consistent goals.
We now have, I think, a unique opportunity, because the Santos Administration is so dedicated to working with us to achieve these goals, to lay down more specific actions. We are working with them intensively, possibly around the clock over the next few days, to be able to reach that kind of consensus on initiatives that they are either already taking, but may not be publicizing as they are working on them, or ‑‑
*Mr. Schock. Ambassador, forgive me for interrupting.
*Ambassador Sapiro. Certainly.
*Mr. Schock. I appreciate what you are saying, and I genuinely trust what you are saying to be true. The problem for us is that when we hear, “in the matter of a couple of days, reaching consensus,” I don’t know whether that means conclusion. Is consensus resolution to those issues? And, more importantly, what is the date? What is the time frame?
I mean the Administration did not dodge the question, was not shy about laying out a time frame and a date certain by which they were going to reach the deal with South Korea. What is the apprehension with Colombia?
*Ambassador Sapiro. There is no apprehension. We are engaged ‑‑
*Mr. Schock. But why don’t we have a date certain? Why don’t we say, “By the end of April, our goal is to bring ‑‑ is to have resolution on this agreement?”
*Ambassador Sapiro. What I can say, with definiteness, is that we are working very hard, we have been, intensively, rapidly, and thoughtfully, to address these concerns with the Colombian Government. These are sensitive issues. These are complex issues. These are not the kind of issues that lend themselves, in my view, to a deadline.
I share your sense of urgency. We all do. That is why we are working so intensively.
*Chairman Brady. Thank you, Ambassador.
*Ambassador Sapiro. But I cannot say if it would be a few days or longer. I can promise to work very hard to report back to you soon.
*Chairman Brady. Thank you. Time has expired. I want to thank the witnesses for their excellent testimony and thank the Members for their thoughtful questions.
Clearly, closing out the remaining issues on Colombia and Panama, presenting them for congressional consideration by July 1st is crucial. And I still see no reason, since the texts on all three are done, that we cannot start technical discussions on them to continue this pace, moving forward.
I want to thank you both very much for being here today.
*Mr. Hormats. Thank you, Mr. Chairman.
*Chairman Brady. Thank you.
*Ambassador Sapiro. Thank you, and Happy Saint Patrick’s Day.
*Chairman Brady. Same to you. And I did notice the green on you, Ambassador Sapiro.
*Ambassador Sapiro. Subtle.
*Chairman Brady. There is a hint of it.
I would like to welcome our second panel to step forward at this time. Today we are joined by five witnesses. Our first witness will be the Honorable Thomas Dorr, president and chief executive officer of the U.S. Grains Council, formerly the under secretary for rural development at the U.S. Department of Agriculture.
We will then hear from William Marsh, who is vice president of legal for the western hemisphere, Baker Hughes. He is also testifying on behalf of the National Association of Manufacturers.
Our third witness will be Ambassador Peter Romero, currently president and CEO of Experior Advisory LLC, and formerly our ambassador to Ecuador and assistant secretary for western hemisphere affairs at the Department of State.
Fourth, we will hear from Adam Isaacson, director of the regional security policy program at the Washington office on Latin America.
And we will conclude with General Barry McCaffrey, who is currently president of BR McCaffrey Associates, and formerly director of the office of national drug control policy and commander of the U.S. Southern Command.
We welcome all of you, and look forward to your testimony. I would also ask that their witnesses keep their testimony to five minutes.
Mr. Dorr, good to see you.
STATEMENT OF THOMAS C. DORR, PRESIDENT AND CHIEF EXECUTIVE OFFICER, U.S. GRAINS COUNCIL, FORMER UNDER SECRETARY FOR RURAL DEVELOPMENT, U.S. DEPARTMENT OF AGRICULTURE
*Mr. Dorr. Thank you, Chairman Brady, Ranking Member McDermott, and distinguished members of the Subcommittee on Trade. My name is Thomas Dorr. I am president and CEO of the U.S. Grains Council. The U.S. Grains Council appreciates the efforts of the subcommittee in holding hearings regarding the importance of ratifying the pending free trade agreements with Colombia, Panama, and South Korea. I will confine my remarks to the significant challenges we face in Colombia.
Colombia is a strategic market with economic growth projected to exceed four percent annually over the next five years. Colombia’s per capita income is projected to increase from $9,000 to nearly $12,000 by 2015, and this income growth will result in substantive increased consumption of animal proteins.
While Colombia is a net exporter of agricultural commodities, it imports over 80 percent of the corn it uses domestically. It imports over 95 percent of the wheat and soybean products it consumes. In 2008, total U.S. agriculture exports to Colombia reached 50 percent market share, and exceeded $1.6 billion.
Since 2008, U.S. market share has declined rapidly to only 21 percent, or approximately 800 million. For U.S. coarse grains, the decline has been more dramatic. In 2008, U.S. agricultural exports of coarse grains approached $635 million, and accounted for 83 percent of the total Colombian coarse grains import. By 2010, U.S. coarse grain exports had declined to $118 million, and market share fell to 18 percent.
Conversely, in 2008, Argentina held just an 11 percent share of coarse grain imports, primarily corn. By 2010, Argentina’s market share was 66 percent. Over the same time period, Brazil’s market share of coarse grain imports to Colombia increased from 5 to 16 percent.
Colombia protects its local production with common external duty of 15 percent. This includes corn and other agricultural commodities. Colombia is also member to the Mercosur Andean community agreement. This agreement includes a price band mechanism that levies additional duties. Colombia’s trade agreement with Mercosur allows member countries to receive a preferential duty.
Argentina and Brazil receive an annual duty reduction on corn imports to Colombia, which completely phases out the basic duty by 2018. Beginning in 2006, the duty preference granted Brazil and Argentinian corn provided a nearly 5 percent advantage over corn imports from the U.S. In 2011, the duty preference of 6 percent will give a 9 percent advantage over U.S. corn imports. And this approximates a $20‑a‑ton advantage.
Even with these duty preferences, the U.S. remained competitive until 2008, due in large part to our close proximity to Colombia. However, the increased duty preference to corn imports for Mercosur has virtually eliminated this advantage.
