Peru-United States Free Trade Agreement
Encyclopedia
The United States – Peru Trade Promotion Agreement is a bilateral free trade agreement, whose objectives are eliminating obstacles to trade
, consolidating access to goods and services and fostering private investment in and between the United States
and Peru
. Besides commercial issues, it incorporates economic, institutional, intellectual property
, labor
and environmental policies
, among others. The agreement was signed on April 12, 2006; ratified by the Peruvian Congress
on June 28, 2006; by the U.S. House of Representatives
on November 2, 2007 and by the U.S. Senate
on December 4, 2007. The Agreement was implemented on February 1, 2009.
administration, the United States enacted the Andean Trade Preference Act (ATPA), eliminating tariff
s on a number of products from Peru, Bolivia
, Colombia
, and Ecuador
. Its objective was the strengthening of legal industries in these countries as alternatives to drug production and trafficking. The program was renewed on October 31, 2002 by the George W. Bush
administration as the Andean Trade Promotion and Drug Eradication Act
(ATPDEA). Under the renewed act, Andean products exempted from tariffs increased from around 5,600 to some 6,300. ATPDEA was set to expire on December 31, 2006 but was renewed by Congress for six months, up to June 30, 2007. A further extension was granted on June 28, 2007, this time for eight months, up to February 29, 2008.
On November 18, 2003, the U.S. Trade Representative
, Robert Zoellick
, notified Congress of the intention of the Bush administration
to initiate negotiations for a free trade
agreement with the countries involved in ATPDEA. Negotiations started without Bolivia in May 2004, however, as each of the three remaining Andean countries decided to pursue bilateral agreements with the United States. After 13 rounds of negotiations, Peru and the United States concluded an agreement on December 7, 2005. Alfredo Ferrero, Peruvian Minister of Foreign Trade and Tourism, and the U.S. Trade Representative Rob Portman
signed the deal on April 12, 2006 in Washington, D.C.
, in the presence of Peruvian President Alejandro Toledo
.
The Congress of Peru debated the agreement for six hours during the night of June 27, 2006 and ratified it in the early hours of the next day. The vote was 79–14, with seven abstentions. The U.S. House of Representatives approved the agreement on November 8, 2007, with a 285–132 vote. The U.S. Senate approved the agreement on December 4, 2007, with a 77–18 vote. The implementation bills gained wide support from the Republican Party
(176–16 in the House, 47–1 in the Senate) and split backing from the Democratic Party
(109–116 and 29–17).
On January 16, 2009 President George W. Bush signed a proclamation To Implement the United States-Peru Trade Promotion Agreement and for Other Purposes, effective February 1, 2009.
The United States looks to this agreement as a way to:
and Valentín Paniagua
. The 2006 election's
runner-up Ollanta Humala
has been its most vocal critic. Humala's Union for Peru
won 45 of 120 seats in Congress, the largest share by a single party, prompting the debate and ratification of the agreement before the new legislature was sworn in. Some Congressmen-elect interrupted the debate after forcibly entering Congress, in an attempt to stop the agreement ratification.
Critics of the Peru TPA say the pact will worsen Peru's problems with child labor
and weak labor rights
, and expose the country's subsistence farmers to disruptive competition with subsidized U.S. crops. Additionally, critics contend that Dubai Ports World
will be able to use its Peruvian subsidiary to obtain rights to operate U.S. ports. Animal rights
groups have opposed this legislation due to the possibility of spreading factory farming practices through Latin America
, increasing U.S. pork
and poultry
exports, and mining
development that causes deforestation
and habitat loss for animals.
The most controversial elements of the agreement relate to forestry. Laura Carlsen, of the Center for International Policy, and contributor to Foreign Policy in Focus notes that "Indigenous organizations warn that this ruling effectively opens up 45 million hectares to foreign investment and timber, oil, and mining exploitation."
In support of Peru TPA
Opposed to Peru TPA
Trade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
, consolidating access to goods and services and fostering private investment in and between the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and Peru
Peru
Peru , officially the Republic of Peru , is a country in western South America. It is bordered on the north by Ecuador and Colombia, on the east by Brazil, on the southeast by Bolivia, on the south by Chile, and on the west by the Pacific Ocean....
