Last year, Arkansas sold nearly $5 billion in exports to world markets, an increase of 74 percent since 2002. That’s good news for Arkansas companies whose sales to some 160 foreign destinations support high-wage jobs across the state and aid the growth of the U.S. economy.
According to the latest figures, nearly 1,400 Arkansas companies are selling internationally, 76 percent of which are small and medium-sized businesses with fewer than 500 employees.
The recent congressional passage of the U.S.-Peru Free Trade Agreement, which will eliminate or dramatically reduce trade barriers for U.S. goods and services, opens new doors for Arkansas exporters. Equally important, Arkansas stands to benefit from approval of the pending free trade agreement with Colombia.
In Colombia, Arkansas export sales have jumped 293 percent since 2002, increasing from $6.5 million to $25 million in 2007, making Colombia one of Arkansas’ fastest-growing markets. An FTA would create unprecedented opportunities to further accelerate this growing and positive relationship.
Implementation of the FTA would promote investment, strip away barriers to trade and strengthen U.S. competitiveness in the world economy.
We already have trade relations between the United States and Colombia, but it is one-way free trade. Over the years, Congress has voted to open the U.S. market to imported Colombian products. In fact, more than 90 percent of Colombian exports to the United States enter duty-free. At the same time, U.S. firms have not had reciprocal access to the Colombian market. U.S. products face Colombian tariffs of up to 35 percent on non-agricultural products and much higher on many agricultural products. A Colombia FTA would address this gap by providing equal market access and transparency.
Once the U.S.-Colombia FTA begins taking effect, more than 80 percent of U.S. consumer and industrial products and more than half of current farm exports will enjoy duty-free entry into Colombia. Upon full implementation of the agreement, all of Colombia’s tariffs on U.S. exports will be eliminated.
For Arkansas, this means more sales of computers and electronics, agricultural commodities, transportation equipment, paper, chemicals and more. It also means more jobs and greater tax revenue for the state. According to the Business Roundtable, key sectors of Arkansas exports would see increased sales to Colombia of between 8 and 56 percent, with estimated duty savings for Arkansas businesses exceeding $3.5 million.
Hytrol Conveyor Company of Jonesboro manufactures equipment for assembly lines and other industrial operations. With help from the U.S. Commercial Service in Arkansas, U.S. Embassy in Colombia and U.S. Export-Import Bank, the firm is expanding into South America.
Dan Fischbacher, director of International Operations, says Colombia is an attractive market because of its pro-business environment and large demand for packaging, distribution and pallet handling. “Any time you can knock down barriers and see taxes reduced, that makes us more competitive,” he says. “Our worldwide exports have contributed significantly to the growth of Hytrol and help support manufacturing jobs here in Arkansas.”
Colombia has recast its previous reputation into a dynamic place to do business:
- Colombia’s track record of consistent growth during the last 30 years has made its economy among the best in South America, with GDP growth of 6.8 percent in 2006.
- President Alvaro Uribe’s focus on improving security has created an economy of open markets and fiscal prudence. Cities such as Bogotá and Medellin are now vibrant and growing. The Port of Cartagena has seen cruise ships port-of-call stops quadruple in the last three years as Colombia now ranks among the top 50 tourism destinations worldwide.
- The “World Bank’s Doing Business Report” ranked Colombia as the region’s top reformer in 2008, with the largest overall improvement in business conditions of any country in the hemisphere.
Free trade is not only important for U.S. economic growth, but helps ensure continued progress in building politically stable and growing economies. By voting “yes” to free trade, we will send a message that we are ready to support continued U.S. business growth globaly.
(William R. Brownfield is the U.S. ambassador to Colombia.)