Order Code RL32770
CRS Report for Congress
Received through the CRS Web
Andean-U.S. Free-Trade
Agreement Negotiations
Updated June 29, 2005
Lenore Sek
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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Andean-U.S. Free-Trade Agreement Negotiations
Summary
In November 2003, the Administration notified Congress that it intended to
begin negotiations on a free-trade agreement (FTA) with Colombia, Peru, Ecuador,
and Bolivia. The notification said that an FTA would reduce and eliminate foreign
barriers to trade and investment and would support democracy and fight drug activity
in the Andean region. The Andean governments wanted to ensure access to the U.S.
market, especially since their current trade preferences will terminate at the end of
2006. In the United States, the business community strongly supports the trade
agreement, labor opposes it, and agriculture is split.
The first round of negotiations was held with Colombia, Peru, and Ecuador
(with Bolivia participating as an observer) in Cartagena, Colombia, in May 2004.
Ten rounds have been held thus far. The latest round was held in Guayaquil,
Ecuador, on June 6-10, 2005; reports suggest that little progress was made. The next
round is scheduled for mid-July in Miami, and at least one more round is expected
after that. There is no scheduled deadline for the talks. Of note, in the last few
months, Ecuador and Bolivia have had sudden changes in their presidencies.
The United States currently extends duty-free treatment to imports from the four
Andean countries under a regional preference program. The Andean Trade
Preference Act (ATPA) authorized the President to grant duty-free treatment to
certain products, and the Andean Trade Promotion and Drug Eradication Act
(ATPDEA) reauthorized the ATPA program and added products that had been
previously excluded. Over half of all U.S. imports in 2004 from the Andean
countries entered under these preferences.
In 2004, the United States imported $15.5 billion from the four Andean
countries and exported $7.7 billion. Colombia accounted for about half of U.S. trade
with the region. Peru and Ecuador almost evenly split the other half, and Bolivia
represented a very small share. The leading U.S. import from the region in 2004 was
crude petroleum oil, which accounted for 37% of imports. Leading U.S. exports to
the region were mining equipment, wheat, broadcasting equipment, and maize.
There are several important issues in the FTA negotiations. One issue is
unresolved disputes involving U.S. investments in Andean countries. Another issue
is a practice called a “price-band mechanism,” where an agricultural tariff fluctuates
so that the import price falls within a specified range. A third issue involves patent
protection for test data. Another major concern is the treatment of trade unionists,
especially in Colombia, where union leaders are targeted by death squads.
If an FTA is concluded, it is uncertain when an implementing bill might be
considered in Congress. Legislation to implement the U.S.-Central American-
Dominican Republic FTA is now being considered in Congress, and any
congressional decision on that legislation would have implications for a U.S.-Andean
FTA.

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Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
U.S.-Andean Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Selected Issues in the Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Investor/State Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Intellectual Property Rights (IPR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Worker Protections and Human Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Textiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Visas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
List of Tables
Table 1. U.S. Trade with the ATPA Countries, 2004 . . . . . . . . . . . . . . . . . . . . . . 6

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Andean-U.S. Free-Trade Agreement
Negotiations
Background
At a meeting with President George W. Bush on April 28, 2003, in Washington,
Colombian President Alvaro Uribe sought a free-trade agreement (FTA) with the
United States as a means to improve Colombia’s economy, provide employment, and
offer an attractive alternative to drug activity in his country. President Bush was
reluctant to agree to free-trade talks, however, because he wanted to achieve broader
market opening through the hemispheric Free Trade Agreement of the Americas
(FTAA).1 Because the FTAA talks appeared to be stalled though, President Bush
reportedly offered at the meeting to send then-U.S. Trade Representative (USTR)
Robert Zoellick to Colombia to discuss bilateral trade between the two countries.
At the time, some Members of Congress supported free-trade talks with
Colombia. On June 11, 2003, Senator Max Baucus, Ranking Member of the Senate
Finance Committee, and three Democratic Members on the House Ways and Means
Committee urged USTR Zoellick to give “significant weight” to market size in
selecting countries for FTAs and included Colombia in a list of possible FTA
partners.2 On August 1, 2003, Senator Charles Grassley, Chairman of the Finance
Committee, and a bipartisan group of four other Senators on the Senate Finance
Committee sent the USTR a letter asking for “serious consideration of initiating
[FTA] negotiations with Colombia....”3
The USTR traveled to Bogota and met with Colombia’s President and others on
August 8, 2003. The purpose of his trip, according to the USTR, was “...to clearly
lay out the scope and depth of such a possible negotiation, what it would involve, and
to listen and learn from Colombians about their goals and expectations.”4 Peru and
Ecuador also expressed interest in FTA negotiations with the United States.
