Gist: Andean Trade Preference Act of 1991

US Department of State Dispatch, March 2, 1992

Background

In September 1989, President Bush approved an Andean counter-drug initiative that expanded narcotics-related military, economic, law enforcement, and intelligence cooperation for selected Andean countries for the purpose of strengthening their counter-narcotics efforts. At the Cartagena summit in February 1990, President Bush joined Andean presidents from Bolivia, Colombia, and Peru in a commitment to fight drug trafficking through a strategy of mutually reinforcing actions to cut demand and supply. At that summit, the Andean presidents appealed to President Bush to provide new trade opportunities to create legal sources of employment to displace permanently the cocaine economy in their countries. Later, in July 1990, President Bush announced that he was sending to the US Congress the Andean Trade Preference Act (ATPA), designed to fulfill his commitment at the Cartagena summit with Bolivia, Colombia, and Peru, as well as Ecuador.

Key Provisions of the ATPA

This proposal, which was signed into law on December 4, 1991, is designed to expand economic alternatives for those countries that have been fighting to eliminate the production, processing, and shipment of illegal drugs. It provides the basic authority for the President to grant duty-free treatment to imports of eligible articles from countries designated as beneficiaries according to criteria set forth in the act. The proposal is patterned after the Caribbean Basin Economic Recovery Expansion Act of 1990, which implemented the Caribbean Basin Initiative (CBI).

Key provisions of the proposal are:

* The President is authorized to designate Bolivia, Colombia, Ecuador, and Peru as beneficiary countries, based upon certain criteria specified in the act.

* Articles are eligible for duty-free entry if they are imported directly from a beneficiary country, consist of at least 35% value-added in a beneficiary country or countries (including CBI countries), and are made of components originating in the beneficiary countries or (if of foreign origin) have been substantially transformed in the beneficiary country or countries into new and different articles of commerce.

* Articles exempt from duty-free treatment include: textiles and apparel, footwear, canned tuna, petroleum and petroleum products, watches and watch parts, and rum. Handbags, luggage, flat goods, work gloves, and leather wearing apparel are subject to duty reduction over a 5-year period. Duty-free entry of sugar, syrups, and molasses is provided consistent with the tariff-rate quotas on these products.

* The proposal establishes import relief and emergency provisions in order to safeguard US domestic industries, including those producing perishable products (i.e., live plants and fresh cut flowers, certain fresh or chilled vegetables, certain fresh fruit, and concentrated citrus fruit juice).

* The US International Trade Commission and the Department of Labor are required to monitor and report annually on the impact of the act on the US economy and US labor, respectively.

The program will remain in effect for 10 years.