The Andean-U.S. free trade agreement (FTA) negotiations began in May 2004, when theUnited States, Colombia, Peru, and Ecuador participated in the first round of talks, with Boliviaparticipating as an observer. After thirteen rounds of talks, however, negotiators failed to reach anagreement. Peru decided to continue negotiating alone with the United States and concluded abilateral agreement in December 2005. On January 6, 2006, President Bush notified the Congressof his intention to enter into a free trade agreement with Peru. Colombia later continued negotiationswith the United States and this agreement was concluded on February 27, 2006. Negotiations withEcuador are stalemated. This report discusses the Andean-U.S. FTA negotiation process and theevolution from the concept of a single FTA into more than one bilateral agreements. The report alsodiscusses U.S.-Andean trade relations and the major trade issues in the negotiations. Given that theprospects of a single Andean-U.S. FTA now appear low, this report will not be updated. At a meeting with President George W. Bush on April 28, 2003, in Washington, ColombianPresident Alvaro Uribe sought a free-trade agreement (FTA) with the United States as a means toimprove Colombia's economy, provide employment, and offer an attractive alternative to drugactivity in his country. President Bush was reluctant to agree to free-trade talks, however, becausehe wanted to achieve broader market opening through the hemispheric Free Trade Agreement of theAmericas (FTAA). (1) Because the FTAA talks appeared to be stalled, President Bush reportedly offered at the meeting tosend then-U.S. Trade Representative (USTR) Robert Zoellick to Colombia to discuss bilateral tradebetween the two countries. At the time, some Members of Congress supported free-trade talks with Colombia. On June11, 2003, Senator Max Baucus, Ranking Member of the Senate Finance Committee, and threeDemocratic Members on the House Ways and Means Committee urged USTR Zoellick to give"significant weight" to market size in selecting countries for FTAs and included Colombia in a listof possible FTA partners. (2) On August 1, 2003, Senator Charles Grassley, Chairman of the Finance Committee, and a bipartisangroup of four other Senators on the Senate Finance Committee sent the USTR a letter asking for"serious consideration of initiating [FTA] negotiations with Colombia...." (3) The USTR traveled to Bogota and met with Colombia's President and others on August 8,2003. The purpose of his trip, according to the USTR, was "...to clearly lay out the scope and depthof such a possible negotiation, what it would involve, and to listen and learn from Colombians abouttheir goals and expectations." (4) Peru and Ecuador also expressed interest in FTA negotiations withthe United States. On November 18, 2003, USTR Zoellick formally notified Congress of the Administration'sintent to begin FTA negotiations with Colombia, Peru, Ecuador, and Bolivia. A press release thataccompanied the notification said that the Administration planned negotiations to begin the secondquarter of 2004, initially with Colombia and Peru, and that the United States would work withEcuador and Bolivia "with a view to including them in the agreement as well." (5) The USTR's letter of notification to Congress identified economic reasons for thenegotiations. It said that an FTA would help U.S. interests "...by reducing and eliminating barriersto trade and investment between the Andean countries and the United States. The FTA will alsoenable us to address impediments to trade and investment in the Andean countries...." The combinedmarkets for the four Andean countries, according to the USTR, have a gross domestic product (ona purchasing power parity basis) of $463 billion and a combined population of 93 millionpeople. (6) The letter ofnotification also stated that an Andean FTA would add momentum to the broader negotiations onan FTAA. Those negotiations were still stalled, primarily because of differences between the UnitedStates and Brazil. The notification identified political reasons for the talks as well. It said that an FTA "...willalso enhance our efforts to strengthen democracy and support for fundamental values in the region." It said that one reason for negotiating with all four countries was that a regional strategy would helpin combating narcotrafficking. (7) It also pointed out several issues of concern to the United States: protection of worker rights in Ecuador; disputes involving U.S. investors in Peru; violence againsttrade unionists and disputes with U.S. investors in Colombia; and the need to work with Bolivia andthe other Andean countries