Bridges Weekly Trade News Digest • Volume 13 • Number 2 • 21st January 2009
US-Peru Trade Deal to Enter Force Despite Labour Objections
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George W. Bush, in one of his final official actions as US president, announced on 16 January that a bilateral trade deal with Peru would enter into force at the beginning of next month. The proclamation was made despite recent protests from labour groups and some Democratic members of the US Congress that the Andean nation’s labour laws do not adequately protect workers’ rights.
Some observers had anticipated the move after the Peruvian Congress passed legislation last week to amend labour and environmental laws that had to be changed before the deal could be put in force.
Legislatures in both countries had already signed off on the deal itself, but according to a pact struck in 2007 between then-US Trade Representative Susan Schwab and Congressional Democrats, President Bush would not officially authorise the agreement until there was certainty that Lima had strengthened certain laws on workers’ rights and environmental protection.
According to the office of the USTR, the legislation recently passed by the Peruvian Congress satisfied those requirements.
“With the president’s issuance of a proclamation to implement the US-Peru Trade Promotion Agreement as of February 1, 2009, I am very pleased to be able to celebrate the entry into force of this important trade agreement,” then-USTR Schwab said in a statement.
Peruvian President Alan Garcia, who has vigorously pursued trade liberalisation since taking office in 2006, also praised the deal.
“We’ve fulfilled a very important goal for our nation,” Garcia said at a ceremony in Lima, calling the agreement a “decisive step” toward deeper integration into the global economy. Peru is also pursuing free trade deals with Canada and China.
Negotiators from the US and Peru agreed on the text of the pact in April 2006, but some Democrats in the US Congress initially refused to ratify the agreement, saying that the deal needed stricter provisions to protect workers’ rights and to preserve the environment. These concerns were somewhat appeased when US Trade Representative Susan Schwab struck a compromise deal with Democrats in May 2007 guaranteeing that all future US trade pacts would respect certain standards on labour, the environment, and access to medicines (see BRIDGES Weekly, 16 May 2007, http://ictsd.net/i/news/bridgesweekly/7751/).
The Bush administration says that Peru has met the standards set out in that compromise, but some Congressional Democrats are not so sure. The two camps’ difference of opinion appears to centre on whether Lima has provided sufficient guarantees that certain outsourcing firms will not be able to deny workers the right to form unions and engage in collective bargaining.
Earlier in the week, Congressional Democratic leaders warned the Bush administration against pushing ahead with the deal.
In a letter dated 14 January, Congressmen Charles Rangel and Sander Levin of the House Ways and Means Committee, which oversees trade, urged Schwab to “resist setting any artificial deadline” for the implementation of the agreement.
Specifically, they expressed concern over certain ‘loopholes’ in recently enacted Peruvian legislation that they argue would allow Lima to take exception to the protection of workers’ rights in some cases.
But then-USTR Schwab shot back with a letter the next day, avowing that “Peru has put in place the laws and regulations necessary” to meet its obligations under the deal.
The following day, Bush made his announcement that the deal would take effect as of 1 February.
Rangel and Levin responded quickly, praising the deal for the progress it represents on labour rights, but criticising it for not going far enough.
“This agreement includes, for the first time basic core labour standards and environmental protections, replacing the ‘enforce your own laws’ standard in those areas that prevented an effective two-way street policy on trade,” the congressmen wrote.
“We were pleased to meet with Peruvian President Alan Garcia when he…announced actions to implement the new standard before Congress approved the FTA. Unfortunately, the Peruvian Congress has subsequently passed legislation including provisions inconsistent with their commitments.”
Labour rights activists in the US – some of whom were instrumental in the negotiation of the 2007 compromise between Democrats and the USTR – also spoke out against the deal last week.
“Peru’s labour laws still fall far short of meeting International Labour Organisation standards, and we are deeply disappointed with the Bush administration’s decision to rush implementation without first securing compliance with the agreement’s provisions,” said Thea Lee, Policy Director at the AFL-CIO, the largest labour union in the US. “This represents a wasted opportunity and shows poor faith on the part of our own government.”
The US is now a party to 17 bilateral free trade agreements; 14 of those deals were enacted while Bush was president. FTAs with Oman and Costa Rica entered into force earlier this month.
Whether the incoming USTR under President Barack Obama will choose to review Bush’s recent decision on the Peru FTA remains to be seen. Obama’s choice for the post, former Dallas mayor Ron Kirk (see BRIDGES Weekly, 14 January 2009, http://ictsd.net/i/news/bridgesweekly/37799/ ) has yet to be confirmed by the Senate. While Kirk’s nomination is pending, Geneva-based trade official Peter Allgeier, who served as Deputy USTR under Schwab, will fill the position.
ICTSD reporting; “Democrats urge caution on implementing FTA after Peru passes legislation,” INSIDE TRADE, 16 January 2009; “US, Peru wrap up free trade pact despite objections,” REUTERS, 17 January 2009; “García: A ‘national goal’ achieved with Peru-US FTA in force,” ANDINA, 16 January 2009.
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