U.S. could scrap trade benefit programs

A top senator on Thursday threatened to scrap a U.S. program that waives import duties on thousands of products from developing countries, particularly India and Brazil, now that world trade talks have collapsed.

Senate Finance Committee Chairman Charles Grassley, whose committee has jurisdiction over trade, told reporters he was frustrated that many developing countries that benefit from the Generalized System of Preferences (GSP) program oppose opening their own markets as part of a new world trade deal.

"Why should we continue to give them preferential treatment and particularly a few countries that get the bulk of the GSP, like India and Brazil?" the Iowa Republican asked, spotlighting two countries that he said shared a big portion of blame for this week's collapse of the world trade talks.

"Right now, no GSP renewal. If I change my mind on that, it's surely not going to include India and Brazil," he said.

The United States imported US$26.7 billion worth of goods from 136 developing countries under GSP in 2005. The 32-year-old trade program, which must renewed periodically, expires at the end of the year.

U.S. Trade Representative Susan Schwab told reporters Wednesday that GSP should be renewed. But in a nod to the view expressed by Grassley and other lawmakers, she indicated the administration could use its administrative authority to exclude some countries or products from the program.

Grassley said he also opposed renewal of a trade preference program for the Andean nations of Peru, Colombia, Ecuador and Bolivia that dates back to 1991 and also expires at the end of this year. That program was created to help curb drug production in the region by creating other job opportunities through expanded duty-free access to the U.S. market for a long list of goods.

The United States has negotiated free trade pacts with Peru and Colombia that would lock in the trade benefits for those countries. However, negotiations with Ecuador have been frozen since Quito seized oil field operated by U.S. company Occidental Petroleum in May.

Bolivian President Evo Morales' decision this year to nationalize the energy industry and his close ties with Venezuelan President Hugo Chavez, an ardent foe of the United States, also have strained relations with Washington.

"I'm not interested in supporting renewal of (the Andean Trade Promotion and Drug Eradication Act, or ATPDEA)," Grassley said. "Ecuador's got a chance to sit down and talk with us. They're nationalizing and confiscating private investment in that country. You know, why should we continue to give them some preferences?"

Bush administration officials said they have not taken an official position yet on Bolivia and Ecuador's request for the ATPDEA to be renewed.

"Ultimately this is a decision that is going to be made by our Congress. And it's one that we are evaluating closely," Assistant Secretary of State for the Western Hemisphere Tom Shannon told reporters.

ATPDEA has been "an important counterpoint to drug production in the region. It's produced hundreds of thousands of jobs in the region, so in that sense it's been a very, very successful program," Shannon said.