U.S.-Peru Trade Promotion Agreement
On April 12, 2006, Trade Representative Rob Portman and Peruvian Minister of Foreign Trade, Alfredo Ferrero Diez Canseco, signed the U.S.-Peru Trade Promotion Agreement in a ceremony at the Organization of American States. Since 2009, US exports to Peru have nearly doubled.
Peru is the third largest country in South America and is approximately three times the size of California. It is the fifth most populous country in Latin America (after Brazil, Mexico, Colombia, and Argentina) with 33.7 million residents, and has a GDP of $223 billion (The World Bank). The President of Peru is popularly elected for a five-year term. A constitutional amendment passed in 2000 which prevents reelection. The legislative branch consists of a unicameral Congress of 120 members.
Peru’s economy is one of the most dynamic in Latin America, showing particularly strong growth over the past few years. During the 1990s, Peru was transformed by market oriented economic reforms and privatizations. From 1994-1997, the economy recorded robust growth driven by foreign direct investment, but stagnated from 1998 through 2001. Upon taking office in 2001, Peruvian President Alejandro Toledo maintained largely orthodox economic policies, and took measures to attract investment. Recent economic expansion has been driven by construction, mining, investment (most significantly in the Camisea natural gas project), domestic demand, and exports.
Peru is a source of both natural gas and petroleum, although the country is currently a net energy importer. In August 2004, Peru inaugurated operations of the Camisea natural gas project. Camisea gas is fueling an electricity generator and six industrial plants in Lima, with other facilities in the process of switching to gas. In a second phase, liquefied natural gas will be exported to the west coast of the United States and Mexico. Once the export phase is in place, the project is expected to boost GDP by 1.3 percent annually, draw over $3 billion in foreign investment, create thousands of jobs, and turn Peru into a net energy exporter.
Peru is the world’s second largest producer of silver, sixth largest producer of gold and copper, and a significant source of the world’s zinc and lead. Mineral exports make up around half of Peru’s total export revenue.
About 500,000 U.S. citizens visit Peru annually for business, tourism, and study. Nearly 16,000 Americans reside in Peru, and more than 400 companies are represented in the country.
In June 2006 the Peruvian Congress overwhelmingly approved the agreement by a vote of 79-14 with six abstentions. The TPA was approved by the U.S. Congress on November 8, 2007 by a vote of 285-132. The TPA was approved by the U.S. Senate on December 4, 2007 by a vote of 77-18. Both the U.S. and Peruvian Presidents have signed the TPA.
The California Chamber of Commerce, in keeping with long-standing policy, enthusiastically supports free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad and elimination of disincentives that impede the international competitiveness of California business. New multilateral, sectoral and regional trade agreements ensure that the United States may continue to gain access to world markets, resulting in an improved economy and additional employment of Americans.
Reasons for Position
- These Trade Promotion Agreements are critical elements of the U.S. strategy to liberalize trade through multilateral, regional and bilateral initiatives.
- Bilateral and regional agreements will complement the possible goal of creating a Free Trade Area of the Americas.
- The TPAs will increase momentum toward lowering trade barriers and set a positive example for other small economies in the Western Hemisphere.
Trading Partner Portal
- USTR Weekly Spotlight: Trade Relations – Peru
- FTA Sample Letter to Congress 1/10/08
- Latin American Trade Coalition
- President Bush’s Speech to U.S. Hispanic Chamber – March 2008
- http://export.gov/FTA/index.asp (U.S. govt website)
Andean Trade Preference Act Extension
In December 2009, President Obama signed legislation to extend the Andean Trade Preference Act (ATPA).
ATPA ensures that products from several trading partners in South America continue to enter the United States duty-free. With this extension, the US is committed to continue economic growth in our hemisphere with a global system based on free and open trade. Congress extended the ATPA, ensuring duty-free access to the U.S. market for trading partners in South America, including Colombia and Peru.
The ATPA also allows for suspending trade preferences with countries that do not live up their promises. Unfortunately, Bolivia has failed to cooperate with the United States on important efforts to fight drug trafficking, so President Bush proposed to suspend Bolivia’s trade preferences until it fulfills its obligations.