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The U.S.-Peru Trade Promotion Agreement

Free Trade Agreements (FTAs) are the cornerstone of U.S. foreign trade policy. Since 1992, the U.S. has signed thirteen FTAs, creating free and open markets worldwide for U.S. goods and services. FTAs have also been the driving force behind Peru’s recent economic growth, increasing real GDP from 2.5% to 6.7% between 1993 and 2005.

In 1991, the Andean Trade Preference Act (ATPA) granted unilateral duty free treatment for over 5,600 products from Peru as well as Bolivia, Colombia and Ecuador. Ten years later, the Andean Trade Promotion and Drug Eradication Act (ATPDEA) extended duty-free status to an additional 700 Peruvian products unilaterally traded with the U.S., while also increasing efforts to combat illegal drug trafficking within the Andean region. The combined effect of these programs spurred greater international investment and job creation in Peru, further strengthening the market for U.S. commercial interests.

Peru at a Glance

Total Area	496,226 sq miles (slightly smaller than Alaska)
Population	28,302,603
Commercial Center	Lima
Languages	Official: Spanish Secondary: Quechua, Aymara
Government Type	Constitutional Republic
Natural Resources	Copper, silver, gold, petroleum, timber, fish, iron ore, coal, phosphate, potash, hydropower, natural gas
Primary Industries	Mining and refining of minerals; steel, metal fabrication; petroleum extraction and refining, natural gas; fishing and fish processing, textiles, clothing, food processing
Work Force	Total: 9.06 million Distribution: agriculture 9%, industry 18%, services 73%
Imports	Petroleum and petroleum products, plastics, machinery, vehicles, iron and steel, wheat, paper
Exports	Copper, gold, zinc, crude petroleum and petroleum products, coffee
Main Imports from the U.S	Agriculture and construction machinery; petroleum and coal products; computer equipment; resin and synthetic fibers and filaments; basic chemicals; communications equipment; oilseeds and grains; other general-purpose machinery
Main Exports to the U.S.	Non-monetary gold; cotton household goods and apparel; copper; petroleum products; fuel oil; assorted vegetables; other precious metals

The success of these previous FTAs was the primary motivation behind the decision to negotiate the U.S.-Peru Trade Promotion Agreement (US-PTPA). The benefits of the ATPA and ATPDEA will be made reciprocal and permanent under the new agreement. Eighty percent of consumer and industrial products and more than two-thirds of current U.S. farm exports to Peru will become duty-free immediately; almost all tariffs will be reduced at annual rate or phased out completely over the next 15 years.

In order to address U.S. exporters’ operational concerns, tariff liberalization efforts are coupled with a legal framework for conducting business in Peru. Within the agreement, the Peruvian Government has also made commitments to enforce its domestic labor and environmental laws. Intellectual property rights will be safeguarded according to both U.S. and international standards.

In the coming years, the US-PTPA will level the playing field for U.S. commercial and agricultural interests alike, providing unlimited access to the growing Peruvian market.

Corporate Social Responsibility

U.S. exporters export far more than their products – they also pass on U.S. business practices and norms. In the U.S., engaging community stakeholders is recognized more and more as not just a “nice thing to do” but as a necessity for a successful business. Too often, U.S. companies are viewed locally as profit-hungry machines indifferent to the community of consumers it serves. This common misconception is being corrected in Peru through a joint project between the U.S. Department of Commerce’s International Trade Administration (ITA), the American Chamber of Commerce in Peru (AmCham) and the Association of American Chambers of Commerce in Latin America (AACCLA) that recognizes the contributions of U.S. companies to economic prosperity and social development.

In order to combat the self-interested image of U.S. businesses ITA, AmCham Peru and AACCLA have undertaken a campaign to highlight U.S. contributions to the region’s economic prosperity. The group has created fourteen country fact sheets highlighting total U.S. investment in each country, the number of jobs supported by U.S. direct investment, and U.S.-added value to the country’s GDP. CS Lima has worked closely with this team to develop Peru’s fact sheet and as a result of these efforts, the Peruvian public is more aware of the significant role U.S. companies play in ensuring their economic wellbeing. Secretary Gutierrez formally launched the results of this project at the October 16 conference of the Association of American Chambers of Commerce of Latin America (AACCLA).

