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Ag Groups Mount Support for Peru TPA

The Agricultural Coalition for U.S.-Peru Trade, comprised of 58 agricultural organizations, sent a letter last week to every member of Congress urging support of the Peru Trade Promotion Agreement.

The letter states "PTPA sets a new and higher standard for future free trade agreements." Peru is already a large importer of many U.S. agricultural products. "PTPA will provide U.S. agriculture producers and exporters the opportunity not only to preserve but to increase market share."

More than two-thirds of current U.S. agricultural exports to Peru will immediately receive duty-free treatment upon entry into force of the agreement.  The tariffs on remaining U.S. agriculture products will be reduced over time, with all tariffs eliminated within 17 years.  Currently only about 1.5 percent of U.S. food and agriculture exports to Peru enjoy duty-free access, the letter says.

Peru already has negotiated trade deals with Colombia, Mexico, Brazil, Cuba and Argentina and is seeking free trade agreements with the European Union, Chile and Thailand.  "PTPA will provide U.S. agriculture producers and exporters the opportunity not only to preserve but to increase market share. Peru's economy is one of the most dynamic in Latin America, with gross domestic product growing at an average annual rate of 4.5% over the past four years," the letter adds.  

Upon implementation of the U.S.-Peru Free Trade Agreement, the National Corn Growers Association says corn growers will see an immediate benefit by having market access for 500,000 metric tons of corn with no tariff, giving the United States a significant competitive advantage over Argentina, which has been the primary supplier of corn.

Current U.S. agricultural exports to Peru include wheat ($78 million in 2005), cotton ($38 million), feed grains ($20 million), oilseeds and related products ($16 million), rice ($9 million) and dairy products ($6 million).  According to the U.S. Agricultural Counselor in Lima, the U.S. can expect to see improved prospects for a wide range of other high-value U.S. food products, including cheese and whey, snack foods, pet foods, fresh and processed fruits and juices and wine.  Tariffs on these products now range from 12% to 25% but will all be reduced to zero over the transition period to free trade.

According to the U.S. Trade Representative, the United States is Peru's fourth largest supplier of consumer-oriented food imports. From 2000-2004, the United States exported to Peru an average of $227 million in agricultural products - and $20 million in feed grains. By the end of the full implementation period of the agreement in 2025, agricultural exports will increase by more than $700 million, according to a Farm Bureau economic analysis.