Program Continues to Have a Small but Indirect Effect on Drug Crop Eradication

Andean Trade Preference Act (ATPA) imports during 2011 continued to have a negligible overall effect on the U.S. economy and consumers, reports the U.S. International Trade Commission (USITC) in its study Andean Trade Preference Act: Impact on U.S. Industries and Consumers and on Drug Crop Eradication and Crop Substitution, Fifteenth Report, 2011.

The agency also noted that the ATPA continued to have a small but indirect effect in reducing illicit coca cultivation and promoting crop substitution efforts in the Andean countries in 2011.

The USITC, an independent, nonpartisan, factfinding federal agency, recently issued its 15th report in a series monitoring imports under the ATPA and the impact of the ATPA on drug crop eradication and crop substitution. In 2011, the ATPA program afforded preferential tariff treatment to most products of Colombia and Ecuador. After May 15, 2012, when the U.S.-Colombia Trade Promotion Agreement entered in to force, Ecuador became the only ATPA beneficiary country.

Since the 14th report, two major changes have had an impact on the ATPA: Peru lost its ATPA eligibility at the beginning of 2011, and imports under ATPA in 2011 were significantly lower because of a lapse in the program. Highlights of the report, which focuses on calendar year 2011, follow:

• The effects of ATPA on the United States in 2011 were negligible. Total imports from ATPA countries represented 1.5 percent of the total value of U.S. merchandise imports in 2011. ATPA-exclusive imports accounted for 0.19 percent of the total value of U.S. imports.
• Of the products imported into the U.S. under the ATPA, U.S. consumers benefited the most from imports of fresh cut roses and fresh cut chrysanthemums through lower prices as a result of duty free treatment. U.S. producers of fresh cut roses were the most negatively impacted as lower priced imports led to a small reduction in domestic production.

   

• ATPA preferences expired on February 12, 2011, but were retroactively renewed on October 21, 2011. In addition, Peru lost its ATPA beneficiary status at the end of 2010. As a result of the lapse and the exit of Peru, imports entered under ATPA fell 70 percent, and ATPA-exclusive imports fell 68 percent.
• Most U.S. imports that entered under ATPA preferences were eligible for duty-free treatment only under the ATPA. Of the $4.4 billion in U.S. imports that were entered under ATPA in 2011, imports valued at $4.2 billion could not have received tariff preferences under any other program. These ATPA-exclusive imports accounted for 13.1 percent of the value of total U.S. imports from ATPA countries.
• Petroleum and petroleum products now dominate the list of leading imports that benefit exclusively from the ATPA. The five leading items benefiting exclusively from the ATPA in 2011 were heavy crude oil, light crude oil, heavy fuel oil, fresh cut roses, and light oil mixtures.
• Future effects of the ATPA on the overall U.S. economy and most economic sectors are expected to be minimal because U.S. imports from Ecuador (the only remaining ATPA beneficiary country) represent such a small portion of total U.S. imports (0.43 percent in 2011). Uncertainty over the future of ATPA trade preferences in 2011 discouraged investment in some sectors. Nevertheless, some investments could generate future exports to the United States under the ATPA, including frozen broccoli and cauliflower, pouched tuna, and plywood.
• The effectiveness of ATPA in reducing illicit coca cultivation and promoting crop substitution efforts in the Andean countries continued to be small and mostly indirect during 2010 and 2011. Although data were unavailable for 2011, illicit coca cultivation in the Andean region has declined in recent years. Sustained aerial and manual eradication operations in Colombia reduced coca cultivation nearly 15 percent in 2010, while Ecuador remained essentially free of drug-crop cultivation despite being a major transit country for drug trafficking.

Andean Trade Preference Act: Impact on U.S. Industries and Consumers and on Drug Crop Eradication and Crop Substitution, Fifteenth Report, 2011 (Inv. No. 332-352, USITC Publication No. 4352, September 2012) is on the USITC's Internet site at www.usitc.gov/publications/332/pub4352.pdf. 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 emailing pubrequest@usitc.gov, calling 202-205-2000, or 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.

USITC general factfinding investigations, such as this one, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, or the Senate Committee on Finance. The resulting reports convey the Commission's objective findings and independent analyses on the subjects investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the USITC submits its findings and analyses to the requester. General factfinding investigation reports are subsequently released to the public unless they are classified by the requester for national security reasons.