Six Reasons to Support a U.S.-Peru Free Trade Agreement



Thanks to fiscal restraint and sound planning, Peru has enjoyed 5 percent annual economic growth since the election of President Alejandro Toledo in 2001. Over that period, more than 500,000 Peruvians have risen above the poverty line. But more needs to be done to encourage small- and medium-sized businesses. The U.S.-Peru TPA would open doors to sustained growth and mandate deeper reforms that will encourage millions more Peruvians to participate in the formal economy.

Six Reasons to Support a U.S.-Peru Free Trade Agreement

Six Strategic Reasons to Support a U.S.-Peru Free Trade Agreement

by Ana Isabel Eiras and Stephen Johnson
WebMemo #1172

July 24, 2006

[Excerpt]

How a U.S.-Peru Free Trade Agreement Serves U.S. Interests

Largely because of commitments elsewhere, the United States provides less and less foreign aid to Latin America than in the past. Nonetheless, it is the private sector that drives economic growth and creates jobs in free societies. The U.S.-Peru Trade Promotion Agreement will help sustain growth in this key country and maintain U.S. engagement with the region. The pact would serve America’s interests in six ways:

1. It benefits the U.S. economy. Once approved by Congress, the trade pact will immediately allow 80 percent of U.S. industrial and textile products and over 60 percent of American farm products to enter the Peruvian market duty-free. The remaining barriers will phase out in 15 years. The pact permanently lowers U.S. barriers to Peruvian goods, to the benefit of U.S. consumers.

2. It counters anti-American sentiment. The U.S.-Peru TPA was approved overwhelmingly by Peru’s unicameral legislature, and U.S. approval would demonstrate faith in a long-time friend and commercial partner. The TPA fills a vacuum that would be left by the expiration of U.S.-Andean trade preferences at the end of 2006. As a consequence, it would also help block Hugo Chávez’s populist advances made through loan offers and oil concessions to Peruvian politicians in exchange for personal loyalty.

3. It rewards pro-market progress. Thanks tofiscal restraint and sound planning, Peru has enjoyed 5 percent annual economic growth since the election of President Alejandro Toledo in 2001. Over that period, more than 500,000 Peruvians have risen above the poverty line. But more needs to be done to encourage small- and medium-sized businesses. The U.S.-Peru TPA would open doors to sustained growth and mandate deeper reforms that will encourage millions more Peruvians to participate in the formal economy.

4. It fosters stability in a highly unstable region. The U.S.-Peru TPA would help Peruvians consolidate current reforms and build on the rules and institutions that are conducive to doing business. These reforms will increase growth and provide average Peruvians with tangible improvements in their lives. This is extremely important because, despite Peru’s progress, nearly half of all Peruvians are still poor and susceptible to populist rhetoric that seeks to replace trade, investment, and markets with repressive economic and political controls, such as are now being contemplated in neighboring Bolivia.

5. It supports a key ally. For more than a decade, Peru has been a partner in combating narcotics trafficking and countering regional terror groups. Under President Toledo, Peru has stood up to the anti-U.S. rhetoric of Venezuela’s Hugo Chávez in such forums as the Summit of the Americas. In the United Nations, Peru has voted in favor of applying nuclear safeguards to Iran and condemned North Korea for its offensive missile tests. In addition, it sent peacekeepers to help stabilize Haiti’s transition back to elected rule.

6. It nurtures a growing trade bloc. U.S. efforts to encourage regional trade began in the 1990s with President George H.W. Bush’s Enterprise in the Americas Initiative and the North American Free Trade Agreement. They were to have concluded with the Free Trade Area of the Americas last year. Approving the U.S.-Peru TPA would give hope to other countries that they can forge similar ties with the United States. Freer markets will facilitate commerce and investment and provide a more public-spirited alternative to Chinese deals involving government officials and monopolies.

When this story was posted in July 2006, this was on the front page of PCOL:




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Support the US-Peruvian Trade Pact Peruvian President Alejandro Toledo, the Peace Corps President, has been lobbying both Democratic and Republican legislators to support the US-Peruvian trade pact before July 28, when his term ends and a US congressional recess begins. If President Bush fails to get approval before Congress goes on recess, it will be a case study proving that the United States does not reward its friends. Please call your representatives.

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