Andean Trade Agreement Benefits Apparel Buyers
U.S. shoppers have saved a bit of money because of a trade agreement between the United States and four South American countries.
In a report prepared recently by the U.S. International Trade Commission, U.S. shoppers would have paid 15.7 percent more for cotton-knit tops coming from Ecuador, Bolivia, Colombia and Peru if those countries had not been a part of the Andean Trade Promotion and Drug Eradication Act, which reduces or eliminates tariffs on many imported goods.
But the trade agreement, established in 1991 as the Andean Trade Preference Act to counter the South American drug trade, has had little effect on illicit coca production and crop substitution, the report said.
In 2007, the United States imported$21 billion worth of goods from those four countries, up from $5 billion in 1991. Oil is the top import, followed by copper cathodes and fresh-cut flowers. Apparel was the fourth-largest category, with nearly $950 million in clothing being shipped in 2007 from the Andean region to the United States.
The apparel industry is still a major employer of people in those countries, making up as much as 25 percent of manufacturing’s payroll.
Among the four countries, Peru is now the top exporter of apparel to the United States. Last year it accounted for nearly two-thirds of U.S. apparel imports from the region, totaling $833 million, with 95 percent of those goods entering duty-free. That is still a small percentage of the $53 billion in apparel and textiles imported by the United States in 2007.
Although U.S. imports from Peru have climbed steadily, they fell 4 percent in 2007 over uncertainties about whether the trade agreement would be extended in 2006, 2007 and 2008.
But Congress extended the trade agreement in October. For Colombia and Peru, the agreement is valid until Dec. 31, 2009. For Ecuador and Bolivia, the trade provision runs through June 30, 2009. However, there is a possible six-month extension for Ecuador while Bolivia is likely to be pulled from the agreement after President George W. Bush noted in September that the Andean country had not complied with the act’s counternarcotics regulations. —Deborah Belgum