. Besides commercial issues, it incorporates economic, institutional, intellectual property
Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
, labor
Labor relations
Industrial relations is a multidisciplinary field that studies the employment relationship. Industrial relations is increasingly being called employment relations because of the importance of non-industrial employment relationships. Many outsiders also equate industrial relations to labour relations...
and environmental policies
Environmental policy
Environmental policy is any [course of] action deliberately taken [or not taken] to manage human activities with a view to prevent, reduce, or mitigate harmful effects on nature and natural resources, and ensuring that man-made changes to the environment do not have harmful effects on...
, among others. The agreement was signed on April 12, 2006; ratified by the Peruvian Congress
Congress of Peru
The Congress of the Republic of Peru or the National Congress of Peru is the unicameral body that assumes legislative power in Peru.Congress consists of 130 members of congress , who are elected for five year periods in office on a proportional representation basis...
on June 28, 2006; by the U.S. House of Representatives
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
on November 2, 2007 and by the U.S. Senate
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
on December 4, 2007. The Agreement was implemented on February 1, 2009.
History
On December 4, 1991, under the George H. W. BushGeorge H. W. Bush
George Herbert Walker Bush is an American politician who served as the 41st President of the United States . He had previously served as the 43rd Vice President of the United States , a congressman, an ambassador, and Director of Central Intelligence.Bush was born in Milton, Massachusetts, to...
administration, the United States enacted the Andean Trade Preference Act (ATPA), eliminating tariff
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
s on a number of products from Peru, Bolivia
Bolivia
Bolivia officially known as Plurinational State of Bolivia , is a landlocked country in central South America. It is the poorest country in South America...
, Colombia
Colombia
Colombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
, and Ecuador
Ecuador
Ecuador , officially the Republic of Ecuador is a representative democratic republic in South America, bordered by Colombia on the north, Peru on the east and south, and by the Pacific Ocean to the west. It is one of only two countries in South America, along with Chile, that do not have a border...
. Its objective was the strengthening of legal industries in these countries as alternatives to drug production and trafficking. The program was renewed on October 31, 2002 by the George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
administration as the Andean Trade Promotion and Drug Eradication Act
Andean Trade Promotion and Drug Eradication Act
The Andean Trade Promotion and Drug Eradication Act is a trade preference system by which the United States grants duty-free access to a wide range of exports from four Andean countries: Bolivia, Colombia, Ecuador, and Peru. It was enacted on October 31, 2002 as a replacement for the similar...
(ATPDEA). Under the renewed act, Andean products exempted from tariffs increased from around 5,600 to some 6,300. ATPDEA was set to expire on December 31, 2006 but was renewed by Congress for six months, up to June 30, 2007. A further extension was granted on June 28, 2007, this time for eight months, up to February 29, 2008.
On November 18, 2003, the U.S. Trade Representative
Office of the United States Trade Representative
The Office of the United States Trade Representative is the United States government agency responsible for developing and recommending United States trade policy to the president of the United States, conducting trade negotiations at bilateral and multilateral levels, and coordinating trade...
, Robert Zoellick
Robert Zoellick
Robert Bruce Zoellick is the eleventh president of the World Bank, a position he has held since July 1, 2007. He was previously a managing director of Goldman Sachs, United States Deputy Secretary of State and U.S. Trade Representative, from February 7, 2001 until February 22, 2005.President...
, notified Congress of the intention of the Bush administration
George W. Bush administration
The presidency of George W. Bush began on January 20, 2001, when he was inaugurated as the 43rd President of the United States of America. The oldest son of former president George H. W. Bush, George W...
to initiate negotiations for a free trade
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...
agreement with the countries involved in ATPDEA. Negotiations started without Bolivia in May 2004, however, as each of the three remaining Andean countries decided to pursue bilateral agreements with the United States. After 13 rounds of negotiations, Peru and the United States concluded an agreement on December 7, 2005. Alfredo Ferrero, Peruvian Minister of Foreign Trade and Tourism, and the U.S. Trade Representative Rob Portman
Rob Portman
Robert Jones "Rob" Portman is the junior United States Senator from Ohio. He is a member of the Republican Party. He succeeded retiring Senator George Voinovich....
signed the deal on April 12, 2006 in Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
, in the presence of Peruvian President Alejandro Toledo
Alejandro Toledo
Alejandro Celestino Toledo Manrique is a politician who was President of Peru from 2001 to 2006. He was elected in April 2001, defeating former President Alan García...
.
