Importers And Manufacturers Seek Renewal Of Andean Trade Pact

A group of eight trade associations representing textile and apparel manufacturers and importers
has written to the leadership of congressional committees that handle international trade issues,
asking them “in the most urgent terms” to approve legislation extending the Andean Trade Preference
Act (ATPA) for another two years. The act, which has been extended year-to-year since 1992, is due
to expire December 31. It grants special trade preferences to imports from Peru, Colombia and

The letter points out that some two million jobs in the region depend on ATPA and says the
three countries are providing a steadily growing market for US exports. Apparel imports from the
Andean region, which enter the United States duty-free, utilize cotton, yarn and fabric made in the
United States. In 2008, US cotton exports to the region totaled almost $150 million, while US
exports of yarn and fabric totaled $160 million.

Participants in the program have been concerned that the year-to-year extension of the
program creates uncertainty in the market, discouraging investments in the area, and in some cases
has resulted in importers looking to Asia for products. As a result, the associations are asking
for a two-year extension of the pact.

The associations point out that ATPA is a centerpiece in the US war on drugs, as it
encourages farmers and manufacturers to produce other products.

“A lapse in the preference program, even for a short period, threatens to undo many of our
economic and foreign policy successes in the region,” the associations said. “Past experience shows
that letting the program lapse with the aim of renewing it retroactively is fraught with serious
problems, not the least of which is harm to US and regional employment as well as US investments in
the region.”

Even though the United States has a free trade agreement (FTA) with Peru, enactment of ATPA
is important because of the co-production of certain products in both Peru and Colombia, which at
this time does not have a FTA with the United States. A FTA with Colombia, negotiated by the Bush
administration and awaiting approval by Congress, would address the co-production issue and also
grant permanent reciprocal treatment for US goods entering Colombia.

Swift passage of the legislation faces some difficulties, because Sen. Charles Grassley,
R-Iowa, the ranking Republican on the Senate Finance Committee, is opposed to preferential
agreements, and he has been successful in the past in delaying passage of preferential trade

November 3, 2009