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Congress weighs future of Andean trade scheme

Washington Post

Congress weighs future of Andean trade scheme

By Doug Palmer, Reuters

30 May 2007

WASHINGTON (Reuters) - U.S. lawmakers have begun talks on whether to extend a 15-year-old trade preference program for Andean countries while free trade deals with Colombia and Peru remain up in the air, congressional aides said on Wednesday.

Senior Democrats on the House of Representatives Ways and Means Committee want to extend the Andean Trade Promotion and Drug Eradication Act for two years before the program expires at the end of June, a congressional aide said.

They have begun talks aimed at overcoming resistance from Sen. Charles Grassley, an Iowa Republican, and other lawmakers who would prefer to see the program expire and Congress pass the two free trade agreements instead, the aide said.

The Andean trade preference program — which covers Colombia, Peru, Ecuador and Bolivia — has been a tool in the U.S. war on drugs since December 1991, when then President George H.W. Bush signed it into law.

It has expired twice since then, most recently last year when lawmakers approved just a six-month extension.

The program help creates jobs outside the region’s massive illegal drug sector by allowing the four countries to export about 5,600 products — including cut flowers, clothing and tuna — to the United States without paying duties.

Republicans, who ran Congress when the program expired last year, crafted the short-term renewal after Democrats won control of the House of Representatives and the Senate in elections in November.

It was structured in a way to put pressure on Congress to approve the free trade pacts with Colombia and Peru, and to put pressure on Ecuador and Bolivia to change economic course and conclude their own free trade pacts with the United States.

Congress could vote on the free trade agreement with Peru by the end of July as a result of a groundbreaking deal on labor and environmental provisions of trade pacts struck between the White House and Congress on May 10.

But the outlook for a vote on the Colombia trade deal is much cloudier because of concerns among Democrats about a paramilitary scandal and a history of deadly violence against trade union members, congressional aides said.

House Ways and Means Committee Chairman Charles Rangel, a New York Democrat, and House Trade Subcommittee Sander Levin, a Michigan Democrat, have proposed renewing the Andean trade preference program for all four countries for two years.

But Grassley has objected strongly to renewing the program for Bolivia and Ecuador, because of actions they have taken against U.S. oil and gas companies and the anti-American rhetoric of the two countries’ leaders.

Senate Finance Committee Chairman Max Baucus, a Montana Democrat, also favors a two-year extension but will work with Grassley and other committee members to find the best way to proceed before the program expires, an aide to Baucus said.

John Murphy, vice president of international affairs at the U.S. Chamber of Commerce, said he expected most U.S. companies to support quick renewal of trade preferences for Colombia and Peru, even though that was a "third or fourth best option" compared to approving the free trade agreements.

The issue is more complicated when it comes to Ecuador and Bolivia, which have "not been treating our member companies well," said Doug Goudie, director of trade policy for the National Association of Manufacturers.

"We have to question whether it is in our interest to extend preferences for them," Goudie said.