Andean-U.S. Free-Trade Agreement Negotiations (CRS Report for Congress)
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| Release Date |
Revised March 14, 2006 |
| Report Number |
RL32770 |
| Report Type |
Report |
| Authors |
M. Angeles Villarreal, Foreign Affairs, Defense, and Trade Division |
| Source Agency |
Congressional Research Service |
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Summary:
In November 2003, the Administration notified Congress that it intended to begin negotiations
on
a free-trade agreement (FTA) with four Andean countries - Colombia, Peru, Ecuador, and Bolivia.
The notification said that an FTA would reduce and eliminate foreign barriers to trade and
investment and would support democracy and fight drug activity in the Andean region. The Andean
governments wanted to ensure access to the U.S. market, especially since their current trade
preferences will terminate at the end of 2006. In the United States, the business community
indicated strong support for the trade agreement, with labor opposing it as the case for many FTAs,
and the agriculture community was split.
The Andean-U.S. FTA negotiations began in May 2004, when the United States, Colombia,
Peru, and Ecuador participated in the first round of talks. Bolivia participated as an observer. After
thirteen rounds of talks, however, negotiators failed to reach an agreement. After the last set of talks,
Peru decided to continue negotiating, without Colombia or Ecuador, and concluded a bilateral
agreement with the United States in December 2005. Colombia later continued negotiations with
the United States and this agreement was successfully concluded on February 27, 2006. Negotiations
with Ecuador are stalemated. A senior US trade official recently stated that the Peru and Colombian
FTAs are likely to be submitted to Congress as separate agreements, thereby constraining the
possibility of an Andean-U.S. FTA.
The United States currently extends duty-free treatment to imports from the four Andean
countries under a regional preference program. The Andean Trade Preference Act (ATPA)
authorized the President to grant duty-free treatment to certain products, and the Andean Trade
Promotion and Drug Eradication Act (ATPDEA) reauthorized the ATPA program and added
products that had been previously excluded. Over half of all U.S. imports in 2005 from the Andean
countries entered under these preferences.
In 2005, the United States imported $20.1 billion from the four Andean countries and exported
$9.9 billion. Colombia accounted for about half of U.S. trade with the region. Peru and Ecuador
almost evenly split the other half, and Bolivia represented a very small share. The leading U.S.
import from the region in 2005 was crude petroleum oil, which accounted for 35% of imports.
Leading U.S. exports to the region were petroleum products, mining equipment, and broadcasting
equipment.
There were several important issues in the FTA negotiations. The trade negotiators stated that
the main obstacles to concluding an overall agreement were in agriculture and intellectual property
rights. Another major concern was the issue of labor standards. Under the notification procedures
founded in the Trade Promotion Authority Act, the trade agreements with Peru and Colombia could
be voted on by the Congress sometime this summer. The narrow passage of CAFTA-DR had been
viewed as an indicator that any U.S.-Andean FTA might also face considerable opposition. How the
Bush Administration's decision to negotiate and submit separate FTAs with Peru and
Colombia
might affect this calculation remains uncertain. This report will not be updated.