Equally disconcerting as the grain flow to Colombia shifts from the U.S. to Brazil and Argentina, their shipments to Colombia now include tonnages of corn over and above those required for their Colombian contracts. These added quantities are shipped in split shipments to Colombia, and then on to Latin American countries such as Panama and the Dominican Republic. This has further eroded U.S. market share, despite our clear freight advantage.
Once trade flows become established and relationships are formed with other trading partners, it is very difficult to win back these markets. The Council has established a strong partnership with the Colombian feed, livestock, and poultry industries, to build capacity and increase sufficiency utilizing U.S. coarse grain products. As a result of these ongoing efforts, we have gained their trust as a consistent, reliable supplier of quality products. Without ratification of the FTA, we will lose this relationship.
The Colombian feed and livestock industries wish to retain and build on this relationship. Representatives of the Colombian feed milling, swine, and wheat industries were in Washington earlier this year. They provided briefings to this committee, the Senate Finance Committee, and both the House and Senate Agriculture Committee. Their message was clear. Although the U.S. has been a reliable, preferred supplier, Colombia has no choice but to import corn and other commodities from Argentina and Brazil because of the lower duties. They stated that the U.S.‑Colombia FTA would allow them the opportunity to acquire more U.S. commodities. However, price is paramount, and the competition is fierce.
*Chairman Brady. Thank you, Under Secretary Dorr. I apologize. Our five minutes has expired. But we had the opportunity to read the testimony that you supplied to us. We appreciate it very much. Thank you.
Mr. Marsh, you are recognized.
STATEMENT OF WILLIAM D. MARSH, VICE PRESIDENT LEGAL, WESTERN HEMISPHERE, BAKER HUGHES, INC. ON BEHALF OF BAKER HUGHES, INC. AND THE NATIONAL ASSOCIATION OF MANUFACTURERS
*Mr. Marsh. Thank you. Good morning, Chairman Brady, Ranking Member McDermott, members of this subcommittee. I am William Marsh, vice president legal, western hemisphere, for Baker Hughes Incorporated. I am pleased to testify today as a member of the National Association of Manufacturers. I have been practicing law for 22 years, with 13 years exclusively in the oil and gas industry, and substantial experience working in Latin America, including Colombia.
Hughes Baker is a top‑tier oil field service company with a century‑long track record. We deliver technology solutions that help oil and gas operators maximize their reservoirs through high‑performance drilling and evaluation, completions and productions, fluids and chemicals, and reservoir analysis. We work side by side with our customers to engineer reliable, application‑specific products and services.
While we operate globally, Baker Hughes is headquartered in Houston, Texas, and is a United States employer and manufacturer. We have a diverse workforce of more than 21,000 highly skilled professionals in science, engineering, manufacturing, and operations support in the United States, and we are located in 28 states.
In addition to providing services globally, Baker Hughes manufactures products in the United States, like pumps, motors, and valves, and exports them to countries worldwide, including Colombia. Roughly 75 percent of Baker Hughes Colombia’s total global imports are from Baker Hughes facilities in the United States. We employ 450 workers in our Colombian operations, and Baker Hughes offers a multitude of products and services in Colombia, ranging from reservoir development services, to intelligent production systems, to integrated operations.
As you have heard today, the U.S.‑Colombia trade promotion agreement will replace a one‑way preferential agreement with one that is mutually beneficial and reciprocal. Because of trade preferences, Colombia’s exports have been entering the United States duty free, though that has been temporarily.
By contrast, Colombia’s average duty on our imports from the United States averages 5 percent, with some tariff peaks at 10 to 20 percent. Eliminating that duty would allow Baker Hughes to more effectively compete in Colombia, increase our exports to serve Colombia’s expanded plans for oil and gas projects, and create more highly‑skilled jobs here at home.
Colombia is a significant market for the United States, second only to Brazil and South America. The United States exports to Colombia exceeded $12 billion in 2010, and over 90 percent of that total was in manufactured goods. According to the United States Department of Commerce, those exports supported nearly 90,000 United States jobs and 10,000 U.S. small and medium‑sized businesses.
More specifically, Colombia is a major prospect for new oil and gas development. According to media reports, the Colombian Government plans to increase oil production up to one million barrels per day by the end of 2012, and activity is likely to remain high for the next decade. As a market leader in oil‑field services, Baker Hughes intends to be a substantial part of that market. The United States trade policy should facilitate our participation in that responsible development.
From a security perspective, there are advantages to developing western hemisphere energy sources like those in Colombia. Colombia is considered a U.S. ally with a relatively stable government and economy. Oil and gas from Colombia could displace oil from less secure foreign sources of supply.
Helping Colombia maintain a strong economy is also in our national interest. Therefore, adopting this reciprocal treaty is a win for both countries. Thank you.
*Chairman Brady. Thank you, Mr. Marsh.
Under Secretary Romero?
STATEMENT OF AMBASSADOR PETER F. ROMERO, PRESIDENT AND CHIEF EXECUTIVE OFFICER, EXPERIOR ADVISORY LLC, FORMER ASSISTANT SECRETARY FOR WESTERN HEMISPHERE AFFAIRS, U.S. DEPARTMENT OF STATE, FORMER U.S. AMBASSADOR TO ECUADOR
*Mr. Romero. Thank you, Mr. Chairman, and thank you for the promotion. I was assistant secretary and retired a couple years ago, but ‑‑
*Chairman Brady. It is Saint Patrick’s Day, we are doing ‑‑
*Mr. Romero. Thank you. Mr. Chairman, thank you for the invitation, ranking senior Member and others, thank you for the invitation.
I think I would like to start out with some good news. And the good news is that, through almost 10 years of U.S. investment in Colombia, that investment, through Plan Colombia and other support, is paying off. Colombia is more democratic, it is safer, it has got a strengthened rule of law, it is more prosperous. And, according to most of your surveys, is the second most business‑friendly country, after Chile, in the hemisphere.
