ATPA Renewal: Background and Issues

M. Angeles Villarreal
Specialist in International Trade and Finance

The Andean Trade Preference Act (ATPA) extends duty-free treatment to certain U.S. imports that meet domestic content and other requirements from Ecuador. There were four countries originally designated to qualify for trade preferences under ATPA, including Bolivia, Colombia, Ecuador, and Peru. Colombia and Peru are no longer designated beneficiary countries because both countries have free trade agreements with the United States that have entered into force. In the case of Bolivia, trade preferences were suspended in December 2008 because Bolivia failed to meet ATPA eligibility criteria related to counter-narcotics cooperation. Bolivia may only be reinstated as a beneficiary country under ATPA if Congress approves legislation to do so.

The purpose of ATPA is to promote economic growth in the Andean region and to encourage a shift away from dependence on illegal drugs by supporting legitimate economic activities. ATPA (Title II of P.L. 102-182) was enacted on December 4, 1991. It was renewed and modified under the Andean Trade Promotion and Drug Eradication Act (ATPDEA; Title XXXI of P.L. 107-210) on August 6, 2002, extending trade preferences until December 31, 2006. Since that time, Congress has provided several short-term extensions of ATPA. The most recent extension took place on October 12, 2011, when the 112th Congress enacted implementing legislation for the U.S.-Colombia Trade Promotion Agreement (P.L. 112-42). As part of the free trade agreement (FTA) implementing legislation, ATPA was renewed for Colombia and Ecuador until July 31, 2013. The implementing legislation directed the President to terminate Colombia’s status as a designated beneficiary country once the agreement entered into force. The U.S.-Colombia FTA entered into force on May 15, 2012.

The impact of the ATPA on coca production in Andean countries has been small and mostly indirect, according to a 2012 study by the U.S. International Trade Commission. The study reports that illegal coca cultivation fell substantially in Andean countries from a 20-year peak of 232,500 hectares in 2007 to 187,000 in 2010. The study also reports that the ATPA, in combination with other alternative development programs, may indirectly have helped support job growth in certain exports from Andean countries, such as fresh-cut flowers, asparagus, bananas, and pineapples.

The trade effects of ATPA on the U.S. economy have been minimal because the amount of U.S. trade with the Andean region is low. The value of duty-free U.S. imports under ATPA accounts for about 0.8% of total U.S. imports, or 0.1% of the U.S. gross domestic product (GDP). Over 80% of U.S. imports from ATPA countries enter duty-free under various trade preference programs or through normal trade relations.

The 113th Congress may consider whether or not to continue renewing ATPA for Ecuador. Policymakers may also consider broader reform of U.S. trade preference programs, including the Generalized System of Preferences (GSP). Some Members of Congress maintain that ATPA has been responsible for helping the Andean region progress economically over the 18-year life of the program. Critics of ATPA argue that unilateral trade programs are ineffective and that trade preferences should not be extended to countries that do not support U.S. foreign and trade policies. The Ecuadorian government’s announcement that it no longer wanted to receive ATPA preferences may have overshadowed the debate for Congress on whether or not to renew ATPA. On June 27, 2013, top Ecuadorian government officials announced that the country was renouncing trade preferences from the United States under ATPA.


Date of Report: July 16, 2013
Number of Pages: 14
Order Number: RS22548
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Outsourcing and Insourcing Jobs in the U.S. Economy: Evidence Based on Foreign Investment Data

James K. Jackson
Specialist in International Trade and Finance

The impact of foreign direct investment on U.S. employment continues to attract national attention. While local communities compete with one another for investment projects, many of the residents of those communities fear losing their jobs as U.S. companies seek out foreign locations and foreign workers to perform work that traditionally has been done in the United States, generally referred to as outsourcing. Some observers suggest that current U.S. experiences with outsourcing are different from those that have preceded them and that this merits legislative actions by Congress to blunt the economic impact of these activities. Other observers argue that investing abroad by U.S. multinational companies impedes the growth of new jobs in the economy and thwarts the nation’s investments in high technology sectors. Some opponents also argue that mid-career workers who lose good-paying manufacturing and service-sector jobs likely will never recover their standard of living.

