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

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actions to withdraw or suspend country eligibility or duty-free treatment have been taken onthe basis of the annual reviews. 24Trade Benefits under ATPAATPA provides duty-free treatment to qualifying imports from designated beneficiarycountries. 25 For some products, duty-free entry under ATPA is subject to certain conditionsin addition to basic preference eligibility rules. Imports of sugar, like those of some otheragricultural products, remain subject to any applicable and generally imposed U.S. tariff-ratequotas (TRQs) and food-safety requirements. 26 In-quota shipments of such products subjectto TRQs are eligible to enter free of duty under ATPA. Under the original ATPA, certainleather handbags, luggage, flat goods (such as wallets and portfolios), work gloves, andleather wearing apparel from ATPA countries were eligible to enter at reduced rates ofduty. 27 Not eligible for any preferential duty treatment under the original ATPA were mosttextiles and apparel, certain footwear, canned tuna, petroleum and petroleum derivatives,certain watches and watch parts, 28 certain sugar products, and rum and tafia. 29ATPDEA authorizes the President to extend duty-free treatment to some of the productspreviously ineligible for preferences under the original ATPA, including certain textiles andapparel, footwear, tuna in foil or other flexible airtight packages (not cans), petroleum andpetroleum derivatives, and watches and watch parts (including cases, bracelets, and straps).Certain handbags, luggage, flat goods, work gloves, and leather wearing apparel, previouslyeligible for reduced rates of duty under the original ATPA, 30 are also eligible for duty-freetreatment under ATPDEA. ATPDEA authorizes the President to proclaim duty-freetreatment for qualifying additional articles if he determines that such articles are “not importsensitive in the context of imports from ATPDEA beneficiary countries.” When ATPDEA24 See 68 F.R. 48657 (Aug. 14, 2003), 69 F.R. 43656 (July 21, 2004), 69 F.R. 51138 (Aug. 17, 2004), 69F.R. 65674 (Nov. 15, 2004), 70 F.R. 2921 (Jan. 18, 2005), 70 F.R. 38238 (July 1, 2005), 70 F.R. 48622(Aug. 18, 2005), 70 F.R. 70652 (Nov. 22, 2005), and 71 F.R. 9851 (Feb. 27, 2006).25 General note 3(c) to the Harmonized Tariff Schedule (HTS) summarizes the special tariff treatment foreligible products of designated countries under various U.S. trade programs, including ATPA. General note11 covers ATPA. ATPA does not cover trade in services.26 These U.S. measures include TRQs on imports of sugar, dairy products, beef, certain food preparations,and cotton fibers established pursuant to sections 401 and 404 of the Uruguay Round Agreements Act(URAA), with the exception of quotas on sugar, which had already been converted to TRQs in 1990 as aresult of a General Agreement on Tariffs and Trade (GATT) ruling. The TRQs replaced absolute quotas onimports of certain agricultural products; U.S. quotas had been imposed under section 22 of the AgriculturalAdjustment Act of 1933 (7 U.S.C. 624) and under the Meat Import Act of 1979 (Public Law 88-482). TheURAA also amended ATPA by excluding from tariff preferences any imports from beneficiary countries inquantities exceeding the new TRQ global trigger levels. Imports of agricultural products from beneficiarycountries remain subject to sanitary and phytosanitary restrictions, such as those administered by the U.S.Animal and Plant Health Inspection Service.27This provision applied to certain articles that were not designated for GSP duty-free entry as of Aug. 5,1983 (the date of enactment of the Caribbean Basin Economic Recovery Act (CBERA). Under the provisionsof the original ATPA, beginning in 1992, duties on those goods were reduced by a total of 20 percent, not toexceed 2.5 percent ad valorem, in five equal annual stages (19 U.S.C. 3203(c)). ATPDEA eliminated thisprovision and allowed the President to determine if duty-free entry is appropriate.28 The original ATPA excluded watches and watch parts containing components produced in countriessubject to column 2 duty rates—effectively, communist countries. Since 1989, the number of countriessubject to column 2 rates of duty has diminished to two–Cuba and North Korea.2919 U.S.C. 3203(b).30As mentioned above, ATPDEA repealed 19 U.S.C. 3203(c), which had previously provided dutyreductions for certain handbags, luggage, flat goods, work gloves, and leather wearing apparel.1-4
was implemented, the President extended ATPDEA duty-free treatment to most newlyeligible products. However, he did not include 17 footwear tariff lines on the basis of theirimport sensitivity in the context of imports from ATPDEA countries. 31Nearly 6,300 tariff lines or products are now covered by ATPA trade preferences, of whichabout 700 were added by ATPDEA. 32 The following products continue to be excluded bystatute from receiving preferential treatment: textile and apparel articles not otherwiseeligible for preferential treatment under ATPDEA; canned tuna; above-quota imports ofcertain agricultural products subject to tariff-rate quotas, including sugars, syrups, and sugarcontainingproducts; and rum and tafia.Qualifying RulesTo be eligible for ATPA treatment, ATPA products must either be wholly grown, produced,or manufactured in a designated ATPA country or be “new or different” articles made fromsubstantially transformed non-ATPA inputs. 33 The cost or value of the local (ATPA region)materials and the direct costs of processing in one or more ATPA countries must total at least35 percent of the appraised customs value of the product at the time of entry. ATPAcountries are permitted to pool their resources to meet the value-content requirement and tocount inputs from Puerto Rico, the U.S. Virgin Islands, and countries designated underCBERA 34 toward the value threshold. In addition, goods with an ATPA content of 20 percentof the customs value and the remaining 15 percent attributable to U.S.