U.S.-Peru Free Trade Agreement

December 10, 2007

Following a rancorous debate in the House, the Senate passed the U.S.-Peru Free Trade Agreement with alarming ease last week. The bill went through with only 17 voting in opposition. Though approval was expected, there were several votes changed from anticipated opposition to approval at the last minute.

The decision of the House leadership to work with the administration in strengthening the labor and medicinal provisions may have been what largely influenced the decision of the Senate, but these provisions will not be enough. They do not address concerns of Peruvian farmers who will likely lose their markets as they are unable to compete with cheaper agricultural products of the United States. Nor will the provisions protect the ecological, medicinal or cultural heritages of the indigenous people.

This defeat is undoubtedly a disappointment, especially as opposition was crucial in the battle against our nation’s current model of trade. The volume of dedicated response on this issue from NETWORK membership, however, has been above and beyond anything we could have hoped for. Together, our message of opposition was loudly voiced and we must remain steadfast in our work to cultivate trade as an instrument of development. As an agreement with Colombia is next, we shift our energy but not our willingness to submit to an unjust system.

More on the House Vote

On November 8, the House passed the bill by a vote of 285 to 132. Like all trade agreements negotiated under Trade Promotion Authority (TPA), which the President enjoyed until July 2007, there could be no House debate on trade pact’s deeply troubling provisions, only an up-or-down vote.

The agreement was supported by 176 Republicans in the House. Among the Democrats, 116 opposed the bill, 109 voted for it, and eight did not vote. This was despite the fact that the Democratic House leadership strongly supported and pushed for passage.

House leadership supported the bill because of an agreement with the Bush administration to renegotiate and strengthen provisions within the trade agreement related to labor, environment and access to medicines. Laudable as this may appear, the labor laws in the new trade bill will not be changed through legislative action in Peru. Undoubtedly, U.S. workers will not be protected from offshoring.

Nor will Peru FTA protect the some 700,000 small Peruvian farmers who will possibly lose their markets as U.S. agricultural corporations export and process cheap agricultural products with which they cannot compete. A major question for U.S. citizens: Where do people who lose their farms relocate?  Remember NAFTA’s disruption of Mexican farmers.

Nor do investment provisions of the pact protect the ecological, medicinal and cultural heritage of indigenous people. As noted by Jessica Walker Beaumont of the American Friends Service Committee, “This trade pact opens the way for large pharmaceuticals and agribusiness corporations to patent traditional knowledge, seeds and life forms…to bio-piracy of the Andean-Amazon region.”  

Background

NETWORK in collaboration with the Interfaith Working Group on Trade and Investment (IWG) has been meeting with congressional staffers over the past weeks reiterating this message:

• We support trade policies that support human rights, democracy, indigenous sovereignty, food sovereignty, environmental justice, economic justice and sustainability of the planet.
• We support trade policies that restrict the power of corporations and strengthen the rights of workers and communities both in the United States and in our trading partners.

The Peru Free Trade Agreement (FTA) fails to meet these criteria.

From the outset, NETWORK has been lobbying in conjunction with interfaith groups against passage of any of these pending trade agreements negotiated under the president’s former Trade Promotion Authority.  Instead, we have been urging Congress to design a trade policy that is an authentic vehicle for development for both the United States and our trading partners. The defeat of Peru FTA could move such a process.

NETWORK will continue urging Congress to oppose passage of the agreement.

In comprehensive testimony to Congress, Peruvian-Americans opposing the Peru agreement stated that the Peru FTA would: 1) threaten small farmers by lowering tariffs on agricultural products as the U.S. exports our cheaper subsidized crops to that nation; 2) open the way for large pharmaceutical and agribusinesses to patent the traditional knowledge, seeds and life forms that comprise the bio-genetic wealth of the Andean-Amazon region, thus threatening the ecological, medicinal and cultural heritage of the people; 3) displace working people who will necessarily be forced to compete for the jobs as corporations relocate to the region; 4) endanger health by restriction of access to cheaper life-saving medicines due to the long patenting process; 5) threaten public health especially of women, children and impoverished people by the privatization of water, healthcare and education. This trade agreement is not an instrument of development.

On October 4, the Senate Finance Committee voted for legislation to implement the agreement, but Senate leaders plan to delay floor consideration until the House version is ready. President Bush sent the measure to Congress two weeks ago, with the House allowed up to 45 days to act on it.

