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

CHAPTER 1INTRODUCTIONThe U.S. Congress enacted the Andean Trade Preference Act (ATPA) 3 in 1991 to encouragethe Andean countries of Bolivia, Colombia, Ecuador, and Peru to reduce drug-cropcultivation and production by granting tariff preferences to qualifying Andean products tofoster trade, including the production and export of nontraditional products. ATPA expiredon December 4, 2001, but was renewed retroactively and amended on August 6, 2002, bythe Andean Trade Promotion and Drug Eradication Act (ATPDEA) as part of the Trade Actof 2002. 4 ATPA, as amended by ATPDEA, authorizes the President to grant duty-freetreatment to many Andean products entering the United States. The preferential tradebenefits provided under ATPA are scheduled to expire on December 31, 2006. To enhancethe trade relationship, the United States and three ATPA beneficiary countries begannegotiating a free trade agreement (FTA) in 2004. 5 The United States and Peru concludedwork on a bilateral FTA in December 2005, and the agreement was signed in April 2006. 6The United States and Colombia reached agreement on a bilateral FTA in February 2006. 7This report fulfills a statutory mandate under ATPA that the U.S. International TradeCommission (the Commission) report biennially on the economic impact of ATPA on U.S.industries, consumers, and the economy in general, as well as on the estimated effect ofATPA on drug-related crop eradication and crop substitution efforts of the beneficiarycountries. 8 The report is the 12 th in the series and the last mandated under current statutoryauthority. The report covers calendar year 2005.Throughout this report, the term “ATPA” refers to ATPA as amended by ATPDEA. Theterm “original ATPA” will be used to identify the original ATPA program that expired inDecember 2001, so that the scope and requirements of that statute can be discussedappropriately.3 ATPA was passed by Congress on Nov. 26, 1991, and signed into law on Dec. 4, 1991 (Public Law 102-182, title II; 105 Stat. 1236, 19 U.S.C. 3201 et seq.). Minor amendments to ATPA were made by Public Law102-583. ATPA became effective July 22, 1992, for Colombia and Bolivia (Presidential Proclamation 6455,57 F.R. 30069, and Presidential Proclamation 6456, 57 F.R. 30087, respectively); Apr. 30, 1993, for Ecuador(Presidential Proclamation 6544, 58 F.R. 19547); and Aug. 31, 1993, for Peru (Presidential Proclamation6585, 58 F.R. 43239).4 Public Law 107-210, title XXXI. ATPDEA duty-free treatment became effective for all four beneficiarycountries on Oct. 31, 2002 (Presidential Proclamation 7616, 67 F.R. 67283).5On May 18-19, 2004, Colombia, Ecuador, and Peru launched FTA negotiations with the United States.See USTR, “Peru and Ecuador to Join with Colombia in May 18-19 Launch of FTA Negotiations with theUnited States,” press release, May 3, 2004.6 USTR, “United States and Peru Sign Trade Promotion Agreement,” press release, Apr. 12, 2006. Seealso USITC, U.S.-Peru Trade Promotion Agreement: Potential Economy-wide and Selected Sectoral Effects,USITC Publication 3855, June 2006.7 USTR, “United States and Colombia Conclude Free Trade Agreement,” press release, Feb. 27, 2006.Consistent with statutory requirements, the President notified Congress of his intention to enter into a freetrade agreement with Colombia on Aug. 24, 2006. FTA negotiations between the United States and Ecuadorwere suspended after Ecuador cancelled its contract with Occidental Petroleum in May 2006. Congress hasnot yet voted on the FTAs with Peru or Colombia.8 The reporting requirement is set forth in sec. 206(b) of ATPA (19 U.S.C. 3204(b)).1-1