In an attempt to open up the global import-export markets to fairer competition, The US has been making many free trade agreements with foreign nations. One that had a very positive impact is the Peru Trade Promotion Agreement (PTPA). The PTPA was signed in On December 14, 2007, and entered into affect on February 1, 2009.
Benefits of Peru Trade Promotion
The PTPA was a substantial benefit to the agricultural business between the two nations. The USDA found that without the PTPA, “…less than 2 percent of U.S. agricultural exports enjoyed duty-free access to Peru. With the agreement “U.S. exporters now receive duty-free treatment on products accounting for nearly 90 percent of current trade and will see all tariffs phased out for the remaining products.” Prior to the agreement Peru also “…applied variable tariffs based on price bands on more than 40 products, including corn, rice, dairy, and sugar”. With the agreement “Peru immediately eliminate its price band system.”
One of the points of the PTPA that is very beneficial is that it was implemented through all the markets. The USDA stated there were “No products…excluded from this agreement. Liberalization of Peru’s market occurred through tariff elimination for all commodities combined with zero-duty tariff-rate quotas (TRQs) on commodities for which tariff elimination takes place over longer periods.” This includes sugar, which “…Under the agreement, all tariffs will be eliminated within 10 years.” This is a good start towards helping open up the trade with sugar to foreign nations. This is, however, most probably because Peru is an importer of sugar, not an exporter. The USTR stated the agreement also includes the topics of “customs administration and trade facilitation, technical barriers to trade, government procurement, services, investment, telecommunications, electronic commerce, intellectual property rights, and labor and environmental protection.” Visit the USTR for a list of the entire trade promotion agreement.
Peru Trade Agreement Concerns
There are some areas of concern with opening trade with Peru. The most notable is their history of labor issues that can make one weary of the consequence of opening up free trade to such a region. Although there was a 2002 reform which was in line with international standards on the rights of workers, there is still doubt on how well this has been put into practice. The International Labor Organization (ILO) “…reports, as well as those of the State Department, document the failure of Peru’s laws to comply with the five basic ILO standards (prohibitions on child labor and forced labor, non-discrimination, and the rights to associate and to bargain collectively).”
Even with these problems in the labor force, the trade agreement with Peru is a great step forward for globalization of the economy, spread of American markets, and allowing more fair competition from abroad in American markets.
By – Domenic Gabriella for Trade.org
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