On November 18, 2003, USTR Zoellick formally notified Congress of the
Administration’s intent to begin FTA negotiations with Colombia, Peru, Ecuador,
and Bolivia. A press release that accompanied the notification said that the
1 “Bush Plays Down Prospects for Colombia Trade Pact.” Reuters. April 30, 2003.
2 Brevetti, Rossella. “Pro-Trade Democrats Urge Zoellick to Consider Market Size in FTA
Choices.” The Bureau of National Affairs, Inc. International Trade Reporter. June 19,
2003.
3 Letter reprinted at website of Inside U.S. Trade, [http://www.insidetrade.com].
4 Office of the USTR. “Zoellick to Visit Colombia, Meet with President Uribe on August
8.” Press Release. August 7, 2003. Available at [http://www.ustr.gov].

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Administration planned negotiations to begin the second quarter of 2004, initially
with Colombia and Peru, and that the United States would work with Ecuador and
Bolivia “with a view to including them in the agreement as well.”5
The USTR’s letter of notification to Congress identified economic reasons for
the negotiations. It said that an FTA would help U.S. interests “...by reducing and
eliminating barriers to trade and investment between the Andean countries and the
United States. The FTA will also enable us to address impediments to trade and
investment in the Andean countries....” The combined markets for the four Andean
countries, according to the USTR, have a gross domestic product (on a purchasing
power parity basis) of $463 billion and a combined population of 93 million people.6
The letter of notification also stated that an Andean FTA would add momentum to
the broader negotiations on an FTAA. Those negotiations were still stalled, primarily
because of differences between the United States and Brazil.
The notification identified political reasons for the talks as well. It said that an
FTA “...will also enhance our efforts to strengthen democracy and support for
fundamental values in the region.” It said that one reason for negotiating with all
four countries was that a regional strategy would help in combating narcotrafficking.7
It also pointed out several issues of concern to the United States: protection of
worker rights in Ecuador; disputes involving U.S. investors in Peru; violence against
trade unionists and disputes with U.S. investors in Colombia; and the need to work
with Bolivia and the other Andean countries on capacity building.
In the United States, the business community supports an Andean FTA. The
National Association of Manufacturers (NAM), for example, states in its trade
agenda that one of its key objectives is the congressional approval of the Andean
FTA and other FTAs now being negotiated.8 Its trade agenda states, “The NAM
supports FTAs because U.S. manufacturers face much higher barriers in foreign
markets than foreign producers face here.” A number of other groups, however,
oppose an Andean FTA. A coalition of 51 labor, religious, and environmental groups
wrote to the USTR on September 9, 2004, urging him to suspend the negotiations.
They argued that the negotiations have been conducted in secret, there has been no
meaningful dialogue with the public, and the Andean negotiations are modeled on
5 Office of the USTR. “USTR Notifies Congress of Intent to Initiate Free Trade Talks with
Andean Countries.” Press Release. November 18, 2003.
6 Ibid.
7 On a regional approach to combating illegal drug activity, the letter of notification stated:
“Narcotrafficking is a regional scourge that respects no borders. Experience has shown that
to combat it effectively requires coordination and effective strategies among all four Andean
countries.” For more information on Andean countries and issues of interest to Congress,
see CRS Report RL32250, Colombia: Issues for Congress, by Connie Veillette; CRS Report
RL32580, Bolivia: Political and Economic Developments and Implications for U.S. Policy,
by Connie Veillette; CRS Report RS21687, Ecuador: Political and Economic Situation and
U.S. Relations, by Clare Ribando; and CRS Report RL32733, Latin America and the
Caribbean: Issues for the 109th Congress, coordinated by Mark P. Sullivan.
8 National Association of Manufacturers website at [http://www.nam.org].

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CRS-3
failed trade agreements.9 Among the signatories were the AFL-CIO, American
Friends Service Committee, and Public Citizen.