The bad news is that, after having spent this taxpayer money, and having results that were probably beyond our expectations early on, literally the Chinese, the Koreans, the Canadians, and the European Unions are the ones that are cashing in on this. This, at a moment when the Chinese ‑‑ and there has been a lot of discussion about the Chinese and their investment in Latin America ‑‑ but it has gone up tenfold over the last couple of years. Their FDI over the period has increased to 17 percent of all Chinese FDI. And, at the same time, the U.S. share of all exports to the region fell from 48 percent to 37 percent. We are losing ground, Mr. Chairman.
If these numbers are not bad enough, the other downside is that when the Chinese cut deals in Latin America, they do not particularly care about the rule of law. They do not particularly care about human rights, labor rights, and foreign corrupt practices, or the environment. And that is basically what is happening, in terms of the reality of Latin America. Certainly the sanctity of their contracts is important to them. But the rest of it really is of little or no importance when it comes to political or ethical practices.
I think it is useful to just take a minute to go back to where we were in the year 2000, when we started Plan Colombia. Colombia was on the verge of ceding swatches of its country to bad guys: paramilitaries, gangs, narcos, guerillas, you name it. You could not travel from one city to the other without taking an airplane. The line around the consulate to leave, to get visas to come to the United States to leave, went around the block. You could not get a visa interview for six months.
This has changed dramatically. President Uribe first turned it around. President Santos is continuing it through his process of democratic security, which is empowerment at the local level. This has worked, this whole of government approach has worked so well, that we have versions of it going on in Afghanistan and Iraq today. We have put a lot of stock behind using it, okay? So it has worked. Colombia is not perfect. It is not Sweden. It will not be, for some time to come.
I have spent 35 years, both in the public sector and the private sector, railing against the double standard towards Latin America. Latin America has a different set of standards that we apply, with respect to foreign policy, than we do the rest of the world. There is not one person in this room that has talked about our negotiations with Vietnam, that has a history of repression against labor and organized labor in that country, and yet that is not even a discussion. And in Colombia, Colombia has to wait for five years, even to get a response.
I would also argue with the Administration that was here. Colombia has not gotten clear guidelines, in terms of what would satisfy the U.S. Government, in terms of whatever change to the laws and reform, that the Administration appeared to suggest when they were here.
Just a few words on labor. Mr. Chairman, I belong to four labor unions in my professional life. I joined them gladly. I was a teacher for a number of years. A lot of the labor issues that are of concern to this committee are, indeed, legitimate issues. But there has been a significant improvement across the board, whether it be assassinations of labor leaders or organizers or even members out in the field, there has been labor reform. There is a robust dialogue at the national and local level labor reform which puts management and labor continually together.
There have been increasing reforms and efforts to address this issue, including special prosecutors and $13 million spent last year to protect labor leaders and labor organizers and labor members in the field. Colombians have done their part.
*Chairman Brady. Ambassador, thank you, and we will submit your testimony for the ‑‑ full testimony for the record.
*Mr. Romero. Thank you.
*Chairman Brady. Mr. Isaacson?
STATEMENT OF ADAM ISAACSON, DIRECTOR, REGIONAL SECURITY POLICY PROGRAM, WASHINGTON OFFICE ON LATIN AMERICA
*Mr. Isacson. Chairman Brady, Ranking Member McDermott, thank you for inviting me to participate in this hearing.
I have a very deep affection for Colombia. I spend most of my adult life visiting it. I have been there about 50 times. I have met some of the bravest people in the world there, labor leaders high among them. And, after all these years, to be honest, I still do not always get it. I cannot fathom how you can carry on, day to day, knowing that, at any time, you could be murdered because you want to improve your workplace or you want to find out who killed your spouse, or you want to recover land that was stolen from you. And you know that your killer has no reason to fear being sent to prison, and could go on to victimize someone else.
It takes a special person to keep believing in her country, or to keep defending his fellow citizens. But Colombia has an amazing number of these people. When I ask them how they keep going, it is also amazing how often they just sort of shrug their shoulders, as though the answer should just be obvious.
I want my country to be on these people’s side. I also want Colombia to take off economically, and put its conflict behind it. I want the United States to contribute to that through its aid and trade policies. That is why my colleagues at the Washington Office on Latin America and I believe that, instead of jumping in, we need to work with the Colombian Government on some clear, achievable benchmarks for progress, and see meaningful results before considering the FTA.
Over the four‑and‑a‑half years since the FTA was signed, there are four areas where this progress has not been sufficient. They are labor law, protection, impunity, and land. On labor law, we hope to see Colombia align its laws with ILO core labor rights. The FTA itself requires this. This means doing away with cooperative trade associations, collective pacts, an expansive definition of “essential workers,” and other obstacles to the right to bargain collectively. These labor laws should have to be enforced, too. So Colombia would need to increase funding and political backing for the parts of the government that are supposed to be doing that.
Second is protection. It’s crucial that there be a sharp drop, ideally to zero, in homicides, attacks, and threats against trade unionists, human rights defenders, victims’ advocates, and Afro‑Colombian and indigenous leaders. Colombia is different from the United States’ other free trade debates. This time we have signed an agreement with a country that is in conflict. Elsewhere, the discussion focused on labor laws, wages, and work conditions.
Those are important. But in Colombia, there is a more immediate life‑or‑death issue. Trade unionists and other people fighting for justice continue to be murdered in shockingly high numbers. These killings have to stop. This stoppage should result from the government’s own rapid response to threats when they occur, its dismantling of new paramilitary groups who are growing quite quickly right now, its protection of the population from the leftist guerillas, and its effective investigations and prosecutions of homicides. And that last one is important.
Third, impunity. This is so critical that, in my view, it is the chief reason for waiting a bit on the FTA. Colombia has got to get the killers behind bars to dissuade future killings. This is where the least progress has been made. After four‑and‑a‑half years we have seen the impunity rate for labor killers only move from 98 percent to 94 percent. That is a tragedy. Progress on impunity takes a while to measure, but there is no substitute. If you do not address impunity you have no guarantee that this will not flare up again.