The Congress of Peru debated the agreement for six hours during the night of June 27, 2006 and ratified it in the early hours of the next day. The vote was 79–14, with seven abstentions. The U.S. House of Representatives approved the agreement on November 8, 2007, with a 285–132 vote. The U.S. Senate approved the agreement on December 4, 2007, with a 77–18 vote. The implementation bills gained wide support from the Republican Party
Republican Party (United States)
The Republican Party is one of the two major contemporary political parties in the United States, along with the Democratic Party. Founded by anti-slavery expansion activists in 1854, it is often called the GOP . The party's platform generally reflects American conservatism in the U.S...
(176–16 in the House, 47–1 in the Senate) and split backing from the Democratic Party
Democratic Party (United States)
The Democratic Party is one of two major contemporary political parties in the United States, along with the Republican Party. The party's socially liberal and progressive platform is largely considered center-left in the U.S. political spectrum. The party has the lengthiest record of continuous...
(109–116 and 29–17).
On January 16, 2009 President George W. Bush signed a proclamation To Implement the United States-Peru Trade Promotion Agreement and for Other Purposes, effective February 1, 2009.
Potential benefits
Peru is interested in the agreement in order to:- consolidate and extend the trade preferences under ATPDEA
- attract foreign investment
- generate employment
- enhance the country's competitiveness within the region
- increase the workers' incomeIncomeIncome is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
- curb povertyPovertyPoverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...
levels. - create and export sugar cane ethanolEthanol fuelEthanol fuel is ethanol , the same type of alcohol found in alcoholic beverages. It is most often used as a motor fuel, mainly as a biofuel additive for gasoline. World ethanol production for transport fuel tripled between 2000 and 2007 from 17 billion to more than 52 billion litres...
.
The United States looks to this agreement as a way to:
- improve access to goods and services
- strengthen its investments
- promote security and democracyDemocracyDemocracy is generally defined as a form of government in which all adult citizens have an equal say in the decisions that affect their lives. Ideally, this includes equal participation in the proposal, development and passage of legislation into law...
- fight against drug trafficking
Sensitive topics
- Intellectual propertyIntellectual propertyIntellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
- Patent protection
- No discrimination against foreign investors
- Elimination of export subsidies
- Schedule for tariff reduction
- Application of farming safeguard measures
- Technical cooperation and assistance programs
- Effective enforcement of environmental legislation
- SovereigntySovereigntySovereignty is the quality of having supreme, independent authority over a geographic area, such as a territory. It can be found in a power to rule and make law that rests on a political fact for which no purely legal explanation can be provided...
to adopt and modify environmental legislation - Mechanisms for environmental cooperation
- Labor
- Rigorous enforcement of national legislation
- Fundamental International Labor Organization treaties
- Sovereignty to modify legislation
- Mechanisms for cooperation
- Environment/Animal Welfare
- Habitat Loss Due to Expansion of Mining Development
- Increased U.S. pork and poultry exports funding factory farmingFactory farmingFactory farming is a term referring to the process of raising livestock in confinement at high stocking density, where a farm operates as a factory — a practice typical in industrial farming by agribusinesses. The main products of this industry are meat, milk and eggs for human consumption...
- Legislation to protect animals could be seen as trade barrier
Criticism
The agreement has suffered consistent criticism. In Peru, the treaty was championed by Toledo, and supported to different extents by President-elect Alan García and candidates Lourdes FloresLourdes Flores
Lourdes Celmira Rosario Flores Nano is a Peruvian politician and lawyer. She currently leads the Unidad Nacional ' alliance and the Partido Popular Cristiano ' in Peru, which is the most well-known right-of-center party of the country.-Biography:Lourdes Flores was born in Lima on 7 October 1959...
and Valentín Paniagua
Valentín Paniagua
Valentín Paniagua Corazao was a Peruvian politician and former Interim President of Peru. Paniagua was elected by the Peruvian Congress to serve as interim president of the country after Alberto Fujimori was ousted from office by Congress in November 2000.As Interim President, his main task was to...
