ITC Reports ATPA/ATPDEA Effect on U.S. Economy, Consumers is Negligible
The International Trade Commission has issued its report, “Andean Trade Preference Act: Impact on U.S. Industries and Consumers and on Drug Crop Eradication and Crop Substitution, Fourteenth Report, 2009,” in which it states that ATPA imports during 2009 continued to have a negligible overall effect on the U.S. economy and consumers.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
(The ATPA, as amended by the Andean Trade Promotion and Drug Eradication Act (ATPDEA), provides trade benefits for eligible Andean countries (currently Colombia, Ecuador, and Peru), which is currently set to expire December 31, 2010, unless extended.)
Highlights of the report are as follows:
PTPA Entered Into Force, Bolivia Suspended Since 2008 Report
Since the ITC’s 13th report, two major changes have had an impact on the ATPA: Bolivia was suspended from ATPA eligibility as of December 15, 2008, and the U.S.-Peru Trade Promotion Agreement (PTPA)1 entered into force on February 1, 2009. Peru retained its ATPA eligibility after the PTPA entered into force.
Duty-Free ATPA Accounted for Only 0.5% of Total Imports
ITC reports that the Andean countries collectively accounted for 1.3 percent of total U.S. imports in 2009. The value of duty-free imports that benefited exclusively from ATPA in 2009 accounted for about 0.5 percent of total U.S. imports. Hence, the overall impact of ATPA-exclusive imports on the U.S. economy was negligible in 2009.
Flower Imports Had Most Impact on Both Consumers and Producers
U.S. imports under the ATPA of fresh cut roses and fresh cut chrysanthemums showed the most significant impact on U.S. consumers through lower prices of ATPA imports (as a result of duty free treatment).
The most significant impact of ATPA tariff preferences for U.S. producers occurred as a result of reduced domestic production in industries producing fresh cut chrysanthemums.
Small/Indirect Effect on Reducing Illicit Coca, Crop Substitution
The ATPA's effectiveness in reducing illicit coca cultivation and promoting crop substitution efforts in the Andean countries continued to be small and mostly indirect.
According to the most recent U.S. government data, net land area under coca cultivation decreased substantially in Colombia but increased in Peru (and Bolivia). Alternative development programs in Colombia and Peru continued to provide the infrastructure and job creation needed to generate export sales of new or improved legal crops eligible for duty-free treatment under the ATPA.
Effects Likely to Continue to be Minimal, Peru Expected to Export Under TPA
According to ITC, the probable future effects of the ATPA are likely to continue to be minimal. U.S. and Andean government and private sector individuals reported that foreign and domestic investments in Colombia and Ecuador that could generate future exports to the U.S. under the ATPA were small in 2009, partly because the repeated expirations and short-term renewals of the ATPA discouraged ATPA-related investment.
Also, with minor exceptions, investments in ATPA-eligible products in Peru are expected to generate future exports to the U.S. under the TPA, rather than the ATPA.
APTA/ATPDEA Set to Expire on Dec 31, But Congress Working on Extension
The ATPA/ATPDEA will expire on December 31, 2010, unless a law extending it is enacted. Congressional sources have stated that the House Ways and Means and Senate Finance Committees are discussing a multi-year extension of the ATPA/ATPDEA and the General System of Preferences (GSP) programs. (See ITT’s Online Archives or 09/29/10 news, 10092901, for BP summary.)
1also referred to as a free trade agreement (FTA)
(See ITT’s Online Archives or 09/28/10 news, 10092820, for BP summary on the expiration of ATPA/ATPDEA and GSP.
See ITT’s Online Archives or 05/07/10 news, 10050721, for BP summary of the ITC’s request for comments for this report.)
(Press release dated 09/30/10, Inv. No. 332-352)
The full ITC report is available here.