December 4, 2007 / 7:50 PM / 12 years ago

Senate approves Peru free trade deal

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.

The American Farm Bureau Federation estimates the pact will boost U.S. farm exports to Peru by more than $700 million annually once it is fully implemented.

Though more than 40 percent of people in the Andean country live in poverty, Peru’s economy has been booming for the last six years, mainly on exports of metals to Asia.

Garcia has said the pact with the United States should add 2 percentage points to annual growth rates in an economy that has been growing at 8 percent a year.

The deal also requires Peru to open its banking, insurance and other services markets to more U.S. companies and strengthen copyright, patent and trademark protections for U.S. products ranging from music to manufactured goods.

As a result of the changes demanded by Democrats, the pact boosts protections for workers in both countries by requiring the two trading partners to adopt, maintain and enforce core international labor standards, such as the right to bargain collectively and go on strike.

The environmental provisions requires the United States and Peru to effectively enforce their domestic environmental laws and to honor international environmental obligations.

For the first time in a U.S. trade agreement, the labor and environmental commitments will be enforceable through the same mechanism as commercial provisions of the pact.

Senate Majority Leader Henry Reid, a Nevada Democrat, said he voted against the agreement in large part because the Bush administration has a poor job of enforcing previous trade deals.

“I recognize that this FTA reflects major improvements from the previous model. But, I still see many holes in U.S. trade policy that need to be filled,” Reid said.

additional reporting by Terry Wade in Lima

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