Tuesday, June 15, 2010

Canada-Colombia FTA Rolls On, US Watches from the Sidelines

Over the last few months, I've frequently opined on how our hockey-loving neighbors to the North have been runningskating circles around the US government when it comes to international economic policy.  While we embrace senseless mercantilism, they rush to open their markets to import competition (and its glorious cost-reduction benefits).  While we kvetch about foreign currency practices, they see the bright side and adapt.  While we maintain the second-highest corporate tax rate in the world (and seemingly add new tax burdens everyday), they lower their corporate tax rate and implement plans to reduce it even further.  And, of course, when we prudishly refuse to enact signed Free Trade Agreements with Panama, South Korea and Colombia, they rush to finish and implement as many FTAs with as many partners as possible.  I'll have a lot more to say about all of this in the next few days (hint, hint), but tonight let's just focus on the last item on the depressing tick-list above, FTAs.  As Bloomberg reports:
Canadian lawmakers today approved a free trade agreement with Colombia, a move that may give its agricultural producers an advantage over U.S. competitors in the Latin American country.

Canada’s House of Commons voted 188 to 79 in favor of the accord, which now moves to the Senate for final approval. The two countries began negotiations in 2007 and signed the agreement in 2008.

“In adopting this free trade agreement, Canada will be in a very strong competitive position vis-à-vis our other competition around the world and this will mean a great deal to our agricultural sector,” Canadian Trade Minister Peter Van Loan told reporters earlier today.

Colombian Trade Minister Luis Guillermo Plata said in an April 28 interview that Canadian exporters may gain as U.S. lawmakers delay approval of their free-trade agreement. Plata traveled to Ottawa and Washington earlier this year to court lawmakers in a bid to build support for the trade accords before Colombian President Alvaro Uribe’s term expires in August.

“Many of the things that we buy from the U.S. we could buy from Canada and we could buy tariff-free,” Plata, 42, said in the interview, pointing to purchases of wheat, barley, corn, machinery and mining equipment....

Prime Minister Stephen Harper’s governing Conservatives have made strengthening ties with Latin America a priority in an effort to broaden markets for Canadian commodities and reduce the country’s dependence on the U.S. economy.

Harper’s Conservatives lack a majority of seats in Parliament and needed the support of the opposition Liberals to pass the legislation. The Liberals amended the agreement to include yearly assessments of human rights conditions.
I've repeatedly gone over the obvious trade and foreign policy implications of the Canada-Colombia FTA and the US-Colombia FTA, so let's leave those important issues alone for now.  Instead, let's look at the sheer politics of the issue. The Bloomberg report makes clear that Canadian PM Stephen Harper lacked the numbers to force the FTA through Canada's lower chamber on a strictly party-line vote.  So he engaged his opposition, worked out a side agreement on human rights, and got the job done (by a huge margin, no less).  Now, let's contrast that with the Obama administration, which (i) has overwhelming partisan majorities in each chamber, (ii) by law (under Trade Promotion Authority) dictates the introduction and timeline of the FTA's implementing legislation, yet (iii) can't even get the economically meaningless US-Panama FTA considered in either congressional chamber.  I'd say that's a pretty strong indication of the President's political willingness to engage on these pending FTAs, wouldn't you?

And given that moving on trade issues requires oodles of political will, is it any wonder at all that Harper's government is sprinting past Obama's?

(Quick answer: no.)

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