While NETWORK supports trade as a vehicle of development, the provisions of a Free Trade Agreement (FTA) must benefit both trading partners. Like the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA), the Peruvian FTA fails in this respect.

Despite the fact that Speaker Pelosi and Representative Rangel reached agreement with the Bush Administration on provisions to strengthen the rights of labor, protect the environment and make available generic medicines to the Peruvian people, there was little guarantee that these provisions would become effective in Peru prior to the approval of the trade agreement.  A free trade agreement with Peru should not be approved until legislation is passed by the Peruvian Congress to guarantee compliance with the labor provisions of the International Labor Organization (ILO) and guarantee their enforcement.  Further, no provisions of a trade agreement should jeopardize the rights of the trading partners.

In a recent petition to the U.S. Congress to negate the passage of the Peru FTA, Peruvian-Americans and human rights advocates noted that most Peruvians are of indigenous and African heritage. About 73 percent of those in indigenous communities live below the poverty line. They will be threatened by provisions of the agreement which allow agribusiness and pharmaceutical corporations to take over their traditional medicine and nutrition knowledge for profit.

Relative to agriculture, U.S. agricultural subsidies represent unfair competition for Peruvian agricultural goods. It is estimated that 700,000 producers of cotton, barley, corn wheat, oilseeds and dairy producers unable to compete with U.S prices will become impoverished. As in Mexico and Central America, when hundreds of farmers suffer the loss of their farms, the alternative becomes migration to countries like the United States.  The coherence of trade, investment and immigration is often lost in the immigration debate.    

Further, mining, oil and natural gas exploration would cause damage to the Peruvian environment, especially the Andes mountain region and the Amazon basin, the largest virgin forest on the planet. In the Free Trade Agreement, multinational corporations have the right to sue governments if any attempt to protect the environment would cause the companies a reduction in profits.

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.

______________________________

NETWORK is part of the Interfaith Working Group on Trade and Investment, which issued the following statement about the U.S.-Peru Free Trade Agreement last fall:

 Interfaith Working Group on Trade and Investment Statement of Opposition to the U.S.-Peru Free Trade Agreement

October 23, 2006

The U.S.-Peru Free Trade Agreement (U.S.-Peru FTA), like CAFTA before it, is a manifestation of the failed “one-size-fits-all” model that does not live up to the principles of trade justice.  Therefore the trade pact must be rejected.  As people of faith, we believe that international trade and investment systems should respect and promote the dignity of the human person, ensure the development and well-being of people in all nations, foster gender and racial equity and lead to environmental sustainability .  However, the U.S.-Peru FTA will not bring us closer to these goals.  We oppose the U.S.-Peru FTA, and urge you to vote no when it comes before Congress.

Peru is engaged in a delicate reconciliation process after decades of armed conflict and the country remains burdened by high levels of poverty and a growing gap between rich and poor.  In a desperate attempt to gain support for the U.S.-Peru FTA, the U.S. Trade Representative is claiming the trade pact will lead to increased democratic stability in the region and curb cultivation of coca and trafficking of cocaine.  Based on our experience with NAFTA and CAFTA we think the opposite is true.  The U.S.-Peru FTA will cause lost livelihoods in rural communities, reduce access to life-saving medicines and perpetuate the global “race to the bottom” for workers and environmental protection. The US-Peru FTA, as currently negotiated, will not bring stability or development to the region!  

We are especially concerned that a U.S. vote for the trade pact is likely to take place outside public scrutiny during a lame-duck session of Congress after the November elections.  The Peruvian legislature approved the FTA during its own lame-duck session between elections and taking office.    

If passed the U.S.-Peru FTA will:

