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

countries in the same year. Industry sources attribute Peru’s growth directly to ATPDEA. 286Peru exports a significant share of its textile and apparel products to the United States, whichaccounted for almost two-thirds of Peru’s textile and apparel exports in 2005. 287Although Peru is a cotton producer, cotton production has dropped dramatically in recentyears, causing a shortage of Peruvian pima cotton. 288 Tanquis cotton production is alsolimited because it requires a long growing season and has low yields. Consequently, Peruimports substantial quantities of cotton fibers, especially from the United States, whichsupplied three-fourths ($48.7 million) of Peru’s cotton imports in 2005. 289 In 2005, U.S.exports of yarn and fabrics to Peru totaled $12.0 million, down 11 percent from the 2004level.Economic analysts in Peru attribute the growth in Peru’s textile and apparel exports to theUnited States directly to the trade preferences granted by ATPDEA, stating that growth wasdue to increased demand and incremental investments that created new jobs. 290 In 2005, theNational Manufacturing Industry Society’s (SNI) textile and apparel committee reported thatinvestment in Peru’s textile and apparel sector (representing purchases of importedmachinery and equipment) grew 12 percent, to $143 million in 2005, compared with a 17.6percent increase in 2004. 291 SNI has also reported that companies have limited theirinvestments in the textile sector because of ATPDEA’s imminent expiration in December2006. 292The U.S.-Peru TPA could further boost U.S. apparel imports from Peru to the extent that itattracts additional foreign investment in Peru’s textile and apparel sector, 293 which is neededto increase production capacity and enhance its competitiveness. 294 Industry sources haveexpressed concern that Peru’s textile and apparel sector could lose its competitiveness in theworld market if the TPA does not go into effect before the expiration of ATPDEA onDecember 31, 2006. 295 Therefore, they have expressed support for an extension ofATPDEA. 296 SNI has also noted that less expensive Chinese products have already had anegative impact on Peru’s domestic industry and SNI has expressed concern that China286 Ibid.287Based on Global Trade Atlas Navigator trade data for 2005 for Peru’s exports of textiles and apparel.288 USDA, Foreign Agricultural Service, “Peru: Cotton and Products Update 2005,” June 23, 2005.289 Based on Global Trade Atlas Navigator trade data for 2005 for Peru’s imports of cotton.290 U.S. Department of State telegram, “Textile Sector Growing at Diminished Rate,” message referenceNo. 1825, prepared by U.S. Embassy, Lima, May 11, 2006.291U.S. Department of State telegram, “Peru: USITC 2005 Investment and Drug Crop Survey,” messagereference No. 2490, prepared by U.S. Embassy, Lima, June 21, 2006.292 Ibid.293 The “relatively short life span” of ATPDEA preferences for apparel has reportedly deterred foreigninvestment in Peru’s textile and apparel sector. U.S. Department of State telegram, “USITC 2004 AnnualAndean Investment and Drug Crop Survey,” message reference No. 2878, prepared by U.S. Embassy, Lima,June 30, 2005.294A trade report stated that production costs in Peru are estimated to be as much as 50 percent higherthan those in China. “Peru Textile Trade,” Dec. 22, 2004, found athttp://www.latelinenews.com/news/11/english/1341916.shtml, retrieved June 23, 2005.295 Carlos Mateo Paz-Soldan, attorney, Schmeltzer, Aptaker & Shepard, on behalf of Exporamerica,written submission to the Commission concerning inv. No. 332-352, Andean Trade Preference Act: Impacton U.S. Industries and Consumers and on Drug Crop Eradication and Crop Substitution, June 8, 2006; andU.S. Department of State telegram, “Peru: USITC 2005 Investment and Drug Crop Survey,” messagereference No. 2490, prepared by U.S. Embassy, Lima, June 21, 2006.296Carlos Mateo Paz-Soldan, attorney, Schmeltzer, Aptaker & Shepard, on behalf of Exporamerica,written submission to the Commission concerning inv. No. 332-352, Andean Trade Preference Act: Impacton U.S. Industries and Consumers and on Drug Crop Eradication and Crop Substitution, June 8, 2006.3-32