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

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expansion-related investments in all ATPA countries except Ecuador, where investment innon-oil ATPA-eligible products was frozen in 2005. Such investments could generateincreased exports to the United States in the future.According to industry and other sources (as cited later in this chapter), during 2005, majornon-oil investments in ATPA-eligible products were constrained in most ATPA countriesby uncertainties related to ATPA’s expiration and to negotiations to conclude bilateral freetrade agreements with the United States. However, investors in Colombia and Peru facedfewer uncertainties than those in Bolivia and Ecuador because of expectations that ATPAtrade preferences would be replaced by similar trade preferences under bilateral FTAs.Indeed, both countries concluded bilateral trade promotion agreements with the UnitedStates, but uncertainties continue regarding when the agreements will enter into effect andwhether there will be a gap between when ATPA expires at the end of 2006 and when thenew agreements are implemented. Industry sources reported that major investments in Peruhave been postponed as a result. Exports from Ecuador, including flowers, will likely declinewhen duties are reimposed, particularly if the U.S. FTAs with Colombia and Peru areimplemented.The Commission identified ATPA-related investments in oil, textiles and apparel, flowers,jewelry, wood products, ethanol, and various fruits and vegetables, including asparagus andavocados, which may generate increased exports to the United States in the future. However,in the textile and apparel sector, competition from China stemming from the expiration ofglobal quotas on January 1, 2005, already adversely affected 2005 total exports to the UnitedStates from three out of the four ATPA beneficiaries. Regional officials in the sector notedthat continued trade preferences that are immediately implemented following ATPA’sexpiration are essential for the Andean textile and apparel industry to remain viable.Investments are described in more detail in the country sections below.Because it is difficult to isolate trends in investment related to ATPA-eligible products alone,information on ATPA-related investment activity and trends during 2005 was drawn largelyfrom official telegrams from U.S. embassies in the Andean region, except as noted.Information on apparel-related investments was gathered from a variety of publishedsources.All four U.S. embassies in the ATPA countries responded to the Commission’s request forinformation regarding new or expansion investments related to ATPA-eligible products. Ofthe four embassies, three were able to provide specific information regarding new orexpansion ATPA-related investment. Information on the textile and apparel industries ineach of the four countries is also provided.The most recent official foreign direct investment (FDI) statistics show that FDI inflows tothe ATPA region increased in 2004 to $5.9 billion (table 3-6). 178 FDI inflows overallincreased to Colombia and Peru and declined to Bolivia and Ecuador. Among other factors,the strong demand for commodities, especially from China, contributed to FDI in mineralsin Peru and in oil and gas in Colombia and Peru. 179 The declines in FDI inflows to Boliviaand Ecuador resulted from continued political and social instability and the 2003 completion178United Nations Conference on Trade and Development (UNCTAD), World Investment Report 2005:Transnational Corporations and the Internationalization of R&D, New York and Geneva, 2005, pp. 304-305.179 Ibid., p. 62.3-18
Table 3-6 Foreign direct investment inflows, by host regions and by economies, 2000-2004(Million dollars)Host region/economy 2000 2001 2002 2003 2004World ................... 1,396,539 825,925 716,128 632,599 648,146Developing countries ......... 253,179 217,845 155,528 166,337 233,227Latin America and the Caribbean 97,523 89,130 50,492 46,908 67,526ATPA ..................... 4,661 5,705 6,223 4,880 5,913Bolivia ................... 736 706 677 197 117Colombia ................ 2,395 2,525 2,115 1,793 2,739Ecuador ................. 720 1,330 1,275 1,555 1,241Peru .................... 810 1,144 2,156 1,335 1,816Source: UNCTAD, World Investment Report 2005: Transnational Corporations and theInternationalization of R&D, 2005.of a major crude oil pipeline, respectively. 