COLOMBIAN FRUSTRATION MOUNTS OVER INACTION ON U.S.-CTPA

UNCLAS BOGOTA 003261

SIPDIS

E.O. 12958: N/A
TAGS: ETRD ECON PREL ELAB EINV PGOV CO
SUBJECT: COLOMBIAN FRUSTRATION MOUNTS OVER INACTION ON U.S.-CTPA


1. (SBU) SUMMARY. While Colombians generally understand U.S.
political realities associated with a vote on the U.S.-Colombia
Trade Promotion Agreement (U.S.-CTPA),resignation has grown within
the Colombian government, business and academic communities over
the lack of action on the accord. The Government of Colombia (GOC)
remains committed to the Agreement's passage, but worries that its
efforts will turn out to be unsuccessful. Business community
members believe that long-term inaction on the U.S.-CTPA will not
result in a leftward political shift in Colombia, but will be
detrimental to U.S.-Colombian relations. Academics lament that the
delay has kept Colombia from locking in certain reforms that would
live on beyond Uribe's administration. Union leaders supportive of
the Agreement note the urgent need for the jobs it would create.
Union leaders that oppose the U.S.-CTPA applaud the delay and
support continued unilateral trade preferences in its place. END
SUMMARY.




2. (SBU) Most Colombians understand U.S. domestic political
realities and concerns over labor and labor violence issues
associated with the U.S.-CTPA. They are aware of the President's
statements during the campaign and his statement on the FTA
following the Uribe bilat in June. Nonetheless, in our
conversations with various stakeholders, responses range from
frustration and resignation to satisfaction over a delay in a vote
on the Agreement.



GOC: GROWING RESIGNATION

--------------




3. (SBU) GOC interlocutors believe the U.S. health insurance
reform debate will preclude consideration of the FTA at this time.
They point to it as one of a list of political issues (including
Trade Adjustment Assistance, the 2008 elections, and assistance to
U.S. automakers) that have trumped consideration of the U.S.-CTPA
since it was first signed in November 2006. On October 8, when
Colombian Senate candidate and former Colombian Central Bank board
member Juan Mario Laserna publicly characterized Secretary
Clinton's alleged remarks to a closed meeting as implying that
action on the U.S.-CTPA would not come until one-and-a-half to two
years, reaction from our contacts appeared to be less surprise, and
more resignation.




4. (SBU) Juan Lucas Restrepo, who negotiated the chapter on
Sanitary and Phytosanitary Measures for Colombia, warned that the
internal danger for the GOC, legislature and business community
would be a loss of faith that the kind of open, transparent,
professional negotiation process that the U.S.-CTPA entailed is
worth the effort. Vice Minister of Trade Gabriel Duque reiterated
the GOC's commitment to providing us with information on Colombia's
labor laws as well as violence and impunity. He expressed a desire
that any requests for action in these areas be part of the
implementation process, rather than preconditions for a vote. He
also said the GOC would be asking for a two-year extension of
Andean Trade Promotion and Drug Eradication Act (ATPDEA) benefits
for Colombia.



PRIVATE SECTOR SEES POTENTIAL HARM TO BILATERAL RELATIONS

-------------- --------------
--------------




5. (SBU) Leaders of U.S. and local companies in Colombia are
focused on how the U.S.-CTPA will benefit them in the global value
chain, regardless of whether they export to the United States.
Mauricio Alvarez, who runs a leather factory that employs

approximately 100 people, including former members of illegal armed
groups, told us he would import more of a key input (ballistic
nylon) from his Delaware-based supplier were it not for the current
steep tariff that would disappear upon entry into force of the
U.S.-CTPA.




6. (SBU) The President of a large textile factory in Medellin told
us that a political shift to the left in Colombia, as some have
suggested, would be an unlikely response to a failure to pass the
U.S.-CTPA. He feared that prolonged inaction would damage the
bilateral relationship. He also noted that the Colombian duty on
imported U.S. cotton, an input for his textiles and apparel,
remains in place and increases his production costs.



ACADEMICS SEE MISSED OPPORTUNITY

-------------- --------------




7. (SBU) Economists expressed dismay at the delay because it
represents a missed opportunity to lock in reforms that would
continue beyond the Uribe administration. Hernan Vallejo, a trade
economist from Universidad de los Andes pointed to advances in
intellectual property and investment protections in particular. He
opined that a subsequent Colombian administration would be free to
withdraw from U.S.-CTPA commitments if the Agreement had not
already entered into force.



PRO-FTA UNIONS: U.S.-CTPA MEANS JOBS

-------------- --------------




8. (SBU) The pro-free trade segment of unionized labor,
particularly in export-oriented sectors, such as textiles,
emphasizes the benefits the U.S.-CTPA will bring in the form of
jobs. Luis German Restrepo, leader of a textile-sector union,
emphasized the urgency of the employment aspect of the U.S.-CTPA,
given the dramatic downturn in trade with Colombia's largest
non-traditional export market, Venezuela.



ANTI-FTA UNIONS: KEEP UNILATERAL PREFERENCES COMING

-------------- --------------
--------------




9. (SBU) On the other hand, one group quite pleased with the
state of the U.S.-CTPA is that segment of Colombian unionized
labor, including the Unified Workers Central (CUT - the country's
largest labor confederation),that opposes all of Colombia's free
trade agreements (FTAs). Jose Luciano Sanin, President of the
National Unionist School (ENS) is unabashed in his mercantilist
argument in favor of continuing unilateral trade preferences for
Colombia, while opposing FTAs because he says they put the
interests of corporations above those of individuals.



CONCLUSION: MITIGATING DETRIMENTAL EFFECTS

-------------- --------------
-




10. (SBU) While political realities will dictate if and when a

vote on the U.S.-CTPA occurs, the USG can work to mitigate any
negative impact on the bilateral relationship through consistency
and clarity of our message about the trade accord. We are
exploring other areas where we can augment the bilateral economic
relationship. A two-year extension of ATPDEA benefits might be one
such area. There may be others.
BROWNFIELD