The Andean governments are pursuing an FTA with the United States to assure
access to the immense U.S. market. They have preferential access now under
unilateral U.S. programs (see following section), but that access is scheduled to
expire at the end of December 2006. An FTA would lock-in those preferences and
additional duty-free treatment. The Andean governments also want to attract foreign
investment and see an FTA with the United States as a way to establish a more secure
economic environment and increase foreign investment.
Within the Andean countries, however, there is broad grass-roots opposition to
an FTA. Opponents argue that any economic benefits from increased trade under an
FTA will be realized by only a small segment of the economy, worsening the
separation of the classes. They also argue that a large part of the Andean population
is poor farmers, who are especially vulnerable and cannot compete against increased
agricultural imports from the United States, which some Andean officials claim are
heavily subsidized. A further argument is that an FTA would mean reduced revenues
for the Andean governments, and some opponents state that revenue losses will have
to be replaced with regressive domestic taxes.10
On March 23, 2004, the USTR issued a press release announcing that the United
States and Colombia would begin FTA negotiations between the two countries, and
possibly other Andean countries, on May 18-19, 2004.11 The naming of only
Colombia made it clear that there were still concerns with Peru and Ecuador that had
not been addressed. The press release mentioned outstanding disputes between U.S.
investors and the Peruvian government and concerns about protection of worker
rights and investor disputes in Ecuador. According to the press release, “We [the
U.S. government] hope that in the coming weeks these countries will take the follow-
on steps that will enable us to include them at the negotiating table, along with
Colombia, at the start of the negotiations. We look forward to including Bolivia at
a later stage, and are working with them to increase their readiness.” On May 3,
2004, the USTR announced that issues with respect to Peru and Ecuador had been
addressed, and those two countries would join with Colombia in the first round of the
negotiations.12
The first round of FTA negotiations was held in Cartagena, Colombia on May
18-19, 2004. Fourteen working groups were established. The negotiators agreed on
a schedule that, according to chief U.S. negotiator Regina Vargo, would probably
9 Alliance for Responsible Trade website at [http://www.art-us.org].
10 Several arguments against the Andean FTA are presented in: Hansen-Kuhn, Karen.
“Andean FTA: Threats to Development,” available on The Development Group for
Alternative Policies (The Development Gap) website at [http://www.developmentgap.org].
11 Office of the USTR. “U.S. and Colombia to Begin FTA Negotiations on May 18.” Press
Release. March 23, 2004.
12 Office of the USTR. “Peru and Ecuador to Join With Colombia in May 18-19 Launch of
FTA negotiations with the United States.” Press Release. May 3, 2004.

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involve seven rounds by early 2005 — one round every five to seven weeks.13 On
the day that negotiations began, students, union members, farmers, and others in
Cartagena held a one-day protest against the negotiations because of feared job loss
in the agriculture sector.14
Bolivia has attended the negotiating sessions as an observer, but is not expected
to be a party to an agreement. The USTR said, “We want to maintain the door being
open....but we also have to recognize realities,” and noted that Bolivia’s government
had “‘some basic stability issues.’”15 In mid-June 2005, the Bolivian president
resigned amid widespread opposition to foreign participation in the natural resource
sectors and other policies, and an interim president took office.
Political change has occurred recently in Ecuador as well. On April 20, 2005,
during the ninth round of FTA negotiations, the Congress in Ecuador impeached
Ecuador’s president Lucio Gutierrez and replaced him with the vice president,
Alfredo Palacio. The new president appointed the country’s trade minister as head
of a new negotiating team.
Ten rounds of negotiations have been held so far: Cartagena (May 18-19, 2004);
Atlanta (June 18, 2004); Lima, Peru (July 26-30, 2004); San Juan (September 13-17,
2004); Guayaquil, Ecuador (October 25-29, 2004); Tucson (November 20-December
4, 2004); Cartegena (February 7-11, 2005); Washington (March 14-18, 2005); Lima
(April 18-22, 2005); and Guayaquil (June 6-10, 2005). Agriculture was not a part of
the tenth round and was being addressed in separate talks later. Even without this
controversial topic, there was little progress, according to several reports.16 The next
(eleventh) round of negotiations is scheduled to take place in Miami the week of July
18. Colombia’s chief negotiator said that at least one more round will be needed
after that.17 When the negotiations might end is highly uncertain.
