69–006 

110TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 110–421 

UNITED STATES-PERU TRADE PROMOTION AGREEMENT 

IMPLEMENTATION ACT 

NOVEMBER 5, 2007.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. RANGEL, from the Committee on Ways and Means, 

submitted the following 

R E P O R T 

together with 

ADDITIONAL VIEWS 

[To accompany H.R. 3688] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Ways and Means, to whom was referred the 

bill (H.R. 3688) to implement the United States-Peru Trade Promotion Agreement, having considered the same, report favorably 

thereon without amendment and recommend that the bill do pass. 

I. INTRODUCTION 

A. PURPOSE AND SUMMARY

H.R. 3688 would implement the agreement establishing a free 

trade area between the United States and Peru. 

B. BACKGROUND

THE UNITED STATES-PERU TRADE PROMOTION AGREEMENT

The United States-Peru Trade Promotion Agreement (hereinafter 

‘‘Peru FTA’’), originally signed in April 2006, was amended in May 

2007 to incorporate key aspects of an historic Congressional-Executive accord (the ‘‘May 10 Agreement’’). As a result of this amendment, the Peru FTA has become the first U.S. free trade agreement 

to include, in its core text, fully-enforceable commitments by the 

Parties to adopt, maintain, and enforce basic international labor 

standards, as stated in the 1988 ILO Declaration on Fundamental 

Principles and Rights at Work. It is also the first U.S. free trade 

agreement to require the Parties to implement and enforce their 

obligations under certain common multilateral environmental 


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agreements and, further, to require Peru to take major, specific 

steps to address illegal logging. These changes make the Peru FTA 

the strongest free trade agreement ever to be considered by the 

Committee with regard to basic internationally recognized labor 

standards and basic protections for the environment. 

The May 10 Agreement also required other important changes to 

the Peru FTA, including: (a) modification of the intellectual property chapter to balance promoting access to medicines and protecting pharmaceutical innovation; (b) modification of the government procurement chapter to allow conditioning of contracts on adherence to basic and minimum labor standards; (c) clarification 

that, where there are national security concerns, the United States 

can prevent foreign companies from operating U.S. ports; and (d) 

clarification that the Peru FTA accords Peruvian investors in the 

United States no greater substantive rights with respect to investment protections than U.S. investors in the United States. 

With all of these changes, the Peru FTA reflects a new approach 

in U.S. trade policy—one that couples traditional market access initiatives with strong, fully enforceable commitments on basic worker 

rights, international environmental standards, access to medicines, 

and other key issues. The Committee believes that such an approach is critically important to level the playing field for U.S. 

workers and business and spread the benefits of globalization more 

broadly. 

Peru has set itself out as an important partner in this approach. 

In August 2007, during a Committee delegation visit to Peru, 

President Garcia referred to the Peru FTA as an historic ‘‘New 

Deal’’ for workers and countries, marking the beginning of a ‘‘grand 

transformation’’ in how governments should approach world trade. 

The Committee believes that this new partnership will broaden 

and deepen what is already a strong economic and political relationship between the United States and Peru. 

Under the new rules of the Peru FTA, nearly 90 percent of current exports by U.S. farmers and ranchers will receive duty-free 

treatment immediately upon entry into force of the FTA. In addition, 80 percent of U.S. exports of consumer and industrial products to Peru will be duty-free immediately upon entry into force, 

with remaining tariffs phased out over ten years. Average Peruvian 

tariffs on imports of goods from the United States were: 5.8% for 

information technology equipment, 7.1% for chemicals, 8.8% for 

metals and ores, 5.9% for infrastructure and machinery, 5.5% for 

transportation equipment, 7.4% for autos and auto parts, 7.9% for 

building products, 9.7% for paper and paper products, and 11.1% 

for consumer goods. 

These and the other trade liberalization benefits of the Peru 

agreement are more likely to be spread broadly in both countries 

due to the historic provisions on basic international labor standards, multilateral environmental standards, and other issues that 

will raise standards both in the United States and abroad. This is 

important for Peru, in its efforts to improve labor standards and 

environmental conditions and for the development of a strong middle class. It is also important for workers in the United States who 

do not want to compete with other nations whose entities suppress 

their workers or negatively affect the environment, and for U.S. 

companies and workers who depend increasingly on the developVerDate Aug 31 2005 14:07 Nov 06, 2007 Jkt 069006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\HR421.XXX HR421

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ment of middle class societies abroad to buy the goods and services 

produced in the United States. 

The following are key aspects of the Peru FTA, beginning with 

those aspects that were amended as a result of the May 10 Agreement: 

Labor: Under the May 10 Agreement, the labor chapter of the 

Peru FTA was substantially revised to include a fully enforceable 

obligation that the Parties adopt and effectively enforce the five 

core international labor rights, as stated in the 1998 International 

Labor Organization Declaration on Fundamental Principles and 

Rights and Work. The Peru FTA also requires both countries to enforce laws related to a sixth set of rights—those pertaining to acceptable conditions of work with respect to minimum wages, hours 

of work and occupational safety and health. These obligations are 

subject to a binding non-derogation provision. 

