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

of the $10.7 billion in imports that benefited exclusively from ATPA during 2005. 123 Thefive leading ATPA-exclusive imports in 2005 were (1) heavy crude oil, (2) light crude oil(HTS 2709.00.20), (3) heavy fuel oil, (4) copper cathodes from Peru (which exceeded itsGSP competitive need limit), and (5) naphthas. Ecuador was the leading supplier of heavycrude oil, Colombia was the leading supplier of light crude oil and heavy fuel oil, and Peruwas the leading supplier of copper cathodes and naphthas. 124 In 2004, heavy crude oil rankedfirst among ATPA-exclusive imports, and light crude oil ranked second. 125For any particular product, the U.S. market share accounted for by ATPA-exclusive imports(value of imports benefiting exclusively from ATPA relative to apparent consumption) wasa major factor in determining the estimated impact on competing domestic producers. 126These market shares varied considerably in 2005 (table 3-3). For instance, the market shareof ATPA-exclusive imports of fresh-cut roses was approximately 87 percent, whereas themarket share of ATPA-exclusive imports of cigarettes (HTS 2402.20.80) was 0.12 percent.Estimated Effects on Consumers and ProducersTables 3-4 and 3-5 present the estimated impact of ATPA tariff preferences on the U.S.economy in 2005. 127 Estimates of the gains in consumer surplus and the losses in tariffrevenue, as well as measures of the potential displacement of U.S. production, are discussednext.Effects on U.S. consumersMen’s or boys’ knitted cotton shirts (HTS 6105.10.00) provided the largest gain in consumersurplus resulting exclusively from ATPA tariff preferences in 2005, from $30 million to $34million (table 3-4). Without ATPA, the price that U.S. consumers would have paid forimports of men’s or boys’ knitted cotton tops from ATPA countries would have been asmuch as 19.1 percent higher (the ad valorem duty rate, adjusted for freight and insurancecharges). Knitted cotton t-shirts (HTS 6109.10.00) provided the second-largest gain inconsumer surplus, from $22 million to $24 million. Without ATPA, the price of imports ofsuch t-shirts from ATPA countries would have been as much as 15.7 percent higher. Ingeneral, products providing the largest gains in consumer surplus also have either some ofthe highest NTR tariff rates or the largest volumes of imports, or both.123The import values reported in tables 3-2 and 3-3 reflect only that portion of imports under each HTSprovision that entered free of duty under ATPA. Even though all of these items were eligible for ATPA tariffpreferences, full duties were paid on a certain portion of imports under each HTS provision for a variety ofreasons, such as failure to claim preferences, insufficient documentation, and indirect shipment patterns.124Leading ATPA suppliers are shown in table 2-7.125 For the list of items benefiting exclusively from ATPA in 2004, see USITC, ATPA, Eleventh Report,2004, p. 3-5.126Other factors include the ad valorem equivalent tariff rate; the substitutability among beneficiaryimports, nonbeneficiary imports, and domestic production; and the overall demand elasticity for the productcategory.127 The methodology used is described in appendix C.3-6