Economists and others generally argue that free and unimpeded international flows of capital ultimately have a positive impact on both domestic and foreign economies. Direct investment is unique among international capital flows because it adds permanently to the capital stock and skill set of a nation, but it also challenges the general theory of capital flows because of the presence of strong cross-border and intra-industry investment. Supporters contend that to the extent that foreign investment shifts jobs abroad, it is a minor component of the overall economic picture and that it is offset somewhat by the investment of foreign firms in the U.S. economy (referred to as insourcing), which supports existing jobs and creates new jobs in the economy.

Broad, comprehensive data on U.S. multinational companies generally lag behind current events by two years and were not developed to address the issue of jobs outsourcing. Many economists argue, however, that there is little evidence to date to support the notion that the overseas investment activities of U.S. multinational companies play a significant role in the rate at which jobs are created in the U.S. economy. Instead, they argue that the source of job creation in the economy is rooted in the combination of macroeconomic policies the nation has chosen, the rate of productivity growth, and the availability of resources. This report addresses these issues by analyzing the extent of direct investment into and out of the economy, the role such investment plays in U.S. trade, jobs, and production, and the relationship between direct investment and the broader economic changes that are occurring in the U.S. economy.


Date of Report: July 21, 2013
Number of Pages: 56
Order Number: RL32461
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U.S.-Taiwan Relationship: Overview of Policy Issues

Shirley A. Kan
Specialist in Asian Security Affairs

Wayne M. Morrison
Specialist in Asian Trade and Finance

The purpose and scope of this CRS report is to provide a succinct overview with analysis of the major issues in the U.S. policy on Taiwan. This report will be updated as warranted. Taiwan formally calls itself the sovereign Republic of China (ROC), tracing its political lineage to the ROC set up after the revolution in 1911 in China. The ROC government retreated to Taipei in 1949. The United States recognized the ROC until the end of 1978 and has maintained a nondiplomatic relationship with Taiwan after recognition of the People’s Republic of China (PRC) in Beijing in 1979. The State Department claims an “unofficial” U.S. relationship with Taiwan, despite official contacts that include arms sales. The Taiwan Relations Act (TRA) of 1979, P.L. 96-8, has governed policy in the absence of a diplomatic relationship or a defense treaty. Other key statements that guide policy are the three U.S.-PRC Joint Communiqués of 1972, 1979, and 1982; as well as the “Six Assurances” of 1982. (See also CRS Report RL30341, China/Taiwan: Evolution of the “One China” Policy—Key Statements from Washington, Beijing, and Taipei.)

For decades, Taiwan has been of significant security, economic, and political interest to the United States. In 2012, Taiwan was the 11th-largest U.S. trading partner. Taiwan is a major innovator and producer of information technology (IT) products, many of which are assembled in the PRC by Taiwan-invested firms there. Ties or tension across the Taiwan Strait affect international security (with potential U.S. intervention), the U.S.-Taiwan relationship, and U.S.- PRC cooperation. While the United States does not diplomatically recognize Taiwan, it is in reality an important autonomous actor. Today, 23 countries (including the Vatican) have diplomatic relations with Taiwan as the ROC. Taiwan’s 23 million people enjoy self-governance with democratic elections. After Taiwan’s presidential election in 2008, the United States congratulated Taiwan as a “beacon of democracy.” Democracy has offered Taiwan’s people a greater say in their status, given competing politics about Taiwan’s national identity and priorities. Taiwan held presidential and legislative elections in January 2012. Kuomintang (KMT) President Ma Ying-jeou won re-election against the Democratic Progressive Party’s (DPP) candidate.

Since Taiwan and the PRC resumed their quasi-official dialogue in 2008 under President Ma and cross-strait tension decreased, some have stressed the need to take steps by the United States and by Taiwan to strengthen their relationship to advance U.S. interests. Another approach has viewed closer cross-strait engagement as allowing U.S. attention to shift to expand cooperation with a rising China, which opposes U.S. arms sales and other dealings with Taiwan. In any case, Washington and Taipei have put more efforts into their respective relations with Beijing, while contending that they have pursued a positive, parallel U.S.-Taiwan relationship.

