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United States And Colombia Approve Free Trade Agreement

James A. Morrissey, Washington Correspondent

The United States and Colombia have reached a free trade agreement (FTA) that should please US textile manufacturers, as it contains a yarn-forward rule of origin that will encourage use of US yarn and fabrics in imported products that will enjoy duty-free treatment. The pact also should result in an increase of exports of US cotton to Colombia.

In announcing the FTA, US Trade Representative (USTR) Rob Portman said the agreement will “ generate export opportunities for US agriculture, industry and service providers and help create jobs in the United States.” In addition, he said, the pact should make an important contribution to combating “narco-terrorism” that he said threatens democracy and regional stability.

The tight rule of origin calls for yarn-forward inputs with none of the loopholes such as tariff preference levels and cumulation that U.S. textile manufacturers have opposed in some past agreements. The agreement is subject to congressional approval, but it does not appear that any major problems lie in the way of ratification.

In 2005, Colombia and the United States had $14.3-billion in two-way trade, and Colombia currently is the second largest agriculture market for the United States in Latin America.

In a related development, the USTR announced the United States is prepared to implement the Dominican Republic/Central American Free Trade Agreement (DR-CAFTA) with El Salvador. That agreement has a yarn-forward rule of origin similar to that in the agreement with Colombia. Although the US Congress approved that FTA and it was signed by President George W. Bush in August 2005, implementation is subject to approval by the legislatures of the participating countries, which must demonstrate they are able to comply with terms of the agreement. El Salvador is the first nation to do so. Others that are in varying stages of ratifying the agreement are Costa Rica, the Dominican Republic, Guatemala, Honduras and Nicaragua.

February 28, 2006