Extending Trade Preferences, an Ecuador Caveat

By December 18, 2009Trade

Journal of Commerce, “House Votes to Extend Trade Programs

The House on Monday voted to extend two widely-supported trade programs, but for only one year.

The General System of Preferences and the Andean Trade Preference Act were to expire on Dec. 31. The GSP, now in its 35th year, allows developing nations to export selected goods to the United States duty-free. There are currently 132 countries in the program, shipping some 3,400 products.

ATPA, started in 1991, gives similar benefits for exporters in Ecuador, Colombia, and Peru in exchange for cooperation in counter-narcotics efforts. President Obama suspended Bolivia’s ATPA privileges for failing to commit to an anti-drug program.

Latin Business Chronicle, “Business Concern Over Ecuador Benefits,” citing rising objections to the deterioration of the rule of law in Ecuador under President Rafael Correa.

“We are disappointed that the Congress did not include a message specifically putting Ecuador on notice that its behavior puts its continued receipt of preferences benefits at serious risk,” Franklin J. Vargo, NAM’s international vice president, said in a letter Monday to the chairman and ranking member of the U.S. House Committee on Ways & Means. “In light of the deteriorating investment climate in Ecuador, as well as Ecuador’s repudiation of its Bilateral Investment Treaty (BIT) with the United States and President Correa’s announcement on sweeping aside fundamental patent protections for pharmaceutical and agricultural chemical products, the NAM believes that language specific to Ecuador should have been maintained in the extension language of [the bill passed].”

NAM is concerned that without continuing language aimed at challenging Ecuador’s actions, other nations receiving preference programs will be tempted to follow suit, leading to worsening investment conditions and undermining a central tenant of preference programs that participants uphold their commitments to the United States on investment and rule of law, it said.

In any case, the House has now gone on record in support of lowering U.S. trade barriers to imports from foreign countries. It’s time to now lower foreign barriers to U.S. exports by approving the U.S.-Colombia, U.S.-Panama and U.S.-Korea free trade agreements.

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