Taiwan’s President Ma Ying-jeou has sought U.S. support for his policies, including Taiwan’s inclusion in the U.S. Visa Waiver Program (VWP) (in 2012), the International Civil Aviation Organization (ICAO), and talks on maritime territorial disputes in the East and South China Seas. Taiwan and the Philippines are concluding parallel investigations into the incident on May 9, when the Coast Guard of the Philippines (a U.S. treaty ally) shot at a Taiwan fishing boat, resulting in the death of a Taiwan fisherman, Taiwan’s sanctions, and bilateral tension. Other policy issues include whether to approve arms sales, restart Cabinet-level visits, and continue trade talks under the Trade and Investment Framework Agreement (TIFA), or TIFA talks (resumed in March 2013). The United States has concerns about Taiwan’s restrictions on U.S. beef and pork, even as Taiwan has claimed attention to international organizations and standards.

Legislation in the 113th Congress includes H.R. 419, H.R. 772, H.R. 1151, H.R. 1960, H.Con.Res. 29, H.Res. 185, S. 12, S. 579, S. 1197, and S.Res. 167. Other congressional actions have focused on arms sales. (See CRS Report RL30957, Taiwan: Major U.S. Arms Sales Since 1990.)


Date of Report: July 2, 2013
Number of Pages: 44
Order Number: R41952
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The Trans-Pacific Partnership Negotiations and Issues for Congress

Ian F. Fergusson, Coordinator
Specialist in International Trade and Finance

William H. Cooper
Specialist in International Trade and Finance

Remy Jurenas
Specialist in Agricultural Policy

Brock R. Williams
Analyst in International Trade and Finance

The Trans-Pacific Partnership (TPP) is a proposed regional free trade agreement (FTA) being negotiated among the United States, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. On March 15, 2013, Japanese Prime Minister Shinzo Abe announced that Japan would seek to participate in the TPP negotiations. On April 24, 2013, the Obama Administration gave Congress notice of its intent to negotiate with Japan in the TPP, and Japan is expected to participate in the next round of negotiations in late July 2013. U.S. negotiators and others describe and envision the TPP as a “comprehensive and high-standard” FTA that aims to liberalize trade in nearly all goods and services and include commitments beyond those currently established in the World Trade Organization (WTO). The broad outline of an agreement was announced on the sidelines of the Asia-Pacific Economic Cooperation (APEC) ministerial in November 2011, in Honolulu, HI. If concluded as envisioned, the TPP potentially could eliminate tariff and non-tariff barriers to trade and investment among the parties and could serve as a template for a future trade pact among APEC members and potentially other countries. Congress has a direct interest in the negotiations, both through influencing U.S. negotiating positions with the executive branch, and by passing legislation to implement any resulting agreement.

The 17th round of negotiations concluded in Lima, Peru on May 24, 2013, and the 18th round is scheduled to be held in Malaysia July 15th-25th 2013. The current goal is to reach an agreement in time for the October 2013 APEC summit in Indonesia. For this deadline to be achieved, outstanding negotiating positions may need to be tabled soon in order for political decisions to be made. The negotiating dynamic itself is complex: decisions on key market access issues such as dairy, sugar, and textiles and apparel may be dependent on the outcome of controversial rules negotiations such as intellectual property rights or state-owned enterprises.

Twenty-nine chapters in the agreement are under discussion. The United States is negotiating market access for goods, services, and agriculture with countries with which it does not currently have FTAs: Brunei, Japan, Malaysia, New Zealand, and Vietnam. Negotiations are also being conducted on disciplines to intellectual property rights, trade in services, government procurement, investment, rules of origin, competition, labor, and environmental standards and other issues. In many cases, the rules being negotiated are intended to be more rigorous than comparable rules found in the WTO. Some topics, such as state-owned enterprises, regulatory coherence, and supply chain competitiveness, break new ground in FTA negotiations. As the countries that make up the TPP negotiating partners include advanced industrialized, middle income, and developing economies, the TPP, if implemented, may involve substantial restructuring of the economies of some participants.

