Peru's leader defends U.S. free-trade pact

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Peruvian President Alan Garcia yesterday offered a strong defense of a free-trade pact with the U.S., which likely would encounter resistance if Democrats win a majority in Congress in the Nov. 7 elections.

Although the agreement could be approved in the lame-duck session after the elections, trade sources said, it would face a tougher battle next year, particularly if Democrats win a House majority.

Under the pending agreement with Peru, 80 percent of consumer and industrial products and more than two-thirds of U.S. farm exports to that country would become duty-free immediately. After that, Peru would implement a gradual elimination of tariffs on U.S. exports.

U.S. trade with Peru last year totaled $7.4 billion, according to the Office of the U.S. Trade Representative.

"I believe that globalization is here to stay with us and that the spread of trade around the world can help all countries," Mr. Garcia said in a speech at the Institute for International Economics.

Peruvian companies already are benefiting from trade with the United States, he said, adding that Peruvian exports to this country supported 800,000 jobs this year, and that U.S. companies are employing more than 100,000 Peruvians directly.

Mr. Garcia said that reducing regulatory and legal barriers on businesses will allow Peruvians to benefit from globalization.

"We are going to prove that trade can help the poor inside Peru," he said.

"In the past, too often the market reformers believed that all you had to do was knock down the barriers to external trade and everyone would benefit," he said.

"We now know that is not enough. The rich and well-connected have succeeded because they have access to legal tools that increase their odds for success," Mr. Garcia said. "We want to get those opportunities into the hands of the ordinary people."

The benefits of free trade extend beyond economic gains, Mr. Garcia said. "We are using free trade to create a new foundation for markets and democracy in Latin America."