on capacity building. On March 23, 2004, the USTR issued a press release announcing that the United States andColombia would begin FTA negotiations between the two countries, and possibly other Andeancountries, on May 18-19, 2004. (8) The naming of only Colombia made it clear that there were stillconcerns with Peru and Ecuador that had not been addressed. The press release mentionedoutstanding disputes between U.S. investors and the Peruvian government and concerns aboutprotection of worker rights and investor disputes in Ecuador. According to the press release, "We[the U.S. government] hope that in the coming weeks these countries will take the follow-on stepsthat will enable us to include them at the negotiating table, along with Colombia, at the start of thenegotiations. We look forward to including Bolivia at a later stage, and are working with them toincrease their readiness." On May 3, 2004, the USTR announced that issues with respect to Peru andEcuador had been addressed, and those two countries would join with Colombia in the first roundof the negotiations. (9) During the first round of FTA negotiations in Cartagena, Colombia in May 2004, negotiatorsagreed on a schedule that, according to chief U.S. negotiator Regina Vargo, would probably involveseven rounds by early 2005 -- one round every five to seven weeks. (10) Fourteen working groupswere established during that first round. On the day that negotiations began, students, unionmembers, farmers, and others in Cartagena held a one-day protest against the negotiations becauseof feared job loss in the agriculture sector. (11) By November 2005, thirteen rounds of negotiations for the U.S.-Andean FTA were held withno successful conclusion: Cartagena (May 18-19, 2004); Atlanta (June 18, 2004); Lima, Peru (July26-30, 2004); San Juan (September 13-17, 2004); Guayaquil, Ecuador (October 25-29, 2004);Tucson (November 20-December 4, 2004); Cartegena (February 7-11, 2005); Washington (March14-18, 2005); Lima (April 18-22, 2005); Guayaquil (June 6-10, 2005); Miami (July 18-22, 2005);Cartagena (September 19-23, 2005); and Washington (November 14-22, 2005). Bolivia attended the negotiating sessions as an observer, but was not expected to be a partyto an agreement. The USTR said, "We want to maintain the door being open....but we also have torecognize realities," and noted that Bolivia's government had "'some basic stability issues.'" (12) In mid-June 2005, theBolivian president resigned amid widespread opposition to foreign participation in the naturalresource sectors and other policies, and an interim president took office. In the December 2005elections, Bolivians elected Evo Morales as their president. When Morales was inaugurated onJanuary 22, 2006, he started a five-year term as Bolivia's fourth president since August 2002. Ecuador experienced political change as well during the negotiations. On April 20, 2005, during theninth round of FTA negotiations, the Congress in Ecuador impeached Ecuador's president LucioGutierrez and replaced him with the vice president, Alfredo Palacio, a physician and politicalindependent. Palacio is the country's seventh president in nine years. The thirteenth round of negotiations in Washington was expected to be the last, butnegotiators failed to conclude the talks over disagreements in intellectual property rights andagriculture. Colombian and Ecuadorian negotiators said they pulled out because they could notaccept U.S. demands for stricter patent protections and reductions in agricultural barriers, whilePeruvian negotiators appeared to be more flexible. The Peruvian negotiators decided that they wouldcontinue talks with the United States without the other countries. The two countries arrived at anagreement in the first week of December 2005. (13) On December 7, 2005, U.S. Trade Representative Rob Portman and Peru's Minister ofForeign Trade and Tourism, Alfredo Ferrero Diez Canesco, announced a successful conclusion tothe U.S.-Peru free trade agreement negotiations. The agreement would eliminate tariffs and otherbarriers to goods and services. (14) Ambassador Portman stated that "An agreement with Peru is akey building block in our strategy to advance free trade within our hemisphere, which we hope tolater bring in the other Andean countries including Colombia and Ecuador." (15) Afterwards, Colombia andEcuador both announced that they would also like to see a successful conclusion to theirnegotiations. On February 27, 2006, U.S. Ambassador Portman and Colombia's Minister of Trade,Industry, and Tourism, Jorge Humberto Botero, announced that the United States and Colombia hadconcluded their work on a free trade agreement.