Congress Passes Differentiated ATPDEA Extension with GSP Renewal

October 6, 2008

On October 3, 2008, the House passed a modified version of H.R. 7222 to extend and improve U.S. Trade Preference Programs, including the Generalized System of Preferences (GSP) and the Andean Trade Preference Drug Eradication Act (ATPDEA).

The original House bill, passed on September 29, 2008, extended all programs for one year, through December 31, 2009, but due to objections by Senate Finance Committee Ranking Member Charles Grassley (R-IA), the bill passed by the Senate was amended to provide a differentiated extension for the four beneficiary countries of ATPDEA.

Under the amended version, only Colombia received year-long ATPDEA extension. Bolivia and Ecuador, the other two beneficiary countries, received extensions for only six-months, at which time the President will be required to certify that they are fulfilling the ATPDEA eligibility criteria. The different treatment reflects concerns about Bolivia’s lack of cooperation in the drug war (a key eligibility criterion), and Ecuador’s deteriorating treatment of U.S. investors.

The Bill, as passed by Congress, also extends and improves other preference programs in the following ways:

• Establishes a “2 for 1” textile and apparel allowance program for the  Dominican Republic. Under the program, when producers purchase a certain quantity of qualifying U.S. fabric (2 square meter equivalents or “SMEs”) for apparel production in the Dominican Republican, they will receive a credit (equivalent to 1 SME) that they can use to ship apparel to the U.S. duty-free.
• Extends the Generalized System of Preferences (GSP) for one year, through December 2009
• Repeals the “abundant supply” provision from the African Growth and Opportunity Act (AGOA). The existing provision has inadvertently made it difficult for least-developed countries (LDCs) to utilize the benefits of AGOA.  The provision included in the H.R. 7222 repeals the existing provision and replaces it with a request for a government study to find new ways to encourage investment in Africa. 
• Reinstates LDC designation for Mauritius under AGOA. Mauritius was an LDC for AGOA purposes until September 2005, and therefore able to use the critical “third country” fabric provisions of the program. Since that designation has lapsed, the Mauritius industry has gone into significant decline, as many garment factories shut down operations in the country and moved to Asia.
• Repeals Customs’ user fee “prepayment” provision. The original provision was need in the 2008 Farm Bill for pay-for purposes but the Rangel/McCrery/Baucus/Grassley staffs agreed to repeal the provision at the first opportunity.
• Imposes a technical fix to the Haiti HOPE II legislation. Two numbers were accidentally transposed in one of the HOPE II provisions that were included in the 2008 Farm Bill. H.R. 7222 fixes this typographical error.