By Matthew Shay
President & CEO, International Franchise Association

Trade is an integral part of the U.S. economy, accounting for more than one-quarter of U.S. GDP and directly supporting more than 12 million U.S. jobs. In 2007, the export of services by the U.S. totaled $472 billion, or 29 percent of all U.S. exports. The services sector alone had an export surplus of $104 billion.

It is in the context of these numbers that makes Speaker Pelosi’s decision to delay the vote on the Colombian Free Trade Agreement so hard to understand.

The Speaker’s reasoning is so Congress can focus its attention on ways to further stimulate the slowing economy. But when you fully understand the benefits to the U.S. economy of passing the Colombia Free Trade Agreement, you see that Congress is overlooking one of the best things they can do for the economy—expand trade with Colombia and level the playing field for U.S. small businesses, especially franchised businesses.

In the broad sense, Free Trade Agreements (FTAs) ensure that market access is two way, ensuring that the U.S. gains access to new and expanded markets. Specifically, FTAs encourage foreign governments to adopt open, transparent and non-discriminatory laws and regulations so that franchised U.S. businesses have an easier time operating overseas.

Without the FTA, the unbalanced trade we have seen will only continue. Currently, goods entering Colombia face an average tariff of 14 percent. But over 92 percent of Colombian goods face no such barriers in the United States. Approving the Colombia Free Trade Agreement would lower most of these tariffs to zero immediately.

Lower tariffs to countries like Colombia will help the U.S. franchising sector in many ways continue the path of economic growth seen over the past decade. From 2001 to 2005, the franchising sector expanded 18 percent adding more than 140,000 new businesses and 1.2 million new jobs to the nation’s economy. In fact, franchising now provides more jobs than many other sectors of the economy, including the durable goods manufacturing and financial activities sectors. Not only can this critical engine of economic growth power local communities here in the United States, but around the region as well.

With the passage of the Colombia Free Trade Agreement, franchised businesses would have full market access. The agreement protects franchisor rights by expanding the definition of trademarks, creating an electronic trademark application system and easier filing requirements. Therefore, an entrepreneur who spent years developing a brand in the U.S. will be free to invest in Colombia without the fear of overnight copycats looking to cash in on a successful idea. Enhanced intellectual property rights ensure the brands of franchise companies are protected.

Also under the agreement, the Colombian government would be prohibited from requiring U.S. companies to incorporate in Colombia in order to provide services. Franchised small businesses, with limited resources that prohibit physically locating in Colombia, will benefit from not having to establish a formal presence. This will allow smaller franchisors the immediate access larger systems enjoy overseas.

Retailers will benefit from the removal of restrictions on the movement of products among manufacturers, wholesalers and consumers. The agreement also provides for facilitation of and assistance for express delivery companies to provide better services to customers in Colombia. And it includes enhancements to Internet and information technology infrastructure to aid in the delivery of services.

Free and fair trade is good for U.S. small and franchised businesses and the communities across America they support. The trade surplus that the service sector provides should be proof enough about the value of strong trade agreement. But add in the U.S. jobs generated by this sector, which includes many franchised businesses, and the benefits are clear. Speaker Pelosi should stop playing politics with the Colombia Free Trade Agreement and instead help entrepreneurs, like franchised U.S. businesses, expand their products, brands and services overseas.

That’s economic stimulus we can afford.

###