Economy

Caterpillar hoping for U.S.-Colombia free trade agreement

by Michael Kay

Coal mines in Colombia may not become the gold mines
they could have been for Caterpillar Inc. (CAT) should a stalled U.S.-Colombia
free trade agreement fail to progress through Congress.

Colombia, because of its massive coal mining operations, is a huge market for
Caterpillar tractors built in Illinois, said Bill Lane, the company’s
Washington-based director of government affairs. But the company’s exports to
the South American country could soon face increased competition from north of
the U.S. border.

Colombia and Canada in early June finished negotiations on a free trade
agreement that some businesses fear could divert Colombian buyers northward as a
U.S.-Colombia free trade agreement remains stalled in Congress.

House Speaker Nancy Pelosi has indefinitely suspended a vote on the agreement,
citing concerns over labor conditions in Colombia.

“By inaction, the U.S. Congress is telling our customers in Colombia ‘we would
prefer you to buy Canadian goods than American goods,'” Lane said.

Caterpillar’s engine imports currently face tariffs of 2.5% in Colombia, he
said.

Other businesses, too, are concerned about losing potential profits to
Canadian competitors.

Luis Guillermo Plata, Colombia’s Minister of Trade, Industry and Tourism, said
during a Wednesday luncheon that he has met with U.S. producers of pork, wheat,
barley and cotton who fear they could lose business to Canada. “I wouldn’t be
surprised that, given a choice, Colombian buyers will buy wheat and barley from
Canada because it would be cheaper,” he said.

He expects a signed agreement with Canada could come as early as November.

Plata is among a number of Colombian officials who have descended on
Washington in recent weeks to push for Congressional approval of the U.S.-
Colombia trade pact as the last scheduled congressional session of the year
winds down.

Colombian President Alvaro Uribe is expected to arrive later this week. He is
not currently scheduled to meet with Pelosi. (DOW JONES)

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