Nine in 10 Americans would support any trade agreement that offered greater benefits to the United States than to the trading partner. Yet three such agreements in the Western Hemisphere face a hard slog in Congress, although they are in this country’s clear economic interest.
Each agreement converts a one-way preference program that now gives special access to U.S. markets, but no trade access for U.S. products in those countries, into a permanent reciprocal agreement that provides new market access for the United States. Each agreement will open new markets for U.S. goods, while continuing duty free access for our partners.
The first agreement, trade promotion with Peru, is ready for congressional action. Peru’s goods now enter the U.S. duty free while U.S. exports to Peru must pay duties. Our current trade relationship with Peru (and Colombia) is based on the Andean Trade Preferences (ATPDEA), which the Democratic Congress recently renewed for six months. The Peru Trade Promotion Agreement (PTPA) will open Peru’s markets to U.S. goods and services. Renewing one-way time limited Andean Trade Preferences (ATPDEA) was important. Adopting permanent reciprocal free trade with Peru is vital and will offer more hope to Peru than any amount of earthquake assistance.
Both the U.S. and Peru benefit from the agreement:
The U.S. gains immediate market access to Peru for 90 percent of our agricultural products and for 80 percent of our consumer and industrial products.
The U.S. International Trade Commission (ITC) estimates the agreement would result in a larger increase in U.S. exports to Peru ($1.1 billion a year) than in Peru’s exports to the United States ($439 million).
According to the American Farm Bureau Federation, U.S. farm exports could increase by $705 million a year.
U.S. GDP may rise by $2.1 billion or more annually under the agreement, according to the ITC.
Four thousand U.S. small companies that export to Peru will benefit from the agreement.
Peru will maintain duty-free market access to the United States for goods that support 400,000 jobs in Peru. At one Peruvian General Mills supplier, duty-free access to U.S. markets — for asparagus — has boosted employment from 80 to 5,000 over the last 15 years. These Peruvian jobs, created by the opening of U.S. markets, will be sustained only if we keep our markets open.
Since 2004, the U.S. has negotiated with Peru, Colombia, Ecuador, and Panama. Of the four, Peru showed the greatest drive to conclude a win/win agreement with the United States. Former Peruvian President Toledo, whose popularity sometimes dropped into single digits and rarely rose above 20 percent, had the vision and courage to fight for his country’s future as a trading nation. He knew granting reciprocal access for U.S. products to Peruvian markets while gaining permanent Peruvian access to U.S. markets was the path out of poverty for thousands of Peruvians.
In December 2005, Peru, having a strong desire to sign the agreement during President Toledo’s tenure, took the initiative to become the first Andean country to complete negotiations with the United States. Nearly two years have passed since those negotiations concluded.
The Peruvian and U.S. governments signed the agreement in April 2006. Before the Peruvian Congress took up the agreement, Peru elected a new president. Mr. Toledo led a spirited campaign to leave a legacy of trade liberalization. The Peruvian Congress delivered; it passed the U.S.-Peru Trade Promotion Agreement 78-14.
Peru’s new President Alan Garcia, though of a different party and philosophy than Mr. Toledo, embraced the trade agreement. Mr. Garcia’s administration has continued to press forward on health, sanitary issues and labor reforms, and has worked with the new Democratic leadership of our Congress to address their concerns. The Peruvian Congress has acted swiftly to adopt revised language reflecting those concerns.
The United States initiated the Andean negotiations as a way to break an impasse in the hemisphere, convert a preference program to reciprocal free trade and advance free trade. Should Congress not approve the results of the negotiations we initiated, we will be seen to have acted in bad faith.
President Garcia has stepped forward as a pragmatic alternative to Hugo Chavez. Congressional approval of this trade agreement will have a tremendous demonstration effect. To disapprove it would have serious consequences for U.S. credibility.
Peru had the courage to conclude an agreement with the U.S., despite difficult domestic and hemispheric political conditions. Peru also demonstrated the flexibility to adapt an agreement their Congress had already approved to meet the concerns of the new U.S. Congress. For the good of both countries, the U.S. Congress should act now to approve that agreement.
Barbara Bowie-Whitman is the former trade policy coordinator in the U.S. State Department’s Western Hemisphere Bureau.