In one of its final acts, the outgoing 109th US Congress narrowly passed a bill containing a raft of trade preferences and other commercial measures long pursued by the Bush administration. Support from both Republicans and Democrats was essential to securing passage of the bill.

The legislation extended the Generalised System of Preferences, which accords duty-free access to certain goods from over 100 developing nations, and prolonged specific trade preference schemes for Andean nations and sub-Saharan Africa. It also normalised trade relations with Vietnam.

Andean preferences extended, with a caveat

Unilateral trade preferences for Peru, Colombia, Bolivia, and Ecuador under the Andean Trade Promotion and Drug Eradication Act (ATPDEA), scheduled to expire at the end of 2006, were extended for an extra six months. This will be followed by a further six months for countries that approve free trade agreements (FTAs) with the US.

Andean exporters had warned that letting the preferences lapse, with the consequent reintroduction of tariffs, could have cost hundreds of thousands of jobs in the region. Although the extension will save jobs, they say that the uncertainty surrounding the future of the preferences will not encourage new investment.

Colombia and Peru have already concluded FTA negotiations with Washington, and thus appear likely to benefit from the additional six-month period. However, whether these accords will secure Congressional approval in the US remains uncertain. The Democrats, who will take control of Congress in January, have threatened to vote against the FTAs unless they are modified to include new provisions on labour standards.

The US has not concluded an FTA with either Ecuador or Bolivia has . Negotiations with the former got bogged down amidst disagreements on several issues, including the treatment of US investors. Talks with the latter never got off the ground. The two countries thus stand to lose duty-free access to the US market on 1 July.

The Bush administration had wanted the preferences prolonged for all four Andean countries. One trade observer suggested that it was unlikely that Washington would move quickly to reimpose tariffs on exports from Ecuador and Bolivia, noting that doing so would have substantial negative effects on those countries.

ICTSD reporting; "ATPDEA Extended for Six Months," FRESH PLAZA, 11 December 2006; "Extension of Andean trade pact welcomed," MIAMI HERALD, 13 December 2006; "Congress Approves Measure Extending Trade Preferences," US INFO, 11 December 2006.