:: U.S. import shifts under trade preference programs
Trends in the Use of Trade Preference Programs for U.S. Imports
To assist developing, industrializing, and transitional economies, the United States offers duty-free market access principally through four trade preference programs:
Most trade preference program beneficiary countries are not major U.S. trade partners. Their shipments entering the U.S. market—whether under trade preference programs, other special programs, or no program claimed—collectively accounted for 15 percent of all U.S. imports in 2012 (figure ST.1), 3 percentage points less than in 2008. However, compared to U.S. imports from all trade partners, the share entering the United States under these trade preference programs was in the range of 3–5 percent during 2008–12. U.S. imports under the four trade preference programs have risen every year since 2009 following the global recession, but have not regained the levels recorded in 2008. Likewise, imports entering the U.S. market under each individual trade preference program in successive years did not reach their 2008 values (figure ST.2).
Levels of imports under trade preference programs reflect not only the overall shifts in U.S. imports affecting all trade partners, as the U.S. economy resumed growing over the past three years since the 2008–09 recession, but also several notable additions of and removals from beneficiary status for individual countries under these programs (table ST.1). In the following sections, imports under each U.S. trade preference program are examined in more detail, not only among leading industry sectors, but also for more specific products.
African Growth and Opportunity Act
Transportation equipment and textiles and apparel were the next largest import categories under AGOA. U.S. motor vehicle imports from South Africa, in particular, accounted for much of the overall increased imports of transportation equipment. Multinational Western European, U.S., and Japanese automakers have invested in South Africa to produce motor vehicle parts and assemble motor vehicles for both local and international markets.
Andean Trade Preference Act
Lower U.S. imports recorded under ATPA provisions over the five-year period reflect the decreasing number of eligible beneficiary countries during this time. In 2008, U.S. imports from Bolivia, Columbia, Ecuador, and Peru were all eligible for ATPA preferences; by the end of 2012, Ecuador was the sole remaining eligible beneficiary country (table ST.1). Additionally, the authority to provide preferential treatment under the ATPA program lapsed for eight months in 2011 before being extended in October 2011 retroactively through July 2013. The legislation extending preferential treatment authority allowed importers that paid duties during the lapse to apply for a refund of duties paid, but the lapse in authorization was considered to have discouraged imports during the eight months it was in existence.
During the five-year period, energy-related products led all U.S. imports granted ATPA preference, growing from 76 percent in 2009 to 92 percent by 2012 (figure ST.4). Colombia and Ecuador are major export-oriented producers of crude petroleum.
U.S. imports of agricultural products under ATPA provisions (the second-largest type of import), particularly fresh flowers from Colombia and Ecuador, decreased in 2011, probably due to the eight-month lapse in the ATPA preferential treatment authority that year. U.S. imports of fresh flowers (other than roses) from both Andean countries were also eligible to enter the United States duty-free under the U.S. GSP program (roses were not eligible for duty-free treatment under the GSP program).
Andean countries are endowed with significant mineral resources and have long histories of mining. The notable declines of U.S. imports of minerals and metals under ATPA provisions in 2009 and 2011 partially reflect the suspension of ATPA eligibility for Bolivia, a major producer of silver, and the removal of Peru, a major producer of copper. The lapse in preferential treatment authority under the ATPA during much of 2011 likely played a role in that year’s decline as well.
Similarly, the decline of U.S. imports under ATPA provisions for textiles and apparel in 2011, particularly of apparel, resulted both from the removal of Peru from ATPA eligibility and from the temporary lapse of preferential treatment authority under ATPA that year. During the lapse, apparel imports from Colombia entered at MFN rates of duty with no preferential treatment sought.
Caribbean Basin Initiative
U.S. imports under the CBI recorded a significant decline from 2008 to 2009, and have fluctuated subsequently (figure ST.5). A major factor influencing decreased U.S. imports under CBI provisions in 2009 was the removal of Costa Rica from eligibility once the Dominican Republic-Central America-United States FTA (CAFTA-DR) entered into force for that trade partner in January 2009. Costa Rica is a major regional producer of textiles and apparel, as well as tropical fruit, which was the leading category for agricultural products imported by the United States from CBI beneficiary countries. Costa Rica is also a source of other types of fresh or processed fruit and vegetables; live plants; cut flowers; beef; and sugar, all of which are now entering under CAFTA-DR rather than CBI.
The leading import sector decrease in 2009 was of certain organic chemicals, primarily from Trinidad and Tobago, in the form of methanol converted from natural-gas liquids production. This decrease was largely attributable to decreased demand in the U.S. market due to the recession. As the largest crude petroleum producer in the Caribbean Basin and the site of a medium-capacity (175,000 barrels per day) petroleum refinery, Trinidad and Tobago was also the predominant source for U.S. imports of energy-related products under CBI provisions, primarily crude petroleum but also certain refined petroleum products. Costa Rica’s removal from eligibility for CBI benefits also contributed to decreased U.S. imports of tires, the second-largest product among chemicals and related products imported under CBI provisions in 2009.