(For other news from the Reuters Latin America Investment Summit, click on http://www.reuters.com/summit/LatinAmericanInvestment08?pid=500)

By Missy Ryan

WASHINGTON, April 4 (Reuters) - A failure to approve a free trade deal with Colombia, one of the Bush administration's most urgent trade priorities, would be among the biggest U.S. blunders in the Americas in decades, a top official said.

Tom Shannon, the top U.S. official for Latin America, urged Democratic leaders in Congress to shelve political interests and embrace the bilateral deal, which would permanently slash trade barriers between the United States and one of its most stalwart allies in the region.

"Not approving the Colombia free trade agreement really would be one of the biggest strategic blunders the United States would have made in the Americas for decades," Shannon said on Friday in the Reuters Latin America Investment Summit.

The Bush administration has been struggling for months to convince the Democratic majority in Congress, increasingly skeptical of global trade, that President Alvaro Uribe has done enough to curb violence against union members in Colombia.

Trade officials have already sought to appease some of lawmakers' concerns by strengthening protections in the agreement for workers and the environment.

They're now expected to soon submit the deal to Congress, setting off a 90-day deadline for a vote, even as leaders like House of Representatives Speaker Nancy Pelosi warn the answer may be "No."

There are other obstacles for the Colombia deal -- and two other trade agreements awaiting approval -- including a debate between lawmakers and the White House over how much assistance should be given to workers who are bruised by trade.

Shannon, the assistant secretary of state for Western Hemisphere affairs, pointed to the approval last year of a similar agreement with Peru as proof that support exists among Democrats for trade agreements.

CONSOLIDATE COLOMBIA REFORMS

He said the agreement would be far more than a shot in the arm for Colombia's economy, arguing it would help consolidate economic, judicial and political reforms that Colombia has made under Uribe, in part with support from Washington.

Colombia's transformation is "still a work in progress," he said, as officials struggle with entrenched guerrillas, a thriving drug trade, and uneasy ties with neighbors like Venezuela and its firebrand President Hugo Chavez.

"For us to step away ... at this moment would, to a certain extent, be collapsing that vision of the future and forcing Colombia back into its own neighborhood, which is a pretty tough neighborhood," he said.

The debate over the Colombia agreement reflects the charged nature of international trade in Washington at a time of U.S. economic weakness and as as the country prepares to select a new president.

Both Democrats Barack Obama and Hillary Clinton have suggested they might withdraw from NAFTA, the 14-year-old trade deal linking the United States, Canada and Mexico.

That is a bad idea, U.S. officials say, because it has enhanced the three countries' trade to the tune of over $900 billion a year without decimating the industrial sector.

"NAFTA, strategically, is probably the biggest and most important thing that has happened to North America since the Louisiana Purchase, and we need to understand that this is something that benefits the United States," Shannon said.

In 1803, the United States purchased a large swathe of French territory then called Louisiana -- stretching from present-day Canada to the Gulf of Mexico -- from France essentially for a song.

His advice for handling NAFTA in the future: "If it ain't broken, don't fix it."