Colombia to Renegotiate Free-trade Agreement with the US

In a meeting with the coffee sector in Huila, President Gustavo Petro announced that Colombia was initiating the renegotiation of the Free Trade Agreement (FTA) with the United States. The trade agreement has been in effect since May 2012, after being signed during the presidency of Juan Manuel Santos. According to Petro, this renegotiation is motivated by the disadvantage in domestic production that Colombia is experiencing. This disadvantage, as explained by the president, hampers Colombia’s competitiveness with the United States. During the same event, the president also reminded that this renegotiation was a promise from his electoral campaign.

Colombia, Importer of North American Corn

To explain these setbacks, President Petro used the example of one of the most essential national products: corn. “If I wanted to replace that corn (referring to the corn imported from the US and Canada) with Colombian corn, we could generate 1,200,000 additional jobs, meaning wealth. Why can’t I do it? Because the Free Trade Agreement with the United States, which was signed a few years ago, prohibits it,” stated the head of state.

Gustavo Petro reviewed the last half-century of Colombian production history. “In 50 years, the country forgot about coffee and forgot about yucca and corn, even though the first contact between humans and corn occurred in Colombia a thousand years ago. Being the staple of indigenous communities, a powerful American cereal as significant as European wheat or Asian rice, discovered by humans in the jungles of Colombia and becoming our fundamental nutrient, today we import almost all corn from the United States and Canada,” lamented the president.

Importing a cereal that’s produced in the country due to obligations from the FTA doesn’t generate wealth, he argued. Likewise, Gustavo Petro took the opportunity to reiterate his opposition to the extractive economic model. This is why he justified the need to renegotiate the ongoing economic agreement with the US, which has been in effect for 11 years.

Productive Model vs. Extractive Model

For President Petro, this renegotiation will help shift back to the productive model that generates wealth and knowledge. “If we are going to industrialize, we need knowledge. That means enhancing public universities, one of this Government’s top priorities,” the president concluded in defense of the economic model change.

“We have to return to the world of production, of work. Work and production exist in both urban and rural areas. And fundamentally, if it’s thriving, it expands into agriculture and industry,” Petro stated, emphasizing the necessity of changing the economic model.

The president reiterated his opposition to continuing the oil or coal extraction model. He vigorously defended a return to agricultural production. According to Petro, prosperity and social equity come from “producing food, industrializing agricultural production, manufacturing motorcycles that we import…,” because, as he said, it involves knowledge.

“Extracting a barrel of oil, inviting a multinational company to extract it and give us revenue, why would we need knowledge for that? That’s why public universities haven’t developed in 50 years. The National University remains the same National University with the same number of students, but with dilapidated buildings because knowledge wasn’t necessary for living off revenue,” the president argued.

Colombian Request for FTA Review

The Colombian government informed the United States of its intention to review, not renegotiate, the FTA in December 2022. In this regard, Trade Minister Germán Umaña stated that work committees would be established during 2023 to study the changes Colombia is requesting. The objective, he said, is to “analyze those balances and imbalances” and reach agreements on how to improve certain conditions.

The chapters of the FTA with the USA that Colombia wants to review in the renegotiation include:

• Market access
• Rules of origin
• Investment
• Intellectual property

However, the announcement made by the president this week goes further. Gustavo Petro spoke in Pitalito (Huila) about renegotiating the FTA. For experts, this is a riskier option as reviewing implies modifying certain existing rules. On the other hand, renegotiation involves changing some rules. In this sense, just as one can gain in some aspects, there’s also the possibility of losing in others.

As explained by María Claudia Lacouture, president of the Colombian-American Chamber of Commerce (AmCham), renegotiation is feasible. However, for Lacouture, the current electoral situation in the US (with elections in November 2024) is not favorable. While Colombia can renegotiate the FTA without passing it through Congress, the United States is obligated to endorse changes in its legislative chamber. For María Claudia Lacouture, this task is hardly achievable in an electoral context.