180 Preliminary statistics for 2005 show that FDIinflows to the ATPA countries continued to increase—to nearly $14 billion—rising inColombia, Ecuador, and Peru, with net disinvestment from Bolivia resulting from foreigninvestor concerns about the political climate in that country. 181 FDI in the ATPA countriescontinued to be concentrated in resource-based industries, such as hydrocarbons and mining,where product prices remained relatively high. 182BoliviaFDI inflows to Bolivia continued to decline in 2004 and 2005 due to continuing political andsocial instability in Bolivia. In 2005, the deteriorating investment climate led to an estimatednet FDI outflow of $280 million. 183 Concerns about government policy in the hydrocarbonssector, a major recipient of FDI, contributed to the decline. In particular, a new hydrocarbonslaw passed in May 2005, followed by nationalization of the hydrocarbons sector on May 1,2006, constrained FDI in this sector. Further, the new Bolivian President, Evo Morales, whoentered office in January 2006, reportedly intends to tighten state controlover several other strategic sectors, including electricity, telecommunications, and railways,as well as mining. 184Despite the weakening investment climate, the U.S. Embassy in Bolivia conducted aninformal survey and was able to identify $14 million worth of investments during 2005 inthe textile and apparel, jewelry, and wood products sectors. 185 According to the Embassy,Bolivian firms in these sectors rely heavily on ATPA trade preferences to compete in theU.S. market, although it should be noted that Bolivian exports of jewelry and wood productsare also eligible for U.S. trade preferences under the GSP. The Embassy noted that medium,small, and micro enterprises, as opposed to large, established firms, accounted for many newATPA-related investments in these sectors in 2005, representing a significant change over180 Ibid., p. 63; and United Nations, Economic Commission for Latin America and the Caribbean(ECLAC), Foreign Investment in Latin America and the Caribbean, 2005, Apr. 2005, p. 30.181ECLAC, Foreign Investment in Latin America and the Caribbean, 2005, p. 26.182 Ibid., pp. 21, 29, and UNCTAD, World Investment Report 2005, p. 73.183 ECLAC, Foreign Investment in Latin America and the Caribbean, 2005, p. 30.184U.S. Department of State telegram, “GOB Unveils Economic Development Plan,” message referenceNo. 1660, prepared by U.S. Embassy, La Paz, June 20, 2006.185U.S. Department of State telegram, “Revision: Bolivia: 2006 USITC ATPA/ATPDEA Impact Report,”message reference No. 1691, prepared by U.S. Embassy, La Paz, June 22, 2006.3-19
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U.S. International Trade Commission
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PREFACEThe submission of this study
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Trade-Related Activities in 2005•
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Organization of the ReportThis chap
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actions to withdraw or suspend coun
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textile and apparel articles made i
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duty-free entry are identical—a C
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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
Page 73 and 74: more in 2004. 132 Asparagus and cut
Page 75 and 76: esulted in greater availability of
Page 77 and 78: In recent years, some U.S. growers
Page 79: U.S. sales of domestically produced
Page 83 and 84: product quality at the volumes requ
Page 85 and 86: $314 million purchase by Phillip Mo
Page 87 and 88: Industry sources attribute the slow
Page 89 and 90: place will have a devastating effec
Page 91 and 92: textile and apparel machinery and t
Page 93 and 94: Textile and Apparel SectorPeru has
Page 95: could begin producing the high-end
Page 98 and 99: Role of ATPA in Counternarcotics Ef
Page 100 and 101: (table 4-1, figure 4-1). 306 Net co
Page 102 and 103: Figure 4-1Net Coca Cultivation in t
Page 104 and 105: to other forms of legal justice. Th
Page 106 and 107: ulk of funding for the plan between
Page 108 and 109: Alternative DevelopmentThe USAID al
Page 111: APPENDIX AFederal Register NoticeA-
Page 114 and 115: 27278 Federal Register / Vol. 71, N
Page 117 and 118: American Chamber of Commerce of Per
Page 119 and 120: Government of Colombia—Colombian
Page 121: Peruvian Asparagus Importers Associ
Page 125: Technical Notes to Chapter 3:Partia
Page 128 and 129: (1)N(Q a /Q a N) = (1+t)ε aa(2)N(Q
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