The Benefits of a U.S.-Colombia Free-Trade Deal

Economists estimate that the free-trade pact with Colombia, which received White House endorsement on Apr. 7 and awaits approval from Congress, could boost U.S. gross domestic product by $2.5 billion a year. Caterpillar (CAT) would be a bigger beneficiary than most. Colombia's booming mining business has made the nation one of the top 10 export markets for the Peoria (Ill.) manufacturer of construction equipment. Removing the country's tariffs on such goods, which range from 5 percent to 15 percent, would cut $100,000 from the $2 million price tag for Caterpillar's D11 bulldozer. Buyers of one of the company's behemoth trucks, which go for $2 million or more, would save $300,000 without the tariffs.

The Colombia pact is one of three free-trade deals signed during the George W. Bush Administration and still awaiting approval. Barack Obama criticized the Colombian agreement, as well as those with Panama and South Korea, while campaigning for President in 2008. Once elected, he pledged to rework all three. Democrats demanded that Colombia take greater steps to protect union activists, who are routinely harassed and sometimes assassinated by right-wing militia in a country emerging from a decades-long conflict with leftist guerrillas. Obama took little action on any of the pacts until the end of last year, when he turned his attention to the one with South Korea. The largest pact since NAFTA in 1994, it is expected to boost exports by $11 billion a year, 10 times that of the Colombia deal. Obama gave it his blessing in December after Korea made concessions to the U.S. auto industry.