Colombia Free Trade Agreement Good for Local Illinois Economy
Washington, May 15 -
This month, after years of negotiations, which begin in 2006 under the Bush Administration, the implementation of the U.S.-Colombia Free Trade Agreement (FTA) finally becomes effective.
As a member of the House Ways and Means committee, the committee of jurisdiction that oversaw the passage of the Colombia FTA, I have heard firsthand the personal stories on how this free trade agreement will help grow the economy in local communities throughout our state. This led me to create the Colombia Caucus with my Democratic colleagues Gregory Meeks of New York and Henry Cuellar of Texas and Republican Mario Diaz-Balart of Florida to help disseminate information about the importance of this critical agreement. These efforts culminated with the introduction of a bipartisan resolution calling for the Administration to submit the Colombia FTA for Congressional approval and listed 101 reasons why doing so is economically beneficial to the U.S. Within a couple of months of the introduction of the resolution, President Obama sent the proposed FTA to Congress where it was swiftly passed in to law. Now that this long-awaited agreement is becoming reality, it will mean more jobs and opportunities for U.S. workers, and here is why.
Ask any farmer, manufacturer or business owner and they will tell you the most frustrating part about doing business in Colombia has been the price to export goods to that market. For example, Colombia represents the second largest market for Caterpillar throughout Central and South America, but when a typical tractor is sold in the U.S. and shipped to Colombia it has come with a $150,000 tariff. On the other hand, all the Colombian coffee and flowers sold into our country were tariff free, making the trade balance tilted heavily in favor of Colombia.
However, as the tariffs are lifted, so too is the renewed optimism for economic growth and job creation. In 2010, according to the U.S. Department of Commerce, the total merchandise exports in Illinois exceeded $48 billion, supporting 650 exporting companies and the over 145,000 people they employ.
Illinois agriculture is already a major supplier of grain to Latin America, and Colombia has been a top ten export market for U.S. corn. After the Bush administration negotiated the Colombia FTA, it languished for several years, and during that time U.S. farmers began losing market share to other countries that had free trade agreements with Colombia. For example, Colombians bought 60 percent less wheat from the U.S. in the past five years as they increased their wheat purchases from free-trading partner Canada.
Marty Turner, a farmer in Beardstown, IL, understands well what lifting these tariffs means for his industry. He grows grains that are shipped down the Illinois River to the Gulf of Mexico and to ports around the world. He will tell you, in good times and bad, U.S. farmers are relied upon to help feed the world’s population, but it comes with a heavy price when additional tariffs are levied on their grains to enter certain markets. The new agreement with Colombia offers renewed hope to gain back the ground lost over the last half decade.
The same optimism is shared by small businesses and manufacturers who have turned to exporting their products as a way to expand their businesses locally and hire more people in Illinois.
In 1915, Quality Float Works was founded. This Schaumburg, IL based company manufactures liquid level devices for home and business water storage tanks and water purification systems. This Illinois manufacturer attributes much of its growth over the last decade to strong export sales, which have increased from 3 percent to 30 percent of their total revenue, resulting in a workforce double of 12 to 24 employees. If you ask Jason Speer, the company vice president, he will tell you the highly skilled workers they have hired can be attributed to the demand for their products around the world.
Selling overseas is also more than just shipping the final product; it’s an extensive network that helps to employ workers in communities across our state. Vermeer, which is headquartered in neighboring Iowa, has dealerships in Aurora, IL, Goodfield, IL and East Moline, IL. Vermeer is a manufacturer of heavy earth moving equipment. As Daryl Bouwkamp, Vermeer’s International Business Development Director told me, when Vermeer’s exports increase, so does the demand for the parts from the 600 suppliers they use, including many in Illinois. In the end, a domino effect is created for the communities where Vermeer suppliers are located, which helps those local economies thrive.
Caterpillar, the Peoria-based manufacturing company, is an iconic example of employing skilled workers in Illinois who make the large track tractors that are made in East Peoria and large mining trucks that are manufactured in Decatur. In both cases, over 80 percent of this equipment is exported to construction sites around the world while employing thousands of people in communities across Illinois.
The story of free trade is a personal one, it’s a local one and, for us in Illinois, it’s one we know well. I take pride in the fact that you can see a CAT tractor used on a construction site in Colombia and that Marty Turner’s grains are feeding people an ocean away. I am proud that a company nearing a century old is manufacturing devices to help purify water across the developing world, and I am proud that “Made in America” isn’t just a slogan; it’s a network of individuals, communities and small businesses. Free trade will allow more Illinoisans to prosper, and that is why this story is worth telling.