U.S.-Andean Trade
The United States extends special duty treatment to imports from Bolivia,
Colombia, Ecuador, and Peru under a regional trade preference program. This
program accounted for about half of all U.S. imports from the four countries in 2003.
13 Mozzo, Javier. “U.S. Toasts Strong Start to Andean Trade Talks.” Reuters. May 19,
2004.
14 Toro, Juan Pablo. “U.S., South American Nations Complete First Round of Free Trade
Talks, Meet Next in Atlanta.” The Associated Press. Associated Press Newswires. May
19, 2004.
15 Brevetti, Rossella. “Zoellick Hopes Progress in Global Round Will Help Lagging
Hemispheric Trade Talks.” Daily Report for Executives. Bureau of National Affairs, Inc.
September 10, 2004.
16 See Andrade Garcia, Carlos. “US, Andean Trade Talks to Drag on After Round Fails.”
Reuters News. June 10, 2005; and Joynes, Kate. “Another Round, Minimal Progress for
Andean Trade Accord.” Global Insight Daily Analysis. June 13, 2005.
17 Ibid.

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CRS-5
The program began under the Andean Trade Preference Act (ATPA; title II of
P.L. 102-182), enacted on December 4, 1991. ATPA authorized the President to
grant duty-free treatment to certain products from the four Andean countries that met
domestic content and other requirements. It was intended 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 was originally
authorized for 10 years and lapsed on December 4, 2001.
After ATPA had lapsed for months, the Andean Trade Promotion and Drug
Eradication Act (ATPDEA; title XXXI of P.L. 107-210), was enacted on August 6,
2002. ATPDEA reauthorized the ATPA preference program and expanded trade
preferences to include additional products that were excluded under ATPA. The
additional products under ATPDEA included petroleum and petroleum products,
certain footwear, tuna in flexible containers, and certain watches and leather
products. ATPDEA also authorized the President to grant duty-free treatment to U.S.
imports of certain apparel articles, if the articles met domestic content rules. Duty-
free benefits under ATPDEA end on December 31, 2006.
In 2004, a major share (42%) of all U.S. imports from the four Andean countries
entered duty-free under ATPDEA, and a smaller share (12%) entered duty-free under
ATPA.18 A very small share (2%) entered duty-free under the U.S. Generalized
System of Preferences, which applies to most developing countries throughout the
world. Of the remaining 44% of imports, most entered duty-free under normal trade
relations, which applies on a nondiscriminatory basis to almost all U.S. trading
partners. Only 10% of the value of U.S. imports from the four countries was dutiable
in 2004. Thus, compared to the status quo, only a relatively small share of U.S.
imports would become duty-free under an FTA. That small share, however, might
include products that are relatively import-sensitive in the United States or
disproportionately important to the Andean countries.
In 2004, the United States imported $15.5 billion, or 1% of total U.S. imports,
from the four countries. The same year, the United States exported $7.7 billion, or
1% of all U.S. exports, to the four countries. Colombia accounted for almost half of
those U.S. imports and over half of the U.S. exports (see Table 1). Peru and Ecuador
split nearly all of the other half of imports and exports, and Bolivia accounted for a
very small share.
The leading U.S. import from the region in 2004 (35% of imports) was
petroleum oil, principally crude oil from Ecuador and Colombia. Other leading U.S.
imports were gold, coal, cut flowers, coffee, articles of copper, and bananas. Leading
U.S. exports to the region were mining equipment, wheat, broadcasting equipment,
and maize.
18 Data from USITC Interactive Tariff and Trade DataWeb at [http://dataweb.usitc.gov]. For
more information on U.S. imports under ATPDEA and ATPA, see, U.S. International Trade
Commission (USITC). The Impact of the Andean Trade Preference Act. USITC Publication
3725. September 2004; and USITC. “The Expanded Andean Trade Preferences Act and
a U.S. Free Trade Agreement with its Beneficiaries.” International Economic Review.
USITC Publication 3742. November/December 2004. P. 14.

