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

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legumes could generate 15,000 new hectares of crops, 30,000 new jobs, and more than $100million in investment if trade preferences were extended. 251The Central Bank of Ecuador analyzed the impact of non-renewal of ATPA and found that$211.3 million in exports, or about 16 percent of Ecuador’s exports to the United Statesexcluding crude oil, could be adversely affected. Of this 16 percent, 83 percent correspondsto exports of roses, followed by pineapples (6.2 percent). The Central Bank also noted thatshould GSP also lapse, 252 $412.4 million, or about 30 percent of non-oil exports to the UnitedStates, could be adversely affected. 253Textile and Apparel SectorEcuador is the smallest Andean supplier of textile and apparel products to the United States;however, its textile and apparel sector has been a historically significant component of thecountry’s economy and employment. A recent manufacturing survey of Ecuador’s Institutefor Statistics and Census (INEC) estimates that the textile and apparel sector directlyemploys 16,000 workers and indirectly employs about 65,000 people. 254 Ecuadormanufactures primarily yarns and fabrics 255 but also produces materials for industrialproduction, finished clothing, and household products. 256 Ecuadorian products are reportedlyrecognized for their quality, designs, and low cost. 257 Currently, Ecuador’s textile andapparel sector does not yet have any full-package programs; however, joint ventures areunder way to improve and increase apparel production. 258Like its Andean neighbors, Ecuador’s demand for raw materials for textile and apparelproduction outstrips supply. Despite growing cotton production since the ATPDEA,Ecuador’s domestic production of cotton represents only 8 percent of consumption. 259 In2005, the United States was the second leading supplier of cotton and cotton yarns andfabrics to Ecuador, accounting for almost one-third of its imports.Ecuador’s apparel production is dominated by two textile companies, Royaltex (whichproduces Lee trousers) and Unicontex (which produces jeans). 260 ATPDEA has reportedlyled to a consolidation of Ecuador’s textile sector, increased imports of and investments in251Ibid.252 Like ATPA, GSP is scheduled to expire in Dec. 2006. For more information, see chapter 1of thisreport.253 Andres Teran, Charge d’Affairs, Embassy of Ecuador, Washington, D.C., written submission to theCommission concerning inv. No. 332-352, Andean Trade Preference Act: Impact on U.S. Industries andConsumers and on Drug Crop Eradication and Crop Substitution, June 16, 2006.254Textile Industry Association of Ecuador (AITE), e-mail message to Commission staff, June 13, 2006.255 Ibid.256 “Ecuador Textiles, Clothing, Yarn, Fabric and More,” May 3, 2004, found athttp://www.ecuadorexports.com, retrieved June 29, 2005.257Ibid.258 Amparo Meneses, (Commercial Assistant, U.S. Commercial Service, Ecuador), e-mail message toCommission staff, June 30, 2006.259AITE, e-mail message to Commission staff, June 13, 2006.260Financial Times Information, “Ecuador: Unicontex Is the Second Main Textile Company in theCountry,” Nov. 14, 2004, found at http;//www.nexis.com/research/search/submitViewTagged, retrieved May31, 2006.3-28
textile and apparel machinery and technology, 261 an expansion of production capacity, andincreased exports of cotton fabric to Peru and Colombia for use in apparel exports to theUnited States. 262 Industry sources report that several textile firms expanded their operationsin 2005. 263Cotton knit shirts and manmade fiber hosiery and shirts represented the bulk of Ecuador’sapparel exports to the United States, which fell 3 percent overall in 2005 from the 2004 level,to $19.3 million (table 2-8). The drop in Ecuador’s exports may be attributed in part to risingproduction and labor costs 264 since the dollarization of Ecuador’s economy 265 in 2000. 266Another key factor has been more intense competition from China and other lower-costAsian suppliers since the elimination of quotas on January 1, 2005. 267Ecuador’s textile industry has expressed concern about the possibility of losing ATPDEApreferences and about not completing FTA negotiations because of the importance of theUnited States as an export market and because the ATPDEA helped Ecuador to increase itsmarket share in selling thread and fabrics to Colombian and Peruvian apparelmanufacturers. 268 At the time of publication, the United States and Ecuador had notconcluded talks or signed a formal agreement.PeruAccording to the U.S. Embassy in Peru, “ATPA and ATPDEA have provided significanteconomic benefits to Peru, particularly by stimulating the growth of apparel and agriculturalexports to the United States.” Peru’s exports to the United States continued to grow rapidlyin 2005 and the U.S. share of Peru’s overall exports continued to climb, growing steadilysince ATPDEA was implemented, from 25.2 percent in 2001 to 30.6 percent in 2005. Peru’sMinistry of Economy and Finance attributes Peru’s strong GDP growth of 6.7 percent in2005 to U.S. market access under ATPA, as well as to high mineral prices. 269261Industry sources report that Ecuador’s textile and apparel firms imported almost $50 million worth ofmachinery and technology to produce textile and apparel products during 2002-2005. See AITE, e-mail toCommission staff, June 13, 2006.262 Ibid.263Amparo Meneses (Commercial Assistant, U.S. Commercial Service, Quito), e-mail message toCommission staff, June 30, 2006.264In Jan. 2000, the minimum base salary in Ecuador was $49.50 per month; by May 2006, the CentralBank of Ecuador reported the minimum base salary as $186.60 per month. A 2004 survey conducted byINEC reported that the minimum wage for an apparel worker was $356 per month. Amparo Meneses(Commercial Assistant, U.S. Commercial Service, Quito), e-mail message to Commission staff, June 30,2006.265Ecuador adopted the U.S. dollar as its official currency in 2000.266“Prospects for the U.S.-Andean Free Trade Agreement: The View from Ecuador,” remarks by JorgeIllingworth, Ecuador’s Minister of Trade, Inter-American Dialogue, Oct. 20, 2005; and EIU, “Ecuador Risk:Labour Market Risk,” Jan. 9, 2006, found at http://dialog.newsedge.com, retrieved Jan. 10, 2006.267 In mid-2005, representatives of the Ecuadorian textile industry predicted that the elimination of textileand apparel quotas could displace its exports from the U.S. market. See, U.S. Department of State telegram,“USITC 2004 Annual Andean Investment and Drug Crop Survey for Report on ATPA,” message referenceNo. 1621, prepared by U.S. Embassy, Quito, July 8, 2005.268Amparo Meneses (Commercial Assistant, U.S. Commercial Service, Quito), e-mail message toCommission staff, June 30, 2006.269U.S. Department of State telegram, “Peru: USITC 2005 Investment and Drug Crop Survey,” messagereference No. 2490, prepared by U.S. Embassy, Lima, June 21, 2006.3-29
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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
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$11.1 billion in 2005 compared with
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Table 2-2 Leading U.S. imports for
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and 9.5 percent in 2004 to 7.7 perc
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2-8Table 2-5 U.S. imports for consu
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2-10Table 2-6 Leading U.S. imports
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Page 42 and 43: Table 2-8 Textiles and apparel: U.S
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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
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Page 81 and 82: Table 3-6 Foreign direct investment
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Page 85 and 86: $314 million purchase by Phillip Mo
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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
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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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