Peru Free Trade Agreement, Another Disaster in the Making

Date Put forth on November 6, 2007 by XicanoPwr
Category Posted in Americas, free trade, Immigration, Indigenous/Indígena, NAFTA

Congress is expected to vote on the Peru Free Trade Agreement, also known as the Peru-United States Free Trade Agreement (PTPA) on Wednesday. The Peru FTA moved rapidly through Congress with the support of the Democratic Party leadership. Like the broken promise to end the war during last years congressional elections, key Democrats including Representatives Pelosi, Rangel and Levin have yet again betrayed the will of the electorate.

Anxious to appease corporate funders, they are siding with the Bush Administration to push this agreement, which will further devastate workers and poor farmers in both countries. During his final month in office, Peruvian President Alejandro Toledo introduced a bilateral free trade agreement (FTA) with the United States, despite widespread reluctance among many Peruvian political figures. Toledo proved to be yet another Latin American president who yielded to Washington’s wishes instead of paying attention to the desires of his fellow citizens.

Peru’s current President Alan Garcia and Peruvian business groups say claim that the FTA will lead to increased prosperity in Peru, where over fifty percent of the population lives below the poverty line. However, 350,000 indigenous people from 1,350 communities spanning 16 different linguistic groups and six regional organizations in Peru say different.

“We are convinced that the FTA will give incentives for further and irreversible destruction of virgin rainforest, which will in turn increase global warming and displace our communities from their home territories. This is an absolutely unacceptable outcome for our planet, and particularly for the territory where our communities live, as we collectively work to reduce the threat of global warming.

“…the Peru FTA, if approved, would threaten every aspect of our livelihoods and sustainable development program. We are very preoccupied that the administration of President Alan García is auctioning off Peru’s Amazon at a breakneck speed to foreign firms ranging from Hunt Oil to Occidental Petroleum and beyond. Already by 2004, as the FTA was just being negotiated, only 15 percent of Peru’s Amazon was zoned for oil, gas and mining – today, that figure is near 70 percent.

Like the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA), the Peruvian FTA will eliminate tariffs and other barriers to goods and services. And like the devastating impact of NAFTA within the agricultural sector of Mexico; the trade agreement would severely impact the Quechua and Aymara subsistence farmers in the rural highlands.

The Peruvian FTA is more than “just about trade,” the trade agreement will dismantle significant services and investment barriers, which, are at odds with public health, safety, and the environment. An issue that has received less attention is the implications of Big Oil on Peru. Big Oil companies has actively been lobbying Congress for more access to the endangered Amazon rainforest.

The Peru deal includes new rights for Big Oil that extend even beyond NAFTA’s awful provisions. The proposed pact would empower multinational oil and gas to drag Peru’s government to World Bank tribunals to demand compensation for changes to the corporations’ exploration and exploitation contracts that could undermine their “expected future profits.”

The bilateral agreement will institutionalize an uneven playing field between the two countries instead of establishing fair and equitable rules for trade that could promote development and reduce poverty. The Peru FTA agreement includes strict new intellectual property rules that the latest threat to traditional knowledge.

Traditional knowledge is a concept that encompasses tangible and intangible creations, cultural manifestations, technologies, sciences, agricultural knowledge, designs, literatures, and, visual and performance arts derived from oral and written traditions. Traditional knowledge is also connected to indigenous traditional territories, lands, natural and genetic resources and, is transmitted from generation to generation. The free trade agreement would allow the US and the private sector to exploit their lands and resources.

The USA and EU are pushing through rules on intellectual property that reduce poor people’s access to life-saving medicines, increase the prices of seeds and other farming inputs beyond the reach of small farmers, and make it harder for developing-country firms to access new technology. The issue of traditional knowledge has come up in the final draft of the agreement which makes provisions on traditional knowledge and biodiversity.

Recognizing the Importance of Biodiversity

The Parties also reached an understanding that recognizes the importance of traditional knowledge and biodiversity and their potential contribution to cultural, economic and social development.

The Parties recognize the importance of the following:

(1) obtaining informed consent from the appropriate authority prior to accessing genetic resources under the control of such authority;

(2) equitably sharing the benefits arising from the use of traditional knowledge and genetic resources; and

(3) promoting quality patent examination to ensure the conditions of patentability are satisfied.

The Parties recognize that access to genetic resources or traditional knowledge, as well as the equitable sharing of benefits that may result from use of those resources or that knowledge, can be adequately addressed through contracts that reflect mutually agreed terms between users and providers.

Each Party shall endeavour to seek ways to share information that may have a bearing on the patentability of inventions based on traditional knowledge or genetic resources by providing:

a) publicly accessible databases that contain relevant information; and

b) an opportunity to cite, in writing, to the appropriate examining authority prior art that may have a bearing on patentability.

