U.S. and Peru Negotiate a Free-Trade Agreement

After 18 months of negotiations, the United States and Peru have come to terms on a free-trade agreement that will eliminate tariffs and trade barriers between the two countries.

However, it is uncertain when the trade pact will go into effect. It has to be ratified by the U.S. Congress. If the Central American Free Trade Agreement is any indicator, it might be a bit of a battle.

After President George Bush signed CAFTA, it took Congress more than a year to agree to the deal. In the U.S. Senate, the vote was 54–45. The U.S. House of Representatives passed the accord in July on a tight 217–215 vote.

The Bush administration was happy with the outcome. “A trade promotion agreement with Peru will generate export opportunities for U.S. companies, farmers and ranchers and help create jobs in the United States,” said U.S. Trade Representative Robert Portman, who concluded the final negotiations in Washington, D.C., on Dec. 7 with Alfredo Ferrero Diez Canseco, Peru’s minister of foreign trade and tourism.

In many ways, importing from Peru will remain the same because most Peruvian products, including apparel items, entered the United States duty free under the Andean Trade Preference Act.

The United States had been negotiating a free trade pact with Peru, Colombia and Ecuador since May 2004 as part of the Bush administration’s efforts to create a free-trade zone throughout the Western Hemisphere. The United States will continue its negotiations early next year with Colombia and Ecuador. Bolivia was an observer to these negotiations and could become part of the agreement at a later date.

In 2004, the volume of goods traded between the United States and Peru totaled $5.8 billion. Of that, $2.1 billion was exported from the United States to Peru, primarily in machinery, cereals, mineral fuel and agricultural products. Peru’s principal textile exports to the United States are cotton knit shirts and blouses, and wool yarn.

Deborah Belgum