WORLD TRADE  
ORGANIZATION  WT/REG260/2 
22 September 2010 
 (10-4817) 
Committee on Regional Trade Agreements Original:   English 
  
 
 
FREE TRADE AGREEMENT BETWEEN THE UNITED STATES AND PERU  
 
Questions and Replies
 
 
 
 The following communication, dated 21 September 2010, is being circulated at the request of the delegations of the United States and Peru.   This document reproduces the questions addressed to the Parties and the responses submitted. 
 
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  Question from the Delegation of Chile
 
 
1. "Parties shall adopt, maintain, and implement laws, regulations, and all other measures 
to fulfil obligations under the multilateral envi ronmental agreements to which they are party 
("covered agreements" listed in Annex 18.2).  The Parties may agree in writing to modify the 
list to include any other multilateral environmental agreement." 
What criteria were used to select the multila teral environmental agreements included in 
the Annex 18.2 list, other than the requirement that both countries be party thereto? 
 All of the MEAs are important and both countries are Party to all of them. 
 
Questions from the Delegation of Japan  
 2. Article 16.6 on related rights contains pa ragraph 4 which stipulates that each Party 
shall accord the rights provided for in the Chap ter of Intellectual Property Rights with respect 
to performers and producers of phonograms to th ose who are nationals of another Party.  Is 
there any reason why this provision includes the limitation of "nationals of another Party?"  Is it related to any intention to make use of th e exception to the most-favoured-nation treatment 
principle as provided for in Article 4 of the TRIPS Agreement in respect of the rights of 
performers and producers of phonograms as well  as broadcasting organizations not provided 
under the TRIPS Agreement? 
 The Parties consider that Article 16.6.4 of  the United States – Peru Trade Promotion 
Agreement (TPA) merely restates the criteria of elig ibility for protection or "points of attachment" for 
performers and producers of phonograms. 
 
    WT/REG260/2 
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  3. Article 16.10.3 (a) stipulates that each Party shall provide procedures and remedies 
(such as preliminary injunctions or equival ent effective provisional measures) for the 
expeditious adjudication of disputes concernin g the validity or infrin gement of a patent 
covering an approved pharmaceutical product or its approved method of use.  Does the 
provision encompass any remedy available specifi cally for a patent covering an approved 
pharmaceutical product or its approved method of use?  If not, please specify the reason why 
this subparagraph is included in the Agreement on top of provisions on provisional measures in 
Article 16.11 of the Agreement as well as in Article 50 of the TRIPS Agreement. 
 The provision provided in Article 16.10.3 (a ) includes any remedy available for any patents 
covering an approved pharmaceutical product or its approved method of use (such as preliminary 
injunctions or equivalent effective provisional measures). 
 
Questions from the Delegation of Pakistan
 
 4. The structure of US imports from Peru is dominated by primary commodities.  In what 
way does the FTA envisage encouraging  value-added imports from Peru? 
 The United States represents one of the most  important markets for Peru’s non-traditional 
value-added exports on goods, such as handicrafts (55% of Peru’s to tal exports to the world in 2009), 
textiles and apparel (40%) and agricultural goods (32%).     In this sense, the United States – Peru Trade Promotion Agreement (TPA) is a key element of 
Parties’ strategy for encouraging value-added imports  from Peru and fits well within Peru's vision to 
become an exporting country of high-quality goods and services.   
 
