The House of Representatives has approved an extension, without modifications, of the US Generalised System of Preferences (GSP) until end-2009. The Senate is yet to vote on the GSP, which is set to expire at the end of this year. However, Republican Senator Charles Grassley is seeking at least a promise of reforms to the GSP – largely aimed at curtailing benefits for emerging economies such as Brazil and India – before agreeing to an extension.
The House-approved bill would also repeal the so-called ‘abundant supply’ requirement in the African Growth and Opportunity Act (AGOA). Under the provision, African apparel exports must use up a certain quota of fabric made either locally or in the US before garments made of imported material can be shipped to the US duty-free.
The situation remains delicate with regard to trade preferences currently enjoyed by Bolivia, Colombia, Ecuador and Peru. The Andean Trade Promotion and Drug Eradication Act (ATPDEA) runs until end-2008, and a number Republicans in both chambers have linked its extension to a congressional vote on the US-Colombia free trade agreement (the proceedings are currently suspended, see Bridges Year 12 No.3 page 16). Others, including Senator Grassley and the US Chamber of Commerce, are reluctant to grant preferences to Bolivia and Ecuador, which they see as hostile to the interests of US investors. Indeed, oil giant Chevron has petitioned the Bush administration to revoke benefits for Ecuador, whose government is suing the company for environmental damage incurred during oil exploration and production between 1972 and 1992. Chevron claims that it carried out a US$40 million remediation programme and was consequently released from any further environmental liability.
The Ecuadorian government estimates that the termination of ATPDEA preferences could result in the loss of up to 350,000 jobs.