14. US Preferences

7 September 2009

The United States has extended preferential trade terms for Ecuador, Colombia and Peru until 31 December 2009 under the Andean Trade Promotion and Drug Eradication Act (ATPDEA). The Obama administration resisted strong pressure from business lobbies to terminate Ecuador's benefits because of outstanding investment disputes. Bolivia's benefits, however, were not reinstated. They were suspended by President Bush last December due to the Morales government's insufficient co-operation with US anti-narcotics efforts.

The ATPDEA and the US Generalised System of Preferences are due for review this fall as both are set to expire by the end of the year. House Ways and Means trade subcommittee chairman Sander Levin wants to start an in-depth discussions on a major reform of all US preference programmes, including the African Growth and Opportunity Act (AGOA), which will not expire until 2015. However, if the health care debate continues to occupy Congress to the extent that it does now, the preference review could be postponed by some months, while current programmes would be granted short-term extensions.

One of the central issues in the upcoming preference reform debate will be Ways and Means member Jim McDermott's legislative proposal to extend duty- and quota-free access to all least-developed countries (LDCs). This has alarmed the 41 Sub-Saharan countries that are eligible export up to 6,400 products duty-free to the US under AGOA. They argue that granting such benefits to all LDCs, and Cambodia and Bangladesh in particular, would erode the value AGOA preferences, especially for textiles and apparel exports.

African countries maintain that they would be unable to compete with the two Asian rivals, which exported more than US$5.5 billion worth of garments to the US last year, or five times as much as all of Sub-Saharan Africa. Those in favour of duty- and quota-free access for all least-developed countries counter that a number of LDCs are poorer than many AGOA beneficiaries.

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