Bilateral agreements and fair trade practices: a policy analysis of the Colombia-U.S. free trade agreement (2006).

This Article brings to the attention of those public servants involved in the design and negotiation of free trade agreements between the United States and developing countries, such as Colombia, the potential benefits and drawbacks of negotiating in a bilateral forum. Rather than critiquing the free trade agreement for its particular provisions, this Article examines the U.S. policy of negotiating bilaterally with developing countries as opposed to multilaterally in the world trade system and what effects such an approach might have on the economic development of the latter. Using an incremental policy analysis, the Article critiques the bilateral approach in terms of economic development and fair trade negotiations using the recent Colombia-U.S. trade agreement as a case study. The Article concludes that a bilateral approach that is disconnected from a broader multilateral context may be detrimental to developing countries and recommends increased oversight of such agreements by the World Trade Organization to ensure a higher degree of fairness.

INTRODUCTION: SIDESTEPPING THE FOREST FOR THE TREES

Colombia is the most politically and economically northern-facing country in South America today. Its ties with the United States go beyond the drug war often associated with its landscape. (1) In fact, Colombia serves as the South American keystone in terms of regional security (2) and stability (3), as well as in terms of bilateral trade with the United States. As the longest-standing democracy in all of Latin America4 and as a major trading partner with the United States, (5) the interests of the two countries are in many ways aligned. (6) With the five-year Plan Colombia program (7) coming to an end and yielding less than desirable results, and the increase of left-leaning politicians in other parts of Latin America, the United States has a strong incentive to strengthen ties with its southern partner. Accordingly, following the unsuccessful negotiation of a regional integration trade agreement between the Americas, negotiations began for the conclusion of a bilateral trade agreement between the two countries. (8)

Following two years of intense talks and attempts to secure a workable agreement, Colombia and the United States signed a bilateral trade agreement on February 27, 2006. (9) This was a momentous occasion for both countries as Colombia, the third-largest Latin American economy, was on the verge of losing its trade preferences under the Andean Trade Preference Act (ATPA), and the United States, which sees Colombia as an important player in its foreign policy, was losing ground in securing a regional trade agreement via the Free Trade Area of the Americas (FTAA). The agreement solidifies many of the trading practices that were in place since 1991 under the ATPA, which was set to expire in December of 2006. (10)

In part, the choice to pursue a bilateral agreement represents a failure on the part of the Bush Administration to secure the FTAA, which had been under negotiation since 1998. (11) Instead, the United States chose to negotiate bilateral agreements with the four Andean countries: Colombia, Bolivia, Ecuador, and Peru. Recent political events in Bolivia (12) and Ecuador (13) indicate the unlikelihood of securing agreements with those countries.

Although the agreement with Colombia has not yet been formalized into law, as it must first be ratified by the U.S. Congress, its supporters offer unquestioning approval of the final terms, and thus, it is likely to be ratified soon. For example, former U.S. Trade Representative Robert Portman said of the deal, "[t]he agreement will help foster economic development in Colombia and contribute to efforts to counter narco-terrorism, which threatens democracy and regional stability." (14) Economists, industry leaders, and politicians on both sides of the agreement have expressed their support for this arrangement. (15)

The agreement is beneficial for U.S. businesses that work with Latin America or that intend to in the future. (16) But is this the best arrangement for Colombia? Will this agreement bring economic growth to the Colombian economy, and will that growth reach the impoverished majority? Would Colombia benefit more from pushing for unification of the Andean Community with Mercosur, uniting two powerful trade blocs and fostering a comprehensive regional trading bloc on par with the European Union and NAFTA?