The Peru FTA is expected to leave 700,000 to 900,000 Peruvians without access to medicines unless public health-care spending and individual incomes increase. Under the Peru FTA, Peru will no longer be able to reject a patent application because a firm fails to indicate the origin of a plant or show proof of consent for its use from a local community. As a result, communities will be forced to pay for patented plant varieties based on genetic resources from their own soil.

Because of the damage NAFTA has done to the agricultural sector, over 850,000 jobs have been lost in the Mexican manufacturing industry, real wages have fallen by 20 percent. As a result, many have fled Mexico to the US, where, through myth or reality, they have come to believe their is ample opportunities to improve their lives. Like it’s predecessor, the US can expect an annual increase of immigration from Peru as millions of peasant farmers lose their livelihoods to imports of subsidized US commodities.

The Peru FTA will put US environmental, food safety and other public interest protections in jeopardy of direct challenge by foreign investors in secret international tribunals. The Bush-negotiated FTAs would extend the NAFTA foreign investor rules which would ban many anti-offshoring and “Buy Local” government procurement policies.

The Peru Trade Agreement should be rejected until its provisions are so revised as to strengthen, not worsen the economic, social and political equality of Peru. Social justice demands such a rejection. We must send them a clear message that their future in Congress depends on pleasing us.

Please use the Public Citizen’s Global Trade Watch’s form to send a letter to your Representative to oppose the Peru NAFTA expansion. Click here

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  1. Gravatar Icon HispanicPundit Nov 7th, 2007 at 9:13 pm

    The reason that even Democrats support free trade, at the constant opposition from trade unions, is because they know that free trade is the best tool at fighting poverty the world has ever seen.

    The reason that free trade is so important is because there is not “an even playing field” between developed countries (like the United States) and underdeveloped countries, for example, underdeveloped countries have many problems that developed countries do not: weak to no property rights, very little to no rule of law, bribery overhead, gross levels of corruption, crime, lower education levels, higher health problems, higher operating costs, language barriers, etc and as such it is a wonder that companies operate there at all. Which again, is why lower pay and such is so critical, it is only through lower pay and weaker labor laws that underdeveloped countries can try to create “an even playing field,” for without them they have nothing.

    And, more importantly, in addition to better working conditions than they previously had, free trade gives them that path, that ladder, out of poverty. Remember, no country, no place, no people, in the history of man has escaped poverty without a significantly large amount of free trade.

    This view that free trade (along with capitalism in general) has markedly reduced world poverty is not a hypothetical, it is happening all around us. For example, look at East Asia, a place that has experienced the greatest alleviation of poverty in the history of man. In half a century, Hong Kong, Taiwan and South Korea have gone from subsistence to First World status. And what free trade and capitalism did to Hong Kong, Taiwan and South Korea, it is now doing to India and China. Millions, and I do mean millions, of people are being lifted out of poverty every year in these two countries – all because of changes towards greater free trade and capitalism. It is no wonder that India and China, instead of the United States, is the one pushing for greater levels of free trade – they know very well that their economy and life depends on it. Peru and many of its citizens, want to be included in this growing and enriching global economy and it would be incredibly immoral and anti-poor for us to refuse them entry – so much so, that even Democrats are pushed to vote in favor of it.

  2. Gravatar Icon ViviendoenPeru Nov 8th, 2007 at 7:39 am

    I am living in Peru and have been doing so since March 2006. I have lived all over South America and there is rampant poverty. This region has the highest amount of inequality of income distribution in the World. There are many issues from Intelectual property rights, investment and other practices that are not always beneficial towards poorer countries, the U.S. has strongly subsidized goods, which this subject of agricultural has not gone through at the DOHA. But lets be honest, US subsidies to its agriculture is not going to change, because it comes down to an issue of Food Security.

    Is peru going to benefit from a FTA agreement? Well it is clear that a majority of Peruvians will not benefit in the short run, In the long run yes Peruvians in general can benefit, but that is exactly the problem, everybody wants to automatically be improved imediately. Peru needs better infrastructure! Without more investment from abroad this will not likely happen. Even with the investment it will take much time! Look at Peru, you have the Coast, la Sierra(Highlands) and the Jungle. Clearly the most infrastructure is along the coastline, and so a FTA will not benefit many local Peruvians in Provinces until there is more infraestructure.

    Besides this economical aspect, there is a very important political aspect, look at Peruvians neighbors, increasingly nationalizing oil businesses for more programs, and increasingly taking more rights away from the population. There is pressure from all sides, and Peru to not fall even further back into time needs this agreement to stand out and try to move forward. This topic should be discussed more later.

