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Truckers Striking, Washington Eyeing, China Vying, and Billionaires Buying – This Week In Colombia Law & Business

February 19, 2011

Ask anyone who lives in Bogotá, the biggest problem in daily life – leaving aside this year’s seasonal rains that came early, stayed late, and would not stop – is transportation. Visitors arriving at the expanding El Dorado Airport (did it expand enough?) have a long slow ride on the Avenida El Dorado due to construction.  But work sites are without workers because funds disappeared in a scandal involving allegations of municipal corruption. Hopes hang on a new metro/subway system, already almost two decades behind the shining, rapid metro in Medellin, with its aerial gondola extension lines. 

To make things worse, this week truckers jammed traffic everywhere striking for higher trucking fees. Vice President Angelino Garzón, himself a former labor leader chosen by President Santos for a national unity government dedicated to improved labor and employment conditions, was unable after days to broker a settlement, but the week ended with a deal to end to the truckers strike.

 

That brought good news to the economy that had mixed messages on trade. A deal to release about half of the delayed payments from Venezuela to Colombian exporters will give a US$365M boost to the Colombian economy. But exports to the US once again became subject to tariffs, when Congress allowed the Andean Trade Preferences Act to lapse the day before Valentine’s Day, when 80% of cut flowers sold in the US come from Colombia. Angry that Republicans allowed the Trade Adjustment Assistance Program to expire, Congressional Democrats refused to extend the Andean Trade Preferences, that allow Colombian exports into the US with tariffs just as if the US-Colombian Trade Promotion Agreement had been passed. The Congressional squabble embarassed the US and angered frustrated Colombians who are making plenty of other trade deals. The Administration and Congress, however, began making a show of getting back on track and I maintain my judgment that the Trade Promotion Agreement will go to Congress by mid-year and pass.

Vice President Garzón, freshly back from a week in Washington to help win passage of the US-Colombia Trade Promotion Agreement, hosted a three ambassador visit from Washington designed to get “fresh information” and to speed up negotiations. The talks are trying demonstrate that the Administration responded to American hesitation over persistent problems with impunity in the killing of labor and human rights leaders. The three visitors will see real dedication to change, not only in increased prosecutions and decreased killings but also in restoring land titles to people displaced by paramilitaries or guerillas – with US aid. Also this week, President Santos formally presented the Law of First of Employment, designed to increase formal employment. (See my post about the new law. It includes, somewhat strangely, needed reforms to the nation’s bankruptcy law.)

On Capitol Hill, there blame game was on. There were two Congressional hearings in Congress relating to the TPA, where Assistant Secretary for Western Hemisphere Affairs Arturo Valenzuela, at one point mentioning that the Colombian Ambassador was seated near him, tried to convince skeptical legislators of both houses that the Administration is serious about submitting the TPA for a vote this year. He also denied that Obama is snubbing Colombia on his Latin America trip this March, since the Summit of the Americas next year is scheduled for Colombia. (That nugget was golden news, but somehow didn’t find its way into any news story I saw.) Treasury Secretary Geithner robustly called for TPA passage this year to help the economy recover through exports.  The State Department spokesman reiterated that increased US engagement on the TPA is designed to get it to Congress by mid-year. That will come after March meetings of the US-Colombia High-Level Partnership dialogue in March. (See my post “Why The Colombian Trade Agreement Will Go to Congress This Year.”) Even President Obama got into the trade show game, making a point of attending a meeting of a trade negotiation advisory committee this week (a committee that has never met before during this Administration).

 

Why so much attention? Because Colombians – especially exporters – feel slighted by the constant foot-dragging in Washington on trade and the resumption of tariffs on their flowers and other exports.  At the beginning of the week, Luis Carlos Villegas, the head of the National Industrialists Association said , if there is going to be a further renegotiation of the TPA, “don’t count on me.”  Ambassador Gabriel Silva told reporters the Colombians were losing patience and were looking to other markets. (See my June 15, 2010 post: “Canada’s New Trade Agreement Turns Up the Heat on the U.S.”) Shortly afterward, President Santos gave an interview in the leading news magazine Semana, echoing Ambassador Silva, that if the TPA does not pass the Congress this year, the Colombians will not insist on it and will look to other markets.  

In an interview with the Financial Times, Santos cleverly drew attention to near-final negotiations with Chinese backers of a new rail system designed to bring coal from near the Caribbean coast to the Pacific coast for Chinese freighters. Bringing up China, the futuristic vision of a railway “dry canal” alternative to the Panama Canal, was smart politics in this context. China has risen from the twelfth to the second trading partner with Colombia just in the time since the TPA was signed. As the Americas’ Society explained this week, Colombia looks to China rather than the US for infrastructure investment. In addition to rails, hydro and energy projects see Chinese backing, which helps compensate for Colombia’s increasing loss of textile business to China.

 

Reaction to the China card on Capitol Hill was swift. Proponents of the TPA frequently mentioned China during hearings this week. President Santos repeated Henry Kissinger’s famous quip that being America’s enemy is bad, but being its friend is fatal, but all signs point now to seeing the TPA concluded this year.

Not just the Chinese have their eyes on Colombia – three billionaires made news this week because they are investing in Colombia. Brazil’s Eike Battista bought Ventana Gold for $US1.43Bn. Carlos Slim was reported to be investing in oilfield services in Colombia as news broke that oil production was up another 13% in January year-over-year. And Sam Zell’s Equity International was said to be readying a big move on Colombia. Delta Airlines is paying attention, too, adding a daily non-stop from JFK to Bogotá. 

From Billionaires to Millionaires – the Milionarios: football team (sorry, “soccer”) has its own rags to riches recovery story to match its Colombia’s. The “Blue Commandos” of the El Campín Stadium in central Bogotá were, at one time, famed for rolling out a huge portrait of a narco-partner of Pablo Escobar. The team’s dubious finances resulted in forfeiture and the team became a ward of the national anti-narcotics directorate. But all that is behind them now, because this week the Financial Superintendency approved the Milionarios to be listed on the BVC stock exchange (soon to be the MILA when it completes its merger with the Peruvian and Chilean exchanges). The action offers cheering fans the chance to become one of the team’s 3000 new shareholders. Just in time: this week, the Council of State ruled against sole-shareholder entities.  Billionaires beware!

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