So, Colombia needs to sharply increase its prosecutions, investigations, and verdicts on labor killings. The same goes for other recent abuses, like the 3,000 civilians that the armed forces are alleged to have murdered in the past 10 years.
Finally, the fourth point, land and victims. Land is at the core of Colombia’s long conflict. The violence has forced more than 5 million ‑‑ mostly rural Colombians ‑‑ from their homes and farms in a country of 45 million. The FTA must neither lock in this injustice nor knock thousands of small farmers out of business. If it does, we could feel the consequences right here, as more cocaine coming to the United States.
On land, the government of President Juan Manuel Santos has a plan that deserves our support. A land and victims law is nearing final approval in Colombia’s congress. This is a decent law, but its test will be its implementation, not just its passage.
These four areas I lay out here are not a recipe for a perfect society, or a Sweden. These are minimal standards to keep the FTA from having unintended consequences that could undermine U.S. interests and values. They are reasonable.
Although I am impressed by the Santos Administration’s policy proposals, we cannot settle just for promises. A new policy or strategy, a new task force or working group or commission, a new directive, order, even a new law, these are great. They are welcome. But they are no substitute for measurable results. And as we measure progress toward these minimal standards, my advice is, to quote Ronald Reagan, “Let us trust, but verify.” And verifying will take some time. That is why we advise engaging Colombia in a constructive discussion of how to get this done right, and verifying that meaningful progress happens.
I look forward to your questions, and to discussing this with you at any time. Thank you.
*Chairman Brady. Thank you, Mr. Isacson.
STATEMENT OF BARRY R. MCCAFFREY, USA (RETIRED), PRESIDENT, BR MCCAFFREY ASSOCIATES, LLC, FORMER DIRECTOR, OFFICE OF NATIONAL DRUG CONTROL POLICY, FORMER COMMANDER, U.S. SOUTHERN COMMAND
*General McCaffrey. Mr. Chairman, thank you and Congressman McDermott for the opportunity to be here.
And, by the way, I share the remarks that Adam just made. He had a tutorial for me yesterday. I think many of his conclusions are right, although I am here to strongly urge passage of the FTA with Colombia almost immediately, certainly by this summer.
I have spent much of my adult life working with the Colombians in one aspect or another. I worked with Presidents Pastrana, Uribe, and now Santos. I think these issues have been discussed at great length, and I would offer a set of facts for you to consider.
Number one, let us remind ourselves that Colombia is one of the most important allies we have, democratic regimes, law‑based regimes, on the face of the earth. In the 200‑year history, much of it has been democratically‑elected governments.
Secondly, I would remind us that Colombian National Police, arguably one of the best in the Americas, and the Colombian Army, have had 5,500 killed in action, and 17,000 wounded since 2002. There was a war going on in Colombia, which is largely entering its end phase. Thanks to their courage and their determination, Colombia is still free.
Third, drug production is down by 60 percent. It is phenomenal. This is a commitment not just by the CNP and the armed forces and the political leadership, but also by the Colombian people, who essentially do not wish to be involved in criminal activity.
Fourth, the major security problem in Colombia for the last 25 years has been the FARC, ELN, and the AUC. They are badly wounded. The AUC is largely dismantled, although, as Adam correctly says, many of them have gone to criminal activity. The FARC are down about 8,000 people and 2,500 in ELN.
The war does go on. There may be as many as 6,000‑plus hardened criminals in so‑called “buckram” organizations, and many of them are in collusion with the FARC and the ELN. This is now becoming a law enforcement issue, and it is also one based correctly, as one of the congressmen previously said, on poverty. It is moving into a different phase.
The Santos Administration, as I look at them, is ‑‑ has enormous focus on improving governance, reform of the judicial system, which is going to be the hardest 20‑year task they face, poverty action, drug criminal gangs, and refugees. They have got maybe a million internal refugees and maybe 400,000 pushed out into Ecuador or Venezuela. But I think that is the commitment of the Administration we are looking at in Colombia today.
Finally, I think we ought to take into account the enormous reduction of violence in Colombia. It is simply unbelievable. I was down there in 2001, just before I left office. There were 2,000 people in my security detachment. When I went back again a couple of years ago, I had a dozen CNP officers. There were no violent incidents in Bogota the week I was there. It is astonishing.
And, by the way, the most trusted, respected institution in Colombia today is the Colombian armed forces, with a 79 percent approval rate in the latest poll numbers. Colombian people understood their determination, their commitment, their courage, and their change, rapid change ‑‑ I have been listening to the Colombians brief me on comprehensive human rights policies and training.
They are trying to understand how you deal with something that, on one hand, was multi‑battalion attacks by the FARC, using indirect fire weapons systems, and now a war that is changing into one in which these young soldiers have to carry two cards, one red, one white ‑‑ blue, excuse me ‑‑ to understand what nature of violent incident they are now confronting, and what the different rules of engagement are. It is a magnificent change in the short period of time that I have observed them.
Final one, and a point that I would offer ‑‑ and a lot of others have already addressed this ‑‑ this is a huge economic problem in the United States. We have lost massive amounts of market share in agricultural products and other areas.
And, oh, by the way, the Colombians are now a major energy‑producing nation. Coal number one, oil up to ‑‑ pushing a million barrels a day. And I will bet you in two or three years they out‑produce Venezuela.
I personally consider the way we have dealt with Colombia an embarrassment, a nation that is a democratic regime under the rule of law coming out of an era of enormous violence. And I urge congressional action in support of the FTA. Thank you, sir.
*Chairman Brady. General, thank you. This has been very useful and interesting testimony, and I thank the witnesses.
Mr. Dorr, your testimony shows exactly how American agriculture is being harmed and will be harmed further if we delay this pact.
Mr. Isacson, I read your testimony at length last night. And, in my view, Colombia is making extraordinary improvement. I agree with you, the new Santos Administration is committed to continuing that progress. And I agree with you, any violence and any impunity associated with that is condemnable. That is why we push so hard to lay out these points. We have pushed the Administration to step forward with an action plan so that Colombia can address this. Now, the longer we are stuck in limbo, unfortunately, I think the less we can lock in both the progress and continued improvement.
