The overall effect of imports under the Andean Trade Preference Act (ATPA) on the U.S. economy and consumers continued to be negligible in 2005, reports the U.S. International Trade Commission.

The ITC, an independent, nonpartisan, factfinding federal agency, recently issued its 12th report in a series monitoring imports under the ATPA. The ATPA program affords preferential tariff treatment to most products of Bolivia, Colombia, Ecuador, and Peru. The ATPA’s goal is to promote the development of sustainable economic alternatives to drug crop production by offering alternative, legal Andean products broader access to the U.S. market. The four Andean countries are the source of the coca plants from which most of the world’s cocaine is produced or are major transit areas for cocaine.

The ATPA was renewed and amended on August 6, 2002, under the Andean Trade Promotion and Drug Eradication Act (ATPDEA), which broadened the scope of products eligible for tariff preferences. 2005 marked the third full year that ATPDEA was in effect. The ATPA is scheduled to expire at the end of 2006.

Following are highlights of the report, Andean Trade Preference Act: Impact on U.S. Industries and Consumers and on Drug Crop Eradication and Crop Substitution, Twelfth Report, 2005:

Total U.S. imports from ATPA countries amounted to $20.1 billion in 2005, of which $11.5 billion, or 57 percent, entered under the ATPA. The value of U.S. imports that entered under the ATPA rose 37 percent in 2005, faster than the increase in total U.S. imports from the region and faster than the growth of U.S. imports from the world.

The large increase primarily reflected an increase in the value of imports of petroleum- related products. Higher oil prices were mainly responsible for the increase, as the volume of some petroleum-related product imports rose substantially while the volume of others fell. Imports of petroleum-related products and apparel articles, which both became eligible for ATPA trade preferences under the ATPDEA, accounted for nearly four-fifths of imports under the program in 2005 and represented 11 of the top 20 U.S. imports under the ATPA. With the exception of cut flowers, other major categories of imports under the ATPA also grew, including copper cathodes, asparagus, and precious metal jewelry.

A few U.S. industries were identified as potentially experiencing displacement by ATPA imports of more than an estimated 5 percent of the value of U.S. production: asparagus; fresh-cut roses; and chrysanthemums, carnations, anthuriums, and orchids. U.S. imports of all of the 20 leading ATPA-exclusive products produced net welfare gains for U.S. consumers in 2005.

The ATPA continued to have a small, indirect effect on drug-crop eradication and crop substitution efforts in the ATPA countries in 2005. Net coca cultivation in the ATPA region in 2005 remained at roughly its lowest level in two decades. With the strong growth of U.S. imports under the ATPA in 2005, the ATPA remained an important source of employment creation for workers who might otherwise have grown illicit coca or entered the drug trade. In particular, ATPA trade preferences supported such industries as flowers in Colombia and Ecuador, asparagus in Peru, and textiles and apparel throughout the region.
Andean Trade Preference Act: Impact on U.S. Industries and Consumers and on Drug Crop Eradication and Crop Substitution, Twelfth Report, 2005 (Inv. No. 332-352, USITC Publication No. 3888, September 2006) will be available on the ITC’s Internet server at www.usitc.gov. The publication will also be available at federal depository libraries in the United States. A CD-ROM or printed copy of the report may be requested by calling 202-205-2000 or by writing to the Office of the Secretary, U.S. International Trade Commission, 500 E Street, SW, Washington, DC 20436. Requests may also be faxed to 202-205-2104.