Another component of the ITA/AmCham/AACCLA project involves publicizing Corporate Social Responsibility (CSR) initiatives being undertaken locally by U.S. businesses. Coca-Cola and FedEx Express are among the many companies spearheading programs such as these. Through its support of the Fundación por los Niños del Perú and Hogar de Cristo, Coca-Cola provides housing, food and education for orphaned Peruvian children; FedEx Express, likewise, provides training programs and medical attention in Peru through its ORBIS traveling medical mission. USDOC, AmCham and AACCLA highlight CSR initiatives such as these to demonstrate how U.S. companies have invested themselves socially with long-term commitments to the Peruvian people. Together, USDOC, AmCham and AACCLA are effectively changing the face and the perception of U.S. business interests in Peru.

2006 Presidential Elections

On June 4, former President Alan Garcia was once again elected to office in a hotly contested race with nationalist rival Ollanta Humala. While Garcia’s track record is one of the worst in Peru’s history, including 7000% inflation between 1985-1990, he has promised to stay the course and continue the economic growth and fiscal responsibility of the former Toledo administration. In the economic plan outlined by his APRA party, Garcia seeks increased private investment in commercial infrastructure to improve the industrial sector’s productivity. Garcia also intends to decentralize and diversify production to increase overall competitiveness. Modernization efforts are coupled by a plan to gradually reduce external and internal debt through market mechanisms. If Garcia is successful, his economic policies should bode well for U.S. commercial interests as they continue to benefit from an open, competitive Peruvian market.

President Garcia

On October 10, 2006, President Alan Garcia made his first official trip to the United States where he called on President Bush, Secretary of Commerce Carlos Gutierrez, USTR Susan Schwab and Secretary of State Condoleeza Rice. The key themes of President Garcia’s visit included: U.S. Congressional approval of the U.S.-Peru Trade Promotion Agreement, Central and South American relations, U.S.-Peru bilateral relations, and the war on drugs.

Joint Statement Between the United States of America and the Republic of Peru

Governor Bush FTAA Mission

Governor Jeb Bush, accompanied by 70 representatives from the private sector as well as Florida state and municipal authorities, visited Peru from January 18-20, 2006. The Governor's primary agenda was to promote commercial ties between Florida and Peru, and to endorse Miami as a possible secretariat for the proposed Free Trade Area of the Americas (FTAA).

The Governor began his visit by making remarks and fielding questions at a 350-person breakfast hosted by the American Chamber of Commerce of Peru. Later, at a meeting at the Presidential Palace with outgoing President Alejandro Toledo and members of his cabinet the Governor advocated for U.S. companies while former Ambassador Charles Cobb, Chairman of Miami FTAA, and Jorge Arrizurieta, COO of Miami FTAA, outlined reasons for choosing Miami as the FTAA Secretariat.

Governor Bush and a private sector audience of 150 listen to President Toledo’s Welcoming Remarks on January 20, 2006 Photo Credit: Commercial Service Lima

The Governor, his associates, U.S. Ambassador Struble and President Toledo also participated in a 150-person Business Roundtable meeting between the Florida and Peruvian governments and NGO and private business representatives to discuss Florida-Peru trade issues. Peruvian Vice Minister and Chief Negotiator Pablo de la Flor and Team Florida Representative Antonio Villamil conducted briefings. U.S. company CEO Giraldo Leyva of La Curacao and VP of Sales Martha McNicholas of Enviro-Mechanical made presentations about their business successes in Peru.

At an event held at the residence of U.S. Ambassador Struble, the President of the Peruvian Congress awarded the Governor with a Medal of Honor in recognition of his achievements in trade and social welfare projects that have benefited the Florida-based Peruvian community.

Exporting U.S. Education to Peru

Educational services comprise a new and exciting export sector for American businesses. Despite growing competition from the United Kingdom, Spain, the Netherlands, Canada and Chile, the United States remains the leading destination for Peruvians studying abroad. Attracted by the quality of education, the opportunity to improve English skills, the abundance of specialized programs and improved employment prospects with U.S. or multi national corporations, Peruvians are pursuing degrees in the U.S. in ever-greater numbers. During the 2004-2005 academic year over 3,600 Peruvians studied at American universities, colleges and training programs.

 

Peruvian demand for U.S. educational services presents significant opportunities for American academic institutions wishing to increase their international enrollment. MBA programs continue to be the most common placements for Peruvians studying in the U.S. (approximately 50% of total applicants), but undergraduate degrees in engineering, economics and administration are popular as well. The student population is drawn from Peru’s highest socioeconomic class, comprising 1% of the total population, as they can afford to study abroad.

Many students seek financial aid or enroll at less expensive community colleges and specialty training centers. Recently, community colleges have become the preferred alternative for Peruvians interested in reasonably priced, academically sound programs with quality of life benefits. The desire for English language proficiency among Peruvian students and professionals has also spurred the demand for language training programs within the United States. These lower-priced education services will become an important market niche in the coming years.

