US Congress Passes Free Trade Agreement with Peru

Reposted from: Upside Down World

Written by Jennifer Gunderman and April Howard
Wednesday, 14 November 2007
ImageA new trade deal with Peru that passed in the US Congress last week boasts non-binding concessions in terms of labor and environmental concessions, and promises more of the same damages to both countries.

President Bush seems to have scored another gain in his trade agenda as Congress approved a free trade agreement with Peru by a comfortable 285 to 132 margin. Still basking in his victory from the recent Costa Rica-CAFTA ratification vote in October, Bush and his supporters hope these recent victories will lead to the approval of pending free trade agreements involving Colombia and Panama.

Concessions That Don’t Concede

This apparent bipartisan free trade approval with Peru became a reality only after Democrats won concessions from the Bush administration regarding labor and environmental issues. These concessions stem from concerns over several NAFTA impact studies that criticized the trade agreement’s lack of protection against trade abuses as well as poor procedures and lack of program funding that could threaten the environment.

A statement released by Democratic Rep. Charles Rangel, chairman of the House Ways and Means Committee called “for the inclusion of labor standards [such as the right to go on strike] and environmental protections including access to medicines and logging controls that will create a landmark in free trade agreements.” However, actual environmental concessions in the deal only “require the US and Peru to enforce their domestic environmental laws and conform to international environmental standards.” According to Joshua Holland of Alternet, Tom Donohue, head of the U.S. Chamber of Commerce, said that his members were “encouraged” by assurances that the deal’s labor provisions “cannot be read to require compliance.”

Despite these concessions, according to Amazon Watch, the agreement “grants new rights for oil companies to drill in the Peruvian Amazon, potentially causing massive deforestation and environmental destruction; [which] will therefore lead to more road construction, literally paving the way for colonists, illegal loggers and poachers, fails to explicitly prohibit trade in endangered species, instead merely re-asserting the U.S.’s existing right to reject timber imports from species listed in the Convention on International Trade in Endangered Species (CITES); Includes in Chapter 10, investor rights provisions that would allow foreign companies to skirt Peruvian law and regulatory authorities [, which] . . . goes further than controversial equivalent clauses in NAFTA and CAFTA; [and] Will benefit U.S. corporations such as Hunt Oil, ConocoPhillips, Occidental Petroleum and Newmont Mining over Peruvian and U.S. citizens.” US copyright and trademark protection in agreement also means Peru’s poor could be hit as the price of medicine rises by 30%, according to the BBC.

Losses to Workers in Both Countries

Opponents to the Peru free trade agreement, most notably strong labor unions both in Peru and the United states, caution that this trade agreement does little to either benefit or protect workers in either country.

Jiron Cusco, president of the General Workers Confederation of Peru (CGTP) takes his opposition a step further stating that the Peru FTA will benefit only a small population of Peru’s wealthiest citizens and that the treaty would “seriously affect Peru’s economy.”

While textiles and agro-export industries, which already export to the US, could benefit, the real benefits are for US businesses. In an interview with Alternet
e=”font-family:georgia,times new roman,times,serif;font-size:100%;”>, research director of Public Citizen’s Global Trade Watch, Todd Tucker, named dozens of multinational businesses and corporations including Citigroup, Occidental Petroleum and Wal-Mart, who have “put their full might into getting the Peru deal passed, including showering millions in congressional campaign donations since January alone . . . [Hoping for] privatized social security systems for Citi, rainforest-destroying oil extraction for Occidental, and a push to Wal-Mart’s efforts to buy out Peru’s retail sector, just as they did in Central America just days after Bush signed [the Central American Free Trade Agreement].” Holland also names General Mills and the Grocery Manufacturers Association PAC as interested parties because they grow vegetables in Peru and plans to move processing facilities to the country as well. Financial service firms including Citibank also stand to gain from the deal’s provisions to allow the company to “sue the Peruvian government for damages if progressive activists succeed in reversing a disastrous social security privatization scheme” that has had disastrous consequences for millions of Peruvian retirees.

Duties will be immediately eliminated “on 80% of industrial and consumer product exports to Peru, and more than two-thirds of farm exports.” Many worry that the disastrous effects of NAFTA in Mexico will be repeated in Peru as subsidized US agricultural produce, including wheat, maize and cotton, will rob Peruvian farmers if business and drive up food prices within the country. In fact, Peru’s government reports that it has put aside about $77 million in order to compensate farmers who suffer losses during the first five years of the agreement.

“We will have an absolutely unjust competition between Peruvian agricultural products and North American agricultural products, because the US subsidizes its agricultural products and we don’t”, says Javier Diez Canseco, head of the Peruvian Socialist Party and a former presidential candidate. “So there is a very strong difference between the conditions of production and the subsidies that the US farmers receive and those that Peru has to deal with.” Nearly half of Peru’s population still lives on less than $2 a day.

According to the Third World Network, though Peru’s economy could increase by $417 million increase in the first year of the agreement, “these gains will be directed almost exclusively at the [mainly coastal] urban sector, which could benefit by $575 million.” Lima-based public policy research institute, GRADE, predicts that the poorest of the rural sector, Quechua and Aymara subsistence farmers in the rural highlands, and in the Amazon interior will suffer losses to the tune of $158 million. TWN says that “The findings of this report echo impact analyses conducted in Colombia and Ecuador, who are negotiating similar FTAs with the US.”

On the other end of the spectrum, a study by the Economic Policy Institute’s Josh Bivens found that US neoliberal trade policies have depressed the wages of 70 percent of the U.S. population. In a statement released by the Teamsters Union, president Jim Hoffa cites the “slim margin” of victory in the Congressional approval of the Peru FTA as evidence of its lack of protection for American workers affected by “off shoring of American jobs.” Hoffa is calling on Congress to focus on trade policies rather than ratification of free trade agreements.

Democratic Support and Dissent

One of the most surprising parts of the agreement was the Democratic Party support it received: 109 Democrats voted yes and 116 voted no. Even House Speaker Nancy Pelosi commented on the paradoxical nature of her for the agreement. “Frankly, I have largely been on the other side of it than I am tonight,” she said. During the debate, many Democrats accused Pelosi of betraying the party’s base.

Journalist Steven R. Weisman of The New York Times Media Group points to two factors that led to democratic support. First, the concessions won in terms of “protections for workers and for the environment in Peru, and by extension in trading-partner countries in future trade deals.” And second, “sizable campaign contributions from the sectors that are benefiting the most from the global economy. These include financial services firms, computer chip makers and other high-tech manufacturers, the entertainment industry and farmers dependent on selling to markets overseas.”

Presidential candidates, “who receive support from unions but also from export-oriented industries,” demonstrate the conflict generated by the issue. O
pposed to the deal were John Edwards, Dennis Kucinich, Christopher Dodd and Joe Biden. Sen. Hillary Clinton, surrounded by pro-free trade Clinton administration officials, sent mixed messages, including asking for a review of NAFTA negotiated by President Bill Clinton, but then decided to
support the agreement. According to Alternet, Sen. Barack Obama, “said that he’d vote for the Peru deal because “it contained the labor and environmental standards sought by groups like the AFL-CIO,” but the AFL-CIO released a statement saying that, because of “several issues of concern to working families,” the AFL-CIO “is not in a position to support the Peru FTA.”

However, Lori Wallach, director of Global Trade Watch at the advocacy group Public Citizen said that “Despite all the pressure, most Democrats, most committee chairmen and three-fourths of the freshmen in the House said no to Speaker Pelosi. The Democrats must now abandon the Bush trade agenda and work on an agenda they can agree on.”

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