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IPS, Italy, November 20, 2006

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TRADE:
Preferential US-Andean Deals Face Uncertain Future
Emad Mekay

CAIRO, Nov 20 (IPS) - A U.S. deal to give Andean nations trade preferences in return for anti-drugs policies is set to expire, and its renewal looks set to be another tough trade battle, both in Washington and with the four South American partners.

The Andean Trade Promotion and Drug Eradication Act (ATPDEA), which gives thousands of products from Peru, Bolivia, Colombia and Ecuador access to U.S. markets, is set to expire on Dec. 31.

The George W. Bush administration has already asked the Republican-controlled Congress to extend the agreement during its "lame duck" period before the Democrats take over in January, having won majorities in both the Senate and the House of Representatives in the Nov. 7 elections. But many Republicans appear reluctant to back the increasingly unpopular U.S. president.

The new Democratic chair of the House Ways and Means Committee, Charles B. Rangel, has said he wants to see labour provisions in the ATPDEA renegotiated to include more labour protections in the four countries, a process that could further delay renewal.

The ATPDEA was enacted by Congress in 1991 and renewed and expanded in 2002 as part of Washington's war against illegal drugs.

As the expiration date looms, the ATPDEA has been the subject of intensive lobbying and debate. The Washington-backed Colombian President Alvaro Uribe was in the United States last week to press for the extension of Andean trade preferences as well as the bilateral U.S.-Colombia free trade agreement.

Bush gave his support for the free trade agreement, which is to be signed on Nov. 22. He also affirmed his support for a continuation of trade preferences.

Top officials from Peru were also in Washington to lobby for the extension of the ATPDEA, which allows the United States to import products such as footwear, petroleum, leather goods, and certain apparel from the Andean countries.

Some business groups and conservatives think-tanks in the U.S. have backed the extension of the Andean Trade Promotion and Drug Eradication Act because they believe it will boost U.S. interests in the Andean region and help curb Venezuelan President Hugo Chávez's socialist policies in Latin America.

"When we create a market here for Bolivian handicrafts, Colombian products, Ecuadorian flowers, or Peruvian produce, we contribute to the fight against illicit drugs," wrote Roger F. Noriega, a visiting fellow at the conservative Washington-based American Enterprise Institute.

Noriega, who served as a State Department official from 2001 to 2005 under the Bush administration, and whose firm Tew Cardenas LLP represents Ecuador's economic development agency, went as far as to say that the future of the Andean region is in play, "thanks to the narco-terrorist threat and the populist flames fanned by Chávez and his followers."

"It is vital that congressional leaders make time in the coming weeks to beat the ATPDEA deadline," he said in a column in the online edition of the Latin Business Chronicle.

Trade preferences differ from free trade agreements in that they are almost always one-way deals and cover fewer issues.

With the exception of Bolivia, the three other Andean nations are negotiating the Andean Free Trade Agreement (AFTA) with the United States, which would replace those preferences. However, Washington froze the talks with Ecuador in May after the South American nation seized the assets of a U.S. oil company.

The Bush administration has warned the three nations that if they do not reach an agreement, their current preferences might not be renewed.

The Heritage Foundation, another conservative think-tank in Washington, argued in a brief study in October that the U.S. should use the Andean nations' desire not to lose jobs and to renew trade preferences in order to firm up the more comprehensive free trade agreements (FTAs) for U.S. businesses and corporations.

"There is a window of opportunity, the U.S. Congress should act quickly on the signed FTAs to lock in long-term benefits for the U.S. and its prospective trade partners," the Heritage Foundation paper said.

"Besides swift movement on the U.S.-Peru and U.S.-Colombia FTAs, Washington should permit a two-year extension of trade preferences to Bolivia and Ecuador as a bridge to conclude bilateral free trade pacts, to be enforced only if both governments negotiate in good faith and cooperate in reducing drug trafficking," adds the document.

"If they choose not to do so, then preferences would lapse -- the snub being clearly theirs, not ours."

Some other arguments on the issue have pushed only for the renewal of trade preferences but not the FTAs, saying the ATPDEA gives the Andean nations one-way privileges without having to open their markets to big U.S. corporations.

They argue that the preferences have become too crucial for the cash-strapped countries.

Last week, the Washington Office on Latin America (WOLA) and the Permanent Assembly for Human Rights of Bolivia (APDHB), two groups active in both nations, have appealed in Washington for the renewal of the existing trade preferences to Bolivia, one of the poorest in Latin America, beyond their expiration on Dec. 31, 2006.

"The extension of these trade preferences is critically important to Bolivia, as roughly 10,000 jobs rely directly on them," Jeff Vogt, of WOLA, told IPS in an electronic message.

"The loss of so many jobs in a country with such high unemployment would be devastating."

WOLA says that the United States has so far excluded Bolivia from the FTA negotiating process because of political instability, a lack of internal consensus concerning the trade agreement, and the failure to pass a hydrocarbons law favourable to foreign investors.

That combined with the political situation in which Bolivian President Evo Morales has closed ranks with Chávez of Venezuela and Fidel Castro of Cuba, and distanced himself somewhat from the United States, which frowns upon the legalisation of coca cultivation (a traditional indigenous crop, but also the raw material for cocaine), could leave the country not only without a trade agreement but even without the existing trade preferences.

But despite these arguments it is not yet clear -- given the chaotic lame-duck period in the U.S. congress -- whether lawmakers in Washington can renew the preferences before Jan. 1, 2007, or whether the Democrats will snub them, as they seem to be planning to.
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