For the first time in any U.S. free trade agreement, the obligations under the labor chapter are subject to the same dispute settlement mechanisms and remedies as all other FTA obligations. A 

party seeking to challenge violations is required to demonstrate 

that the failure to adopt or maintain ILO rights has been in a manner affecting either trade or investment between the countries. 

Peru has already been bringing its laws, regulations, and practices into compliance with internationally-recognized labor standards. Most recently, in August 2007, Peruvian President Alan Garcia announced his commitment to change Peru’s legal framework in 

a number of key areas to implement obligations under the FTA. 

President Garcia has since followed through on his commitment by 

implementing changes to the legal framework governing: (1) temporary employment contracts; (2) subcontracting/outsourcing contracts; (3) the right of workers to strike; (4) recourse against antiunion discrimination; and (5) workers’ right to organize. The Committee applauds the changes made by the Peruvian government. 

The Committee believes that, with these and other recent changes, 

and the commitments and mechanisms under the FTA, Peru has 

in place a framework to ensure compliance with basic international 

labor standards. 

Environment.—Under the May 10 agreement, the environmental 

chapter of the Peru FTA was substantially revised to include a 

fully enforceable commitment that the Parties will implement and 

enforce in their laws and regulations, their obligations under certain common major multilateral environmental agreements 

(‘‘MEAs’’), including the Convention on International Trade in Endangered Species (‘‘CITES’’) and the Montreal Protocol on Ozone 

Depleting Substances, as well certain other environmental laws. 

The agreement also includes a fully enforceable, binding commitment that prohibits Peru from lowering environmental standards 

in the future in a manner affecting trade or investment. Further, 

the agreement establishes that, in the event of an inconsistency between a covered MEA obligation and an obligation under the Peru 

FTA, the Peru FTA cannot be used to undermine the MEA obligation. 

The Peru FTA is not only the first free trade agreement to include these strong environmental obligations, it is also the first free 

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tions. The Peru FTA requires a Party challenging a violation to 

show that the failure to adopt, maintain or implement an MEA or 

enforce other environmental laws has been in a manner affecting 

either trade or investment between the countries. 

The Peru FTA also includes specific provisions to address the 

problem of illegal logging in Peru. For many years, leading environmental groups have raised concerns about illegal logging. Some reports have indicated, for example, that much of the mahogany exported from Peru—over 80% of which is exported to the United 

States—is illegally logged. As a result of the May 10 Agreement, 

the Peru FTA includes an extensive Forest Sector Governance 

Annex to address this problem. 

Under the Annex, Peru is required to take specific steps to address illegal logging and improve forest sector governance. The Forest Sector Governance Annex also requires additional actions to 

stop illegal logging of mahogany and all CITES-listed tree species. 

Further, it establishes innovative new enforcement tools, permitting the United States to investigate illegal logging in-country 

through audits and verifications, and to stop questionable shipments at the border. Like the environmental commitments on 

MEAs and other environmental laws, no previous FTA has included such commitments on illegal logging or provided this broad 

range of enforcement tools. 

Intellectual Property Rights and Access to Medicines.—Under the 

Peru FTA, Peru will adopt higher and extended standards for the 

protection of intellectual property rights such as copyrights, patents, trademarks and trade secrets. The Peru FTA also provides 

enhanced means for enforcing those rights. Under the agreement, 

national treatment must be granted by each partner country to nationals of the other, and all laws, regulations, procedures and final 

judicial decisions must be in writing and published or made publicly available. The Peru FTA will lengthen terms for copyright protection, covering electronic and digital media, and increase enforcement to go beyond the WTO Agreement on Trade-Related Aspects 

of Intellectual Property Rights (‘‘TRIPS’’). Both parties are obliged 

to provide appropriate civil and criminal remedies for willful violators, and parties must provide legal incentives for service providers 

to cooperate with rights holders and limitations on liability. 

With respect to pharmaceuticals, the Peru FTA was amended in 

accordance with the May 10 Agreement to balance better the need 

for access to medicines with promotion of pharmaceutical innovation. The amendments include changes to the ‘‘data exclusivity’’

provision (the period in which a generic manufacturer may not use 

clinical test data of an innovative drug manufacturer to obtain approval for a generic version of the drug) to allow generics to enter 

the market more quickly than under the old provision. New provisions also establish a clear exception that the IPR commitments in 

the FTA do not and should not prevent the Parties from taking any 

measures to protect public health in accordance with the WTO 

Doha Declaration or from utilizing the TRIPS/health solution. 

Similarly, the new text eliminates the requirement that an FTA 

country extend the term of a patent on a pharmaceutical product 

for delays in the patent and regulatory approval process. At the 

same time, the FTA requires each Party to ensure an expeditious 

patent and regulatory approval process for the benefit of patients 


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and patent applicants. Finally, the new text eliminates the requirement that a drug regulatory agency withhold approval of a generic 

until it can certify that no patent would be violated if the generic 

were marketed. Instead of that ‘‘linkage’’ requirement, the new text 

provides that each Party must adopt procedures and remedies for 

the expeditious resolution of patent disputes. 

