"They are ready to throw in the towel," Ambassador Gabriel Silva told Reuters in an interview. "Keeping people convinced and hopeful about bilateral trade relations in this context is quite difficult."
The United States is Colombia's largest trading partner, with two-way shipments of $27.6 billion in 2010, and relies on Bogota as an ally in the fight against drug cartels.
But China has increased its presence dramatically in recent years and is now in talks to build a rail link across Colombia that would rival the Panama Canal.
"I hate to use China as a tool to talk about the U.S.-Colombia trade relationship but I cannot avoid highlighting that today China is the second-largest trade partner for Colombia after the U.S.," Silva said.
"When we first started talking about a free trade partnership with the U.S., China was our 12th largest."
Silva said the rail line was a "very audacious project" that will be on the agenda when Colombian President Juan Manuel Santos visits China in coming weeks.
Ideas to build a rail alternative to the Panama Canal have been discussed with potential investors from various countries since the late 1980s but none came to fruition, Silva said.
"Now there is an opportunity. Why? Because we have China," he said. "China is a factor that is certainly changing the whole game."
Backlast in Colombia
Silva said he was discouraged about the chances for quick renewal of the Andean Trade Preferences Act, which provides duty-free access for most of Colombia's exports to the United States, because it has become entangled in a larger fight between Republicans and Democrats in the U.S. Congress.
Key Democrats have balked at renewing the program without an extension of federal Trade Adjustment Assistance, which also expired over the weekend. That assistance provides funding to help retrain workers displaced by foreign competition.
At the same time, some Republicans want to use the expiration of both programs to force President Barack Obama into committing to a vote on the Colombia free trade pact.
The political stalemate is "generating a backlash in Colombian public opinion against all the issues surrounding trade with the U.S.," Silva said.
It is in the interests of Washington to extend the ATPA, he said, because U.S. jobs in textiles, the floral industry and other sectors are linked to the program, which also supports the U.S. goal of discouraging illegal drug production.
"For every job that you have in the cut flower industry in Colombia, you have three jobs in the American value chain for the flower industry," he said. "That's almost 200,000 jobs."
Colombia signed a free trade agreement with the United States in 2006 that was intended to replace the trade preference program.
But it has languished amid strong opposition from Democrats in Congress, who say Colombia has not done enough to reduce killings of trade unionists and prosecute those responsible.
Last week, U.S. Trade Representative Ron Kirk said Obama told him to intensify talks with Colombia to resolve concerns.
A team including officials from Kirk's office, the White House, State Department and Labor Department are in Colombia this week to make a fresh assessment of the situation.
Supporters of the agreement argue violence in Colombia has fallen sharply in the past decade and that U.S. farmers and manufacturers have lost sales to competitors in other countries because of the delay in approving the trade deal.
They include Senate Finance Committee Chairman Max Baucus, a Democrat, who has demanded Kirk deliver a plan for resolving issues with Colombia when he speaks to the panel on March 9.
Chinese exports to Colombia jumped 224 percent in the first nine months of 2010, an aide to Republican Senator Richard Lugar wrote to the Senate Foreign Relations Committee, citing data from
