Senate panel gives initial okay to Peru trade deal

WASHINGTON (Reuters) - The Senate Finance Committee approved on Friday a draft of a free trade agreement with Peru, which has faced a rough ride in Congress since it was concluded nearly two years.

The panel voted 18-3 to give initial approval of the White House's draft bill to implement the agreement, which was modified earlier this year to satisfy the demands of Democrats for tougher labor and environmental provisions.

The House of Representatives Ways and Means Committee is expected to approve the draft legislation on Tuesday, which would clear the way for the White House to submit a final implementing bill to Congress for a vote.

Once that happens, Congress will have 90 days to approve or reject the pact without making changes. Leading Democrats have said they expect the pact to be approved.

Peru and three other Andean countries already have duty-free access to the U.S. market for over 90 percent of their goods. The deal locks in that access for Peru and phases out tariffs on U.S. exports to a regional ally.

Sen. Kent Conrad, a North Dakota Democrat and critic of most trade deals, urged colleagues to support the agreement as a bulwark against Venezuelan President Hugo Chavez, an ardent foe of the United States.

"It's very clear ... that Mr. Chavez is working to form an anti-American bloc in that part of the world," Conrad said.

Two-way trade between the United States and Peru has doubled over the past three years to nearly $8.8 billion. U.S. goods exports to Peru reached $2.9 billion in 2006.

The Bush administration had hoped to win approval of the Peru free trade agreement last year, but decided not to push for a vote ahead of the November congressional elections.

When Democrats captured control of both the House and the Senate, the White House was forced to renegotiate labor and environmental provisions of the trade pact with Peru -- and three others with Colombia, Panama and South Korea.

Despite making those changes, many Democrats still strongly oppose the trade pacts with Colombia and South Korea.

They say Colombia has not done enough to stop the killings of trade unionists and to bring their murderers to justice.

They accuse the Bush administration of negotiating a lopsided deal with South Korea that will open to U.S. market to more auto imports without tearing down that country's regulatory barriers to U.S. auto exports.

President George W. Bush on Thursday urged Congress to approve all four pending trade agreements.

"If they don't get through, it's a sign that the protectionists are beginning to be on the ascendancy here in Congress and that would be a mistake," Bush said.

(Additional reporting by Adriana Garcia in Washington)