Government Procurement.—Peru is not a party to the WTO 

Agreement on Government Procurement, but the Peru FTA provides comparable benefits to U.S. interests. Specifically, U.S. suppliers will be granted non-discriminatory rights to bid on contracts 

above a certain value from Peruvian government ministries, agencies and departments. The Peru FTA will cover the purchases of 

most Peruvian central government entities, including key ministries and state-owned enterprises, including Peru’s oil company 

as well as all of its first-tier sub-central entities (comparable to 

U.S. states). The Peru FTA requires fair and transparent procurement procedures, such as advance notice of purchases and timely 

and effective bid review procedures. 

For the United States, the Peru FTA excludes from FTA procurement commitments all procurements by local government entities. 

The FTA also excludes all procurements by states that have not 

‘‘opted in’’ to the agreement (and only 8 states have done so). The 

FTA also excludes, for federal procurements, the large number of 

government contracts that fall below the high monetary threshold 

and under carve-outs (for example, for small and minority business 

set asides, purchase of goods in 27 broad Federal Supply Classification categories by the Department of Defense, and for ‘‘Berry 

Amendment’’ procurements of textiles and machine tools by the Department of Defense). 

Like other chapters in the agreement, the Government Procurement Chapter of the FTA was amended pursuant to the May 10 

Agreement. As amended, the Peru FTA provides that U.S. federal 

and state governments may condition government contracts on contractors adhering to the five core labor rights and acceptable conditions of work and minimum wages. 

Port Security.—Pursuant to the May 10 Agreement, the Peru 

FTA was amended to clarify that, if there are national security concerns, the United States has full, non-challengeable authority to 

prevent foreign companies from operating U.S. ports, based on national security concerns. 

Agriculture.—More than two-thirds of current U.S. farm exports 

to Peru will become duty-free immediately under the Peru FTA. 

Tariffs on the remaining U.S. farm products are to be phased out 

within 17 years. Many Peruvian agricultural products enter the 

United States duty-free currently under the Andean Trade Preference Act (‘‘ATPA’’) and other preference programs. The Peru FTA 

would make the duty-free treatment permanent. 

In recognition of Peru’s large number of small and subsistence 

farmers, the Peru FTA includes longer tariff phase-out periods for 

some products (such as standard quality beef, yellow corn, rice, and 

processed dairy products), with no tariff cuts required in the initial 

years of the agreement. The longer phase-outs are intended to provide a period for Peruvian farmers to adjust to import competition. 

Safeguard measures will also be available for specified products, 

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fied levels. The possibility of employing safeguards will expire 

when tariff protection has been phased out. 

Services.—The agreement will provide broader market access and 

greater regulatory transparency in most industries. The agreement 

utilizes the negative list approach for coverage with very few reservations, which means that all services are covered unless specifically excluded. 

Textile and Apparel.—Under the Peru FTA, textiles and apparel 

will be duty-free and quota-free immediately if the products meet 

the agreement’s rules of origin. Rules of origin are generally based 

on the yarn forward standard. The agreement does not make use 

of tariff preference levels. A ‘‘de minimis’’ provision will allow limited amounts of specified third-country content to go into U.S. and 

Peruvian apparel, giving producers in both countries needed flexibility. The FTA does allow use of ‘‘short supply’’ fabrics (that is, 

fabrics not made in Peru or the United States that have been determined not to be commercially available in either country). The 

Parties agreed to 20 short supply fabrics, and the Peru FTA includes a process for adding more. 

Customs cooperation commitments between the United States 

and Peru will allow for verification of claims of origin or preferential treatment, and denial of preferential treatment or entry if 

claims cannot be verified. A special textile safeguard will provide 

for temporary tariff relief if imports under the Agreement prove to 

be damaging to domestic producers. 

Investment.—The Peru FTA draws from U.S. legal principles and 

practices to provide U.S. investors in Peru with a basic set of substantive and procedural protections that Peruvian investors currently enjoy under the U.S. legal system. These include due process 

protections and the right to receive a fair market value for property 

in the event of an expropriation. The Peru FTA includes recourse 

to an investor-state dispute settlement mechanism. 

The investment rules in the Peru FTA are significantly changed 

from those originally included in NAFTA’s Chapter 11 in response 

to concerns about overly broad interpretations by some arbitration 

panels and creative claims brought by some private companies 

against the governments of Mexico, the United States and Canada. 

The changes clarified that, except in rare circumstances, legitimate 

‘‘public welfare’’ regulations do not constitute regulatory expropriations, required investor-state panels to consider the same factors as 

those considered in U.S. courts in determining whether there is an 

expropriation of property, provided guidance regarding the ‘‘minimum standard of treatment’’ obligation, and imposed new transparency requirements. 

In addition, pursuant to the May 10 agreement, new language 

was included in the Peru FTA’s Preamble to clarify that foreign investors in the United States are not to be accorded greater substantive rights with respect to investment provisions than U.S. investors under U.S. law. 

Dispute Settlement.—The Peru FTA sets out detailed procedures 

for the resolution of disputes over compliance with the obligations 

under the agreement. 