The TPP serves several strategic goals in U.S. trade policy. First, it is the leading trade policy initiative of the Obama Administration, and is a manifestation of the Administration’s “pivot” to Asia. If concluded, it may serve to shape the economic architecture of the Asia-Pacific region by harmonizing existing agreements with U.S. FTA partners, attracting new participants, and establishing regional rules on new policy issues facing the global economy—possibly providing impetus to future multilateral liberalization under the WTO.

As the negotiations proceed, a number of issues important to Congress are emerging. One is whether the United States can balance its vision of creating a “comprehensive and high standard” agreement with a large and expanding group of countries, while not insisting on terms that other countries will reject. Another issue is how Congress will consider the TPP, if concluded. The present negotiations are not being conducted under the auspices of formal trade promotion authority (TPA)—the latest TPA expired on July 1, 2007—although the Administration informally is following the procedures of the former TPA. If TPP implementing legislation is brought to Congress, TPA may need to be considered if the legislation is not to be subject to potentially debilitating amendments or rejection. Finally, Congress may seek to weigh in on the addition of new members to the negotiations, before or after the negotiations conclude.


Date of Report: June 17, 2013
Number of Pages: 63
Order Number: R42694
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Trans-Pacific Partnership (TPP) Countries: Comparative Trade and Economic Analysis

Brock R. Williams
Analyst in International Trade and Finance

The Trans-Pacific Partnership (TPP) is a proposed regional free trade agreement (FTA) among 12 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. The negotiating partners have expressed an interest in allowing this proposed “living agreement” to cover new trade topics and to include new members that are willing to adopt the proposed agreement’s high standards. Japan is the most recent country to seek entry into the TPP. The Administration gave Congress notice of its intent to negotiate with Japan in the TPP on April 24, 2013.

The TPP negotiations have been of significant interest to Congress. Congressional involvement includes consultations with U.S. negotiators on and oversight of the details of the negotiations, and eventual consideration of legislation to implement the final trade agreement. In assessing the TPP negotiations, Members may be interested in understanding the potential economic impact and significance of TPP and the economic characteristics of the other TPP countries as they evaluate the potential impact of the proposed TPP on the U.S. economy and the commercial opportunities for expansion into TPP markets.

This report provides a comparative economic analysis of the TPP countries and their economic relations with the United States. It suggests that the TPP negotiating partners encompass great diversity in population, economic development, and trade and investment patterns with the United States. This economic diversity and inclusion of fast-growing emerging markets presents both opportunities and challenges for the United States in achieving a comprehensive and high standard regional FTA among TPP countries.

The proposed TPP and its potential expansion are important due to the economic significance of the Asia-Pacific region for both the United States and the world. The region is home to 40% of the world’s population, produces nearly 60% of global GDP, and includes some of the fastestgrowing economies in the world. Including Canada, Mexico, and Japan, TPP negotiating partners made up 40% of U.S. goods trade in 2012, and the Asia-Pacific economies as a whole made up over 62%. The TPP would be the largest U.S. FTA to date by trade value.

The United States is the largest TPP market in terms of both GDP and population. In 2012, non- U.S. TPP partners collectively had a GDP of $11.9 trillion, just over 75% of the U.S. level, and a population of 478 million, about 50% larger than the U.S. population. Japan’s entry (pop. 128 million and GDP $6 trillion) increases the significance of the agreement on both these metrics.

Unlike most previous U.S. FTA negotiations, the TPP involves countries with which the United States already has an FTA. The United States has FTAs in place with Australia, Canada, Chile, Mexico, Peru, and Singapore, which together account for over 80% of U.S. goods trade with TPP countries. Japan is by far the largest U.S. trade partner among TPP members without an existing U.S. FTA.


Date of Report: June 10, 2013
Number of Pages: 39
Order Number: R42344
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