Trick or Trade? Uncertainty Remains on US-Peru Trade Deal

With flak coming from all corners of the political spectrum, the Democrat-Republican deal to allow the US-Peru trade agreement to pass must have got something right. Or perhaps its most salient feature it that, for now, its details are unclear.

In a previous post I linked to an outline of the deal. A fuller summary can be seen here. To retirate, the key points are that:

• parties to trade agreements with the US will be required to adopt and enforce the five basic standards in the 1998 International Labour Organization declaration, and the labour sections will be subject to the the same dispute resolution mechanisms as the rest of the agreement
• parties must ratify and enforce seven key multilateral environmental agreements, and the environmental sections will be subject to the the same dispute resolution mechanisms as the rest of the agreement
• intellectual property requirements are softened to allow earlier availability of generic medicines to US trade partners
• Peru is specifically required to crack down on illegal logging of mahogany

In the Times Online, columnist Irwin Stelzer blustered that this represented "the end of free trade as we know it". He lamented that:

We can sue our trading partners if they violate the agreement, and they can sue us. For example, if some country such as Panama decides we are violating trade-union rights here at home, they can bring a suit to press Congress to change the law.

Stelzer failed to mention that , in requiring wholesale adoption and implementation of American trademark, copyright and patent laws, the original agreement cut across national sovereignty in far more significant ways.

At the other end of the political spectrum, US netroots activists were furious with the secretive process that had been followed and bemoaned that drafting of the actual legislative language would be delegated to the Bush White House. They also cast doubt on how enforceable the labour and environmental conditions would be.

Blogger David Sirota lambasted the press for applauding the deal when they hadn't seen the all-important legislative language. He pointed to similar, unfulfilled claims about labour and environmental standards being made in relation to the North American Free Trade Agreement (NAFTA) more than ten years ago.

However, a blogger identifying himself as DemHillStaffer claimed that "we defeated the Bush trade agenda and got 100% of what Democrats have been demanding for years". He asserted that the labour and environmental standards will be "FULLY enforceable and subject to the same dispute settlement procedures as every other part of trade agreements, including investment, and intellectual property...EXACTLY what Democrats demanded before the election".

In a later update, Sirota reported the White House as saying that labor and environmental standards would not be written into the core text of trade agreements, "but instead will mean merely unenforceable NAFTA-esque 'side agreements' or even weaker 'letters' of understanding".

In fact, this is something Peruvian representatives were saying at least a week ago.

Somewhat missing in all this angst was what Peruvians might think about the deal. Alan Garcia's government has been presenting the trade deal as a sine qua non for the country's development, by supporting export-led growth and creating much-needed jobs.

But while Peru's televised media has repeated this line, it is far from a universal viewpoint. In La Republica, columnist Javier Diez Canseco launched a scathing attack on Garcia, whom he characterized as 'Toledo II' (previous president Alejandro Toledo, who was a cheerleader for the free trade deal, and who helped the outgoing Peruvian congress controversially push the agreement through on the eve of last year's election).

Diez Canseco pointed out that Garcia had raised significant concerns about the trade agreement during his election campaign and promised to "retire his signature [if Toledo signed the agreement] and review it line by line". But now in government, Garcia had allied himself with "the powerful business Right" and become a "yes man" for the agreement. To the Democrats proposal that Peru's trade preferences be unilaterally extended for two years while issues were sorted out, Garcia "remained mute".

With ratification looking imminent, the attention in Peru has turned back to the impact of the trade agreement on agriculture. The most prominent concern in Peru has been that the FTA will allow an influx of subsidised American products which will push out small farmers - who will then have the option of joining the influx to the already overburdened cities, or perhaps turning to growing coca.

The government has suggested that a system of compensation will be put in place for farmers affected by the trade deal - particularly producers of corn, wheat, and cotton. But La Republica reported that the agricultural subcommission charged with developing such a system had not yet determined which products would be significantly affected, let alone worked out how to implement such compensatory subsidies.

In any case, with specific regulatory change required of Peru at least in respect to mahogany logging, and many rank-and-file Democrats apparently wanting the new conditions to be written into the agreement itself, it's hard to see how only "process" remains for the agreement to enter into force. There may yet be an opportunity for Diez Canseco - and other Peruvians angered by the lack of transparency in trade negotations - to see "a national and congressional debate on the issue".

Categories: free trade, United Statess, Peru, FTA, trade agreement