Senate approves Peru free trade deal

By Doug Palmer

WASHINGTON (Reuters) - The U.S. Senate on Tuesday overwhelmingly approved a free trade pact with Peru, handing President George W. Bush his first legislative trade victory since Democrats took control of Congress in January.

"I look forward to signing this legislation into law and urge Congress to promptly consider and approve our other pending free trade agreements, starting with Colombia," Bush said in a statement after the vote.

The Senate voted 77-18 to pass the agreement, which was revamped earlier this year to include groundbreaking labor and environmental provisions demanded by Democrats.

The agreement rewards a stalwart U.S. ally in a region where Venezuelan President Hugo Chavez frequently chastises the United States for its policies.

"I want to congratulate all of Peru on this excellent news," Peruvian President Alan Garcia told reporters in Lima. "This means more jobs and more social justice."

The strong bipartisan vote raised industry hopes that Congress might grant Bush his wish next year and pass trade deals with Colombia, Panama and South Korea -- despite political obstacles facing each of those pacts.

Five senators running for president were absent for the vote.

While Sen. Hillary Clinton, a New York Democrat, and Sen. Barack Obama, an Illinois Democrat, had said they supported the pact, both Sen. Chris Dodd, a Connecticut Democrat, and Sen. Joe Biden, a Delaware Democrat, were opposed.

The fifth absentee, Sen. John McCain, an Arizona Republican, has been a consistent supporter of trade deals.

The House voted 285-132 for the agreement last month.

The deal locks in Peru's duty-free access to the U.S. market under a longstanding U.S. trade-preference program, creating a more favorable environment for foreign investment the Andean country wants to help create jobs.

GROUNDBREAKING PROVISIONS

For U.S. business, it immediately eliminates duties on 80 percent of industrial and consumer product exports to Peru and more than two-thirds of farm exports. Most other duties will be phased out over 10 to 15 years.

Supporters expect a big boost to U.S.-Peru trade, which totaled about $8.8 billion last year.

However, international aid organization Oxfam criticized the agreement, which they said would expose Peru's small farmers to "massive dumping" of subsidized U.S. farm goods.