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PROCEDURES OF THE TRADE ACT OF 2002

H.R. 3688 is being considered by Congress under the procedures 

of the Trade Act of 2002. Pursuant to these requirements, the 

President is required to provide written notice to Congress of the 

President’s intention to enter into the negotiations. Throughout the 

negotiating process, and prior to entering into an agreement, the 

President is required to consult with Congress regarding the ongoing negotiations. 

The President must notify Congress of his intent to enter into a 

trade agreement at least 90 calendar days before the agreement is 

signed. Within 60 days after entering in the Agreement, the President must submit to Congress a description of those changes to existing laws that the President considers would be required to bring 

the United States into compliance with the Agreement. After entering into the Agreement, the President must also submit to Congress the formal legal text of the agreement, draft implementing 

legislation, a statement of administrative action proposed to implement the Agreement, and other related supporting information as 

required under section 2105(a) of the Trade Act of 2002. 

Following submission of these documents, the implementing bill 

is introduced, by request, by the Majority Leader and the Minority 

Leader in each chamber. The House then has up to 60 days to consider implementing legislation for the Agreement (the Senate has 

up to an additional 30 days). No amendments to the legislation are 

allowed under the requirements of the Trade Act of 2002. 

C. LEGISLATIVE HISTORY

Negotiations for a free trade agreement between the United 

States and Peru began in May 2004. On January 6, 2006, the 

United States Trade Representative (‘‘USTR’’) formally notified the 

Congress of its intention to enter into a free trade agreement with 

Peru. Thereafter, on April 12, 2006, then-U.S. Trade Representative Rob Portman and Peruvian Minister of Foreign Trade and 

Tourism Alfredo Ferrero Diez Canseco signed the United StatesPeru Trade Promotion Agreement. The agreement was ratified by 

the Peruvian Congress in June 2006. 

USTR submitted to Congress on June 9, 2006, a description of 

the changes to existing U.S. laws that would be required to bring 

the United States into compliance with the Agreement. 

On June 24 and 25, 2007, respectively, the United States and 

Peru signed a Protocol of Amendment, revising the Peru FTA to include key aspects of the May 10 Agreement. The Peruvian Congress approved the amendments to the Peru FTA by a vote of 70– 38 on June 27, 2007. 

LEGISLATIVE HEARING

On July 12, 2006, the Committee held a hearing on the implementation of the Peru FTA, as originally negotiated. 

COMMITTEE ACTION

On July 20, 2006, the Committee on Ways and Means considered 

in an informal mark-up session draft legislation to implement the 

Peru FTA, as originally negotiated, and a Statement of Administrative Action. The Committee approved the draft legislation by a vote 


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of 23–13, without amendment. No further action was taken on the 

draft legislation. 

On September 25, 2007, the Committee considered in an informal mark-up session draft legislation to implement the Peru FTA, 

as re-negotiated pursuant to the May 10 Agreement. The Committee approved the draft legislation, without amendment, by voice 

vote. 

On September 27, 2007, President Bush transmitted the United 

States-Peru Trade Promotion Agreement, a legislative proposal to 

implement the agreement, a Statement of Administrative Action 

and supporting documents to Congress. On the same day, H.R. 

3688, a bill to implement the United States-Peru Trade Promotion 

Agreement, was introduced by Majority Leader Hoyer, by request, 

for himself and Minority Leader Boehner. H.R. 3688 was then referred to the Committee on Ways and Means. 

On October 31, 2007, Committee on Ways and Means formally 

met to consider H.R. 3688. The Committee ordered H.R. 3688 favorably reported to the House of Representatives by a vote of 39–

0, without amendment (under the procedures of the Trade Act of 

2002, no amendments are permitted after introduction). 

II. SECTION-BY-SECTION SUMMARY 

Title I: Approval and General Provisions 

SECTION 101: APPROVAL AND ENTRY INTO FORCE

Present law 

No provision. 

Explanation of provision 

Section 101 states that Congress approves the Peru FTA and the 

Statement of Administrative Action. The Peru FTA enters into 

force when the President determines that Peru is in compliance 

with all provisions that take effect on the date of entry into force 

of the Agreement and exchanges notes with the Government of 

Peru providing for entry into force on or after January 1, 2008. 

Reason for change 

Approval of the Peru FTA and the Statement of Administrative 

Action is required under the procedures of section 2103(b)(3) of the 

Trade Act of 2002. Section 101 provides for such approval and for 

entry into force of the Peru FTA. 

SECTION 102: RELATIONSHIP OF THE AGREEMENT TO UNITED STATES

AND STATE LAW

Present law 

No provision. 

Explanation of provision 

Section 102(a) provides that U.S. law prevails in the case of a 

conflict with the Peru FTA. Section 102(b) provides that only the 

United States is entitled to bring a court action challenging a state 

law as being invalid on grounds of inconsistency with the FTA. Section 102(c) states that there is no private cause of action or defense 


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under the FTA and no person other than the United States may 

challenge a federal or state law in court as being inconsistent with 

the FTA. 

Reason for change 

The provision addresses the issue of the operation of the agreement relative to federal and state law, as well as private remedies. 

Section 102 is necessary to make clear that no provision of the 

Peru FTA will be given effect if it is inconsistent with federal law 

and that entry into force of the agreement creates no new private 

remedy. 

