|Under the US-Peru trade agreement, textiles and apparel will be duty- and quota-free.|
Relations between Peru and the United States have experienced a wide range of political and economic changes since the 1970s, although the US has always remained Peru’s main trading partner. In 1990, Peru introduced market-oriented policies and economic discipline that stablilized its relationship with the US. The United States - Peru Trade Promotion Agreement that came into effect in February 2009 is expected to further improve trade relations between the two countries.
Consumer and Industrial Products
Under the agreement, US consumer and industrial product exports — such as agriculture and construction equipment, auto parts, information technology equipment, medical and scientific equipment and forest products — are duty-free. Tariffs will be phased out on such US farm products as high-quality beef, cotton, wheat, soybeans, soybean meal and crude soybean oil, apples, pears, peaches, cherries, almonds and many processed food products, including frozen fries, cookies and snack foods. The US and Peru also resolved significant sanitary and phytosanitary and technical standards issues that are expected to allow the importation of all US beef and beef products (except high-risk materials) that is accompanied by a sanitary certificate from the US Department of Agriculture’s Food Safety and Inspection Service.
Textiles and Apparel
Textiles and apparel will be duty-free and quota-free if the products meet the agreement’s rules regarding product origin. This is expected to promote new opportunities for US and Peruvian fiber, yarn, fabric and apparel manufacturing industries. In a summary of the agreement, the Office of the US Trade Representative points out there is a provision in the agreement that allows “limited amounts of specified third-country content to go into US and Peruvian apparel." There is also a special textile safeguard in the agreement that provides for temporary tariff relief “if imports under the agreement prove to be damaging to domestic producers."
Services and Investments
Peru has agreed to dismantle barriers on services and investments that have traditionally been in place, giving market access to US firms in such services as telecommunications; banking, insurance and securities; distribution services such as wholesale, retail and franchises; express delivery services; computer and related services; audiovisual and entertainment services; energy services; transportation services; construction and engineering services; tourism; advertising services; professional services such as architects, accountants and engineers; and environmental services.
Greater Protection for Intellectual Property
With the wide range of opportunities for expansion opening up for a greater number of industries, the agreement establishes specific guidelines for greater protection of intellectual property rights on computer software, music, and videos; internationally recognized labor rights; commitments to environmental protection; fair and open government procurement that allows US firms to bid on contracts for a wide range of Peruvian government ministries; and a dispute settlement process.
Impact on Agricultural Products
While Peru’s textiles and agro-export industries are expected to benefit from the agreement, there is some concern about how the importation of subsidized agricultural products from the US will impact Peru’s agricultural industry. On the other hand, it seems the agreement has bolstered US agriculture exports to Peru. In a report from the US Department of Agriculture's Foreign Agricultural Service at the beginning of 2010, agricultural exports to Peru hit an all-time high. According to the USDA Foreign Agricultural Service, US exports of corn, soybean meal and oil and poultry meat, among other products, hit a record $530 million in 2009, an increase of 22 percent. US beef exports to Peru also hit a record $6.5 million in 2009, while the export of snack food products increased by more than 40 percent. Exports of US fresh fruit to Peru increased by 29 percent, to more than $1 million.
by James Paine, Demand Media