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Table 1. U.S. Trade with the ATPA Countries, 2004
U.S. Imports
U.S. Exports
Country
Region
Region
Share
Leading Items
Share
Leading Items
(%)
(%)
Bolivia
2
jewelry, tin
2
jewelry, mining machinery
Colombia
48
crude oil, coal
54
maize, vinyl chloride
Ecuador
27
crude oil, bananas
19
mining machinery, kraft
paper
Peru
24
gold, refined
24
wheat, gasoline
copper
Source: USITC Interactive Tariff and Trade DataWeb at [http://dataweb.usitc.gov]. Data are for
U.S. imports for consumption (Customs value) and domestic exports (Fas value). Regional
shares may not add to 100% due to rounding.
Selected Issues in the Negotiations
The following highlights some of the more difficult issues in the negotiations.
In addition to the following, the negotiations also cover other issues such as services
trade, electronic commerce, and government procurement.
Investor/State Disputes
One of the most important issues in the negotiations is unresolved disputes
involving U.S. investments in Andean countries. On October 6, 2004, the House
Committee on International Relations, Subcommittee on the Western Hemisphere,
held a hearing on U.S. investment disputes in Peru and Ecuador. At the hearing, E.
Anthony Wayne, Assistant Secretary of State for Economic and Business Affairs,
testified, “Nearly every U.S. company doing business in Ecuador has faced problems
with Ecuadorian government entities, from regulatory bodies to the courts and the
customs agency.” He said that the situation in Peru was “...considerably better,”
although there still were problems. He stated that both countries had been cautioned
that, “...left unresolved, these disputes are a stumbling block to achieving an FTA.”
A few months later in October 2004, Deputy USTR Peter Allgeier warned that Peru
and Ecuador could be dropped from the FTA, if outstanding investor disputes were
seen as endangering congressional approval of an FTA with Colombia.19
Unresolved disputes continue to be an issue of concern to Congress. On April
13, 2005, the House Committee on International Relations, Subcommittee on the
Western Hemisphere, held a hearing on U.S. trade agreements with Latin America.
At the hearing, John Murphy, Vice President for Western Hemisphere Affairs of the
19 Brevetti, Rossella. “Allgeier Says Peru, Ecuador Face Omission From FTA Unless
Investor Disputes Resolved.” The Bureau of National Affairs, Inc. Daily Report for
Executives. October 4, 2004.

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U.S. Chamber of Commerce, said that the situation regarding investment disputes
with Peru and Ecuador was difficult and that persistent disputes could “...stand as a
substantial obstacle that could block the participation of these countries [in an FTA].”
These disputes have been discussed at the negotiations.
Agriculture
U.S. negotiators have refused to talk about rules for agricultural subsidies,
saying that subsidies should be dealt with in the on-going multilateral trade
negotiations in the World Trade Organization. Nevertheless, an important goal for
the United States in the FTA talks has been elimination of a practice called the
“price-band mechanism.” Under this mechanism, a fluctuating tariff is imposed on
an import for the purpose of keeping the import’s price within a specific range. The
band addresses changes in world commodity prices. Colombia and Ecuador have
these variable duties on over 150 items, including corn, rice, soybeans, and powdered
milk.20 Andean negotiators have said that the price-band mechanism is necessary to
protect their farmers, especially small farmers, against subsidized imports. A
spokesperson for small farmers in Colombia said that there is a large rural population
and high unemployment in Colombia, and without protected alternative crops, the
people will produce drugs.21
Some specific products are especially important to the trading partners. For
example, access to the U. S. market is critical for Andean producers of cut flowers
(Colombia and Ecuador) and asparagus (Peru). These products, however, had the
largest potential displacement effects on U.S. producers under ATPDEA22, so they
are worrisome to U.S. growers. Also, U.S. sugar producers are concerned about
increased imports from the Andean countries. Conversely, Andean farmers see some
U.S. products, such as corn and chicken parts, as threatening.
Intellectual Property Rights (IPR)
A major area of disagreement is so-called “data exclusivity.” This term refers
to an additional period of patent protection that is given to test data, especially data
on pharmaceuticals and agricultural chemicals. The United States wants rules on
data exclusivity in an FTA to protect the results of research by pharmaceutical
companies for five years.23 In related action, the Pharmaceutical Research and
20 USTR. 2004 National Trade Estimate Report on Foreign Trade Barriers. Pgs. 96 and
117.