SECTION 103: IMPLEMENTING ACTIONS IN ANTICIPATION OF ENTRY

INTO FORCE AND INITIAL REGULATIONS

Present law 

No provision. 

Explanation of provision 

Section 103(a) provides that, after the date of enactment, the 

President may proclaim such actions, and other U.S. Government 

officers may issue such regulations, as are necessary to ensure the 

appropriate implementation of any provision of the legislation that 

is to take effect on the date of entry into force of the Agreement. 

The effective date of such actions and regulations may not be earlier than the date of entry into force of the Peru FTA. Where proclaimed actions are not subject to consultation and layover requirements under the Act, proclamations generally may not take effect 

earlier than 15 days after their publication. 

Section 103(b) establishes that regulations necessary or appropriate to carry out actions under the Act and Statement of Administrative Action must, to the maximum extent feasible, be issued 

within one year of entry into force of the Peru FTA or, where a provision takes effect on a later date, within one year of the effective 

date of the provision. 

Reason for change 

Section 103 provides for the issuance of regulations. The Committee strongly believes that regulations should be issued in a 

timely manner to provide maximum clarity to parties claiming benefits under the Peru FTA. The Committee, therefore, notes the importance of the one-year period for issuing regulations and, further, 

that the Statement of Administrative Action commits each agency 

that will be issuing regulations to provide a report to Congress if 

it cannot do so within that time. Such reports must be submitted 

at least 30 days prior to the end of the one-year period. 

SECTION 104: CONSULTATION AND LAYOVER FOR PROCLAIMED ACTIONS

Present law 

No provision. 

Explanation of provision 

Section 104 establishes requirements for proclamation of actions 

that are subject to consultation and layover provisions under the 

Act. The President may proclaim such action only after: (1) obtainVerDate Aug 31 2005 14:07 Nov 06, 2007 Jkt 069006 PO 00000 Frm 00009 Fmt 6659 Sfmt 6602 E:\HR\OC\HR421.XXX HR421

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ing advice from the U.S. International Trade Commission (‘‘ITC’’) 

and the appropriate private sector advisory committees, (2) submitting a report to the Ways and Means and Finance Committees concerning the reasons for the action, and (3) providing for a 60–day 

layover period (starting after the President has both obtained the 

required advice and provided the required report). The proposed action cannot take effect until after the expiration of the 60–day period and after the President has consulted with the Ways and 

Means and Finance Committees regarding the proposed action. 

Reason for change 

The bill gives the President certain proclamation authority but 

requires extensive consultation with Congress before such authority may be exercised. The Committee believes that such consultation is an essential component of the delegation of authority to the 

President and expects that such consultations will be conducted in 

a thorough and timely manner. 

SECTION 105: ADMINISTRATION OF DISPUTE SETTLEMENT

PROCEEDINGS

Present law 

No provision. 

Explanation of provision 

Section 105 authorizes the President to establish an office within 

the Department of Commerce responsible for providing administrative assistance to dispute settlement panels that are established 

under the Peru FTA. The section also authorizes appropriations 

necessary for the establishment and operation of the office and to 

pay the U.S. share of expenses of the panels. 

Reason for change 

Dispute settlement procedures and panels are necessary to ensure that disputes over compliance with FTA provisions can be resolved effectively. The Committee believes that the Commerce Department is the appropriate agency to provide administrative assistance to such panels. 

SECTION 106: ARBITRATION OF CLAIMS

Present law 

No provision. 

Explanation of provision 

Section 106 authorizes the United States to resolve certain 

claims covered by the Investor-State Dispute Settlement Procedures set forth in the Peru FTA. 

Reason for change 

This provision is necessary to meet U.S. obligations under Section B of Chapter 10 of the Peru free trade agreement. 


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SECTION 107: EFFECTIVE DATES; EFFECT OF TERMINATION

Present law 

No provision. 

Explanation of provision 

Section 107 provides that, with the exception of Sections 1–3 and 

Title I, which take effect on the date of enactment of the Act, the 

effective date of the Act is the date the Peru FTA enters into force 

with respect to the United States. The provisions of the Act terminate on the date on which the Peru FTA terminates. 

Reason for change 

Section 107 implements provisions of the Peru FTA relating to 

the effective date and date of termination of the Act. 

Title II: Customs Provisions 

SECTION 201: TARIFF MODIFICATIONS

Present law 

No provision. 

Explanation of provision 

Section 201(a) provides the President with the authority to proclaim tariff modifications necessary or appropriate to carry out the 

Agreement and requires the President to terminate Peru’s designation as a beneficiary developing country for the purpose of the Generalized System of Preferences program as of the date the Agreement enters into force. 

Section 201(b) gives the President the authority, subject to consultation and layover, to proclaim further tariff modifications necessary or appropriate to maintain the general level of reciprocal 

and mutually advantageous concessions with respect to Peru provided for by the Agreement. 

Section 201(c) allows the President, for any goods for which the 

base rate under the Agreement is a specific or compound rate of 

duty, to substitute for the base rate an ad valorem rate to carry 

out the tariff modifications in subsections (a) and (b). 

