Mr. Chairman, the Association of Apparel Exporters to the United States (EXPORAMERICA) is a non-profit association compromised of private Peruvian companies that export apparel to the United States. Our members create jobs in the clothing sector that are instrumental in battling illegal drug production and trafficking. We are pleased that an extension and expansion of the Andean Trade Preferences Act (ATPA) is on the Committee’s agenda. We look forward to working with the Committee on an ATPA that benefits all four Andean nations in order to reduce the drug trade by strengthening the local legal economies.

The ATPA was enacted on December 4, 1991 to authorize preferential trade benefits for the Andean nations. The purpose of the ATPA is to expand economic incentives to assist Bolivia, Ecuador, Colombia, and Peru to generate an alternative to employment in the drug production and trade. The goal is to increase legal employment through exports to the United States market. The beneficiary countries have to meet criteria for cooperating in the drug war. Duty-free treatment only applies to certain products. The product list does not include textiles and apparel. Yet, these products create many farming and manufacturing jobs that provide alternatives to work in the coca fields. The ATPA expires on December 4, 2001. It is essential that the ATPA be extended and expanded promptly.

The ATPA has had only a moderate impact in generating new employment opportunities in Peru because textiles and apparel are excluded from duty free treatment. Textiles and apparel are the principal industrialized exports to the U.S.A. Peruvian products that currently benefit from the ATPA are mostly minerals that do not involve an intensive labor process and have very low import duties. By contrast, we have a fully integrated and highly efficient apparel industry that creates many jobs vital to the fight against drugs. Most apparel from Peru and Bolivia is made from high quality, locally grown cotton or from llama or alpaca that is native to the region. The use of cotton grown in Peru and Bolivia is an essential part of our industry. Cotton is an important alternative crop to the coca and provides an important source of lawful employment for both our agricultural and factory workers.

Recently, the Trade Ministers of the Andean community at a meeting in Lima stated their joint position on the inclusion of textile apparels in the ATPA in a document called "Position of the Andean Community to the Andean Trade Preference Act." The Trade Ministers believe that textiles and apparel should be included in the ATPA and more specifically, "the expansion of the coverage of the ATPA should not be conditioned to regulations regarding the origin of raw materials that restrict the access of our textiles and apparel."

Hundreds of thousand of jobs are at stake. The Trade and Development Act of 2000 now provides the Caribbean Countries with preferential tariff treatment for certain textile and apparel products. This expansion of benefits to CBI countries places Andean farmers and manufacturers at a competitive disadvantage and threatens to undermine the drug war. Peru’s textiles sector supports 32 percent of the population employed in the manufacturing industry, which amounts to approximately 180,500 jobs. Another 200,000 jobs are in the agriculture industry. Workers who would otherwise have lawful jobs will be left without an alternative to coca production, if our industry continues to be at a competitive disadvantage due to high tariff barriers in the United States.

Expanding the ATPA to include textiles and apparel would not have a substantial negative impact on the U.S. economy. In 1999, textile/apparel exports from Andean countries represented only 1.1 percent of the total textile/apparel exports to the United States and 0.46 percent of this is exported from Peru. The ATPA countries export far less textiles/apparel than the CBI region. In addition, Peruvian apparel exporters are interested in importing additional cotton from the United States to supplement the Peruvian cotton production. Thus, to the extent, we can sell more apparel to the United States, the more cotton we will import from the United States, providing export markets and jobs to your country as well.

We look forward to working with you to expand your initiative to provide a solution that benefits all the Andean nations. The drug war cannot be won without improving the economies in the entire Andean region. The data on the drug trade clearly shows that the coca economy is regional, and that actions adopted in one country affect the drug combat efforts in neighboring countries. The success in Peru’s drug fight, for instance, has corresponded with an increase in Colombia’s coca-growing activity. Any bill that does not help the entire region will only move the drug problems from one country to the next, which does not help you or us.

An expansion of the ATPA to include textiles and apparel would provide the necessary economic incentives to eliminate the lure of illicit jobs and build a stronger more stable hemisphere.