COLOMBIA'S TRADE AGENDA - MOVING AHEAD WITHOUT US

C O N F I D E N T I A L BOGOTA 001926

SIPDIS

E.O. 12958: DECL: 05/13/2013
TAGS: ECON ETRD CO
SUBJECT: COLOMBIA'S TRADE AGENDA - MOVING AHEAD WITHOUT US

Classified By: Econ Counselor Lawrence J. Gumbiner for reasons 1.4(b)(d
)


1. (U) Summary. As theQ Washington continues
over the U.S.-Colombia Trade Promotion Agreement (CTPA),
Colombian trade negotiators are working non-stop to wrap up
on-going negotiations with other partners and seek new market
opening opportunities. Colombia expects to finish free trade
negotiations with Canada in late May and close negotiations
with Norway, Switzerland, Iceland and Liechtenstein (the EFTA
countries) in mid-June. Negotiations with the EU have
entered a cul-de-sac, as Bolivia and Ecuador have announced
that critical sectors, such as government procurement and
services, are off the table, leaving the Colombians and the
Peruvians searching for a way forward. Colombian officials
recently returned from meetings in Japan, where they were
setting the ground work for a Bilateral Investment Agreement
and a possible free trade negotiation. End Summary.

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Trade Agenda - Catching Up
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2. (U) Colombia started the decade with only two real trade
agreements, Mexico-Venezuela and the Andean Community. Since
President Uribe came in to office, the Colombian government
has been hurrying to catch up to free trade neighbors like
Chile. Besides the CTPA, Colombia has concluded negotiations
with Chile (expanding an earlier agreement to include areas
such as services and investment),Mercosur (becoming an
associate member) and the northern triangle of Central
America (El Salvador, Guatemala, and Honduras). The Mercosur
Agreement is phasing-in, while the agreements with Chile and
the Central Americans are winding through the congressional
and/or constitutional court approval process. Next in the
queue are negotiations with Canada, the EU, and EFTA. As
these negotiations close, the Colombians are looking towards
Asia, and possible trade or investment agreements with
countries such as China and Japan.

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It's All About US
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3. (C) The rush to make up free trade ground is only part of
the reason Colombian negotiators are traveling the globe.
While Colombia wants to negotiate trade agreements with key
trade partners, our contacts in and out of government tell us
that the GOC hopes that closing with Canada and advancing
with the EU will increaseQn Capitol Hill to pass
the CTPA. Santiago Pardo (protect),trade advisor for a
Colombian manufacturers association, told us that their
analyses demonstrate that U.S. producers of products such as
wheat, barley, beef and pork as well as service companies
will be at a distinct competitive disadvantage with Canada
once the agreement is penned.

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Canada First
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4. (C) Trade Ministry Director Juan Guillermo Castro
(protect) told Econoff that negotiations with Canada will
conclude shortly. The Colombians had hoped to conclude the
Agreement by the end of 2007, but an accelerated five-round
negotiation schedule proved insufficient, even though both
sides accepted large parts of the U.S. agreement as the
starting point. A mini-round in March 2008 narrowed the list
of outstanding issues, and the final round will take place
the last week of May in Bogota, where negotiators are
expected to finalize a deal on the remaining sensitive issues
(agriculture access, a few institutional issues and parts of
the investment chapter).

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EU Negotiations - Shoes Dropping
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5. (C) The EU negotiations hit a serious but not
insurmountable obstacle when Bolivia announced that they
would not negotiate in non-goods areas such as government
procurement, services and investment. While not surprised by
Bolivia's decision, the Colombians and Peruvians had hoped to
progress further along in the negotiations before having to
resolve the matter. According to Castro, Bolivia's only
interest is gaining development assistance from the EU.
Castro expects Ecuador to announce shortly that it too will
not negotiate the non-goods areas. The EU has stated since
the beginning that it would only negotiate with a bloc,
rather than bilaterally. (NOTE: The French Commercial
Counselor told EconCouns that the decision to negotiate in
bloc was for Colombia's benefit; a negotiation just with
Colombia, he stated, would not have been sanctioned by the
European Parliament. END NOTE.) Pardo believes that a
compromise may be found where Bolivia and Ecuador would
participate in the non-trade discussions and
political/cooperation agreements, leaving Colombia and Peru
to pursue a robust trade agreement. Discussions on a
possible solution will take place in July in Brussels.

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Other Markets - Small and Smallest
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6. (C) Negotiators will meet in mid-June in Switzerland to
conclude trade negotiations with the EFTA countries. The
remaining issues include agriculture, fish and services.
Castro does not expect problems bringing that negotiation to
a close.

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BITs and Pieces - Looking West
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7. (C) Colombia trade negotiators and private sector
officials recently returned from meetings in Japan, where
they initiated study groups to investigate the possibility of
negotiating a bilateral investment treaty (BIT). Castro, who
participated in the talks, reported that the meetings went
well and the process will likely lead to a bilateral
investment negotiation and possibly a free trade negotiation.
Trade Minister Plata -- who previously worked for the GOC in
Asia -- has always maintained that Colombia's natural markets
are in the U.S. and the EU and has avoided buying into the
fervor of commerce with Asia. Castro reports, however, that
the Ministry may take up BIT negotiations with a number of
Asian countries once the above mentioned negotiations have
concluded.

Comment
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8. (U) Colombia is jumping into the free trade pool with both
feet. This is both an outgrowth of the Uribe
Administration's export-led growth policies, and a reaction
to the delays in CTPA approval. Within two years, Colombia
is likely to have in place trade accords with nearly all of
its biggest trade partners. While the extent of trade
diversion away from the U.S. and toward other markets is
difficult to predict, there is no escaping the simple fact
that if the U.S. does not approve the CTPA, nearly all U.S.
products will continue to face tariffs while most products
from Canada and other principal competitors will not.
BROWNFIELD