Business Welcomes US Review Of Andean Trade Preferences

by Leroy Baker, Tax-News.com, New York

Monday, July 06, 2009

Business and trade organizations representing some of the largest US multinationals have welcomed the Obama administration’s review of country eligibility for trade preferences under the Andean Trade Preference Act (ATPA).

As a result of the review of ATPA, the administration has declined to extend preferences for Bolivia and put Ecuador on notice that preferences may not be extended again unless long-standing rule of law issues are addressed.

“These trade preferences are a privilege, not a right,” commented Myron Brilliant, the American Chamber of Commerce’s senior vice president for International Affairs. “Congress established clear eligibility criteria for the Andean countries to receive duty-free access to the US market under the ATPA, including respect for the rule of law and fair treatment of US companies. Colombia and Peru have easily met these criteria, but US investors have faced an increasingly hostile environment in Ecuador and Bolivia.”

The Andean Trade Preference Act was enacted in December 1991, to help four Andean countries (Bolivia, Colombia, Ecuador, and Peru) in their fight against drug production and trafficking by expanding their economic alternatives. The Andean Trade Promotion and Drug Eradication Act, enacted on August 6, 2002, renewed and amended the ATPA to provide duty-free treatment for certain products previously excluded under the ATPA. The benefits are subject to the countries meeting the program's eligibility criteria.

Congress last year extended ATPA preferences for Colombia and Peru through December 31, 2009, while establishing a mid-year review of the eligibility of Bolivia and Ecuador due to mounting complaints about the deteriorating treatment of US investors.

Bolivia is currently not receiving benefits under the ATPA program after then President George W. Bush suspended Bolivia’s designation as a beneficiary country in November 2008, citing the country’s failure to meet eligibility criteria in the area of counter-narcotics cooperation.

“We look forward to the day when Bolivia and Ecuador are prepared to move forward to a mature, reciprocal trading relationship in similar fashion to Peru and Colombia,” added Brilliant, “As of now, that day seems distant.”

The National Foreign Trade Council (NFTC) also commended the administration for acknowledging the difficulties American investors face in Ecuador in its decision to extend trade preferences under ATPA.

“Recent experience has shown that American companies face significant challenges there in terms of rule of law and political interference in the judicial process, and we expect the administration to continue to monitor developments there carefully,” NFTC President Bill Reinsch stated.

“ATPA is an important tool to promote economic development and growth within the hemisphere, but to ensure that the system remains fair and mutually beneficial, our trading partners must demonstrate a commitment to abiding by the rules and refrain from interfering in judicial processes,” Reinsch concluded.