WORLD TRADE  
ORGANIZATION  WT/REG260/M/1 
5 October 2010 
 (10-5054) 
Committee on Regional Trade Agreements 
Fifty-eighth Session  
 
 
 
CONSIDERATION OF THE FREE TRADE AGREEMENT BETWEEN  
THE UNITED STATES AND PERU, GOODS AND SERVICES 
 
Note on the Meeting of 27-28 September 2010  
 
Chairman:  Mr A. Suescum (Panama) 
 
 1. The meeting was convened in document WT O/AIR/3598/Rev.1, dated 17 September 2010. 
2. Under Agenda Item C.III of its 58
th Session, the Committee on Regional Trade Agreements 
(hereinafter CRTA or the Committee) consid ered the Free Trade Agreement between the 
United States and Peru (hereinafter the 'Agreement'), goods and services.  
3. The Chairman  said that the Agreement had entered into force on 1 February 2009 and had 
been notified by the Parties to the WTO on 3 February 2009 under Article XXIV:7(a) of the GATT 1994 and the Understanding on the Interpre tation of Article XXIV of GATT 1994 as an 
Agreement establishing a free trade ar ea (document WT/REG260/N/1) and under 
GATS Article V:7(a) as an Agreement providing for the liberalization of trade in services within the 
meaning of GATS Article V (document S/C/N/473).  The text of the Agreement was available, 
together with its Annexes, on the Parties' official  websites.  The Factual Presentation on the goods and 
services aspects (document WT/REG260/1, dated 12 July  2010) had been prepared by the Secretariat 
on its own responsibility in full consul tation with the Parties, in accorda nce with paragraph 7(b) of the 
Transparency Mechanism (TM) fo r Regional Trade Agreements (doc ument WT/L/671).  In addition, 
written questions and replies on the Agreement had been recently distributed in document 
WT/REG260/2, dated 22 Septembe r 2010.  He proposed to organize the consideration of the 
Agreement by first asking the Parties and then ot her Members for general comments.  The Committee 
would then turn to the specifics of the Agreement using the Factual Presentation to guide the debate.  
He proposed to go through the Factual Presentation sec tion by section, and then look at the questions 
and replies document.  
4. The representative of the United States
 said that 1 February 2010 had marked the first 
anniversary of the entry into force of the Agreem ent, which had strengthened her country's ties with 
Peru and created new economic opportunities for workers, businesses, service providers, farmers, 
ranchers and consumers.  Bilateral trade was US$9. 1 billion in 2009, with US  exports of goods to 
Peru at US$4.9 billion.  Top US exports to Peru in cluded industrial machinery,  electrical machinery, 
mineral fuels and plastics and vehicles;  whereas top imports from Peru were precious stones, mineral fuels, copper, knit apparel, and tin.  The Agre ement was comprehensive and had significantly 
eliminated barriers to bilateral trade;  therefore,  like other United States' FTAs, it was complementary 
to, and compatible with, advanci ng the goals and obligations of th e multilateral trading system.  The 
Agreement eliminated tariffs on "substantially a ll trade", in compliance with GATT Article XXIV, 
and provided substantial sectoral  coverage on services, as required by GATS Article V.  With respect 
to trade in goods, the Parties had immediately elimin ated most tariffs on thei r respective exports, with 
remaining tariffs to be phased-out over defined periods of time.  In her delegation's view, the level of WT/REG260/M/1 
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  tariff liberalization in the Agreement was very hi gh.  Among other commitments, Peru had agreed to 
allow trade in remanufactured products, which had opened new and significant export opportunities 
for firms involved in this sector, such as:  engines;  automotive parts;  mining and construction equipment;  transportation machinery;  medical equipment;  and computers.  On services, the Agreement provided substantial sect oral coverage through a "negativ e-list" approach, whereby all 
sectors were liberalized unless a Party had sche duled a specific exception or "non-conforming 
measure".  Services commitments covered cross-bor der supply, as well as the right to invest and 
establish a local presence.  The Agreement also  had specific chapters on financial services, 
telecommunications and e-commerce.  In addition to  comprehensive coverage  of goods and services, 
the Agreement incorporated TRIPs-consistent st andards for intellectual property and important 
disciplines relating to:  customs administration and trade facilitation;  technical barriers to trade;  
government procurement; investment;  telecommuni cations;  transparency;  trade remedies;  and 
competition policy.  The Agreement was the United Stat es' first agreement in force that incorporated 
groundbreaking provisions on protection of labour ri ghts and the environment, and the Parties had 
worked closely to ensure the eff ective implementation of such provis ions.  The first meeting of the 
Free Trade Commission had been held in February 2010;  on that occasion, among other discussions, 
the Parties had formally established the Commi ttee on Agricultural Trade and the Standing 
Committee on Sanitary and Phytosanitary Measures a nd had decided to develo p ways to enhance the 
ability of small and medium-sized enterprises to capit alize on the benefits of the Agreement and take 
greater advantage of the economic opportunities created by it.  She thanked the Secretariat for its hard work and patience and Members for their interest and questions and looked fo rward to any additional 
questions they might have. 
