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NDTO News Article

United States, Peru sign trade agreement

A Trade Agreement reached between the United States and Peru will expand export opportunities for U.S. farmers, ranchers, manufacturers and service providers, U.S. Trade Representative Susan Schwab said after the trade pact’s signing.
President George Bush and Peruvian President Alan Garcia signed the free trade agreement between their countries Dec. 14.
Currently, the U.S. and Peru enjoy a two-way trade relationship of nearly $8.8 billion dollars.

Upon implementation of the U.S.-Peru Trade Promotion Agreement, 80 percent of U.S. exports of consumer and industrial goods to Peru will enter duty-free immediately, with remaining tariffs phased out over 10 years. Additionally, more than two-thirds of current U.S. farm exports will become duty-free immediately.

The trade agreement will level the playing field in a trade relationship that has provided duty-free access to Peruvian products under preference programs such as the Andean Trade Preference Act (ATPA) and the Generalized System of Preferences (GSP). Peru’s people will be able to continue this economic growth and enjoy greater economic and political stability by locking in Peru’s trade relationship with the largest market in the world.

North Dakota exported about $2 million in goods to Peru last year. The state’s top exports to Peru include machinery and value added crops. Peru is a growing market for U.S. products. U.S. goods exports have increased almost 50 percent in the past 10 years. Current U.S. goods exports are more than $2billion per year.

The trade agreement’s benefits include:

• New Opportunities for U.S. Farmers and Ranchers: More than two-thirds of current U.S. farm exports will become duty-free immediately. Tariffs on most U.S. farm products will be phased out within 15 years (many immediately or within 5 years), with all tariffs eliminated in 17 years. In addition, Peru agreed to eliminate its price band system on trade with the United States, and the United States and Peru resolved a number of significant sanitary and phytosanitary (SPS) and technical standards issues that had impeded or blocked U.S. exports of beef, pork, poultry, and rice.

• Strong Protections for U.S. Investors: The agreement establishes a secure, predictable legal framework for U.S. investors operating in Peru. All forms of investment are protected under the Agreement. U.S. investors will enjoy in almost all circumstances the right to establish, acquire and operate investments in Peru on an equal footing with local investors.

• Expanded Access to Services Markets: Peru will accord substantial market access across its entire services regime including financial services. Peru has agreed to eliminate measures that require U.S. firms to hire national rather than U.S. professionals and measures requiring the purchase of local goods. Peru also agreed that both mutual funds and pension funds in Peru will be allowed to use portfolio managers in the U.S.

• Greater Protection for Intellectual Property Rights: The agreement provides for improved standards for the protection and enforcement of a broad range of intellectual property rights, which are consistent, both with U.S. standards of protection and enforcement and with emerging international standards. Such improvements include state-of-the-art protections for digital products such as U.S. software, music, text, and video; stronger protection for U.S. patents, trademarks and test data, including an electronic system for the registration and maintenance of trademarks; and further deterrence of piracy and counterfeiting of criminalizing end-user piracy.

• Internationally-recognized Labor Rights: The agreement includes an enforceable reciprocal obligation for the countries to adopt and maintain in their laws and practice the principles concerning the fundamental labor rights as stated in the 1998 ILO Declaration on Fundamental Principles and Rights at Work, including a prohibition on the worst forms of child labor. Neither Party may waive or derogate from the laws that implement this obligation in a manner affecting trade or investment. There is also an enforceable obligation to effectively enforce labor laws related to those rights and to working conditions. These labor obligations are subject to the same dispute settlement procedures and enforcement mechanisms as commercial obligations. The Agreement also establishes a Cooperative Mechanism for the governments to develop cooperative activities aimed at promoting and advancing fundamental labor rights.

• Commitments and Cooperation to Protect the Environment: The agreement commits parties to effectively enforce their own domestic environmental laws and adopt, maintain and implement laws, regulations and all other measures to fulfill obligations under the seven covered multilateral environmental agreements (MEAs). All obligations in the Environment Chapter are subject to the same dispute settlement procedures and enforcement mechanisms as commercial obligations. The Chapter includes a groundbreaking Annex on Forest Sector Governance, addressing the environmental and economic consequences of trade associated with illegal logging and illegal trade in wildlife, and provides for concrete steps that the Parties will take to enhance forest sector governance and promote legal trade in timber products.

• Fair and Open Government Procurement: U.S. suppliers are granted non-discriminatory rights to bid on contract from a broad range of Peruvian government ministries, agencies, public enterprises, and regional governments. The Agreement requires the use of fair and transparent procurement procedures, such as advance notice of purchase and timely and effective bid review procedures.

• An Open and Competitive Telecommunications Market: Users of the telecom network are guaranteed reasonable and non-discriminatory access to the network. This prevents local firms from having preferential or “first right” of access to telecom networks. U.S. phone companies obtain the right to interconnect with Peruvian dominant suppliers’ fixed networks at nondiscriminatory and cost-based rates.

• Increased Transparency: The Agreement’s dispute settlement mechanisms provide for open public hearings, public access to documents, and the opportunity for third parties to submit views. Transparency in customs operations will aid express delivery shipments and will require more open and public processes for customs rulings and administration. For customs procedures, Peru commits to publish laws and regulations on the Internet, and will ensure procedural certainty and fairness. Peru also committed to make public its response to significant comments received on proposed technical regulations.

• Dispute Settlement: Core obligations, including labor and environment provisions, are subject to the dispute settlement mechanism of the Agreement.