Trade and Humanitarian Groups Urge Reform of U.S. Trade Preference Programs

April 28, 2009

Twenty-nine trade associations and humanitarian groups recently sent a letter to U.S. Trade Representative (USTR) Ron Kirk urging him to reform U.S. trade preference programs for developing countries. The twenty-nine signatories also urge the USTR to renewal existing preference programs well before they lapse so that current sourcing relationships are not hindered by uncertainty. According to the letter, extending current preference programs would alleviate time-pressure on the reform discussion.

The letter stresses the need to pursue policies that will benefit as many of the world’s poorest countries as possible, without giving an advantage to one country or region at an expense to another. To that end, the signatories suggest two major changes existing U.S. preference programs.

The first would create one simple U.S. trade preference program, versus the current system which has programs for various regions of the world (e.g. the Andean Trade Preference Drug Eradication Act and Africa Growth and Opportunity Act). The basic principals of such a system would:

• Extend benefits to all developing countries, including advanced developing countries, that meet clear eligibility criteria;
• Contains consistent, transparent, predicable, and enforceable rules for termination of country and product eligibility that also, when possible, are sensitive to opportunities to expand U.S.-beneficiary and beneficiary-beneficiary trade.
• Includes a mechanism for public comment and a clear review process for continued participation with regular reporting to Congress on performance and trends in eligibility criteria.
• Remains in effect for a period long enough to encourage long-term investment and sourcing.

The second change would provide enhanced benefits for least developed countries, sub-Saharan Africa and designated low middle income countries by:

• Extension of duty-free, quota free market access for all products.
• A less restrictive rule of origin for eligible sub-Saharan African countries.
• Targeted trade capacity building assistance for countries in need, including programs to help producers take advantage of preferences and resources dedicated to building local and regional capacity in sub-Saharan Africa.
• A requirement that all U.S. government foreign assistance policies and tools be aligned to support the development of strong economies and regional integration, where appropriate, to increase participate in local regional and international trade.

USTR Don Kirk has previously indicated a willingness to work with Congress to reform U.S. trade preference programs. Both chairmen of the House and Senate committees responsible for oversight of international trade, Representative Rangel (D-NY) and Senator Baucus (D-MT), have also expressed interest in reforming U.S. preference programs.