 Moreover, in order to take full advantage of  opportunities created by the TPA, Peru has made 
structural reforms during the implementation of the Agreement, includin g trade and investment 
facilitation measures, improvement of the regul atory framework (institutional strengthening, 
administrative simplification and modernization of  the State) and promotion of technological 
innovation.    With regard to institutional mechanisms to  encourage trade among Parties, a Committee on 
Agricultural Trade and a Standing Committee on San itary and Phytosanitary Matters was established 
to provide a forum for monitoring and promo ting cooperation on the implementation of the 
agricultural trade provisions in the Agreement, and to promote cooperati on and consultation on 
sanitary and phytosanitary issues.  Recognizing the important role small and medium size businesses 
(SMEs) play in the economic development and trade of both parties, Peru and the United States also 
established a working group to develop ideas on how to  further enhance the ability of SMEs exporters 
to capitalize on the benefits of the TPA. 
  Peru considers that, in the medium and l ong-term, all these factors will improve the 
conditions of enterprises to compete with fore ign high-quality products in the US and other 
international markets and attract foreign direct investment which would help Peru to become a 
platform for business in the Latin-American and Asia-Pacific regions. 
 
5. Article 2.3 visualizes the possibility of accel erated tariff elimination.  Will the Parties 
state whether they have, or plan to carry out,  consultations on accelerated tariff elimination, 
and in what timeframe? 
 This is a standard provision.  Taking into account that the U.S.-Peru TPA has only just 
entered into force in 2009, Parties do not plan  to carry out consultations on accelerated tariff 
elimination pursuant to Article 2.3.  WT/REG260/2 
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  6. The Peruvian Congress repealed Legislative Decrees No. 1064 and 1090 related to the 
Forestry Annex in June 2009.  It is understood th at Peru was to develop new versions of these 
laws by August 2010, as the final step in FTA implementation.  Will Peru inform if new 
legislation is in place and with what modifications? 
 Legislative Decree No. 1064, which approved the juridical regime to take advantage of lands 
for agricultural use, and Legislative Decree No. 1090, which approved the Forestry and Wildlife Law 
were repealed by the Peruvian Congress in June 2009.   The Peruvian Executive Branch has submitted a Bill for a new Forestry and Wildlife Law 
(Bill 4141) that fully reflects the international oblig ations assumed by Peru, and also implements the 
commitments made in the Annex on Forest Sector Governance under the TPA and helps in 
developing the Peruvian productive forest industry in a sustainable and beneficial manner to the localities where it is performed.  The approval of th is Bill is pending in the Peruvian Congress.  
  With regards to Legislative Decree No. 1064, it  is not related to the implementation of the 
Annex on Forest Sector Governance. So far, ther e is no formal initiative to issue a new regulation 
regarding this matter.    Peru would like to note that, during the last y ears, Peru has been working closely with the 
United States to develop and im plement all legal provisions that  would strengthen environment 
conservation and forest sector governance as cont emplated by the TPA.  Among other things, the 
Parties have convened two meeti ngs of the TPA's Forest Sector Sub-Committee (in July 2009 and 
September 2010) to discuss concrete courses of action.  
Questions from the Delegation of Thailand
 
 
7. Under Chapter 2 - National Treatment a nd Market Access for Goods - each Party 
accords "national treatment" to the goods of the ot her Party.  National treatment is defined in 
accordance with Article III of GATT 1994.  Annex 2.2 contains the exceptions scheduled by the 
Parties to the national treatment rule, as well as import and export restrictions.  Both the 
United States and Peru have exempted actions au thorized by the Dispute Settlement Body of the 
WTO.  For Peru, Articles 2.2 and 2.8 shall not apply to measures by Peru governing the import 
of used clothing and footwear, used vehicles and automotive motors, parts and replacements, 
and used goods, machinery, and equipment which utilize radioactive sources;  however, it is 
specified that Peru's exceptions do not appl y to "remanufactured goods”. Exceptions scheduled 
by the United States are:  controls on the export  of logs of all species;  measures affecting ships 
and shipbuilding under the Jones Act and other legislation related to shipping and notified by 
the United States under paragraph 3(a) of GATT 1994. 
(a) Please specify actions/measures imposed by Peru for the import of used 
clothing and footwear, used vehicles and automotive motors, parts and replacements, and used goods, mach inery, and equipment which utilize 
radioactive sources.  
 As provided in Annex 2.2. of the Agreement, the measures imposed by Peru for the import of 
the aforementioned goods are implemented pursu ant Law N° 28514, Legislative Decree N° 843, 
Urgent Decree N° 079-2000, Supreme Decree N° 003-97-SA and Law N° 27757.
1 
                                                      
