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

ATPA preferences also reduced U.S. tariff revenues, offsetting much of the gain in consumersurplus. For example, for tuna in airtight containers 128 (HTS 1604.14.30), lower tariffrevenues offset 76 percent to 85 percent of the gain in consumer surplus; for women’s orgirls’ knitted cotton shirts (HTS 6106.10.00), the offset was about 77 percent to 88 percent;and for men’s or boys’ knitted cotton shirts (HTS 6105.10.00), the offset was about 78percent to 88 percent. For many of the other products listed in table 3-4, lower tariff revenuesoffset nearly all of the gain in consumer surplus; this typically occurs when NTR duty ratesare relatively low, as is the case with many ATPA-exclusive products.Overall, the estimated net welfare effects of ATPA were small. The gain in consumer surplus(column A of table 3-4) was greater than the corresponding decline in tariff revenue (columnB) for all of the products analyzed for which data were available. Of the resulting estimatednet welfare gains, the largest were for men’s or boys’ knitted cotton shirts ($4.0 million to$6.6 million), knitted cotton t-shirts ($2.5 million to $4.3 million), and men’s or boys’ wovencotton trousers and shorts (HTS 6203.42.40) ($2.5 million to $4.2 million). Men’s or boys’knitted cotton shirts, knitted cotton t-shirts, and men’s or boys’ woven cotton trousers andshorts also had the largest estimated net welfare gains in 2004. 129Effects on U.S. producers 130Estimates of the potential displacement of domestic production (table 3-5) were small formost of the individual sectors. 131 The analysis indicates that the largest potentialdisplacement effects were for asparagus (2.9 percent to 10.8 percent displaced, valued at $4.0million to $14.8 million); fresh-cut roses (1.3 percent to 8.1 percent displaced, valued at $0.5million to $3.2 million); and chrysanthemums etc. (1.1 percent to 6.5 percent of U.S.domestic shipments displaced, valued at $0.3 million to $1.7 million), mainly because of thevery high U.S. market shares enjoyed by these products (see table 3-3). However, even theupper estimates of the displacement share for the majority of the products benefitingexclusively from ATPA were less than 1 percent.Highlights of U.S. Industries Most Affected by ATPAIndustries having estimated displacements of 5 percent or more, based on upper estimates,were chosen for further analysis. In 2005, three products that benefited exclusively fromATPA met this criterion: asparagus, fresh-cut roses, and chrysanthemums etc. Asparagus andcut flowers likewise were identified as having an estimated displacement of 5 percent or128All of the tuna benefiting exclusively from ATPA under HTS 1604.14.30 was entered in flexible foilcontainers under HTS 1604.14.3051 and 1604.14.3091. For more information, see chapter 2.129 See USITC, ATPA, Eleventh Report, 2004, table 3-4, p. 3-8.130 As noted in chapter 1 and appendix C, the Commission’s analysis assumes that the domestic supply isperfectly elastic. This assumption means that any change in the demand for domestic production (such as thatresulting from a drop in the price of imports from ATPA country suppliers) results in quantity changes andnot price changes.131U.S. market share, ad valorem equivalent tariff rate, and elasticity of substitution between beneficiaryimports and competing U.S. production are the main factors that affect the estimated displacement of U.S.domestic shipments. In general, the larger the ATPA share of the U.S. market, ad valorem equivalent tariffrate, and substitution elasticity, the larger the displacement of domestic shipments.3-10