Andean Group - November 2006 (ISSN 1741-4466)

The imminent expiry of the Andean Trade Promotion and Drug Eradication Act (Atpdea), and stalled status of the US free trade agreements with Peru and Colombia, prompted the US government to take steps to renew the agreement. Atpdea was introduced to promote export diversification away from coca leaf production in Ecuador, Bolivia, Peru and Colombia by giving their exports preferential access to the US market. The Act is due to expire on 31 December 2006 with potentially disruptive consequences for all countries involved.

During a visit to Colombia on 24 October the US Under Secretary of State for Political Affairs, Nicholas Burns, announced that the US government would ask Congress to renew the act. On 2 November a group of 28 US legislators sent a letter to the House Speaker, Republican Dennis Hastert, asking him to move forward a bill that will "bridge the gap between the expiration of the Andean Trade Preference Act and the entry into force of the free trade agreements with Peru and Colombia." In their letter they argued that US investors would pull out of the region and move elsewhere if they didn't have the certainty that the trade benefits will continue, which would mean a loss of US influence with two staunch US allies in an "unpredictable region".

Ecuador and Bolivia, for whom a free trade agreement with the US is not on the cards, welcomed Burns' announcement. Bolivian vice-president Alvaro Garcí­a Linera attributed the decision to the Bolivian government's lobbying in Washington. The Ecuadorean trade minister, Tomás Peribonio, greeted the news with more caution; "It's positive, but in the end it is Congress who decides whether or not to renew Atpdea". The reaction in Peru and Colombia has been mixed. Their free trade agreements are currently languishing in the US Congress and will not be considered until it reconvenes for the "lame-duck session" after the mid-term elections on 7 November. The president of Peru's Asociación de Exportadores, Luis Vega, said that "if the Atpdea is extended, we run the risk that the FTA will be forgotten." Although the administration of President George W Bush strongly supports the agreements, members of the Democratic party have expressed concerns about the agreements' provisions for labour protection, so the agreements may have difficulty passing if the Democrats gain control of Congress in the mid-terms. 

Under Atpdea the Andean countries do not have to pay tariffs on key exports to the US. The Act has been successful in increasing exports from Andean countries to the US by as much as twenty-fold in Ecuador, ten-fold in Colombia, six-fold in Peru and four-fold in Bolivia. The preferential treatment from the US has stimulated the growth of many non-traditional export sectors. In Ecuador products such as flowers, tuna, ceramic products, wood, broccoli and mangoes have flourished under Atpdea.