Caterpillar hoping for US-Colombia free trade agreement

DOW JONES | Thursday, 18 September 2008

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

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.