	Background

The Andean-U.S. free trade agreement (FTA) negotiations began in May 2004, when theUnited States, Colombia, Peru, and Ecuador participated in the first round of talks, with Boliviaparticipating as an observer. After thirteen rounds of talks, however, negotiators failed to reach anagreement. Peru decided to continue negotiating alone with the United States and concluded abilateral agreement in December 2005. Colombia later continued negotiationswith the United States and this agreement was concluded on February 27, 2006. The report alsodiscusses U.S.-Andean trade relations and the major trade issues in the negotiations. A press release thataccompanied the notification said that the Administration planned negotiations to begin the secondquarter of 2004, initially with Colombia and Peru, and that the United States would work withEcuador and Bolivia "with a view to including them in the agreement as well." It said that an FTA would help U.S. interests "...by reducing and eliminating barriersto trade and investment between the Andean countries and the United States. It said that an FTA "...willalso enhance our efforts to strengthen democracy and support for fundamental values in the region." 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 over halfof all U.S. imports from the four countries in 2005. The program began under the Andean Trade Preference Act (ATPA; title II of P.L. ATPA authorized the President to grant duty-free treatment to certainproducts from the four Andean countries that met domestic content and other requirements. After ATPA had lapsed for months, the Andean Trade Promotion and Drug Eradication Act(ATPDEA; title XXXI of P.L. In 2005, the United States imported $20.1 billion, or 1% of total U.S. imports, from the fourcountries. Peru and Ecuador split nearly all of the other half of imports and exports, and Boliviaaccounted for a very small share. The leading U.S. import from the region in 2005 (35% of imports) was petroleum oil,principally crude oil from Ecuador and Colombia. Leading U.S. exports to the region were petroleumproducts, mining equipment, broadcasting equipment, and data processing machines. Nevertheless, an important goal for the United States in the FTA talks was the elimination of apractice called the "price-band mechanism." (27) 
Some specific products were especially important to the trading partners. These disputes were discussed at the negotiations. The main outstanding issues are related to agriculture. (41) 
A senior US trade official recently said that the U.S. trade agreements with Colombia andPeru are likely to be treated as separate agreements by the Congress, thereby narrowing thepossibility of a stand-alone Andean-U.S. FTA. Given the TPA notificationprocedures, the free trade agreements with Colombia and Peru could be voted on by the Congresssometime this summer. 109-53 ) had been viewed as an indicator that anyU.S.-Andean FTA might also face considerable opposition. How the Bush Administration's decisionto negotiate and submit separate FTAs with Peru and Colombia may affect this calculation remainsuncertain.
In November 2003, the Administration notified Congress that it intended to beginnegotiations on a free-trade agreement (FTA) with four Andean countries - Colombia, Peru,Ecuador, and Bolivia. The notification said that an FTA would reduce and eliminate foreign barriersto 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 currenttrade preferences will terminate at the end of 2006. In the United States, the business communityindicated strong support for the trade agreement, with labor opposing it as the case for many FTAs,and the agriculture community was split.
The Andean-U.S. FTA negotiations began in May 2004, when the United States, Colombia,Peru, and Ecuador participated in the first round of talks. Bolivia participated as an observer. Afterthirteen rounds of talks, however, negotiators failed to reach an agreement. After the last set of talks,Peru decided to continue negotiating, without Colombia or Ecuador, and concluded a bilateralagreement with the United States in December 2005. Colombia later continued negotiations withthe United States and this agreement was successfully concluded on February 27, 2006. Negotiationswith Ecuador are stalemated. A senior US trade official recently stated that the Peru and ColombianFTAs are likely to be submitted to Congress as separate agreements, thereby constraining thepossibility of an Andean-U.S. FTA.
The United States currently extends duty-free treatment to imports from the four Andeancountries 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 TradePromotion and Drug Eradication Act (ATPDEA) reauthorized the ATPA program and addedproducts that had been previously excluded. Over half of all U.S. imports in 2005 from the Andeancountries entered under these preferences.
In 2005, the United States imported $20.1 billion from the four Andean countries andexported $9.9 billion. Colombia accounted for about half of U.S. trade with the region. Peru andEcuador almost evenly split the other half, and Bolivia represented a very small share. The leadingU.S. import from the region in 2005 was crude petroleum oil, which accounted for 35% of imports. Leading U.S. exports to the region were petroleum products, mining equipment, and broadcastingequipment.
There were several important issues in the FTA negotiations. The trade negotiators statedthat the main obstacles to concluding an overall agreement were in agriculture and intellectualproperty rights. Another major concern was the issue of labor standards. Under the notificationprocedures founded in the Trade Promotion Authority Act, the trade agreements with Peru andColombia could be voted on by the Congress sometime this summer. The narrow passage ofCAFTA-DR had been viewed as an indicator that any U.S.-Andean FTA might also faceconsiderable opposition. How the Bush Administration's decision to negotiate and submit separateFTAs with Peru and Colombia might affect this calculation remains uncertain. This report will notbe updated.