Ambassador Romero and General McCaffrey, I am struck both by your expertise, sense of experience in the region. Your points about the loss of national security and the consequences of our failure to act, I think that is an important part of this debate and of this agreement.
Finally, Mr. Marsh, you talk about the consequences of further delay on a company like yours. You mentioned Colombia is a major prospect for new oil and gas development, and may more than double its oil production in two years. I know the infrastructure effort in Colombia is impressive, as well, as they rebuild their ports and their airports and roads.
And I want to ask you ‑‑ in fact, I would like to ask unanimous consent to introduce for the record a paper by the Ways and Means Committee outlining the infrastructure opportunities in Colombia that could create jobs here in the United States.
*Chairman Brady. Without objection.
*Chairman Brady. Could you talk a minute about the impact of these longer‑term contracts? You are not selling copy paper that gets replenished every quarter. You are selling major equipment. And when you are at a disadvantage to other countries, you know, it is not a matter of a loss of six months or a year. You are losing the life of this equipment, of the services, of the accessories that go with you.
So, can you talk about for us, so we understand exactly the consequences of delaying this agreement further?
*Mr. Marsh. Certainly you are correct, Chairman Brady. As we bid on projects ‑‑ and these are long‑term projects ‑‑ if we are not able to be competitive and win those projects, we lose not only that project, which may be a long‑term project in and of itself, we lose the opportunity to build the infrastructure that goes along with those projects, which puts us at a further competitive disadvantage by not having that infrastructure to support future projects.
At the same time, competitors from other countries are developing infrastructure because they were successful in bids that we were disadvantaged and not successful in obtaining. So it is not just the life of the equipment, but it is also building that infrastructure within the country that will impact our future work and our ability to export from the United States into Colombia in the future, because we do not have that infrastructure in‑country to support the jobs in the U.S.
*Chairman Brady. So these are longer‑term consequences and losses.
*Mr. Marsh. Absolutely. Not only are our contracts long‑term contracts, but along with those contracts come infrastructure that we will build in‑country that will support future contracts.
*Chairman Brady. Do you believe we should delay any further on this agreement?
*Mr. Marsh. Any further delay continues to put us at a competitive disadvantage. So, no, we would not delay any further and we should support immediate action with respect to the agreement.
*Chairman Brady. General McCaffrey, you finished your testimony very strongly, saying that this was an embarrassment that we have not moved forward on this four years later on a key ally. Do you feel Colombia feels that same way, that an ally of that strength in that region ‑‑ can they even understand why their strongest partner would delay an agreement for so many years?
*General McCaffrey. Well, you know, I would remind all of us the media and the political attention of all three of these nations ‑‑ Korea, Panama, and Colombia ‑‑ is fixed on this hearing today. And so, tonight on TV, the Colombian people are going to try to sort out in their mind how they can be one of the predominant allies of the United States ‑‑ they are working with us now in Mexico, and training people in Afghanistan, they are a democratically‑elected regime, they produce dramatic changes and results, and yet we are diddling them for over four years on an economic trade deal.
I say that recognizing ‑‑ and I really mean this ‑‑ that Adam’s concerns are valid. And yet, in the same note, Pete Romero pointed out you do not hear that kind of conversation about the outrages going on in Bolivia and Venezuela, with Mr. Chavez. So it has been a selective focus on Colombia that sometimes escapes me. They are a remarkable group of sophisticated people who are mystified by our behavior.
*Chairman Brady. Thank you, General. Mr. McDermott is recognized.
*Mr. McDermott. Thank you, Mr. Chairman. I ask unanimous consent to introduce the recent ILO mission report regarding Colombia. It really notes continuing problems with labor and violence.
*Chairman Brady. Without objection.
*Mr. McDermott. I just want to correct one thing here. I hear a lot of talk about, the Chinese this and the Chinese that. This is not going to change. If we pass this agreement with Colombia, it is not going to change the fact that the Chinese are the biggest trading partner. We have free trade agreements with Chile, and the Chinese are outdoing us there. And we have got free trade agreements with Peru, and the Chinese are outdoing us there, as well.
So, to hold it up as an answer to this whole issue that is going to stop the Chinese ‑‑ I think we need a hearing on what is going on with Chinese. That is a legitimate question. But I do not think that one should portray this as being something that is going to deal with China.
What I would like to ask Mr. Isaacson is the question, when General McCaffrey says, “Put this thing in right now,” what does that do to labor violence? What does that do to impunity? What does that do to labor conditions? How would you spin out the effect of that?
Because what we are arguing here whether this glass half full or is it half empty. That is what we are arguing about. And some of us are saying we want more in the pitcher, and others are saying there is already enough, and that we should move forward. So I would like to hear your suggestions about what you think would happen.
*Mr. Isacson. Sure. If the agreement was to be approved right now, the conversations ‑‑ and there are some, actually, constructive conversations going on, as we heard in the last panel, between the U.S. and Colombian officials about benchmarks, about improvements, about reducing killings, about punishing ‑‑ those conversations would stop. Why continue them? You have got an agreement now.
If those conversations stopped, sure, there are people in Colombia’s government who, out of their own good will and their belief in what is right, would probably try to continue some of these prosecutions, and would probably try to continue pushing funding into some of the right categories to keep these going.
But, you know, these good people in the Colombian Government face some very powerful opposition who do not exactly share their view of the necessity of not circling the wagons and actually ‑‑ and seeing these things reformed. They could lose. I think we give them a lot of leverage right now, as they try to push for these reforms. And we could, in fact, in just a relatively short time, bring some major historic institutional change that benefits both of our countries.
*Mr. McDermott. I would like to characterize why it has taken four years, because that is the issue. Why has it been here four years, and have people not been paying attention? Is it fair to say that the Uribe government talked a good game, but it was the implementation of the game of what they talked that was minimal, at best? Is that a fair characterization of why we are still hung up on this point?
