WORLD TRADE G/L/102
4September 1996
ORGANIZATION(96-3478)
Original: English COUNCIL FOR TRADE INGOODS
19September 1996
ANDEAN TRADE PREFERENCE ACT
Request forRenewal ofWaiver
Thefollowing communication hasbeenreceived from thePermanent Mission oftheUnited
States.
_________________
BytheDecision oftheCONTRACTING PARTIES totheGATT 1947 of19March 1992
(L/6991, BISD 31S/385), theUnited States wasgranted awaiver ofitsobligations under paragraph
1ofArticle 1oftheGATT 1947, fortheprovision ofduty-free treatment toeligible products of
beneficiary Andean countries under theAndean Trade Preference Act(ATPA). Thiswaiver wasgranted
fortheperiod 4December 1991until4December 2001. Pursuant toparagraph 1(b)(iii) oftheGATT
1994, thewaiver became partoftheGATT 1994 when theMarrakesh Agreement Establishing the
World Trade Organization (“WTO Agreement ”)entered intoforce on1January 1995. Asprovided
forinparagraph 2oftheUnderstanding inRespect ofWaivers ofObligations under theGeneral
Agreement onTariffs andTrade 1994, unless renewed, thiswaiver willexpire on31December 1996,
twoyears afterentry intoforce oftheWTO Agreement.
TheATPA, which wassigned intolawon4December 1991, authorizes thePresident toprovide
certain trade benefits tofourAndean nations --Bolivia, Colombia, Ecuador andPeru. TheActis
intended tohelpthebeneficiaries reduce theproduction andtrafficking ofillicit drugs byoffering
opportunities toexpand trade inlegitimate products. TheATPA provides almost thesame benefits
astheCaribbean Basin Economic Recovery Act,awaiver forwhich wasgranted byDecision ofthe
General Council on15November 1995 (WT/L/104). Congress authorized theATPA foraperiod
oftenyears, ending on4December 2001.
TheUnited States requests thatMembers renew thewaiver fortheperiod ending on4December
2001, inorder toenable theUnited States tocontinue toprovide duty-free access forimports ofeligible
articles intotheUnited States from beneficiary Andean countries, asprovided intheAndean Trade
Preferences Act(Public Law102-182 of4December 1991).
Awaiver ofparagraph 1ofArticle IoftheGATT 1994isnecessary sothattheUnited States
cancontinue toprovide suchduty-free treatment consistent withitsinternational obligations. This
request ismade inaccordance withtheGuiding Principles tobefollowed inconsidering applications
forwaivers adopted on1November 1956; theUnderstanding inRespect ofWaivers ofObligations
under theGeneral Agreement onTariffs andTrade 1994; andparagraphs 3and4ofArticle IXof
theWTO Agreement. Thepolicy objectives oftheATPA andtheexceptional circumstances justifying
awaiver aredescribed below.G/L/102
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Discussion
InSeptember 1989, theAdministration announced theAndean Trade Initiative (ATI) and
established theinteragency Andean Trade TaskForce. Thegeneral guidance forthisTaskForce was
toexamine carefully UStrade lawsandpolicies forways toexpand trade opportunities between the
United States andthedrug-producing countries oftheAndean region.
AttheFebruary 1990Cartagena Drug Summit, President Bushagreed, interalia,tofacilitate
access totheUnited States market. TheATPA isintended tofulfil thiscommitment.
On23July1990, theAdministration proposed toCongress aprogram ofbenefits forthefour
Andean nations ofBolivia, Colombia, Ecuador andPerusimilar tothose enjoyed byCaribbean Basin
Initiative (CBI) beneficiaries. Abillproviding suchbenefits wassenttoCongress on5October 1990,
andintroduced laterinJanuary 1991. TheATPA passed Congress on26November, 1991. On
4December 1991, theATPA wassigned intolaw.
