Publication Number: 3803

Report Title: Andean Trade Preference Act: Impact on U.S. Industries and Consumers and on Drug Crop Eradication and Crop Substitution, 11th Report 2004

Investigation Number: 332-352

Author's name(s): Joanne Guth

Date Published: September 2005

Report Description/Introductory Text: USITC economic assessment of the Andean Trade Preference Act, ATPA, and the Andean Trade Promotion and Drug Eradication Act, ATPDEA. The USITC report assesses economic effects of ATPA and ATPDEA related trade and investment on the U.S. industries and consumers and the effectiveness of ATPA in promoting drug-related crop eradication and crop substitution in the Andean countries. The report also assesses the probable future economic effect of ATPA related trade and investment on the United States.

In this report, the U.S. International Trade Commission (USITC) assesses the actual economic impact and the probable future effects of the Andean Trade Preference Act (ATPA) on the U.S. economy generally, and on U.S. industries and consumers, and the effectiveness of ATPA in promoting drug-related crop eradication and crop substitution efforts of Bolivia, Colombia, Ecuador, and Peru. The actual impact of ATPA on the United States in 1999 is estimated using partial equilibrium analysis. The probable future effect of ATPA on the United States is estimated by an examination of ATPA-eligible investment in the beneficiary countries. The report also analyzes the effects of ATPA on the beneficiary countries and includes a comprehensive review of U.S. trade under ATPA in 1999.

The overall effect of ATPA-exclusive imports (those ineligible for other tariff preferences) on the U.S. economy and consumers continued to be negligible in 1999. However, U.S. imports of ATPA-exclusive products were estimated to have potentially significant effects on domestic industries producing asparagus; chrysanthemums, carnations, anthuriums, and orchids; and fresh-cut roses. U.S. imports of all of the 20 leading ATPA-exclusive items produced net welfare gains for U.S. consumers in 1999. The probable future effect of ATPA on the United States is also expected to be minimal in most sectors. Case studies on Bolivia and Peru and general equilibrium analysis suggest that ATPA has had a small but positive effect on the economies of the ATPA countries. ATPA continued to have a small, indirect but positive effect on drug-crop eradication and crop substitution efforts in ATPA countries in 1999. Alternative development efforts to introduce new products and expand licit-crop production in the region are continuing to show promising results, especially in Bolivia and Peru.

USITC prepared this report in accordance with section 206 of the ATPA.

Topics Covered: USITC economic assessment, USITC economic effect, Andean, trade preference, ATPA, ATPDEA

Countries: United States, Bolivia, Colombia, Ecuador, Peru

HTS Numbers: 0603, 0709, 1604, 2402, 2709, 2710, 6105, 6109, 6110, 7113

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