US-Peru Trade Deal a Step Back for Development

As the Senate Committee on Finance considers the merits of the US-Peru free trade deal, international aid agency Oxfam America warned today that the agreement will institutionalize an uneven playing field and will have a detrimental impact on the livelihood and health of poor Peruvians.

According to Oxfam, the agreement, entitled US-Peru Trade Promotion Agreement, does not take into account the economic and social disparities between the two trading partners and fails to realize the potential benefits of trade as an engine for development and poverty reduction.

“The Peru free trade deal will harm thousands of Peru’s small farmers, limit access to affordable new medicines by unduly extending the monopoly rights of the international pharmaceutical industry and will restrict Peru’s ability to regulate foreign investment to ensure it serves national development, said Stephanie Weinberg, trade policy advisor for Oxfam America.

Although outgoing Peruvian president Alejandro Toledo has touted the benefits of the agreement which was approved by its lame-duck Congress, there is deep concern among much of Peru’s population about the effects of the agreement, with a broad cross-sections of civil society actively questioning the trade agreement.

"With three quarters of the rural population of Peru living in poverty, it would be irresponsible to expose our small farmers to unfair trade because of American agricultural subsidies,” Guillermo Rebosio with the National Convention of Peruvian Agriculture, who came to Washington to meet with Members of Congress. “Peruvians deserve a trade agreement with development and equity at its heart, supporting efforts to strengthen democracy and successful anti-drug policies, but this agreement will do the opposite, by threatening the income of Peruvian farmers, who will be forced to compete with highly subsidized American products like cotton, corn and wheat.”

While the Peru FTA fails to take into account that the effect of US agricultural subsidies would have on Peru's small farmers, it also undermines public health efforts in the country by restricting generic competition, which will increase prices for new medicines in Peru. This will have a serious impact on half of the Peruvian population that does not have health insurance and will severely strain the already overburdened public health system.

“Peru has nothing to gain and a lot to lose from the harsh intellectual property provisions imposed by the US in this free trade agreement that far surpass currently accepted global standards already in effect in Peru,” said Roberto Lopez, director of Health Action International in Peru. “As a result, the price of new medicines will increase dramatically, with the Health Ministry estimating that in each of the first five years the agreement is in effect, 700,000 Peruvians will be unable to afford the medicines they need.”

“With the Doha Round now on ice, the US seems poised to continue negotiating harmful bilateral trade agreements that exacerbate existing inequities by forcing developing countries to make deeper concessions, while gaining less than they would at the WTO,” continued Weinberg. “No matter the spin, this free-trade agreement will stifle opportunities for development and should be rejected.”