Online education and training programs are another option that has become more common due to the availability of low-cost Internet access. Demand for E-learning and multimedia training has grown considerably, particularly among Peruvian corporations.

Peru’s recent economic growth has created a growing market for U.S. universities, colleges and training programs. Not only can a greater number of Peruvian students now afford to study in the United States, but newly created employment opportunities in Peru also make American degrees even more valuable. The ratification of the US-PTPA will become another driving force behind increased Peruvian enrollment at American academic institutions in the foreseeable future. One has to look no further than Chile for proof; in the year following the signing of the U.S.-Chile FTA, the country witnessed a 104% increase in the number of students studying in the United States.

Beyond the economic implications, the availability of educational services carries even greater significance in terms of improving general living conditions in Peru. A well-educated Peruvian population will be vital to the country’s economic growth and global competitiveness over the long term. U.S. educational services will also expose more Peruvians to American culture, further strengthening ties between the two countries.

The Commercial Service Office in Lima is committed to promoting U.S. Educational Services opportunities. Besides providing market research, CS Lima offered four events during 2006, working in concert with the State Department’s Regional Education Language Office, the Embassy Public Affairs office and the Bi-National Centers in Peru. These events included the Lima-based Education USA 2006 Fair held May 1-2 and three Trade Americas/CS Lima events held in the cities of Arequipa June 26-28, Trujillo August 23 and Chiclayo August 24. The Trade Americas/CS Lima events featured a catalog show and videoconferences hosted by the Denver USEAC that put students in touch with universities in Colorado and promoted joint-venture opportunities for U.S. and Peruvian universities.

Education Fair Photo Credit: Commercial Service Lima

Standards

On April 27, 2006, representatives from ASTM International, one of the largest voluntary standards development organizations in the world visited Lima. Teresa Cendrowska, Director of External Relations, and Jessica Hychalk, Manager for Global Cooperation of, met with SCO Hanson-Muse and Senior Commercial Specialist Jochamowitz to discuss international standards and investigate possible cooperative programs for creating an awareness of standards and the technical and commercial resources they represent. Standards can be used to promote trade and eliminate trade barriers, both important concepts within the context of the U.S.-Peru TPA and pending Congressional ratification in the United States. ASTM and CS Lima have since exchanged links to their respective websites.

The first activity between CS Lima and ASTM took place on April 28, 2006. SCS Jochamowitz participated in an ASTM organized seminar for an audience of technical committee members of INDECOPI, the Peruvian national standards body. Ms. Cendrowska and Ms. Hychalk explained ASTM procedures, its structure, and how ASTM facilitates international participation. SCS Jochamowitz introduced CS Lima's role in promoting standards and acted as interpreter as needed. ASTM published an article about this event in the June edition of its Standards publication.

The Inter-American Telecommunications Commission (CITEL) held its annual meeting in Lima, Peru June 19-23, 2006. U.S. government and industry representatives comprised the 50-member U.S. delegation. The President of the Advanced Television Systems Committee (ATSC) Forum, Robert Graves and Alan Stillwell of the Federal Communications Commission participated in the meetings to further the ATSC’s mission of educating policymakers, broadcasters and manufacturers about the benefits of high definition and digital television (HD/DTV) technology and to advocate for adoption of the ATSC family of DTV standards. CS Lima organized a seminar working with the Peruvian Association of Radio and TV Broadcasters, Digital Transgroup and Telvicom. Mr. Graves, SCO Hanson-Muse and Senior Commercial Specialist Jochamowitz presented the latest advances for the ATSC standard to an audience of 45 participants from the Peruvian Ministry of Telecom, broadcasters, associations, and others involved in the television sector.

Mr. Graves used meetings arranged by CS Lima to advocate with industry and the Peruvian government to implement the ATSC standard and provide a briefing about recent advances in Mexico and Guatemala. Senior Commercial Specialist Jochamowitz and SCO Hanson-Muse accompanied Mr. Graves and Mr. Stillwell on visits to INDECOPI, the Peruvian Government standards authority, the Peruvian Association of Broadcasters, the government technical institute on telecommunications, and lunch with the Vice Minister of Telecommunications.

Intellectual Property and Compliance efforts

CS Lima and the U.S. Department of State organized the first-ever Latin American Customs IPR training workshop held October 24-25, 2005 in Lima. Funded by the U.S.-Patent and Trade Office (U.S.-PTO), the workshop was an historic, collaborative effort between U.S.-PTO, U.S. Customs, the State Department and CS Lima attracting 80 Peruvian government representatives who work to prevent smuggled or pirated goods from entering Peru. The participants came from Lima and key border countries including Brazil, Ecuador, Chile and Bolivia (Tumbes, Tacna, Tarapoto, Iquitos, Puno and Arequipa). The workshop was made possible thanks to a proposal that focused on optical disc piracy and counterfeit pharmaceutical and toy imports.

