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Guest
Opinion: A boon for outsourcers, pact rips off United States
By ALAN
TONELSON
Published
on Sunday, June 08, 2008.
Last modified on 6/8/2008 at 1:45 am
WASHINGTON - With a recession either under way or imminent, triggered by
reckless over-borrowing and dismal under-production, the last thing
Americans need is an outsourcers' boondoggle like the proposed trade
agreement with Colombia.
Supporters claim the deal will jumpstart U.S. exports and thus overall
demand for American-made products and services. After all, backers say,
previous U.S. presidents and Congresses gave Colombia duty-free access
to the U.S. market years ago. This deal finally gives American producers
the same opportunities in Colombia.
Yet last year, Colombia bought only 0.75 percent of all U.S. goods
exports. That figure would have risen to only 3 percent even if
Americans had supplied all of that nation's foreign purchases. Why?
Because the latest (2005) comparative data show that Colombia's entire
economy is only slightly larger than that of greater metropolitan area
of Charlotte, N.C., and less than 1 percent the size of the entire U.S.
economy.
Worse, fully 49 percent of Colombians lived below the poverty line in
2005. As of 2006, the nation's unemployment rate was 12 percent, and
under-employment stood at an astronomical 35.4 percent.
But if Colombians overall have zero potential as major consumers of
American exports, what do U.S. supporters of the deal really want from
Washington?
Low-wage labor supply
What they want is yet another opportunity for multinational companies to
supply their overwhelmingly U.S. customers - not new foreign customers -
from a penny-wage, regulation-free foreign production site rather than
from the United States itself.
For the Colombia agreement doesn't simply eliminate most Colombian
tariffs over time. It also makes permanent access to the immense U.S.
consuming base for any entity producing in Colombia, locally or
foreign-owned, regardless of how economic circumstances may change.
In other words, the deal's main effect is not opening a new source of
foreign demand for U.S.-origin goods and services, but removing most of
the risk of replacing U.S. factories and workers with export-oriented
operations in Colombia.
Indeed, Alan Garcia, president of Colombia's neighbor, Peru, spilled the
beans the very day he signed his own impoverished nation's free trade
deal with the United States.
"Come and open your factories in my country so we can sell your products
back to the United States," he urged an audience of outsourcers in
Washington last fall. Colombia's nearly identical deal will produce
similar results, and in the process boost America's already gargantuan
trade deficit and foreign debts
Precisely because the economic case won't fly, proponents have turned to
selling the Colombia deal through national security alarmism.
Reject the agreement, they warn, and the United States will stiff a
staunch ally in a region increasingly vulnerable to the anti-American
radicalism of oil-rich Venezuela's President Hugo Chavez and his
rogue-state leader buddies.
Approve the deal, supporters insist, and Washington will show Latin
countries the payoffs of cooperating with the United States, and aid
Colombia's own struggles against still-powerful narco-terrorists.
Poor arguments
Yet these Cold War-era arguments are completely irrelevant today. For
all his histrionics, Chavez knows he needs Americans to buy his oil, and
can barely keep his mismanaged economy afloat, much less stir major
trouble abroad. Most important, without superpower patrons like the
former Soviet Union, even an implacably hostile Venezuela would remain a
geopolitical midget.
The United States should promote Latin American prosperity and stability
where practicable - to stem the flood of narcotics and illegal
immigrants.
Along with the emergence of more competent, less corrupt regional
leaders, trade policy can help. But first Washington must realize that
Latin America's main trade policy problem is not inadequate access to
U.S. customers as such, but cutthroat competition for this market from
China and other Asian producers.
Rather than enabling Asian predation by remaining open to all export
comers, the United States must set strategic trade policy priorities.
Alan Tonelson is a research fellow
at the U.S. Business & Industry Council in Washington,
www.usbusiness.org.
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