The U.S.-Peru Trade Promotion Agreement Implementation Act ratifies a trade deal negotiated by the United States and Peru. The agreement is modeled on the 1994 North American Free Trade Agreement (NAFTA) and the 2005 Central American Free Trade Agreement (CAFTA) and, like those agreements, removes most export tariffs between the signatory nations while also increasing protection for pharmaceutical patents and other intellectual property. The agreement includes requirements that public services be open to private investment and that the government allow international companies to bid for its purchases. The Peru trade agreement differs from previous trade pacts in that it requires the U.S. and Peru to abide by their commitments to certain environmental agreements and to conform to core labor principles. The agreement also requires Peru to take action against illegal logging and reforms provisions in previous trade deals that would have made it difficult for Peru to access affordable generic drugs. Trade deals with Panama, Colombia, and South Korea are also pending.
The Middle-Class Position:
The Middle Class Opposes. Increased international trade can contribute to economic growth, but the way trade rules are formulated in agreements like this means that the benefits of trade are distributed unevenly, ultimately undermining the middle class and aspiring middle class in both the U.S. and the nations it trades with. A central problem is that the Peru trade agreement empowers businesses and investment capital to cross international borders more easily, providing a decisive advantage over working people who are not so internationally mobile and whose rights are not equally well protected in all of the nations covered by the agreement. This imbalance of power creates incentives to move U.S. jobs overseas and puts downward pressure on the wages of American workers as they are placed in more direct competition with poorly-paid, disempowered Peruvian workers.
The new provisions on labor rights in this agreement represent a step in the right direction, but are unlikely to make a significant impact on Peru’s poor labor rights practices: while Peru must agree to follow a set of labor rights principles, such as eliminating employment discrimination and forced labor, it is not bound to any specific agreed-upon standards. At the same time, Mexico’s twelve years of experience with NAFTA suggest that the average person in Peru will also see their standard of living decline under this agreement. In the U.S., the experience of NAFTA suggests that more jobs will be lost due to displaced domestic production than will be gained due to export growth. The deal also raises concerns about food safety for middle-class consumers especially because the imports of largely untested Peruvian seafood are expected to increase dramatically.
From the Experts:
“We strongly oppose this trade deal for two principal reasons. First, the specific agreement is seriously flawed in its protections of the interests of American workers. Secondly, its passage would further extend and add yet another precedent for the trade policies of the last 15 years that have cost America millions of jobs, undercut our financial stability and eroded our national security… We appreciate that the Ways and Means Committee has made some improve¬ments in the labor provisions of the original language negotiated by the Bush administration with the govern¬ment of Peru. But the changes do not repair its fatal weaknesses.” - Douglas J.McCarron, General President, the United Brotherhood of Carpenters and Joiners of America (November 2, 2007)
“The Democratic majority arrived with a fair trade mandate from a public strongly opposed to staying the course on the failed Bush trade agenda…[Rather than supporting this agreement, Congress] should aim instead at addressing the flood of unsafe imported foods and products, the many incentives to off-shore U.S. jobs, the endless ‘trade’ pact attacks on our environmental and safety laws and the nearly $800 billion trade deficit that is slowing U.S. economic growth and threatening global economic stability.”–Lori Wallach, Director, Public Citizen Global Trade Watch (June 25, 2007)
“The proposed pacts with Peru, Colombia and Panama are designed to force Americans into another destructive wage-cutting competition with desperate foreign workers just as BusinessWeek reports that ‘many countries south of the border are building up their outsourcing infrastructure.’… Major labor leaders in Peru, Colombia and Panama oppose the deals, and not one respected U.S. human rights, religious or anti-poverty group supports them… Democratic leaders say the deals include labor provisions protecting American workers. But as the U.S. Chamber of Commerce's president told reporters, he has received ‘assurances that the labor provisions cannot be read to require compliance’ with minimum international standards.” -David Sirota, Columnist and Author, Hostile Takeover: How Big Money and Corruption Conquered Our Government--And How We Take It Back (September 21, 2007)
Beyond this Bill:
Trade deals may be at the top of Corporate America’s agenda, but they aren’t a priority for the American middle class. Instead, measures that will enable Americans to retain a middle-class standard of living in the face of the intense global competition that already exists – such as universal access to health care, more affordable college education and greater protection for labor rights at home – must take precedence. To truly benefit the middle class, any new trade deals must decisively break with the failed NAFTA-CAFTA model and be written from scratch, taking into account from the beginning the interests of not only multinational corporations but also consumers, the environment, and working people in the U.S. and abroad.
United States trade deficit as of August 2007: $57.6 billion
Minimum monthly wage in Peru, in U.S. dollars: $155
Estimated percentage of increased inequality of earnings in the U.S. in 2006 attributable to trade policy: 7
Minimum annual loss this represents to the typical married couple household in the U.S.: $2,000
Approximate proportion of U.S. workers whose jobs are potential targets for off-shoring if present trade policies continue over the next two decades: 1 in 4
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