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

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(1)N(Q a /Q a N) = (1+t)ε aa(2)N(Q n /Q n N) = (1+t)ε na(3)N(Q d /Q d N) = (1+t)ε dawhere ε ij is the uncompensated elasticity of demand for good i with respect to price j. Thevalues for the elasticities ε aa , ε na , and ε da are derived from the following relations:(4) ε aa = V a η - V n σ na - V d σ da(5) ε na = V a (σ na + η)(6) ε da = V a (σ da + η)where the V i ’s are market shares for ATPA imports, non-ATPA imports, and domesticoutput, respectively, η is the aggregate demand elasticity, and the σ ij ’s are the elasticities ofsubstitution between the ith and jth products. 366 Estimates of the aggregate demandelasticities were taken from the literature. 367 Ranges of potential net welfare and industrydisplacement estimates are reported. The reported ranges reflect a range of assumedsubstitutabilities between ATPA products and competing U.S. output. The upper estimatesreflect the assumption of high substitution elasticities. The lower estimates reflect theassumption of low substitution elasticities. 368Since the implementation of ATPDEA in October 2002, apparel assembled in ATPAcountries from U.S.-made fabric and components has come to dominate the list of leadingimports benefiting exclusively from ATPA. U.S. producers of such fabric and componentsbenefit from ATPA duty preferences. Where the U.S. value of components can be identified(for example, the U.S. value of components assembled abroad under HTS 9802.00.80 isrecorded and data are readily available), it is possible to estimate the effect of ATPA tariffpreferences on U.S. producers of the components. In the case of cut apparel parts used inthe assembly of apparel in ATPA countries, the U.S.-produced cut parts are recorded as366 Equations (4) through (6) are derived from P.R.G. Layard and A.A. Walters, Microeconomic Theory(New York: McGraw-Hill, 1978).367The aggregate elasticities were taken from sources referenced in USITC, Potential Impact on the U.S.Economy and Selected Industries of the North American Free-Trade Agreement, USITC publication 2596,January 1993.368 Commission industry analysts provided evaluations of the substitutability of ATPA products andcompeting U.S. products, which were translated into a range of substitution elasticities–3 to 5 for highsubstitutability, 2 to 4 for medium, and 1 to 3 for low. Although there is no theoretical upper limit toelasticities of substitution, a substitution elasticity of 5 is consistent with the upper range of estimates in theeconomics literature. Estimates in the literature tend to be predominantly lower. See, for example, Clinton R.Shiells, Robert M. Stern, and Alan V. Deardorff, “Estimates of the Elasticities of Substitution BetweenImports and Home Goods for the United States,” Weltwirtschaftliches Archiv, 122 (1986), pp. 497-519; andMichael P. Gallaway, Christine A. McDaniel, and Sandra A. Rivera, “Short-Run and Long-Run Estimates ofU.S. Armington Elasticities,” North American Journal of Economics and Finance, 14 (2003), pp. 49-68.C-6
apparel production in the United States, and the effect of ATPA tariff preferences can beadded to the (negative) displacement effects for that industry.Given equations (1)N through (3)N, one can derive the following equations for calculating thechanges in consumer surplus, tariff revenue, and domestic output:Consumer surplus (where k is a constant)area ofP aε aatrapezoid P a abP a N = I kP a dP aP a N(1+ε aa )= [1/(1+ε aa )] [(1+t) - 1 ]P a NQ a N if ε aa … -1= k ln(1+t) if ε aa = -1Tariff revenue from U.S. imports from ATPA partnersarea ofrectangle P a acP a N = (P a - P a N)Q aDomestic output= P a NtQ a given P a = P a N(1+t)ε aaarea ofrectangle Q d NdeQ d = P d (Q d - Q d N)= tP a NQ a N(1+t) given Q a = Q a N(1+t)ε aaε da= P d Q d N [(1+t) - 1]The change in the value of U.S. cut apparel parts = uP a NQ a N[(1+tN) - 1], where u is the ratioof the value of U.S. cut apparel parts to total imports under ATPA, and tN is the ad valoremequivalent of duties paid on imports under HTS 9802.00.80 under ATPA. t is opposite insign to the displacement effect shown above. The net effect of ATPA tariff preferences ondomestic output is estimated asε aaε daε aaP d Q d N [(1+t) - 1] + uP a NQ a N[(1+tN) - 1].C-7
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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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2-28Table 2-12 Leading U.S. exports
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Figure 2-5U.S. exports to ATPA coun
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EcuadorThe growth rate of the Ecuad
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CHAPTER 3ECONOMIC IMPACT OF ATPA ON
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Products That Benefited Exclusively
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Several leading imports that were i
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Table 3-3 Leading imports that bene
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Table 3-5 Estimated displacement ef
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more in 2004. 132 Asparagus and cut
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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
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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 106 and 107: ulk of funding for the plan between
Page 108 and 109: Alternative DevelopmentThe USAID al
Page 111: APPENDIX AFederal Register NoticeA-
Page 114 and 115: 27278 Federal Register / Vol. 71, N
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
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