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U.S. Insurers Hope for Peace in Colombia Trade Talks
(BestWire Services Via Thomson Dialog NewsEdge) U.S. insurers are hopeful that Congress and the Bush administration can work out an agreement allowing both sides to support the pending U.S.-Colombia Free Trade Agreement, but are trying to steer clear of the political wrangling that thus far threatens to derail the pact.
Among the deal's financial services commitments are that Colombia will eliminate measures requiring U.S. firms hire national rather than U.S. professionals, and that both mutual funds and pension funds will be permitted to use portfolio managers in the United States. The agreement also would allow U.S. investors to "enjoy in almost all circumstances the right to establish, acquire, and operate investments in Colombia in an equal footing with local investors," including binding international arbitration, according to U.S. Trade Representative Susan Schwab.
Using his trade promotion authority, President Bush sent the pact to Congress in the form of directed legislation the morning of April 8. The TPA, also known as "fast track" authority, requires that Congress take action on the deal within 90 days. In a press briefing, Bush said "waiting any longer to send up the legislation would run the risk of Congress adjourning without the legislation ever getting voted on."
Finalized in February 2006 and signed by representatives in both countries in November of that year, approval of the FTA has nonetheless been held up by concerns raised by some congressional Democrats about Colombia's labor and environmental standards, prompting several revisions of the original pact.
More recently, presidential candidates Sens. Hillary Clinton, D-N.Y., and Barack Obama, D-Ill., among others, have declared opposition to the deal until the Colombian government demonstrates progress in controlling violence targeting the country's labor leaders.
According to Schwab, two-way trade with Colombia reached $18 billion in 2007. The South American country's life insurance market has averaged between 15% and 18% growth over the past four years to reach $1.8 billion, while the nonlife market has enjoyed 19% growth and currently stands at $2.5 billion.
"We support the goals and substance of the agreement, but understand the politics involved at this point," American Council of Life Insurers spokesman George Burke said. "ACLI will continue to monitor the situation as it progresses through Congress."
"Trade liberalization continues to be an important remedy for our current economic distress, and particularly in this environment, we need to be opening up more markets to U.S. goods and services, including insurance, especially services where there is a favorable balance of trade," said David Snyder, vice president and assistant general counsel for the American Insurance Association.
Snyder expressed hope the United States, "for our own domestic interests, as well as the interests of developing countries," also would continue "to push as hard as it can as fast as it can to approve these bilateral agreements and to push to a successful result in the Doha development round in the (World Trade Organization)."
In December, the Senate voted 77-18 to ratify the U.S.-Peru Free Trade Agreement, which overturned a number of unilateral preferences called for by the 16-year-old Andean Trade Preference Act (BestWire, Dec. 5, 2007).
(By R.J. Lehmann, Washington bureau manager: raymond.lehmann@ambest.com)
Copyright ? 2008 A.M. Best Company, Inc.
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