Section 201(d) directs the President, when implementing tariff 

rate quotas under the Agreement, to ensure that imports of agricultural goods do not disrupt the orderly marketing of commodities in 

the United States. 

Reason for change 

The provision implements the duty reduction commitments made 

in the Peru FTA. 

SECTION 202: ADDITIONAL DUTIES ON CERTAIN AGRICULTURAL GOODS

Present law 

No provision. 

Explanation of provision 

Section 202 implements the agricultural safeguard provisions of 

Article 2.18 and Annex 2.18 of the Peru FTA. Section 202(b) directs 


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the Secretary of the Treasury (‘‘Secretary’’) to assess an additional 

duty in any year when the volume of imports of a ‘‘safeguard good’’

exceeds 130 percent of the in-quota quantity allocated to Peru for 

the good in that calendar year as set forth in Annex 2.3 of the 

Agreement. The additional duty is calculated as a specified percentage of the difference between the Normal Trade Relations (‘‘NTR’’

or ‘‘MFN’’) rate of duty and the duty set out in the Schedule of the 

United States to Annex 2.3 of the Agreement. The sum of the duties assessed under the agricultural safeguard and the applicable 

rate of duty in the U.S. Schedule may not exceed the NTR (MFN) 

rate of duty. No additional duty may be applied on a good if, at the 

time of entry, the good is subject to a safeguard measure under the 

procedures set out in Subtitle A of Title III of the bill or under the 

safeguard procedures set out in Chapter 1 of Title II of the Trade 

Act of 1974 (the ‘‘Section 201’’ global safeguard). The additional duties remain in effect only until the end of the calendar year in 

which they are imposed. 

Reason for change 

This provision implements commitments made in the Peru FTA 

relating to agricultural safeguards. Such safeguards provide important temporary relief to farmers in the United States and Peru who 

face a surge in certain agricultural imports following entry into 

force of the Peru FTA. 

SECTION 203: RULES OF ORIGIN

Present law 

No provision. 

Explanation of provision 

Section 203 codifies the rules of origin set out in Chapter 4 of the 

Peru FTA. Section 203(b) establishes three basic ways for a Peruvian good to qualify as an ‘‘originating good’’ and therefore be eligible for preferential tariff treatment when it is imported into the 

United States. A good is an originating good if: (1) it is ‘‘wholly obtained or produced entirely in the territory of Peru, the United 

States, or both’’; (2) it is produced entirely in the United States, 

Peru, or both and any materials used to produce the good that are 

not themselves originating goods are transformed in such a way as 

to cause their tariff classification to change or the good otherwise 

meets regional content and other requirements, as specified in 

Annex 3–A or Annex 4.1 of the Peru FTA; or (3) it is produced entirely in the territory of Peru, the United States, or both exclusively from originating materials. 

Under the rules in Chapter 3, Annex 3–A, Chapter 4, and Annex 

4.1 of the Peru FTA, an apparel product must generally meet a tariff shift rule that effectively imposes a ‘‘yarn forward’’ requirement. 

Thus, to qualify as an originating good imported into the United 

States from Peru, an apparel product must have been cut (or knit 

to shape) and sewn or otherwise assembled in Peru, the United 

States, or both from yarn, or fabric made from yarn that originates 

in Peru, the United States, or both. 

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cial quantities in a timely manner, and such products are treated 

as if they originate in Peru, regardless of their actual origin, when 

used as inputs in the production of textile or apparel goods. Section 

203(o)(4) provides a process by which the President may modify 

that list at the request of interested entities, defined as Peru and 

potential and actual suppliers and purchasers of textile or apparel 

goods. 

The remainder of Section 203 sets forth more detailed rules for 

determining whether a good meets the FTA’s requirements under 

the second method of qualifying as an originating good. These rules 

include those pertaining to de minimis quantities of non-originating materials that do not undergo a tariff transformation, transformation by regional content, and alternative methods for calculating regional value-content. Other provisions in section 203 address valuation of materials, determination of the originating or 

non-originating status of fungible goods and materials, and treatment of accessories, spare parts and tools, packaging materials, indirect materials, and goods put up in sets. Section 203(1) specifies 

that goods that undergo further production or other operations outside Peru or the United States (with certain exceptions) or do not 

remain under the control of the customs authorities of such other 

countries do not qualify as originating goods. 

Reason for change 

Rules of origin are needed to confine FTA benefits, such as tariff 

cuts, to Peruvian goods and to prevent third-country goods from 

being transshipped through Peru and claiming benefits under the 

FTA. This provision implements the commitments made in the 

Peru FTA with respect to rules of origin applying to imports from 

Peru. 

SECTION 204: CUSTOMS USER FEES

Present law 

No provision. 

Explanation of provision 

Section 204 of the bill implements the U.S. commitments under 

Article 2.10.4 of the Peru FTA to eliminate the Merchandise Processing Fee (‘‘MPF’’) on originating goods. In accordance with U.S. 

obligations under the General Agreement on Tariffs and Trade 

1994, the provision also prohibits use of funds in the Customs User 

Fee Account to provide services related to entry of originating 

goods. 