. The 2006 election's
Peruvian national election, 2006
The first round of the 2006 Peruvian national election was held on April 9, 2006 to elect the President of the Republic, two Vice-Presidents, 120 Members of Congress, and five Peruvian members of the Andean Parliament , for the 2006-2011 period.No single presidential ticket obtained more than half...
runner-up Ollanta Humala
Ollanta Humala
Ollanta Moisés Humala Tasso is a Peruvian politician and the President of Peru. Humala, who previously served as an army officer, lost the presidential election in 2006 but won the 2011 presidential election in a run-off vote...
has been its most vocal critic. Humala's Union for Peru
Union for Peru
Union for Peru is a Peruvian political party. UPP was founded by Javier Pérez de Cuéllar, ex UN Secretary General, in 1994. UPP was originally a liberal or centrist political party....
won 45 of 120 seats in Congress, the largest share by a single party, prompting the debate and ratification of the agreement before the new legislature was sworn in. Some Congressmen-elect interrupted the debate after forcibly entering Congress, in an attempt to stop the agreement ratification.
Critics of the Peru TPA say the pact will worsen Peru's problems with child labor
Child labor
Child labour refers to the employment of children at regular and sustained labour. This practice is considered exploitative by many international organizations and is illegal in many countries...
and weak labor rights
Labor rights
Labor rights or workers' rights are a group of legal rights and claimed human rights having to do with labor relations between workers and their employers, usually obtained under labor and employment law. In general, these rights' debates have to do with negotiating workers' pay, benefits, and safe...
, and expose the country's subsistence farmers to disruptive competition with subsidized U.S. crops. Additionally, critics contend that Dubai Ports World
Dubai Ports World
DP World is a major operator of marine ports with 49 terminals in operation and a further 9 under development across 31 countries. In 2010, DP World handled nearly 50 million TEU across its portfolio from the Americas to Asia...
will be able to use its Peruvian subsidiary to obtain rights to operate U.S. ports. Animal rights
Animal rights
Animal rights, also known as animal liberation, is the idea that the most basic interests of non-human animals should be afforded the same consideration as the similar interests of human beings...
groups have opposed this legislation due to the possibility of spreading factory farming practices through Latin America
Latin America
Latin America is a region of the Americas where Romance languages – particularly Spanish and Portuguese, and variably French – are primarily spoken. Latin America has an area of approximately 21,069,500 km² , almost 3.9% of the Earth's surface or 14.1% of its land surface area...
, increasing U.S. pork
Pork
Pork is the culinary name for meat from the domestic pig , which is eaten in many countries. It is one of the most commonly consumed meats worldwide, with evidence of pig husbandry dating back to 5000 BC....
and poultry
Poultry
Poultry are domesticated birds kept by humans for the purpose of producing eggs, meat, and/or feathers. These most typically are members of the superorder Galloanserae , especially the order Galliformes and the family Anatidae , commonly known as "waterfowl"...
exports, and mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
development that causes deforestation
Deforestation
Deforestation is the removal of a forest or stand of trees where the land is thereafter converted to a nonforest use. Examples of deforestation include conversion of forestland to farms, ranches, or urban use....
and habitat loss for animals.
The most controversial elements of the agreement relate to forestry. Laura Carlsen, of the Center for International Policy, and contributor to Foreign Policy in Focus notes that "Indigenous organizations warn that this ruling effectively opens up 45 million hectares to foreign investment and timber, oil, and mining exploitation."
External links
- Final Text of the United States - Peru Trade Promotion Agreement Página del Tratado de Libre Comercio Peruvian Government's site on the agreement
- Congressional Research Service Report on Andean Free Trade Agreement, including Peru TPA
- Senate Finance Committee Hearing on Peru TPA
- House Ways and Means Committee Hearing on Peru TPA
- Carnegie Endowment for International Peace Report on Peru TPA / AFTA
- Projections of Increases in Child Labor and Rural Poverty with US-Peru TPA by Young Lives, a project of the U.K. government and Save the Children
In support of Peru TPA
- U.S. Trade Representative's Site on Peru TPA
- Emergency Committee for American Trade Site on Peru TPA
- Business Roundtable Statement on Peru TPA
- Heritage Foundation Memo on Peru TPA
Opposed to Peru TPA
- Rep. Sander Levin (D-Mich.) Speech on Peru TPA
- League of United Latin American Citizens' Statement on Peru TPA
- Oxfam America's Site on the Peru TPA and other trade pacts
- Global Trade Watch Site on Peru TPA/AFTA
- Citizen's Trade Campaign Site on Peru TPA/AFTA
- AFL-CIO Site on the Peru TPA and other trade pacts El Perú frente al TLC (TLC Así NO) Peruvian opposition site