5. The representative of Peru
 believed that the Agreement was complementary to the 
advancement of the objectives of the multilateral trading system, since it was fully compatible with Peru's obligations under the WTO and developed the commitments assumed in that context.  The high 
level of the Agreement and its scope reflected both countries' deep comm itments to free trade, 
openness and transparency, as well as Peru's efforts to continue to promote trade liberalization within 
the WTO.  For instance, under the Agreement, Pe ru had agreed to enter the WTO Agreement on 
Information Technology and it was currently reduci ng its bound tariffs on information technology 
products, which would reach zero duties in 2013.  Th e Agreement represented a considerable source 
of trade and investment opportunities for Peru wi th a country that constituted its major trading 
partner.  She pointed out that Peru's total exports  to the United States had grown at an average annual 
rate of 15% in the period 1994-2008.  As a result of the Agreement, it was expected that Peru's 
non-traditional exports would grow at a rate of 23%  per year in 2009-2014.  The United States was 
the second largest source of foreign direct investment  in Peru, after the European Union, in sectors 
such as industry, mining, financial services and energy, with approximately US$2.7 billion of 
investment stock in 2009.  In terms of market access for goods, the Agreem ent offered an additional 
gain by providing legal certainty for Peruvian ex porters as they would no longer have to depend on 
preferences granted unilaterally and on a transitiona l basis by the United States.  In this way, the 
Agreement helped Peru to consolidate its duty-free access to the United States, with a greater impact 
on the non-traditional sector, to establish stable and predictable rules on bilateral trade relations, to 
develop a diversified export sector for goods and servi ces, and to attract investments.  The Agreement 
contributed to improve efficiency and productivity of Peruvian industry through access to cheaper 
imports of inputs, technology and capital goods wh ich were required to ensure competitiveness and 
specialization of its productive sector.  More importa ntly, in order to take fully advantage of the 
opportunities created by the Agreement, Peru had u ndertaken structural reforms including measures 
on trade and investment facilitation, improvement of the regulatory framework and promotion of 
technological innovation.  These reforms, which in the medium and long term would improve 
business conditions to compete with high technology products on international markets, would also 
attract greater investments assisting Peru to become a business platform for Latin America and the Asia-Pacific region.  Her delegation appreciated th e detailed summary delivered by the United States' 
delegation on disciplines and commitments in th e Agreement and stressed other characteristics  WT/REG260/M/1 
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  contained therein.  In trade in services, Peru ha d undertaken commitments which greatly exceeded its 
GATS commitments, since liberalization modalities ha d been undertaken under the "negative-list" 
approach.  Peru's commitments in intellectual propert y had consolidated its support for the principles 
of the TRIPS Agreement and provided an additiona l opportunity for relevant domestic legislation to 
be harmonized with international st andards, leading to an improveme nt in the national legal system 
for protection of IPRs.  Furthermore, the Partie s had reached an Understanding whereby they had 
recognized the importance of trad itional knowledge and biodiversity and their potential contribution 
to cultural and social development.  Under th e Chapter on government procurement, Peruvian 
suppliers were entitled to participate in procurem ent activities undertaken by federal and sub-central 
entities in the United States, and US suppliers would be able to participate in procurement activities 
undertaken by central and sub-cen tral entities in Peru.  A total of 61 and 78 central government 
entities were covered by Peru and the United Stat es respectively regarding this discipline.  The 
Agreement with the United States was the first agreem ent that had entered into force for Peru;  it had 
opened the path towards a fairly ambitious trade negotiation agenda, previously begun with Peru's 
strong commitments to achieve economic integration in the hemisphere through negotiations of the 
Free Trade Area of the Americas between 1995 and 2003.  However, Peru remained strongly 
convinced that bilateral and regional trade agreem ents were complementary and could not substitute 
for the multilateral trading system.  She thanked th e Secretariat for having prepared the Factual 
Presentation, which provided an informative and br oad view of the Agreement, Members for their 
interesting questions and the United States' delega tion that had worked closely with Peru in the 
preparation for the meeting.  She hoped that this information had been useful for Members to better 
understand the terms of the Agreement and was willing to answer any additional questions they might 
have. 