  3. Gravatar Icon William Churchill Nov 8th, 2007 at 11:28 am

    This agreement is terrible for Peru.
    For one of many examples, look at the free trade agreement between Canada and the US.
    The US destroyed our softwood lumber industry.
    In spite of numerous judgements in Canada’s favor, the US continued to punish us with ridiculous tariff’s and fee’s. Finally, after our industry was in ruins, Bush’s lapdog, Steven Harper sold out his country and let the US have every thing it wanted in spite of NAFTA and the WTO.
    It all comes down to trust. The rest is just words.
    You cannot trust the United States.

  4. Gravatar Icon Guajolotl Nov 8th, 2007 at 6:15 pm

    The idea that free trade fights poverty is awesome in its ignorance, or its viciousness.The IMF and World Bank countries (under the control of the US) take advantage of the colonized country when it is undergoing a crisis, such as a sudden steep rise in petroleum prices or the aftermath of a war. The first thing they do is devaluate the colonized country’s currency to make it weak against the dollar, so when it asks for a loan, as it must, it is getting squeezed against the strong dollar. On top of this the IMF imposes usurious terms- 27% or more interest. The economic production of the colonized country is wrecked. For example, in agriculture, the US subsidizes its farmers to sell products cheaper than the colonized farmers can produce, thus bankrupting them. After there is no more local competition, US investors are free to raise prices and bring in the MacDonalds, the Starbucks and Pizza parlors. Under the terms of the loan, the colonized country must reduce its tariffs, further impoverishing it, and further enriching the US investors, who dump their products at high profit margins. The US will build factories at the colonized country’s expense, import all materials from the US denying that production income to the colonized country, have the colonized natives assemble the articles at about a dollar a day, items which in turn are sold in luxury stores in the US and Europe at huge profits. The IMF will not allow unions, nor do they pay health benefits nor pensions nor recognize safety on the job. The colonized country winds up working only to service the debt and has less than half of its GNP to spend on its own infrastructure and citizens, neglecting health, education, housing and other issues. Crime, delinquency and migrations become the answer to increased poverty and unemployment, which in turn provide an opportunity for mercenary armies, often paid for by US taxpayers, to keep civil unrest in the colony under control.

  5. Gravatar Icon HispanicPundit Nov 8th, 2007 at 6:56 pm

    Free trade is analogous to a modern invention. Was it good for by-hand clothing manufacturers that a machine was invented where the process can be done without much human involvement? Probably not, but the population as a whole is better off because of it. The same can be said about farming, telecommunications, and the computer industry. In other words, there is no doubt that free trade, like inventions, displace some workers and benefit others, but that is a very different conclusion than one that asks “Is the economy as a whole better off because of it”. And in the case of free trade in general, the answer is a resounding yes – again, just like inventions as a whole improve standard of living while at the same time displacing some workers.

    With that said, there is a difference between a free trade agreement with Canada vs one with Peru. Canada and the United States, both being industrialized countries, are competing on a much more even playing field. The flow of goods will probably differ by industry, with each countries respective comparative advantage benefiting. However, free trade with Peru is more on the level of say, free trade with China and India, and the flow of labor is much more likely to flow from the United States to Peru…resulting in a substantial gain in Peru’s labor market.

    Just ask the average manufacturing worker in the United States what he or she thinks of trade with China…I bet the reply you get will be the opposite of what the average manufacturer in China says about the United States. So unless you actually think free trade with China and India is harming the Chinese and Indian economy, it is going to be very difficult for one to argue against free trade with Peru on poverty grounds.

  6. Gravatar Icon NN Dec 2nd, 2007 at 10:42 pm

    The Peruvian people were much better off under Fujimori. For all the celebration of the democratic heroes Toledo and Garcia, the truth finally shows that they are corrupt and willing to sell out the livelihoods of a nation of Peruvians.

  7. Gravatar Icon NN Dec 2nd, 2007 at 10:52 pm

    At least under Fujimori, the local economy of Peru had protection and developed for the benefit of Peruvians. These so called democratic leaders wish only to appease American interests. Peruvians will pay rich American farmers for their subsidized wheat, bankrupting Peru’s own agriculture. And then Peru will be completely dependent on the USA. But that is the price of “Democracy” as Peru’s media and middle class wanted it.

  8. Gravatar Icon Erik Stone Dec 9th, 2007 at 10:39 am

    Hispanicpundit, you are right on. It takes a wise, educated, and compassionate person to see the benefit of a washing machine when thier job has been displaced by a washing machine. The environment is a big picture situation where reducing poverty for the most people may eventually lead to greater natural disasters, plague, or war, though reduced space or global climate change. Unfortunately, without current technology, which can be quite destructive(burning oil, cutting the rainforest, or over fishing), much of the world population would die off rather quickly. New technologies must be created to sustain current populations, as well as a greater number of people at a higher standard of living. This isn´t done though restricting trade and ideas, it´s done though free exchange of trade and ideas. In the long term, our only hope for survival for the greatest number of people is though technology, and free exchange. If you don´t think so, take a look at North Korea where they don´t have either.

