Extension of trade preferences beneficial for development

WASHINGTON ? International aid agency Oxfam America applauded enactment of legislation that will extend and improve US trade programs that help developing countries. President Bush signed the legislation today, which would have expired otherwise. These preference programs are an important component of US trade and development policy, as they support developing country efforts to grow their economies and harness the benefits of trade to pull people out of poverty.

?Trade preference programs are contributing to the growth of manufacturing and agricultural sectors in many developing countries. This helps create jobs, especially for women, who often have relatively few economic alternatives,? said Raymond C. Offenheiser, President of Oxfam America. ?Congress did the right thing by extending these preferences before they expire, as they offer opportunities for developing countries as well as for US businesses and consumers.?

For more than three decades, the United States has extended preferential duty-free market access to imports from developing countries as a means of stimulating economic growth and poverty reduction. This legislation extends for one year the Generalized System of Preferences (GSP), which provides duty-free entry to more than 4,650 products from 131 designated beneficiary countries and territories. It also provides a one-year extension of the Andean Trade Preferences Act (ATPA), which waves duties on additional products from Colombia, Peru, Ecuador and Bolivia, although the Senate forced a compromise that treats Bolivia and Ecuador differently by limiting their participation in the program to six months with Presidential discretion for another 6 month term. In addition, the bill amends the African Growth and Opportunity Act to ensure that African countries can use third country fabric in apparel qualifying for duty-free treatment.

?Trade preference programs benefit not only developing countries but also US businesses which have relied on goods imported duty-free to be used as inputs into products that are manufactured here,? said Offenheiser. ?Next year, Congress should take early action to improve and expand on these preference programs in order to enhance their ability to help the poor in developing countries.?

The US is the Andean countries? most important trading partner and over half of Andean country exports to the United States now enter under the ATPA. An estimated 2.3 million jobs in the Andean countries depend on the ATPA. Limiting the extension of benefits for Bolivia and Ecuador will adversely affect their efforts to enhance economic growth and reduce poverty and is unlikely to resolve US foreign policy differences with those countries. This problem is exacerbated by the US Trade Representative?s recent action to suspend Bolivia, South Americans poorest nation, from receiving benefits through ATPA at all, which could take effect as soon as next month.

?Bolivia and Ecuador have widespread poverty and denying them the ability to benefit from the US Andean preference program will only exacerbate poverty in two of South America?s poorest nations, ? Offenheiser stated. ?In the end, helping to reduce poverty will do more to further US foreign policy goals than punishing these nations because of differences with their current political leadership."