Reason for change 

As with other free trade agreements, the Peru FTA eliminates 

the MPF on qualifying goods from Peru. Other customs user fees 

remain in place. Section 204 is necessary to put the United States 

in compliance with the user fee elimination provisions of the Peru 

FTA. The Committee expects that the President, in his yearly 

budget request, will take into account the need for funds to pay expenses for entries under the Peru FTA given that MPF funds will 

not be available. 


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SECTION 205: DISCLOSURE OF INCORRECT INFORMATION; FALSE CERTIFICATIONS OF ORIGIN; DENIAL OF PREFERENTIAL TARIFF TREATMENT

Present law 

No provision. 

Explanation of provision 

Section 205 implements Articles 4.18.5 and 4.19.3 of the Peru 

FTA. Section 205(a) prohibits the imposition of a penalty upon importers who make an invalid claim for preferential tariff treatment 

under the agreement if the importer acts promptly and voluntarily 

to correct the error and pays any duties owed on the good in question. The provision also makes it unlawful for a person to certify 

falsely, by fraud, gross negligence, or negligence that a good exported from the United States is an originating good. However, the 

provision prohibits the imposition of a penalty if the exporter or 

producer promptly and voluntarily provides notice of the incorrect 

information to every person to whom a certification was issued. 

Section 205(b) provides that if an importer, exporter or producer 

has engaged in a pattern of conduct in providing false or unsupported representations, U.S. authorities may suspend preferential 

treatment with respect to identical goods imported by that importer, exporter or producer. 

Reason for change 

This provision is necessary to implement commitments in the 

Peru FTA relating to application of penalties for submission of false 

information or certifications by importers, exporters and producers. 

SECTION 206: RELIQUIDATION OF ENTRIES

Present law 

No provision. 

Explanation of provision 

Section 206 implements Article 4.19.5 of the Peru FTA and provides authority for the Customs Service to reliquidate an entry to 

refund any excess duties (including any merchandise processing 

fees) paid on a good qualifying under the rules of origin for which 

no claim for preferential tariff treatment was made at the time of 

importation if the importer so requests, within one year after the 

date of importation. 

Reason for change 

Article 4.19.5 of the Peru FTA anticipates that private parties 

may err in claiming preferential benefits under the agreement and 

provides a one-year period for parties to make such claims for preferential tariff treatment even if the entry of the goods at issue has 

already been liquidated, i.e., legally finalized by customs officials. 

Section 207 is necessary to put the United States into compliance 

with Article 4.19.5. 


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SECTION 207: RECORDKEEPING REQUIREMENTS

Present law 

No provision. 

Explanation of provision 

Section 207 of the bill implements Article 4.17 of the Peru FTA. 

The provision requires any person who completes and issues a certificate of origin under Article 4.15 of the agreement for a good exported from the United States to maintain, for a period of five 

years after the date of certification, specified documents demonstrating that the good qualifies as originating. 

Reason for change 

Section 207 is necessary to put the United States in compliance 

with the recordkeeping requirement provisions in the Article 4.17 

of the Peru FTA. 

SECTION 208: ENFORCEMENT RELATING TO TRADE IN TEXTILE OR

APPAREL GOODS

Present law 

No provision. 

Explanation of provision 

Section 208 implements the customs cooperation and verification 

of origin provisions in Article 3.2 of the Peru FTA. Under Article 

3.2, the United States may request the Government of Peru to conduct a verification of whether a claim of origin for a textile or apparel good is accurate or a particular exporter or producer is complying with applicable customs laws, regulations, and procedures 

regarding trade in textile or apparel goods. Section 208(a) provides 

that the President may direct the Secretary to take ‘‘appropriate 

action’’ while such a verification is being conducted. ‘‘Appropriate 

action’’ may include: (i) suspending preferential tariff treatment for 

textile or apparel goods that the person subject to the verification 

has produced or exported if the Secretary believes there is insufficient information to sustain a claim for such treatment; (ii) denying 

preferential tariff treatment to such goods if the Secretary decides 

that a person has provided incorrect information to support a claim 

for such treatment; (iii) detaining such goods if the Secretary considers there is not enough information to determine their country 

of origin; and (iv) denying entry to such goods if the Secretary determines that a person has provided erroneous information on their 

origin. 

Under Section 208(c), the President may also direct the Secretary 

to take ‘‘appropriate action’’ after a verification has been completed. 

Such action may include: (i) denying preferential tariff treatment 

to textile or apparel goods that the person subject to the 

verification has exported or produced if the Secretary considers 

there is insufficient information to support a claim for such treatment or determines that a person has provided incorrect information to support a claim for such treatment; and (ii) denying entry 

to such goods if the Secretary decides that a person has provided 

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cient information to determine their origin. Unless the President 

sets an earlier date, any such action may remain in place until the 

Secretary obtains enough information to decide whether the exporter or producer that was subject to the verification is complying 

with applicable customs rules or whether a claim that the goods 

qualify for preferential tariff treatment or originate in an FTA 

country is accurate. 

Under Section 208(e), the Secretary may publish the name of a 

person that the Secretary has determined: (i) is engaged in circumvention of applicable laws, regulations, or procedures affecting 

trade in textile or apparel goods; or (ii) has failed to demonstrate 

that it produces, or is capable of producing, textile or apparel 

goods. 

