Cablegate: Colombia Pushes Forward with Ambitious Trade Agenda

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R 051623Z NOV 09
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RUEATRS/DEPT OF TREASURY WASHINGTON DC
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UNCLAS SECTION 01 OF 03 BOGOTA 003309

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ETRD ECON ECIN PREL CO
SUBJECT: COLOMBIA PUSHES FORWARD WITH AMBITIOUS TRADE AGENDA

REF: BOGOTA 3261; BOGOTA 1515; BOGOTA 1499; BOGOTA 15

1. (U) SUMMARY. The Government of Colombia continues to make
progress toward its goal of having nine free trade agreements
(FTAs) with 45 countries in place by 2010. While not all nine are
likely to be in force by next year, Colombia is already looking to
other trade partners in the Hemisphere as well as Asia for
additional FTAs. Colombia's trade agenda, which includes the
U.S.-Colombia Trade Promotion Agreement (U.S.-CTPA), is a long-term
strategy focused on diversifying its export markets and inserting
itself into the global supply chain. END SUMMARY.

URIBE'S GOAL: 9 FTAs WITH 45 COUNTRIES BY 2010

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2. (U) When President Alvaro Uribe came to power in 2002, Colombia
had only two free trade agreements with five countries. Through
the Andean Community of Nations (CAN), Colombia enjoyed the
benefits of free trade with Bolivia, Ecuador, Peru and Venezuela.
The G-3 was essentially a limited FTA among Colombia, Venezuela and
Mexico. Venezuela has since withdrawn from both agreements. In
2005, the CAN's trade agreement with Mercosur entered into force,
adding four more countries to Colombia's list of free trade
partners.

2009: CHILE AND CENTRAL AMERICA FTAs ENTER INTO FORCE

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3. (SBU) Colombia's FTA with Chile entered into force in May 2009
and offers all the protections and benefits of a state-of-the-art
agreement (Ref C). According to Colombian Trade Ministry's
Director of Economic Integration Alfredo Ramos, Colombia's FTA with
Central America's Northern Triangle will enter into force on
November 12 with Guatemala and El Salvador, and as soon as possible
thereafter with Honduras, given its current political crisis.

PROGRESS, BUT POSSIBLE SNAGS, WITH CANADA, EFTA

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4. (SBU) Colombia signed FTAs with Canada and with the European
Free Trade Association (EFTA) countries (Switzerland, Norway,
Iceland and Liechtenstein) in November 2008. The Colombian
Congress approved the FTA with Canada in August 2009, and the
Agreement is currently awaiting the approval of Colombia's
Constitutional Court (approximately a 6-month process). However,
on the Canadian side, resistance from NGOs and opposition parties,
ostensibly on labor and human rights grounds, has complicated the
minority government's plan to hold a vote. According to Commercial
Officer Edsel Aytona of the Canadian Embassy in Bogota, as
Canadians debate their own FTA with Colombia, they are watching
closely the political process surrounding the U.S.-CTPA.

5. (SBU) Colombia's FTA with EFTA is written such that it can
enter into force with member-states on separate timetables,
depending on when each country is ready. Switzerland and
Liechtenstein have already ratified the Agreement. The Colombian
Senate has approved the FTA in Committee, but the Agreement has yet
to go to full votes in either chamber or be presented to the

BOGOTA 00003309 002 OF 003

Constitutional Court. Swiss Deputy Chief of Mission in Bogota
Francesco Quattrini told us there had been only limited NGO
opposition to the FTA in Switzerland in the days before the
legislative vote, and emphasized what he considered Switzerland's
pragmatic approach to the Agreement, saying, "We tend to focus
mainly on the commercial benefits of FTAs." Norwegian Ambassador
to Colombia Vibeke Knudsen told us that a legislative vote in
Norway has so far been delayed and that her embassy has been called
on to help counter increasingly vocal opposition to the FTA from
Norwegian organized labor and NGOs.

NEW FTA WITH MEXICO COULD SOFTEN BLOW FROM VENEZUELA

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6. (SBU) In August 2009, Colombia and Mexico closed negotiations
on a new FTA, which expands and updates commitments made as part of
the G-3 agreement in the mid-1990s. While the agreement does not
include ethanol, as Colombia had hoped, it greatly expands
Colombia's access to Mexico's market for agricultural products.
The GOC sees the FTA as a tool to help reduce Colombia's $2.4
billion trade deficit with Mexico and provide a market for exports
that previously went to Venezuela before its recent imposition of
trade restrictions. According to Ramos, certain provisions of the
Colombia-Mexico FTA, such as those benefitting Colombian dairy
products can be implemented provisionally, before the Agreement is
signed or ratified, thereby providing immediate relief to sectors
hit by the precipitous drop in trade with Venezuela. Ramos did not
speculate when the Agreement would be signed.

NEGOTIATIONS ONGOING WITH EU

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7. (U) Bogota will host the seventh round of negotiations between
Colombia, Peru and the European Union the week of November 16.
Negotiators had hoped to close negotiations in the summer of 2009
(Ref B). Peruvian officials have said publicly the November round
will be the last one. GOC officials remain more guarded in their
optimism, acknowledging that "the last five percent of a
negotiation is by definition the hardest five percent." Bananas,
beef, sugar and tropical products are still outstanding issues on
which Colombia is seeking resolution, while dairy, pork, spirits
and automobiles top the EU's list of pending issues.

LOOKING BEYOND THE NINE FTAs

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8. (SBU) While not all nine FTAs are likely to be in force by
2010, Colombia is already looking to other trade partners to see
how it can expand its free trade agenda. At the top of this list
is Panama. Both are examining how they can use their pending FTAs
with the U.S. as a basis for a bilateral Agreement. According to
Ramos, FTA negotiations with Panama could begin as soon as Colombia
implements the necessary changes to come into compliance with a WTO
ruling in favor of Panama, against Colombia, so as to first put
that bilateral irritant behind them. The Dominican Republic and
Uruguay are other countries of interest to Colombia, though
probably for something less than a full FTA. The GOC has announced
its intention to open an Embassy in Abu Dhabi and hopes that a
trade agreement with the United Arab Emirates will follow soon
thereafter. Colombia has an aggressive trade and investment
strategy aimed at Asia, which will be reported septel. FTA
negotiations with South Korea are expected to begin in 2010.

BOGOTA 00003309 003 OF 003

COMMENT: AMBITIOUS TRADE AGENDA WITH EYE TOWARD U.S.

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9. (SBU) Colombia's ambitious trade agenda goes beyond
diversifying its exports away from erratic markets like Venezuela
and Ecuador. It is a concerted effort to insert Colombia into the
global supply chain and solidify its status as a secure destination
for foreign investment. The GOC is moving forward with its other
trade partners irrespective of action on the most important piece
of its trade agenda, the U.S.-CTPA. U.S. exporters, such as the
U.S. Wheat Associates, have expressed concern that Colombia's FTAs
with other countries will cut into U.S. companies' market share.
Senior GOC trade officials have said privately they hope the U.S.
takes notice of Colombia's actions vis-C -vis other countries as a
way of showing Colombia's commitment to free trade, including with
the U.S.
BROWNFIELD

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