ATPA extension vital to Peruvian trade
CURRENTLY UP FOR REVIEW BY THE U.S. CONGRESS, THE ANDEAN TRADE PREFERENCE ACT (ATPA) ALLOWS OVER 6,000 PERUVIAN PRODUCTS TO ENTER THE U.S. AT ZERO TARIFFS

Start a conversation about U.S.-Peruvian relations these days and before too long it is bound to turn into a discussion of ATPA, the Andean Trade Preference Act. The United States is the largest customer for Peru’s exports (30%) and provides the Andean country with roughly the same percentage of its total imports. Since 1991, ATPA has allowed all but a handful of products from Peru, Bolivia, Colombia and Ecuador to enter the U.S. market on zero-tariff basis. This December, it must be renewed without change, renewed and rewritten, or scrapped altogether.

The Bush administration supports having ATPA extended and expanded to cover exports currently excluded under the act–principally garments and textiles. But approval is far from certain in Congress, where members are careful not to tread on the toes of agribusiness interests at home. Foreign Minister Diego García Sayán argues that, “all the Andean countries taken together could not produce more than 1.4% of overall U.S. textile imports, and much of that is in specific high-end, non-mainstream wool and cotton varieties. If those exports were to double, it would make a world of difference for us.”

RAÚL DIEZ CANSECO TERRY Minister of Industry, Tourism, Integration and International Trade Negotiations

The Vice President and Minister of Industry, Tourism, Integration and International Trade Negotiations, Raúl Diez Canseco Terry, adds that the ATPA debate is particularly important in the light of the forthcoming introduction of the Free Trade Area of the Americas (FTAA). “The Bush administration is going to push to have FTAA ready by 2005, which means that Peru must prepare its whole economy in order to become an exporting country. So far, Peru has had a protected and closed economy and ATPA represents an important step to enable us to adjust to this new environment.”

ATPA was created as an incentive for crop substitution, encouraging countries to eradicate the cultivation of the coca plant from which cocaine is made. Washington has praised Peruvian authorities for their success. As Deputy Minister for International Trade Alfredo Ferrero notes, “no cash crop anywhere in the world is as profitable to grow as the coca bush.” Opening up U.S. markets to goods has helped offer Peruvian farmers alternatives, and one out of every four asparagus eaten in the United States is grown in Peru.
According to Jaime A. Garcia Diaz of the American Chamber of Commerce, U.S. investment in Peru, while substantial, is perhaps not everything it should be. “Even so, in asset terms, Americans are the main investors, with $8 billion tied up in the country. A U.S. company got the last major privatization, Electroandes, paying a 90% premium over the minimum bid.”

In addition to trade and investment, the United Sates has provided Peru with over $1.3 billion food, and disaster relief aid since 1990, while USAID’s food assistance has reached 1.7 million Peruvians. Other programs offer financing and technical know-how for improving public health facilities and implementing environmental safeguards in the mining industry.
Finally, most of the two million Peruvians who live outside their country of birth (around 10% of the population) are in the United States. “We see these people as Peruvians working in a different setting for their country’s future,” says Mr. García Sayán. “Many were business professionals who fled an insurgency that cost 25,000 lives and inflation running upwards of 7,000% back in the 1980s. We would like to encourage all of them to stay in touch, contribute their input on the direction the country should be taking, and maybe eventually consider bringing the experience they have acquired back home. We certainly could use it.”