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

CHAPTER 2TRADE WITH THE ANDEAN REGIONIntroductionThe principal purpose of this chapter is to present and analyze U.S. imports during 2005under the provisions of the Andean Trade Preference Act (ATPA), as amended by theAndean Trade Promotion and Drug Eradication Act (ATPDEA). 52 Total U.S. imports fromATPA countries and U.S. exports to ATPA countries in 2005 are also examined. Asdiscussed in chapter 1, calendar year 2005 was the third full year that APTDEA was ineffect; thus, for the second year, imports under the expanded ATPA can be compared withsuch imports in a prior year.The chapter is organized as follows. First, the chapter presents trends in overall U.S. importsfrom ATPA countries and the decline in the dutiable share of total imports from thesecountries caused mostly by the expansion of ATPA preferences. That section is followed byan analysis of the leading U.S. imports under ATPA (which include imports eligible underthe original ATPA as well as imports that became eligible later under ATPDEA). Finally,the chapter examines the composition and trends of U.S. exports to ATPA countries.Throughout the chapter, trade is discussed at a 2-digit and 8-digit Harmonized TariffSchedule (HTS) subheading level. The relative importance of individual beneficiarycountries as sources of and destinations for this trade is also covered.Trade OverviewIn 2005, U.S. trade with ATPA countries continued to increase; two-way trade was up by25 percent from the 2004 level, which in turn was up 27 percent from the 2003 level. Highercommodity prices played an important role in boosting this trade. Between 1991 (whenATPA was enacted) and 2005, U.S. imports from the region quadrupled and U.S. exports tothe region more than doubled.U.S. exports to the region reached a record value in 2005 of $8.9 billion, up by over 16percent from 2004. ATPA countries collectively accounted for 1.1 percent of total U.S.exports in 2005, as in 2004. However, U.S. imports from ATPA countries grew significantlyfaster, to a record $20.1 billion in 2005, up by almost 30 percent from 2004. ATPA countriescollectively accounted for 1.2 percent of U.S. imports in 2005, compared to 1.1 percent in2004 and between 0.8 and 1.0 percent during 1991-2003. Rising prices of majorcommodities imported from ATPA countries were the major cause this surge in the value ofimports.The United States has run a deficit in merchandise trade with ATPA countries as a groupsince 1999, and this deficit has grown especially fast since 2002. 53 In 2005, the UnitedStates registered a trade deficit with each ATPA country, with a combined U.S. deficit of52As discussed in chapter 1, the terms “ATPA” and ”expanded ATPA” refer to ATPA as amended, andthe term “original ATPA” refers to the original ATPA program that expired in Dec. 2001.53 Exports, imports, and trade balances are defined as merchandise trade given in current U.S. dollars.2-1