Letter Supporting Renewal of the Generalized System of Preferences (GSP) and the Andean Trade Preference Act (ATPA) for Colombia and Peru

TO THE MEMBERS OF THE UNITED STATES CONGRESS:

The U.S. Chamber of Commerce, the world’s largest business federation representing the interests of more than three million businesses and organizations of every size, sector, and region, urges you to support legislation extending the Generalized System of Preferences (GSP) and the Andean Trade Preference Act (ATPA) for Colombia and Peru, both of which will expire on December 31. While the Chamber has concerns relating to the continued eligibility of Ecuador for benefits under ATPA and believes Ecuador should receive greater scrutiny, it also believes that these programs should be extended.

For more than three decades, GSP has provided duty-free treatment to selected goods imported from more than 130 developing countries. Approximately three-quarters of U.S. imports using GSP are raw materials, parts and components, or machinery and equipment used by U.S. companies to manufacture goods in the United States for domestic consumption or for export. In this fashion, GSP boosts the competitiveness of U.S. manufacturers and lowers the cost of consumer goods for American families. A Chamber study found that moving GSP imports from the docks to the retail shelves supports tens of thousands of U.S. jobs.

Similarly, ATPA has a proven record generating trade, growth, and jobs. Created with the goal of fostering legitimate development alternatives to narco-trafficking in the Andean countries, ATPA has boosted trade and today sustains hundreds of thousands of jobs in Colombia and Peru. These jobs tend to pay above-average wages and often serve as a gateway for workers to enter the formal sector. American workers benefit as well: Colombia’s cut flower industry, for example, sustains roughly 400,000 jobs, half in Colombia and half in the U.S. transportation, distribution, and retail industries. Similar to GSP, ATPA lowers the cost of industrial inputs and boosts the competitiveness of U.S. manufacturers.

However, ATPA is not a substitute for the stronger relationship and level playing field that the United States is seeking to forge with Colombia through the U.S.-Colombia Trade Promotion Agreement. Failure to implement this agreement while Colombia enters into separate trade agreements with other nations is causing U.S. workers, farmers, and companies to lose sales and market share in Colombia. For example, following implementation of a new trade accord between Colombia and Mercosur, the U.S. share of Colombia’s market for soybeans, corn, and wheat dropped by 69%, 65%, and 57%, respectively, in 2008-2009, with total U.S. farm exports to Colombia falling by nearly half. Imminent entry-into-force of the Canada-Colombia Free Trade Agreement will cause this trend to accelerate. The Chamber urges Congress to work with the Administration to expedite approval and implementation of the U.S.- Colombia Trade Promotion Agreement.

In the interim, failure to extend ATPA would create a gap in the trading relationship that could undermine anti-narcotics efforts and result in even more significant losses of opportunities in Colombia and the United States. Also, notwithstanding implementation last year of the U.S.- Peru Trade Promotion Agreement, it is important that ATPA be extended for Peru to avoid disruption of co-production arrangements in the apparel sector between the United States, Colombia, and Peru.

On the other hand, Ecuador’s ongoing pattern of failure to respect the rule of law, private property, and the sanctity of contracts raises serious questions regarding whether the country meets the statute’s eligibility criteria. Some of these issues were noted in the President’s June 30, 2009, report to Congress on Ecuador’s ATPA eligibility and in the U.S. Department of State’s 2009 Investment Climate Statement with respect to Ecuador. In the Chamber’s view, the rule of law in Ecuador has continued to deteriorate and Ecuador has continued to flout its international investment commitments.

Previous bills extending ATPA established a requirement that the administration periodically conduct an evaluation of whether Ecuador is complying with the statute’s eligibility criteria relating to the fair treatment of U.S. companies. If Congress elects to extend Ecuador’s benefits under ATPA, the Chamber urges that at a minimum Congress include in the legislation a similar requirement for an evaluation specific to Ecuador on at least an annual basis.

The Chamber appreciates your consideration and looks forward to working with you on renewal of GSP and ATPA with Colombia and Peru before their expiration on December 31.

Sincerely,
R. Bruce Josten