21 Otis, John. “Tree Oil Plan Tries to Bear Fruit; Growing Palm Extract Instead of Lucrative
Coca is a Hard Sell for Colombia Farmers.” Houston Chronicle. February 6, 2005.
22 USITC. The Impact of the Andean Trade Preference Act. P. 3-11.
23 The United States negotiated rules on data exclusivity in the Central American-
Dominican Republic FTA. Guatemala subsequently approved a law that the USTR claims
is inconsistent with the data exclusivity provisions of the FTA. A bill to repeal that law was
introduced in the Guatemalan congress on January 28, 2005. See, Brevetti, Rosella.
“Guatemala Takes Steps Toward Repeal of Data Law USTR Claims Violates CAFTA.”
(continued...)

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Manufacturers of America (PhRMA) has petitioned the U.S. government to withdraw
ATPDEA benefits for Peru and Ecuador because they have no data exclusivity laws.24
Oxfam has argued, “Guaranteeing exclusive rights over pharmaceutical data will
result in delays and limit generic competition in cases where the patent has expired
or a compulsory license has been granted.”25 The Andean countries had opposed
rules on data exclusivity, arguing that the additional period keeps generic
pharmaceuticals from entering the market and thus hurts poor people. Most recently,
however, there have been reports that some Andean countries might be considering
a three-year period of protection for test data.
Another IPR issue is so-called “bio-piracy.” Andean negotiators want IPR
provisions to protect against the use of “traditional knowledge” and “genetic
resources” without fair compensation. The United States wants “second use”
protection, where a product gets additional protection if it is found to serve a use
other than the original one under the patent. It also wants protection against parallel
imports, which are products legitimately made in one foreign country, but imported
into another country without the approval of the IPR holder. The Andean countries
oppose these U.S. positions.
Worker Protections and Human Rights
Some unions and labor rights groups have protested against trade negotiations
with Ecuador and Colombia, because they claim that these countries have
unacceptable records on worker rights and permit violence against trade unionists.
For example, an official with the International Confederation of Free Trade Unionists
(ICFTU) criticized Colombia’s president for negotiating with paramilitary forces,
who are the killers of trade unionists according to the ICFTU official, and said that
the more a union protests the president’s economic policy, the more the union is
persecuted.26 The Colombian government responds that through several programs
it has instituted, it “...has clearly demonstrated its commitment to the protection of
human rights and has given special priority to the protection of union members.”27
The U.S. State Department country report on human rights for Colombia identifies
many legal rights for unions, but recognizes problems with protecting those rights.28
For example, the report states that in Colombia, the Constitution provides a right for
23 (...continued)
Bureau of National Affairs, Inc. Daily Report for Executives. February 1, 2005.
24 The Colombian government issued decrees in 2002 and in 2003 that gave protection of
data for drugs and for agricultural chemicals respectively. See, USTR. 2004 National
Trade Estimate Report on Foreign Trade Barriers. P. 98.
25 Oxfam. “Make Trade Fair for the Americas; Agriculture, Investment and Intellectual
Property: Three Reasons to Say No to the FTAA.” Oxfam Briefing Paper 37. Available at
the Oxfam website a [http://www.oxfam.org].
26 Interview on ICFTU web page [http://www.icftu.org].
27 Written Comments by the Government of Colombia Regarding Its Commitment to Human
Rights and Labor Rights. Before the Trade Policy Staff Committee. April 2, 2004.
28 U.S. Department of State web page at [http://www.state.gov].

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most workers to organize unions, but in practice, “...violence against union members
and anti-union discrimination were obstacles to joining unions and engaging in trade
union activities....”
Ecuador’s record on human rights is also controversial. On February 1, 2005,
38 House Members (37 Democrats, 1 Independent) wrote to the foreign trade
minister of Ecuador, expressing concern with “...serious workers’ rights violations
in Ecuador and Ecuador’s failure to live up to commitments made to the U.S.
government in October 2002, as part of a review of Ecuador’s benefits under the
[ATPDEA].”29 They said that they would recommend the gradual withdrawal of
Ecuador’s ATPDEA benefits and that Ecuador’s continued failure to observe the
ATPDEA commitments “...casts doubt on whether Ecuador will be able to follow
through with obligations...” under an FTA.30 (As mentioned earlier, Ecuador’s
president was replaced on April 20, 2005.)