1 These notifications are availabl e for Members' consultation in th e Market Access Division of the 
WTO Secretariat. WT/REG260/2 
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   This legislation includes quantitative restricti ons (prohibition on imports)  that Peru applies 
based on Article XX.b and XX.g of GATT 1994 and SPS Agreement in order to protect the environment and the health and life of  people, animals and vegetables.  
  Peru has notified these quantitative restricti ons to WTO as mentioned by the following 
documents: 
 
- G/MA/. NTM/QR/1  (March 1996); 
- G/MA/NTM/QR/1/Add.4 (September 1997); 
- G/TMB/N/83 y Add 1 (1995-1996). 
 
(b) Please specify actions/measures imposed by the United States for controls on 
the export of logs of all species;  measures affecting ships and shipbuilding under the Jones Act and other legislation related to shipping and notified by the United States under paragraph 3(a) of GATT 1994. 
 
Controls on the export of log of all species
: 
 
 The United States maintains restrictions on export of logs under the following two statutes: 
  Forest Resources Conservation and Shortage  Relief (FRCSR) Act (Pub. L. 101-382; 
16 U.S.C. §§620 – 620j).  The FRCSR Act restricts th e exports of logs harvested from lands west of 
the 100
th meridian in the contiguous 48 states held or owned by the federal government, a state, 
political subdivision thereof, or other public agen cy, unless the logs are deemed surplus to domestic 
manufacturing needs. The FRCSR Act does not appl y to private lands, timber harvested from any 
forests east of the 100th meridian.  Forests not subject to the FRCSR Act account for approximately 90 
percent of timber harvests in the United States.   
  The purpose of the law is to promote conser vation of forest resources in conjunction with 
State and Federal resources management plans, and other actions or decisions, affecting the use of 
forest resources; to ensure sufficient supplies of  certain forest resources or products which are 
essential to the United States, consistent with Ar ticle XI.2(a) of the GATT 1994; to take action 
essential for the acquisition and distribution of forest  resources or products in short supply in the 
western United States; to continue and refine the Federal policy of restricting the export of 
unprocessed timber harvested from Federal lands in th e western United States; and to effect measures 
aimed at meeting these objectives in conformity with  U.S. WTO obligations.  See 16 U.S.C.  § 620. 
 
 Export Administration Act of 1979, as amended (Pub. L. 96-72; 50 U.S.C. app. § 2406(i)).  
The United States also maintains short supply contro ls with respect to unpro cessed western red cedar 
pursuant to the Export Administration Act of 19 79, as amended.  The Department of Commerce 
administers an export licensing regime with respect to these products (see 15 C.F.R. 754.4).  DOC grants license applications for export of such tim ber harvested from public lands in Alaska, private 
lands, and Indian lands.  
 
The effect of existing log export restrictions on the supply of logs available for export from 
the United States is minimal.  More than 225 milli on m3 of logs are harvested annually in the United 
States, the majority of which is harvested on forest la nd that is not subject to the restriction (forests in 
the eastern United States and private forests in the western United States).   
 