Working with Market Access and Compliance Peru Desk Officer Maria Cameron and the U.S. Embassy’s Economic section, SCO Hanson-Muse vetted the proposal with U.S.-PTO and along with Senior Commercial Specialist Muroi, organized a teleconference between U.S. company pharmaceutical company representatives, USTR and Market Access and Compliance analysts which yielded real-time information about Peruvian WTO TRIPS compliance violations in the industry. The two day seminar featured presentations by the U.S. Ambassador, U.S.-PTO, U.S. Customs, the Minister of Production, SUNAT (Customs/Tax Authority), INDECOPI (IPR Protection Agency) and Blockbuster Video. CS Lima also organized a breakfast briefing for AmCham members and an evening reception for the workshop group at the SCO residence, attended by the Agency heads of SUNAT and INDECOPI.

Best Prospects for U.S. Exporters

The U.S. currently serves as Peru’s premier commercial and agricultural partner. The abundance of high quality, competitively priced products affords U.S. exporters a distinct advantage over the country’s other major trading partners, including its South American neighbors. This advantage will be compounded by the U.S.-PTPA as U.S. commercial interests gain greater market access and the overall investment climate improves. The most competitive sectors for U.S. exports include:

Commercial Products

Agricultural Products

Doing Business in Peru

The following tips are useful for prospective exporters:

Success Stories

Doing business in any unfamiliar market can present challenges. Fortunately, the U.S. Commercial Service is available to assist U.S. companies that encounter difficulties.

The following are recent examples of how Commercial Service programs such as catalog shows, FTA outreach programs and seminars and CS Lima programs that feature other agencies such as the Export Import Bank of the United States help U.S. clients achieve success in exporting to Peru.

Viasys Healthcare and Silmed SAC

The local representatives for both VIASYS Healthcare and Silmed SAC have worked with the Commercial Service in Lima for several years. Commercial Specialist Muroi supported Silmed SAC by providing information about the AARC congress, which was held in Las Vegas, December 8-11, 2003. This event was very important for Silmed to learn about the new technology developed by VIASYS. With this training received by Mr. Rodolfo Yvan Munoz, Silmed presented the VIASYS offer and won ESSALUD's bid for two equipment worth $1,035,998. This success is based on a bid award of a government tender for two acquisitions of medical equipment for ESSALUD, the Peruvian Social Security Institute.

PNC Bank

Commercial Service Lima organized an Export Finance Seminar for PNC Bank from Pittsburgh, PA. PNC Bank visiting executives presented their program that offers Ex-Im guaranteed credit for projects and services and the importation of capital goods. The audience was composed of top managers of medium sized local businesses. This seminar allowed PNC Bank to promote its services to the local business community, and to appoint an independent consultant as its local contact person.

As a result of these activities and after receiving counseling from Sr. Commercial Specialist Jochamowitz and Commercial Assistant Velez counseling, Mr. Luis Moreno, Financial Manager of Minera Casapalca, contacted Mr. Marco Aurelio Pisfil of PNC Bank. Mr. Moreno and his company subsequently were qualified to receive an Exim Bank loan, in October 2004 that was used to purchase $906,695 worth of WA-based company D'Angelo International Equipment.

Market Research

Industry/Market Research Reports are structured market overviews and updates produced by the Commercial Service in Lima. These reports offer succinct industry-specific information that can help determine market potential, market size and competitors for U.S. products and services.
 

Market Research Briefs produced by the U.S. Commercial Service in Lima are currently available on the following sectors:

Agricultural Chemicals

Architectural, Construction and Engineering Services

Call Centers

Computer Hardware and Peripherals

Construction Machinery and Equipment

Drugs and Pharmaceuticals

E-Commerce

Education and Training Services

Farming Machinery and Equipment

Food Processing and Packaging Equipment

Industrial Refrigeration Equipment – Cold Chain

Internet Software

Mining Industry Equipment

Natural Gas Production and Transportation, and Machinery Equipment

Oil and Gas Field Machinery

Plastics Materials and Resins

Pollution Control Equipment

Pulp, Paper and Paperboard

Pumps, Valves and Compressors

Safety and Security Equipment

Sugar Production and Processing Equipment

Telecommunications Services

Travel and Tourism Services

Water Resources Equipment and Services



Find these market research reports at the U.S. Government’s export portal.

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