  9. Gravatar Icon Monticello Mar 5th, 2008 at 2:28 pm

    In my opinion HispanicPundit, is right and wrong. Right in the sense that free trade is the tool to build stronger economies and life workers and society to higher levels. Wrong in the sense that free trade is not what is intented with the trade agreement, but the looting of natural resources. In his first post Pundit states the reason for problematic growth in developed regions and he is right. There are a number of points that must first be considered before a developing country attempts to trade with developed countries. There are 3 ways to generate wealth, and mining is one of them – developed countries want access to the vast naturasl resources withing Latin America. All the issues Pundit stated before are the back drop to the out right robbery that will occur with developed countries if the agenda of developing countries is not clearly articulated. The US is ruled by corporations, corporations seek only ot maximize profit – if you dont know what that looks like then take a look at the US. I mean not the 90210 version, but the lack of education, jobs, health care, the destruction of the family, drugs, greed, murder – this is what profit seeking has done in the US. It is shameful but one of the US’ growth industry is the prison industry. To the peoples of developing countries, if they treat their own citizens this way – who do you think these countries will do you developing countries with weak legal and property rights, corruption, ill-education. I will tell you – the Republic of Peru, issued some governement debt back in the late 1990s. Timies got tough and they wanted to re-negotiate bond payments. A US hedge Fund Elliot Associates bought a face value of 22 Mill bonds for 11 mill. They sued Peru over the re-structure and was awarded $55 mill in compensation. Not bad they paid 11 mill and got 55 mill. – that money could have been used for roads, education, investment, medicine – instead it was paid to greedy venture investors.

    I ask Pundit and others to really do some research and to be honest. In my opinion, if all the countries of Latin America worked in concert, they would soon have wealth that would revial the US (there are many that claim the US is in a state of decline, proving this is very easy and does not take a lot of ingenuity). I challenge people that think that free-trade is good, look at your relationship with the countries in question – Nixon played a huge part in the coupe and suffering of the chilean people, for Chile to consider this type of trade agreement with the US it would be insanity. If I could, please read John Tirman’s book “100 Ways America is screwing up the world”, read it and decide if that type of free trade will help anyone but the super rich

  10. Gravatar Icon Peruanista Mar 17th, 2008 at 2:20 am

    I was born in Peru and I’ve lived in the United States almost half of my life. Living here I’ve become aware of the benefits of capitalism and trade but I’ve also seeing the worst of them: money without justice creates unfair, corrupted and violent societies, where humans are not the main reason for governments anymore and their rights have a price.

    A nation like Peru where a small elite controls money, politics and power will get even more unfair because the rich will benefit of free trade, while most Peruvians will get only coins, while they do the hard work. Free trade is not the solution for Latin American inequality, because it protects the rights of the rich and the powerful US corporations and their local partners against the rights of the poor majority. Free trade should be replace with FAIR trade where progress is brought for all of those who work hard for their future, with fair salaries, rights and respect for the environment.

    Peru can’t compete with the US at all, therefore Peruvian small businesses and farmers will be greatly affected. Over 80.000 Peruvians asked their government for a national referendum on the FTA but their leaders responded that “llamas can’t decide about trade” and Congress passed this deal overnight in a lame-duck session, when most Peruvians were against it. Alan Garcia run as a candidate against the FTA, but once elected he traveled to DC several times to beg US Congress to approve it.

    Democrats lied to their constituents saying that labor and environment protections are included in the Peru FTA but Peru doesn’t even have a national labor legislation. How can the US push Peru to respect labor rights when 12 million undocumented workers are exploited in their own soil?

    Recently, 5 Peruvian farmers were shot in the head by the Peruvian police after striking for protections against free trade. Peruvians are not represented by their own government: Fujimori, Toledo and Garcia are all working to impose neo liberal free trade policies that are keeping the majority of Peruvians under poverty, while the rich gets richer, just like in the US.

    Today Peru is 1st. world producer of silver, 5th. of gold, and one of the main producers of copper and other minerals necessary for the US war machinery. This FTA is not good for the economy of Americans, it is just another imperialist imposition and the continuation of the Monroe doctrine and manifest destiny, to control the lives of Latin Americans so we continue as the backyard of the US, that way people south of the border will never reach progress for all, it is not good for the power of conservative US interests.

    Now you wonder why Hugo Chavez is more popular in Peru every time. Don’t be surprised if in 2011 a leftist candidate gets elected. Now here is a very informative link about the Peru FTA:

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