   WT/REG260/2 
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  Measures affecting ships and shipbuilding under th e Jones Act and other legislation related to 
shipping and notified by the United States under paragraph 3(a) of GATT 1994 : 
 
 As noted in Annex 2.2, Section B, these measures are measu res under the existing 
provisions of the Merchant Mari ne Act of 1920 (46 App. U.S.C.  § 883), the Passenger Vessel 
Act (46 App. U.S.C. §§ 289, 292, and 316), and 46 U. S.C. § 12108, to the extent such measures were 
mandatory legislation at the time of accession of the United States to the General Agreement on 
Tariffs and Trade 1947 (GATT 1947) and have not b een amended so as to decrease their conformity 
with Part II of the GATT 1947.   
  As Thailand may be aware, Paragraph 3(a)  of the GATT 1994 provides an exemption from 
Part II of the GATT 1994 for measures under specific mandatory legislation – enacted by a Member 
before it became a contracting party to the GATT 1947 – which prohibit the use, sale or lease of foreign-built or foreign-reconstructed vessels in co mmercial applications be tween points in national 
waters or waters of an exclusive economic zone.   
 
 On 20 December 1994, the United States notif ied the measures listed in Annex 2.2 as 
measures meeting the conditions of paragraph 3(a)  of the GATT 1994.  Paragraph 3(b) of the 
GATT 1994 calls for a review of this exemption every fi ve years after the date of entry into force of 
the WTO Agreement, and thereafter every two years.  There have been six reviews to date;  with the 
last review held at the General Council Meeting of  December 2009.  In addition, the United States has 
provided WTO Members with annual statistical report s pursuant to the requirements of paragraph 3(c) 
of the GATT 1993.  The last such report was circulated as WT/L/746.   
 
8. For the 47 tariff lines that are excluded from liberalization by the Un ited States (0.5% of 
its tariff lines) the average preferential tariff by HS Section is the same as their corresponding 
average MFN tariff rate, thus implying no libera lization in rates (Chart III.1).  Chart III.2, 
which gives a further breakdown of the Sectio n by HS Chapter shows that in Chapters 17, 
18, 19 and 21, where tariffs will remain after the Agreement is fully implemented, average 
applied MFN and preferential rates range from 18.5% for Chapter 19 to 28.6% for Chapter 17.  
The excluded (sugar) products are described below in the section on agricultural measures and in the section on tariff-rate quotas. 
 Could the United States explain the reasons behind the exclusion of the 47 tariff lines 
from liberalization under this Agreement?  
 Paragraph 5 of the United States' Appendix 1 to the U.S.-Peru FTA tariff schedule provides 
for new duty-free access for Peruvian sugar and cer tain high-sugar-content pr oducts.  This duty-free 
access is provided through a pr eferential tariff-rate-quota (TRQ) with a duty-free in-quota quantity 
that grows annually each year for the life of th e Agreement.  For the sensitive sugar and sugar-
containing products covered by this TRQ, free trad e is achieved through the growth in the TRQ in-
quota quantity, rather than through movement off the MFN tariff rate for the over-quota tariff lines.  
 
9. Article 2.19 establishes a "Sugar Compensati on Mechanism" under which, in any year, 
the United States may apply a mechanism that r esults in compensation to Peru's exporters of 
"sugar goods" in lieu of according duty-free treatm ent to some or all of the duty-free quantity 
of sugar goods established in Appendix I to the Schedule of the United States to Annex 2.3.  Such compensation shall be equivalent to the es timated economic rents Peru's exporters would 
have obtained on exports to the United States of any such amounts of sugar goods and shall be 
provided within 30 days after the United States exercises this option.  The United States shall 
notify Peru at least 90 days before it exercises this option and, on request, shall enter into 
consultations with Peru regarding application of the mechanism.  WT/REG260/2 
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  (a) In reference to the sugar comp ensation mechanism, under what 
circumstances may the US not accord th e duty-free treatment to sugar from 
Peru that is subject to duty-free treatment? 
(b) Thailand understands that before having  the sugar compensation mechanism 
in place, the US has to consult with the Peru. In case where there’s no agreed 
solution, will the US continue to apply the mechanism? 
(c) Thailand would like US to provide an example on how to calculate 
compensation when this mechanism is initiated. 
 This provision has not been operationalized sin ce the entry into force of the Agreement, as 
Peru has not met the net sugar exporter thr eshold provided for in the Agreement.    
 
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