Textiles
A small but significant share of U.S. apparel imports from Andean countries
still pay full duty under ATPDEA. The Andean region is not considered a major
supplier, but there could be some increase in imports. In addition, the rule of origin
for textiles and apparel has been an important issue in the negotiations.
Visas
Andean countries, especially Colombia, wanted to have visa and immigration
issues in the talks. They said that heightened U.S. security has made it hard for their
business representatives to enter the United States. U.S. negotiators have insisted
that immigration issues are not negotiable.
Environment
An important environmental issue concerns investment provisions. In a letter
dated September 13, 2004, a number of environmental groups, including Friends of
the Earth, Natural Resources Defense Council, and Sierra Club, expressed concern
about the possible inclusion in an Andean FTA of an investment chapter similar to
Chapter 11 of the North American Free-Trade Agreement.31 That chapter allowed
private investors from one signatory country to seek binding arbitration against the
government of another signatory. Such provisions, environmental groups argue in
29 Letter from World Trade Online at [http://www.insidetrade.com].
30 On December 17, 2004, Human Rights Watch reported that in a special session of
Ecuador’s congress called the preceding week by the president, “...52 members of the 100-
seat congress voted to replace 27 of the 31 justices with their own political allies.” Human
Rights Watch saw this action as a violation of judicial independence. Available at
[http://hrw.org].
31 The letter is available at [http://www.choike.org/documentos/ngos_us.pdf]. For further
information on Chapter 11, see CRS Report RL31638, Foreign Investor Protection Under
NAFTA Chapter 11, by Robert Meltz.

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their letter, could allow “... foreign companies to completely bypass domestic courts
to challenge public interest safeguards.” On the other hand, U.S. negotiators have
sought such provisions in trade agreements, since U.S. companies want such
protections for their foreign investments. After the most recent round of talks, U.S.
negotiator Vargo indicated there was “substantial disagreement” on investment issues
and said that the “... investment text includes ‘probably more brackets’ than in any
other area ...,” which means that much work is still needed in that area.32
Prospects
The most recent (tenth) round of negotiations was held June 6-10, 2005 in
Guayaquil, Ecuador. The chief negotiators from Colombia, Ecuador, and Peru are
reportedly meeting in Quito, Ecuador on June 27-29, 2005, to coordinate their
positions before the next (eleventh) round of negotiations,33 which is scheduled to be
held in Miami the week of July 18, 2005. Negotiations are expected to continue at
least through the summer and probably into the fall. Agriculture and IPR continue
to be the most difficult remaining issues, and the parties are still far apart on many
other important provisions.
Negotiators had originally intended to conclude an FTA in time to meet the
current deadlines under trade promotion authority (TPA). Under current TPA
deadlines, expedited legislative procedures apply to implementing bills for trade
agreements, if, among other requirements, the agreements are entered into by June
30, 2005, and the President gives notice of the signing at least 90 days before. The
Andean FTA talks did not meet the original TPA deadline, but a two-year extension
of TPA appears likely. As long as Congress does not pass an extension disapproval
resolution before July 1, 2005, negotiators have another two years to conclude an
Andean FTA with an implementing bill considered under expedited legislative
procedures (deadlines for congressional action, no amendments). A possibly more
important, earlier deadline for negotiators, however, would be the year-end 2006
expiration of U.S. trade preferences for the Andean countries.
It is uncertain if or when a U.S.-Andean FTA might be reached and Congress
might consider action on an implementing bill. Legislation to implement the U.S.-
Central America-Dominican Republic FTA (CAFTA-DR) is now being considered.
Votes on such legislation are good indicators of congressional support for, or
opposition to, a U.S.-Andean FTA.
32 Rugaber, Christopher S. “U.S., Andean Countries Complete Eighth Round of Talks;
Significant Work Remains.” The Bureau of National Affairs, Inc. Daily Report for
Executives. March 22, 2005.
33 “Ecuador, Colombia, Peru Negotiators on FTA with USA Meet in Quito June 27-29,
2005.” Latin America News Digest. June 28, 2005.

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