• THREATEN SMALL FARMERS by lowering Peru’s tariffs on agricultural products, making the country vulnerable to cheap subsidized imports from the U.S, which would effectively wipe out local farmers—as happened to the 1.3 million who have been displaced in Mexico since NAFTA passed 12 years ago.  This is of particular concern in a country working to curb coca production. 
• THREATEN INDIGENOUS PEOPLES by opening the way for large pharmaceutical and agribusiness corporations to patent traditional knowledge, seeds, and life forms.  This opens the door to bio-piracy of the biogenetic wealth of the Andean-Amazon region and threatens the ecological, medicinal and cultural heritage of indigenous peoples.
• EXACERBATE THE ROOT ECONOMIC, POLITICAL, AND SOCIAL INEQUALITIES which could lead to increased drug production while doing nothing to address consumption issues in the North.   
• THREATEN PUBLIC HEALTH through the FTA’s intellectual property provisions, which restrict access to life-saving medicines through unnecessarily long patents and data-protection provisions that impede the production of generic and more affordable alternatives.  According to Doctors Without Borders, after the first 5 years of the trade deal, between 700,000 to 900,000 people are expected to be excluded from receiving medicines.
• THREATEN WOMEN, CHILDREN, AND THE POOR through provisions promoting the privatization and deregulation of essential services such as water, healthcare and education.  As these services become less accessible, women and the poor would have to make up for increases in prices of these services in order to ensure adequate health, education and nutrition conditions for themselves and their families, increasing their workday within and outside  the home.
• THREATEN U.S. AND PERUVIAN SOVEREIGNTY through undermining the ability of governments at all levels to enforce vitally important domestic procurement policies in order to create space for foreign competition.  Moreover, the establishment of additional secret trade tribunals whose rulings over-ride local laws and policies effectively making trade rules more powerful than democratic institutions and domestic laws.  
• THREATEN WORKING PEOPLE as corporations gain increased ability to relocate in search of lower labor costs—perpetuating a "race to the bottom".  This trend is disproportionately felt by low-skilled workers who are forced to compete for jobs.  Communities are also forced to compete for investment by requiring less of employers.  The global race to the bottom has been a significant factor in the stagnation of job quality in the U.S. and the spread of sweatshop labor in Latin America.   Without resources for enforcement of Peruvian labor laws, the U.S.-Peru FTA is likely to perpetuate rather than alleviate this problem.
• THREATEN THE ENVIRONMENT because under the trade agreement, investors have the right to sue governments in closed tribunals for measures which ‘cause’ the loss of profits, even if these measures are to protect people or the environment.  This is of grave concern in a country that hosts part of the upper Amazon basin—one of the most bio-diverse areas on earth with many rural communities dependent on natural resources for their livelihoods. Improved cooperation and positive measures should be pursued through efforts to meet the standards set out in multilateral environmental agreements. These include building institutional capacity, transferring ‘clean’ and appropriate technology, and providing technical and financial assistance . 

We believe that trade and investment should not be seen as ends in themselves, but rather as means towards sustainable broad-based development.  Trade based on principles of justice must have mechanisms which provide protections for the most vulnerable sectors of society and ensure poverty reduction.  Experience has proven that side agreements, funding for trade capacity building for developing countries, and Trade Adjustment Assistance funding in the U.S. have been insufficient to address the failures of this flawed model.

As members of diverse faith communities, we are convinced that international trade and investment agreements must be shaped according to recognized standards of human rights, morality and justice.  Because the U.S.-Peru FTA fails these standards—and will harm ordinary people in both countries—we urge you to oppose it. 

The Following Members of the Interfaith Working Group on Trade and Investment Endorse this Statement

American Friends Service Committee

Center of Concern

Church World Service

Columban Justice, Peace and Integrity of Creation Office ( USA)

Evangelical Lutheran Church in America (ELCA)

Justice and Peace Office, Conference of Major Superiors of Men (CMSM)

Lutheran World Relief

Maryknoll Office of Global Concerns

Medical Mission Sisters Alliance for Justice

Medical Mission Sisters - Sector North America

Medical Mission Sisters – Sector Latin America

Mennonite Central Committee Washington Office

Missionary Oblates of Mary Immaculate, Office of Justice, Peace and Integrity of Creation

NETWORK, A National Catholic Social Justice Lobby

PLANT (Partnership for the Land and Agricultural Needs of Traditional peoples)

Presbyterian Church ( USA), Washington Office

Quixote Center/Quest for Peace

SHARE Foundation:  Building a New El Salvador Today

Sister of the Holy Cross, Congregation Justice Committee

Sisters of Notre Dame International Justice and Peace Office

United Church of Christ, Justice and Witness Ministries

United Methodist Church, General Board of Church and Society

Washington Office on Africa

The INTERFAITH WORKING GROUP ON TRADE AND INVESTMENT is a Washington-based  working  group  with  representatives  from  a  range  of  faith-based  organizations  committed  to asserting a stronger presence of communities of faith in public policy discussions on international trade and investment [ 1225 Otis Street, NE, Washington, DC 20017 · Tel: 202.635.2757 x 134 · Fax: 202.832.9494 · Email: iwg@coc.org]