The Impact of the Andean Trade Preference Act (Thirteenth Report 2007)

Summary

Andean Trade Preference Act (ATPA) imports during 2007 continued to have a negligible overall effect on the U.S. economy and consumers, and ATPA continued to have a small but indirect effect in reducing illicit coca cultivation and promoting crop substitution efforts in the Andean countries, reports the U.S. International Trade Commission (ITC) in its study Andean Trade Preference Act: Impact on U.S. Industries and Consumers and on Drug Crop Eradication and Crop Substitution, 2007.

The ITC recently issued its 13th report in a series monitoring imports under ATPA and the impact of ATPA on drug crop eradication and crop substitution. The ATPA program affords preferential tariff treatment to most products of Bolivia, Colombia, Ecuador, and Peru.

Shortly after the Commission delivered this report to the Congress and to the President on September 30, 2008, Congress passed and the President signed legislation that extends the President’s authority to provide preferential treatment under the Andean Trade Preference Act (ATPA) by 1 year, through December 31, 2009, subject to certain country-specific exceptions for Bolivia and Ecuador.

The ITC found that:

• The overall impact of ATPA-exclusive imports on the U.S. economy was negligible in 2007.
• U.S. imports under ATPA of knitted cotton tops and fresh or chilled asparagus showed the most significant impact on U.S. consumers through lower prices of ATPA imports (as a result of duty free treatment).
• The most significant impact of ATPA tariff preferences for U.S. producers occurred as a result of reduced domestic production in industries producing fresh or chilled asparagus and fresh cut flowers (roses and chrysanthemums).
• Since ATPA was enacted in 1991, its economic impact on the U.S. economy as a whole and on all but a limited number of U.S. industries and consumer goods has been minimal. The probable future effects of ATPA are likely to continue to be minimal. U.S. and Andean government and private sector individuals reported that the uncertainties related to the scheduled December 2008 expiration of ATPA preferential tariff treatment and the recently negotiated U.S. bilateral free trade agreements with Peru and Colombia were dampening regional interest in investment to produce ATPA-eligible exports, particularly in Bolivia and Ecuador.
• ATPA's effectiveness in reducing illicit coca cultivation and promoting crop substitution efforts in the Andean countries continued to be small and mostly indirect. Further, data show an increase in the land area under coca cultivation in Bolivia, Colombia, and Peru during 2006 (the most recent year for which official U.S. data are available). According to the U.S. Agency for International Development, ATPA remains a key component of U.S. counternarcotics efforts to provide economic incentives to stimulate economic development and the growth of licit alternative economic activities in the Andean countries.

View the publication at: http://www.usitc.gov/publications/332/pub4037.pdf