*Mr. Isacson. Sure. The Uribe government, on a lot of things, was not even talking a good game. President Uribe, on many occasions in public, often flanked by the high command of the armed forces, would get up and call reformers, labor leaders, independent journalists, “terrorists,” or “friends of the guerrillas,” without producing any evidence to that.
At the same time, in 2008, an enormous scandal, which I alluded to in my testimony, exploded. And we suddenly learned that thousands of civilians had been killed on his watch, and with impunity there. That certainly, while not directly related to labor, cast a shadow over this whole thing.
A further scandal where we found out that the Uribe government’s presidential intelligence agency was spying on judges, on reporters, on opposition politicians, listening to their phone conversations, following them around, and even issuing threats, cast a further shadow over this.
So, you know, any time you had momentum, something would happen that slowed it down.
*Mr. McDermott. Let me just say one thing. I have also heard some suggestions here that we are not paying any attention to what is going on in Vietnam, and we are talking about the trans‑Pacific partnership and so forth.
The fact is that those are some of the sticking points about whether or not the Vietnamese will be included in a TPP. I am personally one of those people who thinks that is maybe more important than Colombia. And I think that we will have to work hard to bring in both Malaysia and Vietnam, because of these kinds of issues.
And I think ‑‑ I yield back the balance of my time.
*Chairman Brady. Thank you, sir. Ms. Jenkins is recognized.
*Ms. Jenkins. Thank you, Mr. Chair. Mr. Dorr, you talked extensively about the horrific loss in U.S. ag exports to Colombia because of our failure to pass this trade agreement. We have fallen from 71 percent to 27 percent in market share for Colombia imports of key ag products just since 2008.
So, looking ahead, first of all, what happens to our market share in wheat, for example, if we do not ratify this agreement, and Canada’s agreement goes into force on July 1st, as expected?
And secondly, what happens if we are able to implement the trade agreement? Will the U.S. market share jump right back to where it was, or how long would that be expected to take?
And then, finally, is there any difference between getting is past by July 1st and, say, getting it past by the end of the year?
*Mr. Dorr. Well, certainly, I think the numbers on the Canadian FTA versus the pending FTA with the U.S. are well known. And while the Colombians clearly prefer the U.S.‑quality wheat, markets dictate. And, as a result of the price differentials, it is clear that we are losing market share to Canada, and would continue. I would presume, unless there was some other extraordinary events, to do so, as well.
However, if you look at time lines for successful conclusion of these agreements, there are differing harvest periods in both hemispheres. And, for example, in the case of corn, if an FTA were concluded earlier than later, when there is a period of time in which there are no supplies available from the southern hemisphere, it gives U.S. producers an opportunity to get back into that market.
And, based on the relationships, the historical relationships that we have had, it is clearly a large market, one that we anticipate could be as much as two million tons of corn. And in today’s environment, that could be anywhere from $3.5 billion to $4 billion worth of business, as opposed to what we are seeing this year, at about $118 million.
So, obviously, timing is of the essence. And when these things are delayed, what you end up with is development of market relationships with other suppliers that, once you are able to get back in the market, you have to displace. And that is always more difficult.
*Ms. Jenkins. So, how long does it take, if they were signed, for us to regain our market share? Do you have any idea?
*Mr. Dorr. Well, I ‑‑ in the case of corn, which is something ‑‑ and sorghum DDGs, which I am more familiar with, and wheat, we are fairly comfortable that if there was a successful conclusion to the agreements, we would be able to re‑engage our customers and begin to recapture those markets, because there are innate advantages, logistical advantages, and the ability ‑‑ and the quality systems and the way in which we deal with our customers, we think, would make us a preferred supplier. And we believe we could re‑establish those relationships.
The longer we go, because of price differentials, it will be more difficult.
*Ms. Jenkins. Okay. Well, there is some urgency among, I think, Kansas producers that if we delay this beyond the summer, that we will miss an entire year, based on the growing season. And the buying ‑‑ would you agree with that?
*Mr. Dorr. Absolutely. And that is what I was alluding to. Because if you have a market coming ‑‑ or if you have a crop coming on stream in the next two to three months, and you are in a position to capture that market, to delay it for a longer period of time gets you into the following year, sets up your competitor to capture the market, and clearly you have been displaced for at least another period of time that will make it quite difficult to recapture.
*Ms. Jenkins. If we want to begin to replace and recapture our percentage of the market, we really need to get this ratified within the next few weeks, as opposed to the next few months.
*Mr. Dorr. It is clear that, as a market developer ‑‑ and I want to make sure that this is clear, we are not lobbying this issue. But we clearly understand what the timing issues are, relative to when crops are produced and when markets are available. And the longer these sorts of things are in an abeyant state, the more difficult it is to capture those markets. And that is very obvious.
*Ms. Jenkins. Okay. Thank you, Mr. Dorr. Mr. Chairman, I would yield back.
*Chairman Brady. Thank you. Mr. Davis?
*Mr. Davis. Thank you, Mr. Chairman. General McCaffrey, it is a delight to have you here. My first battalion commander is your classmate from the Military Academy, and my best friend at Fort Bragg was your IG in the 24th Division in Desert Storm. So it is great to have an opportunity to reconnect in a less formal environment than the one you ran as a general officer. But I appreciate your insight very much.
Energy security is a very important component of our national security in so many ways. As gas prices are spiking, developments in Libya, the Middle East, some of the bluster of Hugo Chavez, with his rabid anti‑Americanism is making it very clear to me that we are too reliant on foreign energy sources and, in particular, creating a dependency relationship on countries that are not necessarily our friends, and seeing large amounts of our capital leaving the country.
I appreciated yours and Mr. Marsh’s comments about Colombia as an energy provider that is seeking to expand its capacity. And I was wondering if you would elaborate some on your thoughts today on how this trade agreement will contribute long‑term to the United States energy security.
*General McCaffrey. Well, certainly it is not a central area of my expertise, but you know, I spend a lot of time on TV, nonetheless, talking about it.
*Mr. Davis. Most of Congress has a tradition of speaking on things that are not their expertise, too.