Purpose
TheATPA should beviewed inthecontext oftheuseofUStrade policy inourefforts to
encourage countries dependent ontrade innarcotics todevelop alternative legitimate crops andnew
industries capable ofcompeting intheworld market. Drug production andtrafficking ofcocaine
presently inflicts farmore serious economic andsocial consequences ontheUnited States thanany
other illicit drug. Virtually allcocaine originates inthecountries thatbenefit from theATPA. The
economies ofthisregion havebeenseriously affected bythedisplacement oflegitimate economic activity
bythatofnarcotics producers andtraffickers. TheUnited States isusing trade opportunities, such
asthose offered intheATPA, asincentives forencouraging people intheAndean nations tomove
outofillicit drugs andintolegitimate products.
TheATPA augments thebenefits provided totheregion under theGSP, aswellastheefforts
ofother nations topromote trade andeconomic development intheregion.
TheUnited States isseeking awaiver from paragraph 1ofArticle Iinorder tocontinute to
implement thekeyprovisions oftheATPA, which provide atemporary extension ofone-way, reduced-
tariffaccess fortheAndean nations. Duty-free treatment isextended onallproducts, withtheexception
oftextiles andapparel, footwear, petroleum andpetroleum products, certain leather products, aminor
category ofwatches andwatch parts, canned tunaandrum. Thetariffs ofthoseleather products excluded
fromduty-free treatment werebeing reduced by20percent,subject tocertain limitations, phased-in
overfiveyears beginning from 4December 1991. Thepreferences willlastfortenyears, having
commenced on4December 1991.
Effect onother contracting parties
Thetariff preferences provided under theATPA havenotandwillnotcreate newbarriers or
otherwise impede thetrade ofcontracting parties because beneficiary countries represent averysmall
share ofUStrade andbecause theprogram islimited inbothscope andduration.
Thetrade figures provided inAnnex 1andintheinformation submitted bytheUnited States
forthe1991 waiver demonstrate thatthepreference given toATPA imports hasnotresulted in
displacement oflikeproducts from non-ATPA sources.G/L/102
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Effect onMFN andGSP
TheATPA program isacompletely autonomous program which hasnever involved thebinding
ofmargins ofpreference. Theprogram didnotimpede U.S.tariffnegotiations intheUruguay Round,
inwhich amajor objective wasthezero-for-zero initiative forelimination oftariffs onamost-favoured-
nation basis. TheATPA program isalsoindependent oftheU.S.GSPprogram asamatter ofstatute
andamatter ofpolicy.
OnAugust 20,1996, President Clinton signed legislation toreauthorize theGSPprogram,
retroactive toAugust 1,1995. Provision ofATPA benefits willnotnegatively affect GSPbenefits.
Conclusion
TheUnited States requests thattheMembers giveitsapplication forawaiver expeditious
consideration. TheUnited States isprepared toenter intoconsultations andtocooperate fully in
providing additional information about theATPA anddiscussing thespecific terms ofthewaiver.ANNEX 1G/L/102
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4USTrade withtheAndeans
(Values inmillions ofdollars)
U.S.Imports
Volume Share Volume Share Volume Share Volume Share Volume Share
Source 1991 1992 1993 1994 1995
Total U.S.Imports 487,129 100.00% 532,665 100.00% 580,659 100.00% 663,256 100.00% 743,505 100.00%
Bolivia 208 0.04% 162 0.03% 191 0.03% 260 0.03% 263 0.04%
Colombia 2,736 0.53% 2,837 0.53% 3,032 0.52% 3,171 0.48% 3,755 0.51%
Ecuador 1,327 0.25% 1,344 0.25% 1,399 0.24% 1,726 0.26% 1,930 0.26%
Peru 776 0.14% 738 0.14% 754 0.13% 841 0.13% 1,035 0.14%
Total ATPA 5,047 0.96% 5,081 0.95% 5,376 0.92% 5,738 0.90% 6,983 0.95%