U.S. shipper groups support trade promotion agreement with Peru
Shipper representatives from several large trade groups urged Congress Wednesday to pass the U.S.-Peru Trade Promotion Agreement legislation recently negotiated by the Bush administration.
“This is an example of an agreement that is balanced because it offers us the opportunity to grow U.S. dairy exports without the potential for a third-party country to exploit this agreement to the disadvantage of U.S. dairy farmers,” said Ray Souza, owner of Turlock, Calif.-based Mel-Delin Dairy, on behalf of the Western United Dairymen, before the House Ways and Means Committee.
Most shippers see the agreement as leveling the playing field of trade between the two countries. The United States eliminated 97 percent of import duties on Peruvian exports under the 1990 Andean Trade Preference Act, whereas many U.S. exports to Peru are still subject to import duties of 12 percent to 25 percent.
“The day the agreement enters into force, 80 percent of U.S. consumer and industrial products and more than two-thirds of current U.S. farm exports will enter Peru duty free,” testified Richard Norman, vice president of human resources for Coats North America on behalf of the U.S. Chamber of Commerce and U.S.-Peru Trade Coalition.
Two-way trade between the United States and Peru has doubled during the past three years, reaching $7.4 billion in 2005. However, Norman said this trade has been lopsided in favor of Peruvian exports to the United States because of their duty-free status.
Norman called the trade promotion agreement “a critical step in U.S. efforts to promote sustainable economic growth in the Western Hemisphere through trade rather than aid.” He added that it “follows in the footsteps of the successful U.S.-Chile Free Trade Agreement.”
U.S. poultry shippers are optimistic that the trade promotion agreement with Peru should help overcome traditionally high barriers to imports of U.S. chicken leg quarters. Once the agreement is implemented, the amount of duty free access for U.S. poultry imports will increase to about 24,000 metric tons over 10 years. “The United States has never exported more than 2,400 metric tons of poultry, and that includes all poultry products, to Peru in any year,” Sara Lilygren, vice president for federal government relations for Tyson Foods on behalf of National Chicken Council, told the Ways and Means Committee.
U.S. manufactured exports to Peru are expected to increase under the agreement. The fastest growing categories of U.S. manufactured exports to Peru currently include petroleum and coal products; furniture-related products; and boilers, tanks and shipping containers, Norman said.
In addition, the trade promotion agreement requires Peru to make certain customs improvements for the sake of trade facilitation. Goods must be cleared by Peruvian Customs within 48 hours of arrival under the agreement.
Francisco X. Santeiro, managing director for global trade services in FedEx Express’s Latin America and Caribbean division, highlighted to the House committee the agreement’s provisions related to express shipments, such as customs clearance within six hours after submission if customs documents. Express shipments may also be processed through customs prior to arrival in Peru.
“As customs experts often point out, if you can’t measure customs clearance times you can’t improve them; and if you don’t have a goal, you never will,” Santeiro said.