*General McCaffrey. Right.
*Mr. Davis. We will definitely consider you at a higher category ‑‑
*General McCaffrey. I think there is some central facts. One is ‑‑ the biggest fact is the U.S. has no national energy strategy, which is shameful, and particularly in terms of reducing use of energy.
The second reality is that, when we look at our imports, thankfully, the majority of our external imports come out of Canada and Mexico, thank God.
The next reality is Venezuela is our next supplier. And there has been a continuing unbelievable confrontation with Mr. Chavez with the Chinese in the wings, with their voracious appetite for energy and mineral deposits in the global context, putting that at some risk.
Thankfully, Colombia is now becoming a major energy supplier, both coal and oil ‑‑ and natural gas, potentially, along with Ecuador. And I think it is going to grow in the future. It would be hard pressed for us to ignore the reality ‑‑ and, by the way, to underscore, Bogota is a three‑hour flight from Miami. This is not the eastern Pacific. These are our friends, our allies, and our next‑door neighbors. And they are an important potential source of energy for the United States, and we ought to exploit that.
*Mr. Davis. I remember back in the summer of 2001 you shared with a group of us that Hugo Chavez was probably the greatest emerging threat in the western hemisphere, particularly to American and democratic interests.
Do you feel that moving towards a strategy of energy independence, and particularly embracing the Colombian agreement, and working closely with them as they develop their energy, will be ‑‑ help to neutralize that, or mitigate that threat?
*General McCaffrey. Well, I think it is. You know, Chavez is a different problem. This giant, beautiful country of Venezuela, it has been traditionally an ally of the United States, has increasingly slipped into what essentially is one‑man rule, where Chavez is now ‑‑ clearly dominates all the institutions of the state: the armed forces, the congress, the media. The Catholic Church has been intimidated, he is wrecking his own oil industry. At some point we will have to develop a notion on what are we supposed to do about Chavez, in conjunction with our Latin American allies.
But in the short run, I think the argument on the FTA stands on its own merits with Colombia. These people are a democratic regime, they are implementing the rule of law, violence has decreased dramatically since 2002 ‑‑ and, by the way, a lot of that through the Uribe Administration. I am a little bit uneasy about the comments that imply that only now that Santos is in office we can start moving forward. The Colombian people think Uribe is a national hero. They will study him for the next 100 years because of what he did to turn the situation around.
But, nonetheless, the group we are dealing with now, the Santos regime, as Adam correctly points out, he is focused on land reform, he is focused on reducing violence against labor leaders, better governance. These people are moving in the right direction.
*Mr. Davis. All right. Thank you very much, General. I yield back, Mr. Chairman.
*Chairman Brady. Mr. Reichert?
*Mr. Reichert. Thank you, Mr. Chairman. This is for anyone on the panel. Colombia is promising ‑‑ is a promising market for U.S. exports of green technology. Colombia’s traditional industries have increasingly become committed to energy cogeneration in their plants, creating the opportunity for U.S. firms to export engines, generators, spoilers, and heat recovery systems across a lot of sectors.
Colombia is also very big for hydro‑power, solar, thermal, and wind markets. They are small, but they are all growing. And, unfortunately, Colombia’s tariffs on clean energy technology and other green tech imports are very high, ranging from 5 to 15 percent. The World Bank has identified these tariffs as tariff barriers to Colombia’s adequate development of clean technology. This is good news for the environment and for U.S. exporters. And the Colombian trade agreement would eliminate these tariffs for U.S. products that touch all of these energy‑efficient technologies.
So, I understand that several of you have experience with new energy technology. I would like to ask anyone on the panel whether you believe this trade agreement will help expand the markets for clean energy technology, and thereby incentivizing American innovation and global competitiveness of our American companies in this sector. So, anyone wish to address that question?
*Mr. Romero. In the vein of not being an expert on this, as Barry alluded to with his question, let me just say that the Colombian Government has set objectives for the use of clean technology in the years ahead.
I do know that they have completed mapping of the country, in terms of wind power, and where the best places to install wind power would be. They are heavily involved already in the African palm oil industry. And I think that there is all kinds of opportunities for solar there.
This would be a particularly good captive moment, if you will, to pass the FTA, because our equipment, our expertise, our services, would be able to enter into the country duty‑free. And it is a particularly good moment because President Santos has put a high priority on alternative energy and green technology in his Administration. So it would be a particularly good moment for U.S. exporters.
*Mr. Reichert. All right, thank you.
*General McCaffrey. I wonder if I might add one comment.
*Mr. Reichert. Yes, sir.
*General McCaffrey. Just the business platform in Colombia ‑‑ I always have to remind people 60,000 Americans live in Colombia; 250‑plus American businesses are on the ground in Colombia. They are the easiest people in Latin America to do business with. They are smart, they are tough, many of them are educated here. They are committed to the rule of law. So this is another opportunity, I think, Mr. Congressman, you have accurately pointed out.
*Mr. Reichert. Thank you, sir. Mr. Dorr?
*Mr. Dorr. I would just make one very quick comment, in that in a collaborative manner, they make an excellent market for distiller’s dry grains that are an outgrowth of the ethanol industry in this country. And it is a short market hop down there. It is a great feed product that is very, very well priced. And it mitigates a lot of food cost issues, particularly when you look at the number of very poor people in Colombia that, right now, with the tariffs in place, are dependent upon white corn, for example, with a high tariff level.
And so, these are opportunities to blend the use of green technologies throughout the hemisphere. And this is one that I think makes a lot of sense.
*Mr. Reichert. Thank you. One real quick question. General McCaffrey, during Ambassador Kirk’s testimony before the full committee on February 9th, he said that he could not move forward with the Colombian trade agreement because of “labor‑related concerns that go to the core American values.”
I agree that the importance of our core values does ‑‑ like keeping drugs and drug violence off our streets and away from our children. What do you think about that comment, that this goes right to the core American values ‑‑ and we all recognize keeping drugs and drug violence off our streets ‑‑ help a country raise their children with those values?
