WASHINGTON, D.C. — While he supports global democracy in principle, Versailles, Ind., farmer Jim Benham believes the competition that goes with it tends to lower overall standards for manufacturing and goods, rather than raise them.</p><p>
The president of the Indiana Farmers Union thinks United States farmers will see immediate benefits from the United States-Peru Trade Promotion Agreement recently approved by both the House and Senate, but is worried about its long-term impact on the economy.</p><p>
“We have seen trade frequently referred to as ‘the race to the bottom,’” Matthew Beck, communications director for the House Committee on Ways and Means, admitted, explaining past trade agreements have not taken workers’ rights in other countries into account, which has resulted in cheap labor and lower prices that undercut American-produced goods. “That’s not a race that we want to run, want to enter or can win.”</p><p>
For that reason, he said one major difference between this agreement and NAFTA (North American Free Trade Agreement) are provisions for labor. While he said past legislators approved an “enforce your own labor laws” approach with foreign nations under the likes of NAFTA, this bilateral trade agreement demands Peruvian compliance with United Nations International Labor Organization standards.</p><p>
Along those lines, Beck explained the agreement also sets labor standards for Peruvian companies wanting to compete for U.S. contracts. “We don’t want sweatshops,” he said. (Another provision allows the U.S. an “unchallengeable right” to refuse the foreign contract oversight of port security for any port it deems sensitive to such concerns.)</p><p>
There has been some question of how the U.S. intends to police these provisions, but according to trade counsel with the Committee on Ways and Means, the problem has never been finding whistleblowers, usually among charity and other organizations in those countries; it’s been legal ability to enforce penalties for violations.</p><p>
Another provision is a directive for Peru to observe international conventions on protection of endangered species, both plant and wildlife. Beck said 80 percent of Peru mahogany coming into the U.S. has been from illegal logging. Like the labor requirement, he said this will enable the U.S. to refuse import of goods illegally produced.</p><p>
Intellectual property on technology and medicine, he said, are protected under the agreement, which also provides faster access for Peruvians to cheaper generic American-produced drugs. Beck said this is not expected to result in a cost increase to Americans but may lead to faster access to generic drugs here as well.</p><p>
Finally, Beck said the agreement makes provision that foreign investors of U.S. interests will not be treated preferentially to domestic investors.</p><p>
“This is not NAFTA,” he said. “The changes are so significant.”
Trade with Peru does not make up a great percentage of the American economy. U.S. Department of Commerce figures show U.S. exports to Peru in 2006 – including agricultural – were $2.9 billion. But according to the Latin America Trade Coalition, the U.S. has invested $1 billion in Peru’s liquefied natural gas sector and plans to add another $2 billion in coming years, and stated that trading with Peru may keep it “a reliable and secure source” of the heating fuel, especially at a time of high natural gas prices in the U.S.</p><p>
Andy Fisher, press secretary to U.S. Sen. Richard Lugar (R-Ind.) – who voted for the Peru agreement – said promoting trade makes for better trading partners by cutting poverty in those countries and reducing their need for aid. He said NAFTA created “huge export possibilities” and has helped Indiana pharmaceutical, medical devices, automotive parts and ag industries.</p><p>
“There really aren’t any down sides to free trade,” Fisher said.
Lugar also wrote in an October op-ed piece for the Miami Herald that “U.S. policy in Latin America is in trouble” and that enacting a trade agreement with Colombia (such as with Peru) may help end violence and corruption in that country “by attracting investment, boosting jobs and cutting poverty.”</p><p>
In a statement, however, fellow Republican Rep. Pete Hoekstra (Mich.) said he voted against the Peru agreement partly because “it has failed … to eradicate narcotic production in Peru despite becoming one of the world’s largest producers and exporters of asparagus.”