“Powerplay By US Canners In Andean Tuna Agreement”ff

By Atuna

The latest Forum Fisheries Agency (FFA) briefing displayed an article about how - according to the FFA - the US uses unilateral agreements, such as the Andean Trade Preference Act (ATPA), to powerplay developing nations in the tuna business.

Established in 1991, the ATPA provides for duty-free treatment into the US for most exports from Bolivia, Colombia, Ecuador and Peru, including tuna packed in aluminum foil pouches.

The stated rationale for this Act is to encourage economic diversification away from coca production (and the processing of and trade in cocaine) by providing a competitive advantage relative to other countries through duty reductions on goods exported to the US. The ATPA is an extension of the US Generalized System of Preferences (GSP) scheme and provides enhanced benefits to eligible countries as it covers more categories of goods and has more liberal rules of origin and related procedures.

However, duty free treatment is provided for most products except (among others) canned tuna; in fact, of the top twenty US imports from the Andean region only canned tuna incurs duty. According to the FFA briefing, the most important reason for this is the influence of political lobbying by certain elements of the US canned tuna industry, which has an interest in protecting its processing plants in Los Angeles, Puerto Rico and American Samoa.

Nonetheless, since 2004 the ATPA provided for duty free treatment for tuna in pouches, of which Ecuador is the major supplier to the US along with Thailand.

Although the ATPA may not be compatible with the WTO, it has received continued one-year extensions from the US government since 2006. The most recent extension, finalized in October, allows the continuation of the ATPA until the end of 2009.

The article stated that under pressure from US business lobbies and a senior Republican senator, a clause was written into the extension that subjects Ecuador to review after a period of six months, with the ultimate ‘stick’ of cutting trade preferences if it does not comply with US demands, including improvement of the environment for foreign investors.

Regardless of the validity of US demands, FFA believes that this case demonstrates the vulnerability of developing countries to political pressure where they are dependent upon unilaterally applied trade preferences, such as under GSP schemes.

According to the article, it is important to note that both Colombia and Peru are in the final stages of negotiating FTAs with the US, which, upon their conclusion, will supersede the ATPA. Whether or not these FTAs will be passed under the new Obama administration or, if they are, if their existence will reduce the likelihood of the ATPA being extended again solely to Bolivia and Ecuador is not know.  

Given the political-economic tensions between these latter two countries and the US it might be speculated that it will not, but at the same time, the Obama administration may adopt a more conciliatory line to Ecuador and, to a lesser extent, Bolivia.

US political pressure associated with the continuation of the ATPA demonstrates the problems of relying on unilateral trade preferences.