The Impact of the Andean Trade Preference Act Twelfth ... - USITC

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ulk of funding for the plan between 2000 and 2007, with agreements between theGovernment of Ecuador and donors to date financing approximately $78 million. USAIDobjectives in the northern border region aim to increase citizens’ satisfaction with theperformance of local institutions; increase the availability of basic infrastructure such aspotable water, sanitation, bridge, and farm-to-market road projects; and increase legalemployment and income for small- and medium-sized farmers in the region. 328The Government of Ecuador, in its submission to the Commission for this report, identifiessome of the effects of ATPA on the creation of jobs and exports in specific industries,including the positive results that this economic growth has had on combating drugtrafficking. 329 The export flower industry in Ecuador is one such major ATPA beneficiary,showing a steady increase in exports of cut flowers, from $13.6 million in 1990 to nearly$400 million in 2006. The U.S. market represents roughly 75 percent of Ecuador’s exportmarket, according to the government’s submission. Exports from the cut roses subsector andthe gypsophila (known as “baby’s breath”) subsector have benefitted in particular from theATPA program. 330 Flower production is concentrated mainly in the highlands of Ecuador,where it draws farmers from traditional agriculture to work in one of the principal exportorientedagricultural activities in the region. In particular, the flower industry draws largenumbers of workers from the northern provinces of Ecuador and provides employment formany Colombian refugees who are fleeing violence as government efforts to eradicate cocacultivation meet resistance from antigovernment rebels who control the coca plantings. 331Broccoli is another major nontraditional export industry for Ecuador, employingapproximately 4,000 families directly in production, processing, and packing and up to10,000 families indirectly in related sectors such as agricultural inputs, transport, and otherservices. In particular, these jobs employ workers from indigenous communities located inthe rural Ecuadorian highlands, areas where illegal coca cultivation would be a likelyalternative without legal job opportunities. Ecuador’s broccoli exports have increasedthreefold between 2000 and 2005, reaching 50,000 tons in 2005. Ecuador’s broccoli exportsto the U.S. market are valued at $11 million, representing approximately 32 percent of itstotal broccoli exports. 332Mangoes are yet another nontraditional export that the Government of Ecuador suggestswould disappear without ATPA preferences. The submission calculates that approximately90,000 people are employed directly or indirectly by the mango industry in Ecuador. 333In 2005, investment prospects appear frozen for many of the industries promoted throughATPA preferences—such as flowers, apparel, leather, and fruits—as investors attempt togauge the future with respect to the renewal of ATPA benefits. As the possible loss of ATPA328U.S. Department of State, INCSR 2006, pp. 110-111.329Andres Teran, Charge d'Affairs, Embassy of Ecuador, Washington, D.C., written submission to theCommission concerning inv. No. 332-352, Andean Trade Preference Act: Impact on U.S. Industries andConsumers and on Drug Crop Eradication and Crop Substitution, June 16, 2006.330 U.S. Department of State telegram, “USITC 2004 Annual Andean Investment and Drug Crop Surveyfor Report on ATPA,” message reference No. 1621, prepared by U.S. Embassy, Quito, July 8, 2005, par.13-16.331 Andres Teran, Charge d'Affairs, Embassy of Ecuador, Washington, D.C., written submission to theCommission concerning inv. No. 332-352, Andean Trade Preference Act: Impact on U.S. Industries andConsumers and on Drug Crop Eradication and Crop Substitution, June 16, 2006.332Ibid., “Broccoli in Ecuador” section.333 Ibid., “Information on ATPDEA Provided by Mango Foundation” section.4-10
enefits becomes more evident to Ecuadorian investors, there is increasing discussion ofmanaging these losses by subsidizing Ecuadorian exports to the United States. 334 AlthoughEcuador’s climate allows higher quality flowers to be grown than in Colombia, Ecuadoriangrowers also face higher costs, such as for transportation. The industry is also concerned thatmuch of Ecuador’s flower industry will shift to Colombia if Ecuador loses ATPA benefitsand Colombia implements a free trade agreement with the United States.PeruThe government continues to pursue a coca reduction and elimination policy through forcederadication (in locations such as state parks) as well as a voluntary eradication policyundertaken by willing municipalities in exchange for alternative development benefits.Despite these efforts, recent reports point to increases in net coca cultivation in Peru in2005. 335Net coca cultivation in Peru is estimated to have increased some 38 percent, from 27,500hectares in 2004 (its all-time low) to approximately 38,000 hectares in 2005, according tothe U.S. Office of National Drug Control Policy (ONDCP). 336 The ONDCP estimate reportedthat over one-third of the increase was due to new coca plantings in nontraditional growingareas in Peru that were not surveyed in 2004. 337 Record high prices for coca leaf contributedto the increase, as well as armed attacks against coca eradication teams, which slowederadication efforts. 