*General McCaffrey. Well, I actually ‑‑ you know, I strongly endorse his remarks. I think these are core American values. And I say that as someone whose family, you know, in the Depression era, was strongly pro‑union.
I think what we need to underscore, though, is the astonishing commitment over the last ‑‑ certainly since 2002, to making Colombia safer, to lowering violence, to increasing the rule of law, to transferring thousands of cases from military courts to civilian courts, to include cases that are already in front of military justice, to locking up rogue army or police officers ‑‑ a general ‑‑ for 40 years behind bars.
So, there have been significant changes for the better in Colombia.
*Chairman Brady. General, thank you ‑‑
*General McCaffrey. I personally believe the FTA will contribute to that, and add leverage. A point of disagreement, though ‑‑
*Chairman Brady. General, if I may, thank you so much for your testimony today. And I would encourage any written response ‑‑ this is a great dialogue ‑‑ for all the witnesses, by the way.
*Mr. Herger. Mr. Chairman, thank you very much for holding this hearing on this incredibly important issue. Trade is so important, certain important in my district, important to our nation, important to growing jobs, establishing jobs in our country.
Mr. Isacson, you testified that WOLA supports expanding trade, but that WOLA does not support moving forward with this trade agreement until concerns regarding Colombian labor and human rights have first been resolved. I believe the opposite, that with the tremendous progress that Colombia has already made in this area, that we should be moving forward, and engage Colombia through this trade agreement which will, in turn, be a benefit to the Colombian workers.
WOLA’s position also appears to be inconsistent with the approach espoused in this April 2008 WOLA special report, which is entitled, “Opting for Engagement.” One of the report’s principal arguments is that increased commercial engagement, increased trade, is a promising way of exerting a positive influence on a country’s policies and practices with regard to human rights.
In fact, the report recommends that the United States take that approach, but towards Cuba. It does not mention Colombia. Now, everyone agrees that implementation of our agreement with Colombia would result in increased trade with the United States. But in my view, increased trade with the United States also helps us exert a positive influence on another country’s labor and human rights conditions.
Now, I would like to ask ‑‑ and with my time, Mr. Isaacson, I think I know what your opinions are ‑‑ but I would like to ask of our other panelists, please describe how they have seen labor conditions in developing world impacted by expanded trade with the United States. Mr. ‑‑ yes, Mr. Romero?
*Mr. Romero. Free trade does not resolve all outstanding conflicts between labor and management. And it does not lift all boats in the way that we would like to see those boats lifted. But it does force local entrepreneurs and owners and managers to compete with U.S. entrepreneurs and owners and managers that have best practices, that practice the kind of respect for labor law that we have in this country in their own countries.
I have seen this on the ground, in places like El Salvador, and even in Guatemala, where the entrance of U.S. entrepreneurs into these areas has lifted up not just wage scales, but also respect and benefits for workers in that area. And I think it would do the same thing in Colombia.
Just one thing to add to that, and that is that passing a free trade agreement with Colombia now ‑‑ which I strongly believe is long overdue ‑‑ would also provide us not only the mechanism of raising standards, but it would also give us the opportunity to employ mechanisms when the Colombians failed. There is all kinds of mechanisms that ‑‑ the special trade representative having to do with labor ‑‑ that you can register complaints. There are hearings, et cetera. It is not like we have one bite at this apple, and then forever and ever we are subject to whatever happens in Colombia. We have a lot of control after we pass a free trade agreement.
*Mr. Marsh. I would just add to what the ambassador said, that within Colombia we hire a very highly‑specialized workforce, and we have a strong commitment and track record of treating employees fairly in the United States and worldwide. We apply our labor standards worldwide. We view the immediate passage of the agreement as essential so that we can continue to create jobs not only in the U.S., but jobs in Colombia, where we can hire those people and apply the same ethical labor standards to our employees in Colombia.
*Mr. Herger. Thank you. General?
*General McCaffrey. Well, I would add, having spent hours listening to the two Castro brothers at close range, that I strongly endorse engagement with Cuba, lifting the trade embargo, getting our people in there, and trying to improve the miserable lot of the Cuban workforce, as well as opening them to U.S. agricultural products, pharmaceuticals, et cetera.
So I think that argument is correct, and it applies to Colombia in a very different sense, since Colombia is at the top of the heap of democracies in South and Central America.
*Mr. Herger. Thank you.
*Chairman Brady. I thank you.
*Mr. Herger. Thank you, Mr. Chairman.
*Chairman Brady. I want to thank the witnesses for their excellent testimony, for the Members, for their thoughtful questions. And let me note that Members may submit questions to our witnesses for the record. And if they do, I hope you will respond promptly. I know you will.
And our witnesses today made clear that the pending trade agreement with Colombia offers significant economic and geostrategic benefits. A continued delay will only harm American interests in the region and the ability of American workers, businesses, and farmers to compete in these markets, as our competitors move ahead.
Witnesses have made clear moving forward to show ‑‑ to allow congressional consideration of this agreement by July 1st is in the national security interests of the United States, and will help us re‑engage as leaders within our hemisphere.
I hope the Administration will lay out a clear strategy and action plan for ‑‑ and time table for considering the Colombia agreement. I strongly believe that we should consider all these agreements by July 1st. I hope that we can work together to make that happen.
But for now, this committee is adjourned. Thank you.
[Whereupon, at 12:46 p.m., the subcommittee was adjourned.]
QUESTIONS FOR THE RECORD
SUBMISSIONS FOR THE RECORD
The Council of the Americas
Colombian American Chamber of Commerce
U.S. Labor Education in the Americas Project (USLEAP)
International Labor Rights Forum
United Auto Workers Local 879
John I. Laun, President CSN
The National Corn Growers Association (NCGA)
United States Conference of Catholic Bishops
Consumer Electronics Association
California Cut Flower Commission
Department of International Relations, Boston University
Human Rights Watch
Interfaith Working Group on Trade and Investment
U.S. Chamber of Commerce and the Association of American Chambers of Commerce in Latin America
American Association of Exporters and Importers
BR McCaffrey Associates, LLC