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Monday, February 28, 2011

Agriculture in Pending U.S. Free Trade Agreements with Colombia, Panama, and South Korea

Remy Jurenas
Specialist in Agricultural Policy

The 112th Congress is expected to consider separate free trade agreements (FTAs) signed by the Bush Administration with South Korea, Panama, and Colombia. If and when submitted, these trade agreements will be debated under trade promotion authority, or fast-track rules, designed to expedite congressional consideration. Liberalizing trade in agricultural products, particularly the pace of expanding market access for the more sensitive agricultural commodities, was one of the more challenging areas that trade negotiators faced in concluding each of these FTAs. In each instance, issues dealing with food safety and animal/plant health matters (technically not part of the FTA negotiating agenda) were not resolved until later.

Of these three pending agreements, the U.S.-South Korea (KORUS) FTA would be the most commercially significant for U.S. agriculture since the North American Free Trade Agreement (NAFTA) took effect with Mexico in 1994. Because Colombia, one of the largest markets in South America, imposes a high level of border protection on agricultural imports, the Colombia FTA has the potential to noticeably increase U.S. agricultural exports. Though Panama is a relatively small market, U.S. exporters would have opportunities to make additional sales.

Many U.S. commodity groups, some general farm organizations, and many agribusiness and food firms support these three trade agreements. They argue for quick approval to secure the benefits of additional agricultural exports once all three are fully implemented (estimated to range from $2 billion to $4 billion). They contend that the timely approval of these FTAs will protect or enhance the U.S. competitive position in these three markets. Their focus has shifted from not simply securing the gains already negotiated, to ensuring that the United States moves before other major agricultural exporting countries (e.g., the European Union, Australia) lock in preferential access under their FTAs negotiated with South Korea, Colombia, and Panama.

During 2010, the Obama Administration’s objective was to address outstanding issues of concern to some Members of Congress before submitting these FTAs to Congress for consideration. In December, U.S. and South Korean negotiators agreed to changes in the KORUS’ auto provisions sufficient enough for the President to call now for its quick approval. Though the Administration and some Members of Congress sought a full opening of South Korea’s market to U.S. beef (i.e., slaughtered from all cattle, irrespective of age), Korean negotiators succeeded in deflecting this issue off the table. Recent movement by Panama on a bilateral tax information sharing treaty and labor rights issues could influence the U.S. timetable for taking up the Panama FTA. Colombia’s handling of labor union violence and human rights is viewed by the Administration and some Members as the main issues that still need to be resolved before that FTA is submitted to Congress for a vote.

Some Members disagree with the Administration on the timing of when Congress should take up these trade agreements. Republican leaders argue that all three FTAs should be either voted on as one package or in quick succession. Some also have suggested that their support for other trade programs awaiting congressional renewal depends on the White House making clear its strategy for moving these agreements. The Administration has stated it will submit the KORUS FTA soon in order to secure congressional approval by mid-2011, and will forward the Panama and Colombia FTAs when the pending issues are resolved.

Date of Report: February 14, 2011
Number of Pages: 24
Order Number: R40622
Price: $29.95

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