338 According to the U.S. Department of State, coca growers (cocaleros)located in rural valleys in Peru have become better organized and increasingly violent,including ambushing police and intimidating alternative development teams, in particularin the distant mountainous valleys where antigovernment guerrilla forces were once active. 339334U.S. Department of State electronic mail communication, “USITC Information Request,” prepared byPaul R. Baldwin, U.S. Embassy, Quito, received June 29, 2006.335U.S. Department of State, INCSR 2006, pp. 116-119.336 U.S. Office of National Drug Control Policy, ONDCP Public Affairs, “U.S. Releases 2005 PeruvianCoca Cultivation Estimate,” press release, Feb. 10, 2006, found athttp://www.whitehousedrugpolicy.gov/news/press06/021006.html, retrieved Apr. 6, 2006.337ONDCP, “2005 Peruvian Coca Cultivation Estimate,” Feb. 10, 2006. According to the U.S.Department of State, Peru surpassed its 2005 coca eradication goals, but increased coca plantings nonethelessoutstripped Peru's eradication efforts. As of March 2006, the Government of Peru's national drug controlagency, Devida, was accepting as accurate the June 2005 UN Office of Drugs and Crimes estimate of 50,000hectares of coca under cultivation in Peru. See U.S. Department of State, INCSR 2006, pp. 11-12. The U.S.Government and the United Nations employ different survey methodologies to arrive at their estimates,which in turn yield different final results, although both sets of estimates are roughly parallel over time. Anadditional complication can arise with the July 2005 revision of the official U.S. Government cultivation andproduction estimates for coca in the Andes from 2000 through 2004. See CNC, Major Illicit-Drug-ProducingNations – Cultivation and Production Estimates, 2000-04, July 2005; United Nations, Office of Drugs andCrime, Coca Cultivation in the Andean Region, June 2006; Devida, “Devida Alerta: Hay un PeligrosoAumento de Cultivo de Hoja de Coca,” Mar. 28, 2005, found athttp://www.devida.gob.pe/Modulos/Noticia/DetalleNoticia.asp?Cod=244, retrieved Mar. 30, 2005; Devida,“Cultivos de Coca Se Incrementaron a 48 Mil 600 Hectares en 2005,” press release, Mar. 30, 2005, found athttp://www.devida.gob.pe/Modulos/Noticia/DetalleNoticia.asp? Cod=212, retrieved Mar. 30, 2005; andUSTR, Second Report to the Congress on the Operation of the Andean Trade Preference Act as Amended,Apr. 30, 2005, p. 48.338ONDCP, “2005 Peruvian Coca Cultivation Estimate,” Feb. 10, 2006.339 U.S. Department of State, INCSR 2006, pp. 11-12.4-11
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U.S. International Trade Commission
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PREFACEThe submission of this study
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Trade-Related Activities in 2005•
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Organization of the ReportThis chap
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actions to withdraw or suspend coun
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textile and apparel articles made i
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duty-free entry are identical—a C
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analysis assumes that the supply of
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$11.1 billion in 2005 compared with
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Table 2-2 Leading U.S. imports for
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and 9.5 percent in 2004 to 7.7 perc
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2-8Table 2-5 U.S. imports for consu
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2-10Table 2-6 Leading U.S. imports
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Table 2-8 Textiles and apparel: U.S
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Virtually all flower imports from t
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The 2005 list of leading imports un
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Table 2-9 U.S. imports for consumpt
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cathodes, four apparel products, on
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2-26Table 2-11 U.S. exports to ATPA
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Page 60 and 61: EcuadorThe growth rate of the Ecuad
Page 63 and 64: CHAPTER 3ECONOMIC IMPACT OF ATPA ON
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Page 73 and 74: more in 2004. 132 Asparagus and cut
Page 75 and 76: esulted in greater availability of
Page 77 and 78: In recent years, some U.S. growers
Page 79 and 80: U.S. sales of domestically produced
Page 81 and 82: Table 3-6 Foreign direct investment
Page 83 and 84: product quality at the volumes requ
Page 85 and 86: $314 million purchase by Phillip Mo
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Page 89 and 90: place will have a devastating effec
Page 91 and 92: textile and apparel machinery and t
Page 93 and 94: Textile and Apparel SectorPeru has
Page 95: could begin producing the high-end
Page 98 and 99: Role of ATPA in Counternarcotics Ef
Page 100 and 101: (table 4-1, figure 4-1). 306 Net co
Page 102 and 103: Figure 4-1Net Coca Cultivation in t
Page 104 and 105: to other forms of legal justice. Th
Page 108 and 109: Alternative DevelopmentThe USAID al
Page 111: APPENDIX AFederal Register NoticeA-
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Page 117 and 118: American Chamber of Commerce of Per
Page 119 and 120: Government of Colombia—Colombian
Page 121: Peruvian Asparagus Importers Associ
Page 125: Technical Notes to Chapter 3:Partia
Page 128 and 129: (1)N(Q a /Q a N) = (1+t)ε aa(2)N(Q
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