The overall effect of imports under the Andean Trade Preference Act (ATPA) on the U.S. economy and consumers continued to be negligible in 2004, reports the U.S. International Trade Commission (ITC).

The ITC, an independent, nonpartisan, factfinding federal agency, recently issued its eleventh report in a series monitoring imports under 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.

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. The year 2004 marked the second full year that ATPDEA was in effect.

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, Eleventh Report, 2004:

• Total U.S. imports from ATPA countries amounted to $15.5 billion in 2004, of which $8.4 billion, or 55 percent, entered under ATPA. The value of U.S. imports that entered under ATPA rose 43 percent in 2004, 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 increased imports of petroleum-related products. The high price of oil contributed to the increase, but the volume of such imports also rose substantially. Imports of petroleum-related products and apparel articles, which both became eligible for ATPA trade preferences under ATPDEA, accounted for about three-fourths of imports under the program in 2004 and represented 10 of the top 20 U.S. imports under ATPA (classified by 8-digit HTS provision). With the exception of copper cathodes, other major categories of imports under ATPA also grew, including cut flowers, 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 2004.

• ATPA continued to have a small, indirect effect on drug-crop eradication and crop substitution efforts in the ATPA countries in 2004. Coca eradication in the region reached a record high and net coca cultivation declined to a record low in 2004, although the levels represented only slight changes from the levels reported in 2003. With the strong growth of U.S. imports under ATPA in 2004, 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, Eleventh Report, 2004 (Inv. No. 332-352, USITC Publication No. 3803, September 2005) will be available on the ITC's Internet site 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 202-205-1809 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.