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214 IRET Congressional Advisory 1 (2006)

handle is hein.taxfoundation/iretcgadv0211 and id is 1 raw text is: INSTITUTE FOR RESEARCH ON THE ECONOMICS OF TAXATION IRET is a non-profit 501 (c)(3) economic policy research and educational organization devoted to informing the public about policies thait will promote growth and efficient operation of the market economy. November 29, 2006 Advisory No. 214 PASS PERU TRADE PROMOTION AGREEMENT NOW Important business faces the lame duck Congress. One key item is ratification of a trade promotion agreement with a prominent hemispheric trading partner, Peru, which is ready for Congressional action. (Another agreement, with Colombia, has just been signed, and should be considered as soon as the Congress has examined its contents. The two agreements are on different time tracks because Peru closed months ahead of Colombia.) Peru had the courage to conclude an agreement with the United States, despite trying domestic and hemispheric political conditions. For the good of both countries, the U.S. Congress should act now on that agreement, despite post-election turmoil. Our current trade relationship with Peru (and Colombia) is based on the Andean Trade Preferences (ATPDEA), which is also up for renewal. ATPDEA gives the Andean group special access to U.S. markets, but does not give U.S. exporters the same access to Andean markets. It is a one-way preference program. By contrast, the Peru Trade Promotion Agreement (PTPA) opens Peru's markets to U.S. goods and services. Renewing Andean Trade Preferences (ATPDEA) is important. Adopting reciprocal free trade with Peru is vital. Both merit prompt action, with ATPDEA renewal making the bridge to full and prompt implementation of PTPA. Former Peruvian President Alejandro Toledo was a staunch U.S. ally on trade issues. He huddled with Mercosur presidents in Mar del Plata last year during a tendentious 12-hour negotiation, rare at Head of State level. Toledo struggled to persuade them to continue support for the Free Trade Area of the Americas (FTAA). Although his father lay critically ill, President Toledo stayed on in Argentina pressing for a trade agreement throughout the Americas. The FTAA had been in trouble for more than two years, since a Brazilian push to cut back the scope of the FTAA, and despite U.S. attempts to bridge those differences. Even worse, Argentina was working to produce a 2005 Summit ignoring the FTAA altogether. While President Toledo fought for an agreement among all of the Americas, he enthusiastically embraced another avenue for freer trade with the United States, involving bilateral and regional efforts. The U.S. opened that avenue at the 2003 Miami Trade Ministerial (which is also where 34 trade ministers ratified a compromise approach to the FTAA). There, the U.S. announced a series of negotiations for bilateral and regional Free Trade Agreements (FTAs) - with beneficiaries of our Andean trade preference program and with Panama. The concept - as with the CAFTA/ Dominican Republic agreement - was to convert time- limited one way trade preference programs (giving access to U.S. markets, but no trade access for U.S. products to markets in those countries) into permanent reciprocal trade agreements. This would open new markets to U.S. goods, while assuring continued duty free access for our partners to U.S. markets. Given the impasse over creating a real FTAA, the United States negotiated FTAs with Peru, Colombia, Ecuador, and Panama. Of the four, Peru showed the greatest drive to conclude a win/win agreement with the United States. A Peruvian President, whose popularity with the public dropped into single digits at times and rarely rose above 20%, had the vision and courage to fight for his country's future as a free trader. He knew that 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. g~*m kfl A * * gg~ 8 ~eg

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