Oct 12 (Reuters) - The U.S. Congress on Wednesday approved a long-delayed trade pact Colombia, along with deals with South Korea and Panama.
Here is an assessment of some possible winners and losers emerging from the U.S.-Colombia accord.
The deal could add 0.5 to 1.0 percentage points to Colombian GDP growth and is expected to help Colombia triple exports to the United States over the next five or six years, from $17 billion a year currently to some $50 billion, Commerce Minister Sergio Diaz-Granados said. Non-mineral exports will generate an additional 300,000 jobs over the same period, the minister said.
* Flowers and other plants
Colombia is the world’s second-largest exporter of cut flowers after the Netherlands and the largest supplier to the U.S. market. Seventy-six percent of the $1.24 billion in flowers Colombia shipped globally last year went to the United States. Colombia had preferential tariff access since the early 1990s under the Andean Trade Preferences Act but that legislation expired in February and Colombian flowers were slapped with duties ranging from 3.2 percent to 7 percent. With the free-trade agreement, those duties will be eliminated.
Textiles and clothing
The Andean nation last year boosted clothing and textile exports to the United States by 17.4 percent versus 2009. Since the expiration of the trade preferences act, Colombian products such as children’s clothes, jeans, underwear and sheets are paying duties averaging between 25 percent and 35 percent. Now they will be tariff-free, saving millions of dollars per year.
Colombia exported $250 million in leather goods such as bags, wallets and suitcases in 2010, and exports in the first months of 2011 grew 35 percent, despite a fall in the demand for footwear. Since expiration of the preferences act, leather products have paid $3 million in tariffs. With the free-trade deal, sales could increase 15 percent per year on average and allow zero-tariff machinery imports.
Colombia produces 2 million metric tonnes of rice per year for local consumption, but does not export. With the deal, the United States would be allowed to send Colombia 79,000 tonnes of rice tariff-free under a quota that would gradually increase. Local farmers fear the market will be overwhelmed by cheaper U.S. rice, forcing them out of business. Around 500,000 families grow rice, corn, wheat and sorghum.
Colombia consumes around 4 million tons of corn per year, but it produces only around 1 million tons. Locally grown white corn is used for food and most imported yellow corn goes to animal feed. Colombia imported 3.6 million tons of corn in 2010/2011, including $118 million worth from the United States. The United States has been losing market share of corn imports to other South American countries but that could change with the deal. Local growers worry they cannot compete.
Poultry farmers see good and bad in the U.S. trade agreement. They would benefit from cheaper yellow corn to feed their animals, but they would face a flood of cheap chicken. U.S. consumers prefer chicken breasts, so U.S. poultry companies send legs and other parts abroad at a discount. An imported ton of chicken legs costs $1,000, while the same ton produced locally and sold in a supermarket could cost $2,000. In 2010 U.S. poultry producers exported an estimated $22 million worth of chicken to Colombia.
Sources: Interview with commerce minister; ANDI, Colombia’s national industry association; ASOCOLFLORES, the national flower exporters association; ACICAM, the national leather industry association; FENAVI, Colombia’s poultry industry federation; Colombian agriculture associations, the Colombian embassy and the U.S. Department of Agriculture.