The overall effect of imports under the Caribbean Basin Economic Recovery Act (CBERA) and the Andean Trade Preference Act (ATPA) on the U.S. economy and consumers continued to be negligible in 1998, reports the U.S. International Trade Commission (ITC).

The ITC, an independent, nonpartisan, factfinding federal agency, recently issued its annual reports monitoring imports under the two programs in a single publication. The CBERA program, operative since January 1, 1984, affords preferential tariff treatment to most products of 24 designated Caribbean, Central American, and South American countries. 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 reports, Caribbean Basin Economic Recovery Act: Impact on U.S. Industries and Consumers, Fourteenth Report, 1998 and Andean Trade Preference Act: Impact on U.S. Industries and Consumers and on Drug Crop Eradication and Crop Substitution, Sixth Report, 1998:

• U.S. imports under CBERA declined from 19.3 percent of all U.S. imports from CBERA countries in 1997 to 18.8 percent in 1998, marking the first year since the implementation of CBERA of a decline in share from the previous year. U.S. imports from CBERA countries -- both under CBERA and overall -- were depressed by lower commodity prices, smaller allocations of sugar quotas, and damage caused by hurricanes Georges and Mitch.

• The Commission did not identify any U.S. imports under CBERA that would have potentially significant negative effects on domestic industry. U.S. imports of the 20 leading CBERA-exclusive items, except two sugar subheadings, produced net welfare gains for U.S. consumers in 1998. The probable future effect of CBERA 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 a case study on Costa Rica to analyze the effectiveness of CBERA in promoting export-led growth and diversification of production in the beneficiary countries. The case study revealed that CBERA appears to have played an important role in stimulating economic growth through export diversification.

• Although total U.S. imports from ATPA countries declined by 3.6 percent in 1998, U.S. imports under ATPA increased by 21.6 percent to $1.6 billion. During the ATPA years, the relative importance of U.S. imports of fresh-cut flowers has diminished as a share of U.S. imports under ATPA, falling from 43.3 percent of the total in 1994 to 32.9 percent in 1997 and 27.5 percent in 1998. The year 1998 was the first year since the implementation of ATPA that a cut-flower product was not the leading item under ATPA; instead, copper cathodes ranked first.

• 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: chrysanthemums, carnations, anthuriums, and orchids; asparagus; and fresh-cut roses. U.S. imports of nearly all of the 20 leading ATPA-exclusive items produced net welfare gains for U.S. consumers in 1998. 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 Colombia and Ecuador to analyze the effectiveness of ATPA in promoting export-led growth and diversification of production in the beneficiary countries. Both case studies revealed that ATPA has had only a small effect to date.

• ATPA continued to have a slight but positive effect on drug-crop eradication and crop substitution in the Andean region in 1998. Eradication efforts contributed to a slight overall decline in the volume of land under coca cultivation, and alternative development efforts to introduce new products and expand licit-crop production in the region are continuing to show promising results.

Caribbean Basin Economic Recovery Act: Impact on U.S. Industries and Consumers, Fourteenth Report, 1998 and Andean Trade Preference Act: Impact on U.S. Industries and Consumers and on Drug Crop Eradication and Crop Substitution, Sixth Report, 1998 (Invs. Nos. 332-227 and 332-352, USITC Publication No. 3234, September 1999) will be available on the ITC's Internet server at http://www.usitc.gov. The publication will also be available at federal depository libraries in the United States. A printed copy 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.