U.S. and Peru Conclude Free Trade Agreement
The Office of the U.S. Trade Representative (USTR) has issued a press release and fact sheet stating that the U.S. and Peru have completed a comprehensive free trade agreement (FTA). USTR Portman noted that as many products from Peru already enter the U.S. market duty-free under the Andean Trade Preference Act (ATPA), this FTA with Peru will level the playing field and make duty-free treatment a two-way street.
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In May 2004, the U.S. initiated FTA negotiations with three Andean nations - Peru, Colombia, and Ecuador. The USTR states that the negotiations with Colombia and Ecuador will resume early next year. The USTR adds that Bolivia has participated as an observer and could become part of the agreement at a later stage.
Under the Trade Act of 2002, the Bush Administration must notify Congress at least 90 days before signing the FTA with Peru.
According to the USTR, highlights of the Peru FTA include (partial list):
80% of U.S. exports of consumer and industrial products to become duty-free immediately. The USTR states that 80% of U.S. exports of consumer and industrial products to Peru will be duty-free immediately upon entry into force of the agreement, and an additional seven percent will be duty free within five years. All remaining tariffs will be eliminated within ten years.
2/3 of U.S. farm exports will become duty-free immediately. More than two-thirds of current U.S. farms exports to Peru will become duty-free immediately. Items that will receive immediate duty-free treatment include high qualify beef, cotton, wheat, soybeans, soybean meal and crude soybean oil; key fruits and vegetables including apples, pears, peaches, and cherries; almonds, and many processed food products including frozen French fries, cookies, and snack foods.
The USTR notes that tariffs on most remaining U.S. farm products will be phased out within 15 years, with all tariffs eliminated in 18 years. U.S. farm products that will benefit from improved market access include pork, beef, corn, poultry, rice, fruits and vegetables, processed products and dairy products.
Duty-free treatment for qualifying textiles and apparel. The USTR's fact sheet also states that textiles and apparel will be duty-free and quota-free immediately if the products meet the agreement's rule of origin, promoting new opportunities for U.S. and Peruvian fiber, yarn, fabric and apparel manufacturing.
De minimis provision for limited amounts of third-country apparel content. The U.S.-Peru FTA includes a "de minimis" provision that will allow limited amounts of specified third-country content to go into U.S. and Peruvian apparel, giving producers in both countries needed flexibility.
Textile safeguard provision. The Peru FTA also includes a special textile safeguard that will provide for temporary tariff relief, if imports under the FTA prove to be damaging to domestic producers.
Comprehensive rules of origin. The Peru FTA provides comprehensive rules of origin in order to ensure that only U.S. and Peruvian goods benefit from the FTA. The rules of origin are designed to provide clarity, predictability and certainty to the private sector and customs administrations.
Transparent and efficient customs procedures. The Peru FTA requires transparency and efficiency in administering customs procedures, including the FTA's rules of origin. Peru commits to publish laws and regulations on the Internet, and will ensure procedural certainty and fairness.
Removal of tariff and non-tariff barriers to IT products. The Peru FTA provides that Peru will join the World Trade Organization's (WTO's) Information Technology Agreement (ITA), which removes tariff and non-tariff barriers to information technology products.
Dismantling of significant services and investment barriers. Peru has agreed to exceed its commitments made in the WTO, and to dismantle significant services and investment barriers, such as measures that require U.S. firms to hire nationals rather than U.S. professionals and measures requiring the purchase of local goods.
Greater protection for IPR. The USTR states that in all categories of intellectual property rights (IPR), U.S. companies will be treated at least as well as Peruvian companies, and the agreement makes a number of important improvements to IPR protections.
USTR Press Release (dated 12/07/05) available at http://www.ustr.gov/assets/Document_Library/Press_Releases/2005/December/asset_upload_file744_8518.pdf
USTR Peru FTA Fact Sheet available at http://www.ustr.gov/assets/Document_Library/Fact_Sheets/2005/asset_upload_file266_8547.pdf?ht=peru%20tpa%20facts%20peru%20tpa%20facts
USTR Peru FTA Fact Sheet on Labor Rights available at http://search.crownpeak.com/cpt_redirect/659?account=1003&qid=5605