What are Colombia’s potential economic gains from a PTA?
Will making US trade preferences for Colombia permanent attract new investment? That’s the White House line, echoed by Nick Kristof. I’m skeptical of the magnitude of the effect. Jeff Schott at the Peterson Institute of International Economics edited a volume on US-Colombian trade relations a few years ago. He wrote: An FTA would provide contractual guarantees regarding the permanency of the trade preferences, in stark contrast to the uncertainty that surrounds whether the US Congress will reauthorize the ATPA [Andean Trade Preferences Act] before it expires at the end of 2006. Such uncertainty imposes costs on bilateral trade and investment and has contributed to the lackluster FDI in Colombia by US firms… To be sure, other factors — including Colombia’s macroeconomic policies, security environment, and domestic regulatory policies — may be of equal or greater importance in investment decisions. Oh, that nasty uncertainty. Reuters – Feb 14 – Expiring U.S. trade benefits for Colombia,
