START TRADE WAR, LOSE DRUG WAR

BOGOTA -- Anyone who thinks a pan-American free trade deal is in the bag
ought to follow the current machinations in the U.S. Senate -- follow it as
closely as the people I met last week in the heartland of conflict-ridden
Colombia.

I'd spent the day with Francisco Santos, vice-presidential candidate on the
front-running ticket in this Sunday's election. We were in Tolima province,
where they grow a lot of coffee and rice, and where they used to grow a lot
of cotton. The Santos entourage was to stay the night at a guest house near
a textile factory run by a man named Gustavo Bernal.

Mr. Bernal asked some local businessmen, farmers and political types around
for whiskey, anise-flavoured aguardiente and a chicken dinner. Since Mr.
Santos stands to become the second-most powerful person in the Colombian
government later this year, it was hardly surprising that our host also
served up what can only be described as a pitch. The most impressive part
was his up-to-the-minute knowledge of U.S. trade politics. This stuff is
fairly heavy lifting, so please bear with me.

After 11 years, a U.S. law called the Andean Trade Preferences Act expired
last week. Overnight, businesses in the poorest part of South America lost
tariff exemptions worth billions of dollars on products such as cut
flowers, textiles and minerals. ATPA was originally designed to help
farmers substitute legal crops for illegal opium poppies and cocoa leaf.
But powerful U.S. senators say it's bleeding jobs from textile-producing
states.

That would make ATPA's renewal hard enough. Worse still, it is now tied to
the much broader issue of so-called trade-promotion authority. This is the
free hand President George W. Bush wants in negotiating major deals such as
the free trade area of the Americas -- which optimists believe will be
reached by 2005.

The House of Representatives has passed a fast-track bill, but the Senate
is balking. It is expected to vote this week on a trade bill that would
renew the Andean concessions, but also allow senators to tinker with the
FTAA and other major deals after they're negotiated. Mr. Bush has said he
will not sign such a bill.

So protectionism is alive and thriving. Canada and Europe aren't shy about
it, of course. But it's the United States that's supposed to be the
greatest apostle of free trade, and yet everything in Washington points in
the opposite direction. Aside from the trade legislation, a farm bill
approved this month by Mr. Bush was stuffed with new subsidies. Put it all
together, and you can hardly blame people for asking what's going on.

That's what Mr. Bernal's pitch was about. Mr. Santos and his presidential
running mate, Alvaro Uribe, are proposing to inject significant subsidies
into Colombia's coffee and cotton industries. The message he got at dinner
was: Go for it.

According to Mr. Bernal, even with the Andean exemptions in place, foreign
competition has devastated Colombia's cotton industry. Production is just
one-eighth of what it was in 1979. During the same period, illegal drug
production has soared, providing employment to tens of thousands and a
steady income to right-wing paramilitaries and left-wing guerrillas.

Meanwhile, the United States is spending $1.3-billion (U.S.) to help
Colombia and neighbouring countries fight the drug trade. Don't be
surprised if Colombia's next government asks for more. And don't be
surprised if 2005 comes and goes with the FTAA still chugging uphill, like
the great big trade deal that couldn't.