ITC Reports ATPA/ATPDEA Effect on U.S. Economy, Consumers is Negligible
The International Trade Commission has issued a report, Andean Trade Preference Act: Impact on U.S. Industries and Consumers and on Drug Crop Eradication and Crop Substitution, Thirteenth Report, 2007, which states that ATPA imports during 2007 continued to have a negligible overall effect on the U.S. economy and consumers.
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(The ATPA, as amended by the Andean Trade Promotion and Drug Eradication Act (ATPDEA), provides trade benefits for eligible Andean countries (currently Bolivia, Colombia, Ecuador, and Peru).
Shortly after the ITC delivered this report to the President and Congress, the President signed into law H.R. 7222 (Public Law 110-436) on October 16, 2008 extending the ATPA/ATPDEA through December 31, 2009 for Colombia and Peru and through June 30, 2009 for Ecuador and Bolivia (with the possibility of an additional six month extension for Ecuador and Bolivia if certain conditions are met). See ITT's Online Archives or 10/20/08 news, 08102015, for BP summary of the extension of ATPA/ATPDEA.)
Highlights of Effects of ATPA on U.S. Economy
Highlights of the ITC's report on the effects of ATPA on the U.S. economy include:
Andean countries accounted for 1.1% of U.S. imports. The Andean countries collectively accounted for 1.1% of total U.S. imports in 2007. The value of duty-free imports that benefited exclusively from ATPA in 2007 accounted for about 0.6% of total U.S. imports. Hence, the overall impact of ATPA-exclusive imports on the U.S. economy was negligible in 2007.
Five leading products had 1% or lower U.S. duties. The five leading products benefiting exclusively from ATPA in 2007 were heavy crude oil; light crude oil; copper cathodes from Peru; heavy fuel oil; and fresh-cut roses. The U.S. duties on copper cathodes and on petroleum products such as crude and heavy fuel oil are low (1% ad valorem or less) and, as a result, ATPA tariff preferences likely had little impact on total U.S. imports of those products.
Knit cotton tops, asparagus showed most impact on U.S. consumers. U.S. imports under ATPA of knitted cotton tops and fresh or chilled asparagus showed the most significant impact on U.S. consumers through lower prices of ATPA imports (as a result of duty free treatment). Imports of knitted cotton tops provided the largest benefit, and fresh or chilled asparagus the second largest benefit, to U.S. consumers. (The most significant impact of ATPA tariff preferences for U.S. producers occurred as a result of reduced domestic production in industries producing fresh or chilled asparagus and fresh cut flowers (roses and chrysanthemums).)
Probable future effects likely to be minimal. Since ATPA was enacted in 1991, its economic impact on the U.S. economy as a whole and on all but a limited number of U.S. industries and consumer goods has been minimal. The ITC states that the probable future effects of ATPA are likely to continue to be minimal.
U.S. and Andean government and private sector individuals reported that the uncertainties related to the scheduled December 2008 expiration of ATPA preferential tariff treatment and the recently negotiated U.S. bilateral free trade agreements with Peru and Colombia were dampening regional interest in investment to produce ATPA-eligible exports, particularly in Bolivia and Ecuador.
ATPA Also Had Minimal Effect on Drug Crop Eradication, Substitution
The ITC also reports that ATPA's effectiveness in reducing illicit coca cultivation and promoting crop substitution efforts in the Andean countries continued to be small and mostly indirect.
Further, data show an increase in the land area under coca cultivation in Bolivia, Colombia, and Peru during 2006 (the most recent year for which official U.S. data are available). The ITC states that ATPA remains a key component of U.S. counternarcotics efforts to provide economic incentives to stimulate economic development and the growth of licit alternative economic activities in the Andean countries.
(President Bush has recently proposed to suspend ATPA/ATPDEA benefits for Bolivia. See ITT's Online Archives or 09/29/08 news, 08092915, for BP summary.)
(See ITT's Online Archives or 05/30/08 news, 08053020, for BP summary of the ITC's request for comments on the effects of ATPA/ATPDEA for 2007.)
ITC contact - Peg O'Laughlin (202) 205-1819
ITC press release (Inv. No. 332-352, dated 11/06/08) available at http://www.usitc.gov/ext_relations/news_release/2008/er1107ff1.htm
ITC report (dated September 2008) available at http://hotdocs.usitc.gov/docs/pubs/332/pub4037.pdf