The overall effect of imports under the Andean Trade Preference Act (ATPA) on the U.S. economy and consumers continued to be negligible in 1999, reports the U.S. International Trade Commission (ITC).

The ITC, an independent, nonpartisan, factfinding federal agency, recently issued its biennial report monitoring imports under ATPA. The ATPA program, signed into law in December 1991, affords preferential tariff treatment to most products of Bolivia, Colombia, Ecuador, and Peru. These 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'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.

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, Seventh Report, 1999:

• U.S. imports under ATPA increased by 6.4 percent to $1.8 billion in 1999. At the same time, total U.S. imports from ATPA countries increased 17.6 percent, reflecting primarily higher prices of petroleum products. As a result, the portion of U.S. imports from ATPA countries entering under ATPA dropped from their peak ratio of 19.7 percent in 1998 to 17.8 percent in 1999. Also, U.S. exports to the region declined 27.8 percent, resulting in an uncharacteristically large U.S. trade deficit of $3.6 billion with the region.

• A few 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; 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, as estimated by an examination of export-related investment in the beneficiary countries, is expected to be minimal in most sectors.

• The Commission conducted case studies on Bolivia and Peru and used a general equilibrium analysis to analyze the effectiveness of ATPA in promoting broad-based economic growth and sustainable economic alternatives to drug crop production in the Andean region. The case studies, as well as the general equilibrium analysis, suggest that ATPA has had a small but positive effect on the economies of the ATPA beneficiaries.

• ATPA continued to have a slight but positive effect on drug crop eradication and crop substitution in the Andean region in 1999. Eradication efforts contributed to an overall decline of 4 percent in the volume of land under coca cultivation, despite an increase in Colombian production. Alternative development efforts to introduce new products and expand licit crop production in the region continued to show promising results.