6. The representative of Bolivia  thanked the delegations of Peru  and the United States for their 
interventions and the Secretariat for the work carri ed out in preparing the Factual Presentation.  She 
expressed her delegation's deep concern on the ne gative impact that agreements, such as the 
Agreement between Peru and the United States, could have on regional institutions causing the 
deterioration of the integration process that had taken many years and effort to build up.  She 
informed Members that, for more than 40 years, the Andean Community had been considered as one 
of the main processes of integration in Latin Amer ica, with a strong institutional structure which 
covered economic, political, cultural and social asp ects.  The Andean Community was based on its 
own rules, called Decisions, which were applicable immediately with direct effect and prevailed over 
national rules, i.e. they had supranational character.  In order to achieve this community law that had 
been approved by consensus, members of the Ande an Community had carried out tremendous efforts 
throughout past decades and had ach ieved a strong integration system based on Andean legal rules.  
She focused on two main concerns, that had also been included in two requests submitted by Bolivia 
before the Andean Community Court of Justice, one  for nullity and the other for non-compliance.  
First of all, the Agreement violated Decision 598,  which enabled negotiations between the Andean 
Community and third countries on condition that these would not affect the Community rules and 
would keep the Community informed about any commitm ents with third parties.  In concluding the 
Agreement with the United States, Peru had brought  about modifications to the Common Regime of 
Industrial Property, without having carried out  the required communication with the Andean 
Commission and without having consulte d with its Andean partners on th eir sensitivities.  In this way, 
it had affected Bolivia's trade interests and caused , among others, the departure of Venezuela from the 
group.  Secondly, with respect to nullity, Decision 486, establishing the Common Regime on Industrial Property, had been changed in order to ad just to the requirements of the Agreement.  The 
modification of Decision 486 was intended to provide different legislation on industrial property in 
contrast with the common regime endorsed by Artic le 55 of the Cartagena Agreement, which formed 
the basis of such Decision, and shou ld have been adopted by consensus.   In light of the above, Bolivia 
had submitted requests before the Andean Community Cour t of Justice so as to act in the interest of 
all parties involved and to avoid that integrati on processes be the collateral victims of free trade 
agreements, although Bolivia respected the sovereignt y of Peru and the United States.  She said that WT/REG260/M/1 
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  the declaration and questions posed by Bolivia ha d not only the objective of receiving clarification 
from both Parties before the WTO, but also served as  an example of the risks and dangers that could 
affect integration processes among developing countri es in the face of free trade agreements between, 
on one side, a developed country and, on the ot her, individual members belonging to regional 
integration institutions.  She said that Bolivia and Pe ru had more things in common than things that 
divided them.  Five hundred years ago, particularly in the Andean part of the two counties, cultures 
such as the Quechua or Aymara had formed one singl e entity, and were then divided by an imperial 
power which created arbitrary divisions.  In coming years, Bolivia and Peru would celebrate 200 years 
of political independence and it was important to maintain also economic independence for their 
populations;  40 years ago, the first stone had been laid for an organization – the Andean Community 
– that would make it possible to have greater econo mic, social and political independence.  Bolivia 
did not want all things it had in co mmon with Peru to be negatively affected by artificial divisions due 
to the political and trade interests of another po wer.  She reaffirmed that, apart from artificial 
divisions created outside the region,  Peru was a friend and a brother for Bolivia, and she wanted it to be clear before the WTO.   