-made (excludingPuerto Rican) materials or components, 35 as well as goods containing inputs that undergodouble substantial transformation within the ATPA countries and are counted with otherqualifying inputs to total 35 percent, are deemed to meet the 35 percent value-contentrequirement. 36ATPDEA extended for the first time duty-free treatment to specified textile and apparelarticles imported from designated ATPDEA beneficiary countries, effective on October 31,2002. ATPDEA authorized unlimited duty-free and quota-free treatment for imports of31 USTR, First Report to the Congress on the Operation of the Andean Trade Preference Act As Amended,Apr. 30, 2003, p. 6.32 USTR, “New Andean Trade Benefits,” fact sheet, Sept. 25, 2002. Accordingly, approximately 90percent of rate lines provide duty-free treatment to U.S. imports from the ATPA region (60 percent fall underATPA and 30 percent have normal trade relations (NTR) rates of free). U.S. imports under the approximately10 percent of rate lines remaining are dutiable.33 Products undergoing the following operations do not qualify: simple combining or packagingoperations, dilution with water, or dilution with another substance that does not materially alter thecharacteristics of the article (19 U.S.C. 3203(a)(2)).34CBERA countries are Antigua, Aruba, the Bahamas, Barbados, Belize, British Virgin Islands, CostaRica, Dominica, Dominican Republic, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica,Montserrat, Netherlands Antilles, Nicaragua, Panama, St. Kitts and Nevis, St. Lucia, St. Vincent and theGrenadines, and Trinidad and Tobago.35 19 U.S.C. 3203(a).36 Double substantial transformation involves transforming foreign material into a new or differentproduct that, in turn, becomes the constituent material used to produce a second new or different article in thebeneficiary country. Thus, ATPA countries can import inputs from non-ATPA countries, transform theinputs into intermediate material, and transform the intermediate material into ATPA-eligible articles. Thecost or value of the constituent intermediate material can be counted toward the 35 percent ATPA contentrequirement. For additional information, see U.S. Department of Commerce and U.S. Agency forInternational Development, Guidebook to the Andean Trade Preference Act (Washington, DC: GovernmentPrinting Office, July 1992), p. 5.1-5
Page 2 and 3: U.S. International Trade Commission
Page 5: PREFACEThe submission of this study
Page 17: Trade-Related Activities in 2005•
Page 20 and 21: Organization of the ReportThis chap
Page 24 and 25: textile and apparel articles made i
Page 26 and 27: duty-free entry are identical—a C
Page 28 and 29: analysis assumes that the supply of
Page 30 and 31: $11.1 billion in 2005 compared with
Page 32 and 33: Table 2-2 Leading U.S. imports for
Page 34 and 35: and 9.5 percent in 2004 to 7.7 perc
Page 36 and 37: 2-8Table 2-5 U.S. imports for consu
Page 38 and 39: 2-10Table 2-6 Leading U.S. imports
Page 42 and 43: Table 2-8 Textiles and apparel: U.S
Page 44 and 45: Virtually all flower imports from t
Page 46 and 47: The 2005 list of leading imports un
Page 48 and 49: Table 2-9 U.S. imports for consumpt
Page 52 and 53: cathodes, four apparel products, on
Page 54 and 55: 2-26Table 2-11 U.S. exports to ATPA
Page 56 and 57: 2-28Table 2-12 Leading U.S. exports
Page 58 and 59: Figure 2-5U.S. exports to ATPA coun
Page 60 and 61: EcuadorThe growth rate of the Ecuad
Page 63 and 64: CHAPTER 3ECONOMIC IMPACT OF ATPA ON
Page 65 and 66: Products That Benefited Exclusively
Page 67 and 68: Several leading imports that were i
Page 69 and 70: Table 3-3 Leading imports that bene
Page 71 and 72: 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
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In recent years, some U.S. growers
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U.S. sales of domestically produced
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Table 3-6 Foreign direct investment
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product quality at the volumes requ
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$314 million purchase by Phillip Mo
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Industry sources attribute the slow
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place will have a devastating effec
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textile and apparel machinery and t
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Textile and Apparel SectorPeru has
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could begin producing the high-end
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Role of ATPA in Counternarcotics Ef
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(table 4-1, figure 4-1). 306 Net co
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Figure 4-1Net Coca Cultivation in t
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to other forms of legal justice. Th
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ulk of funding for the plan between
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Alternative DevelopmentThe USAID al
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APPENDIX AFederal Register NoticeA-
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27278 Federal Register / Vol. 71, N
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American Chamber of Commerce of Per
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Government of Colombia—Colombian
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Peruvian Asparagus Importers Associ
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Technical Notes to Chapter 3:Partia
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(1)N(Q a /Q a N) = (1+t)ε aa(2)N(Q
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