ATPA Extension Crucial to Andean Economies

 
A bill backed by Florida Senator Bill Graham and 11 other Senate co-sponsors to extend the Andean Trade Preference Act for four years (it expires in December) has been pending in Congress for many months. Expiration of the ATPA would add considerable economic difficulties to the already precarious situation of the four eligible Andean economies (Colombia, Peru, Bolivia and Ecuador), all of which are undergoing political and economic adjustments. The main benefit of the Graham bill is the provision of duty-free and quota-free access for textiles and apparel from the Andean economies.

The House of Representatives is preparing to consider legislation similar to the Graham bill that would extend duty-free access to regional fabric. The Andean countries strongly favor this measure, arguing that the NAFTA parity accorded to Central America and the Caribbean under the CBERA (Caribbean Basin Act) has hurt Andean exporters. Both bills would give special treatment to products made from Andean llama, alpaca and vicu�a wool.

Ecuador, a major tuna processor, is lobbying for the inclusion of canned tuna in the duty-free benefits. The issue is complicated by the current US court case against Mexico for its use of long nets that capture and kill dolphins, causing the US to restrict its tuna imports from Mexico. Further opposition may come from the possibility that, if this provision is added, Ecuador could benefit more from the inclusion of canned tuna in the ATPA than Mexico does under NAFTA.

The Bush administration has not taken a position on the Graham bill or the specific set of benefits to be included. The Office of the US Trade Representative has indicated to Congress that the administration favors renewal and the broadest possible inclusion of new trade benefits in the ATPA. Part of the administration's concern is due to the ATPA's role in the anti-narcotics battle in the Andean countries. In testimony before the Senate Finance Committee on August 3, Deputy USTR Peter Algeier stated that "the ATPA functions as a US trade policy tool that contributes to our fight against drug production and trafficking." It is the goal of the ATPA, he added, to "promote export diversification and broad-based economic development that provides sustainable economic alternatives to drug production in the Andean region." The USTR supports extending the ATPA to allow the Andean countries to transition to the wider benefits that will be available when the FTAA enters into effect in 2005.

The ATPA has helped the expansion of nontraditional exports from the Andean economies, generating income, jobs and foreign exchange. Cut flowers have been the biggest beneficiary but have begun to give way to other exports, among them: copper cathodes, zinc plates, pigments, mangoes, processed tuna and asparagus. During the last half of the 1990s, ATPA-eligible exports increased to account for 19.7% of total exports from the four participating Andean countries. (This percentage fell to 17.8% in 2000 owing to higher oil prices.) US exports to these countries have also benefited, increasing by 60% during the same period.
 

http://www.ustr.gov US Department of State USTR Office of Congressman P. Crane