7. The representative of Bolivia
 then asked the following ques tions:  whether the compliance 
with Article 16.9(2) of the Agreement, which st ated that a Party not granting protection through 
patents to plants upon entry into force of the Ag reement should make all reasonable efforts to accord 
such protection, would modify Peru's Law 27811, which established the Regime of Protection for 
Collective Knowledge of I ndigenous People linked to  biological resources of one of the Parties;  
whether, with respect to the same Article, the Parties would establish a specific mechanism for the 
protection of access to biological diversity, given that Peru was a country classified as "mega 
diverse";  and, finally, whether any reasonable efforts made by Peru under the Agreement for the protection of plants by means of patents would im ply a new modification of the Andean Community's 
Decision 486 on Industrial Property.  She then asked what were the criteria and reasoning applied by 
Peru to determine the inclusion in the tariff lib eralization programme under the Agreement of goods 
that were sensitive for Bolivia and other member s of the Andean Community, whose preferences 
would be eroded by the Agreement with the Unite d States;  and if the United States knew whether 
Peru had followed, for the notification and ratifica tion of the Agreement, the procedures established 
under the Andean Community.  The representative of Peru
 replied that, in negotiating, signing, and 
implementing the Agreement with the United Stat es, it had scrupulously abided by the Andean 
Community's legislation and the WTO, and had taken into account the trade sensitivities of all 
members of the Andean Community, including Boliv ia.  Bolivia had decided to use the channels 
provided in the Community to state its positions on th is issue, thus Peru considered that this issue 
should be dealt within the Andean Community, which was the appropriate forum.  He remarked that 
trade among members of the Andean Community, in  particular between Bolivia and Peru, had 
constantly increased in the past years;  for instan ce, in 2009 Bolivia's exports to Peru had increased by 
18% in comparison with the previous year, according to official figures provided by the Secretariat.  
In the period January-July 2010, the increase was 35% .  This clearly demonstrated the strength of 
their economies and the good results of economic in tegration within the Andean Community.  He 
reasserted Peru's firm commitment to the Andean  integration process and the achievement of its 
objectives, and shared the friendly words of the delega te of Bolivia in describing the cultural, ethnic, 
geographical, social and economic links that united the two counties and fortified their commitments 
towards integration.  In his view, this spirit of  union had guided Peru and Bolivia over the past few 
months in carrying out activities in different area s to further strengthen bilateral relations.  The 
consideration exercise conducted by the CRTA was extr emely important for Peru because of its basic 
objectives of transparency and information.  The outcome of Peru's economic and trade policy had 
been crucial for the sustainable development of its economy over the last eight years, including 
combating poverty and strengthening its democratic in stitutions and system.  He concluded that the 
specific questions posed by Bolivia  would be answered in writing by  the Parties within the deadline 
provided by the Transparency Mechanism.  WT/REG260/M/1 
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  8. The representative of the European Union  referred to a written question made by Chile in the 
Questions and Replies document, which had been answ ered by the Parties in a generic way.  In order 
to better understand the selection criteria used to list a number of multilateral environmental 
agreements (MEAs) in the Agreement, he asked th e Parties to elaborate on the importance to address 
the covered agreements, such as the Ramsar C onvention on Wetlands, in the context of trade 
agreements and whether the incorporation of such  agreements was intended to enhance the mutual 
supportiveness between trade and environment.   The representative of the United States  confirmed 
that the intention in the Agreement was to encour age the mutual supportiveness of trade agreements 
and MEAs and highlight the importance of fulfilling ME As obligations in this particular context.   
9. The representative of Bolivia  stated that her country maintained a reservation with respect to 
the process that had taken place before the WTO, sin ce the notification of the Agreement, its Factual 
Presentation and its consideration by the CRTA unde r the Transparency Mechanism, did not and 
would not represent for Bolivia a tacit acceptance of such Agreement.  She believed that her 
delegation had adopted this position because Peru, in Bolivia's opinion, by concluding the Agreement, 
had violated the rules of the Andean Community  and had affected the interests of Bolivia, 
undermining more than 40 years of efforts to set up a strong integration system based on the full 
respect of the legal position of the Andean Commun ity, and this position would certainly be further 
reported in the appropriate regional framework.  Bolivia decided to adopt this position mainly in order 
to maintain, preserve and deepen the integration process which had taken place over the past four 
decades in the Andean region.  Bolivia was not against Peru, which was considered as a brother 
country, and hoped its position would be reflected in all documents related to the Agreement's 
consideration. 
10. The Chairman  said that the consideration of the goods and services aspects of the Free Trade 
Agreement between the United States and Peru had allowed the Committee to clarify a number of 
questions and oral discussion of the Agreement coul d be concluded in accordance with paragraph 11 
of the Transparency Mechanism.  If any delegations  wished to ask follow-up  questions they were 
invited to forward submissions in writing to the Secretariat by 5 October 2010  and the Parties were 
asked to submit replies  in writing by no later than 19 October 2010.  In accordance with paragraph 13 
of the Transparency Mechanism all written submis sions, as well as minutes of this meeting would be 
circulated promptly, in all WTO official la nguages, and would be made available on the 
WTO website. 
11. The Committee took note  of the comments made. 
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