US-Colombia Free Trade Agreement a Step Back for Development

Washington, DC — International relief and development organization Oxfam America called today’s signing into law of the US-Colombia Trade Promotion Agreement a step backward for development and poverty reduction in Colombia. 

“This agreement locks yet one more developing country into an unfair trade relationship with the United States based on a set of rules that do more harm than good for people living in poverty,” said Raymond C. Offenheiser, Oxfam America’s president. "This deal will undermine efforts to address the problems of drug trafficking and internal conflict that have resulted in the internal displacement of one in every 10 people in the country, exacerbating poverty and inequality.”

Nearly a third of Colombians live in rural areas, more than half of them in poverty – twice the urban poverty rate – and most depend on agriculture for their livelihoods.  Most of Colombia’s 1.8 million small farmers earn less than the national minimum wage, have barely 5 years of formal education and receive little if any government support, even as they produce over half the basic food basket consumed in the country. As the free trade agreement comes into effect on January 1st, 70 percent of subsidized US agricultural exports will enter Colombia duty-free while large duty-free quotas of other products will also flood the Colombian market, thereby lowering farm-gate prices and undermining the ability of Colombia’s small farmers to compete on the domestic market.

“Trade always brings with it winners and losers, but it can only be an engine for development and poverty reduction if the rules of trade actually benefit people living in poverty,” said Offenheiser. “Yet agreement after bilateral agreement negotiated by the United States over the last decade includes provisions that disproportionately impact the most vulnerable.”

Rural poverty and inequality fuel both the armed conflict and the illegal economy in Colombia. The US has invested $8 billion over the last decade in counter-narcotics, counter-insurgency and alternative development efforts, but the Colombia trade deal will undermine these investments. The adverse impacts will be concentrated on those households that are more vulnerable and have fewer resources, particularly those who produce rice, corn, beans, wheat and sorghum, as well as poultry and pork.  These nearly 400,000 farmers are likely to lose between 48 and 70 percent of their income.

“If Colombia’s small farmers can no longer compete with US exports under the free trade deal, rural poverty will spike, and farmers will be left with little options but to take up coca cultivation, join up with illegal armed groups, or migrate to urban areas,” said Offenheiser.

Investment provisions in the trade deal could, similarly, undermine sustainable development efforts in Colombia, where mining concessions are proliferating.  Mining companies have sued the governments of El Salvador and Peru for many millions of dollars under the US-Central America Free Trade Agreement and the US-Peru FTA, alleging loss of anticipated profits due to restrictions on their operations caused by their failure to meet local environmental standards. Colombia could face similar suits should it seek to regulate mining activities in the future in order to further protect the environment and local communities that depend on agriculture for their livelihoods.

“Sadly, the Administration and Congress continue to fail to take into account poverty reduction and development concerns when designing and implementing trade deals,” said Offenheiser. “It is a short-sited approach that will only undermine long-term US foreign policy and development interests.”