Reason for change 

To avoid textile transshipment, special textile enforcement provisions were included in the Peru FTA. Section 208 is necessary to 

authorize these enforcement mechanisms for use by U.S. authorities. 

SECTION 209: REGULATIONS

Present law 

No provision. 

Explanation of provision 

Section 209 directs the Secretary to prescribe regulations necessary to carry out the tariff-related provisions of the Act, including 

the rules of origin and customs user fee provisions. 

Reason for change 

This provision gives the President necessary regulatory authority 

to carry out the agreement. No such regulation may take effect before the Peru FTA enters into force. 

Title III: Relief From Imports 

SECTION 301: DEFINITIONS

Present law 

No provision. 

Explanation of provision 

Section 301 defines ‘‘Peruvian article’’ and ‘‘Peruvian textile or 

apparel article,’’ which are key terms for Title III. 

Reason for change 

This provision clarifies the scope of the provisions in Title III. 

Subtitle A: Relief from Imports Benefiting from the Agreement 

SECTIONS 311–316

Present law 

No provision. 


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Explanation of provisions 

Sections 311–316 authorize the President, after an investigation 

and affirmative determination by the U.S. International Trade 

Commission (‘‘ITC’’), to impose certain import relief measures 

when, as a result of the reduction or elimination of a duty under 

the Agreement, a Peruvian product is being imported into the 

United States in such increased quantities and under such conditions as to be a substantial cause of serious injury or threat of serious injury to a domestic industry. 

Section 311 provides for the filing of petitions with the ITC and 

for the ITC to conduct safeguard investigations under Subtitle A. 

Section 311(a)(1) provides that a petition requesting a safeguard 

action may be filed by an entity that is ‘‘representative of an industry.’’ As under Section 202(a)(1) of the Trade Act of 1974, a trade 

association, firm, certified or recognized union, or a group of workers can be considered such an entity. Section 311(b) sets out the 

standard to be used by the ITC in undertaking an investigation 

and making a determination in Subtitle A safeguard proceedings. 

Section 311(c) provides that certain provisions of Section 202 of 

the Trade Act of 1974 also apply with respect to investigations initiated under Section 311(b), including provisions defining ‘‘substantial cause’’ and listing factors to be taken into account in making 

safeguard determinations. 

Section 311(d) exempts from investigation under the section Peruvian articles with respect to which relief has previously been provided under Subtitle A. 

Section 312 requires the ITC to make a determination not later 

than 120 days after the date on which the Section 311 investigation 

is initiated. Under Sections 312(b) and (c), if the ITC makes an affirmative determination, it must find and recommend to the President the amount of import relief that is necessary to remedy or 

prevent serious injury and to facilitate the efforts of the domestic 

industry to make a positive adjustment to import competition. Section 312(d) directs the ITC to submit a report to the President regarding the determination no later than 30 days after the determination is made. Section 312(e) requires the ITC to make this report public and to publish a summary of it in the Federal Register. 

Section 313(a) provides that the President, within 30 days of receiving a report from the ITC under Section 312, must provide import relief to the extent that the President determines is necessary 

to remedy or prevent the injury found by the ITC and to facilitate 

the efforts of the domestic industry to make a positive adjustment 

to import competition. Under Section 313(b), the President is not 

required to provide import relief if the relief will not provide greater economic and social benefits than costs. 

Section 313(c) sets forth the nature of the relief that the President may provide. The President may take action in the form of a 

suspension of further reductions in the rate of duty to be applied 

to the articles in question, or an increase in the rate of duty on the 

articles in question to a level that does not exceed the lesser of the 

existing NTR (MFN) rate or the NTR (MFN) rate of duty that was 

imposed on the day before the Peru FTA entered into force. Under 

Section 313(c)(2), if the relief the President provides has a duration 

greater than one year, the relief must be subject to progressive liberalization at regular intervals over the course of its application. 


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Section 313(d) provides that the President may initially provide 

import relief for up to two years. This period may be extended for 

an additional two years (to a maximum aggregate period of four 

years) if, after an investigation by the ITC and receipt of an ITC 

report, the President determines that import relief continues to be 

necessary and there is evidence that the industry is making a positive adjustment to import competition. The ITC must conduct an 

investigation on these issues if, within a specified period before the 

relief terminates, a concerned industry files a petition requesting 

an investigation. The ITC must issue a report on its investigation 

to the President no later than 60 days before the termination of the 

import relief. 

Section 313(e) specifies that on the termination of import relief, 

the rate of duty for the remainder of the calendar year is the rate 

that was scheduled to have been in effect one year after the initial 

provision of import relief. In the calendar year that follows the year 

of termination of import relief, the President may either apply the 

rate of duty set out in the relevant U.S. Schedule to the Peru FTA 

or eliminate the duty in equal annual stages until the end of the 

scheduled phase-out period. 

Section 313(f) exempts from relief any article that is: (i) subject 

to import relief under the global safeguard provisions in U.S. law 

(Chapter 1 of Title II of the Trade Act of 1974); (ii) subject to import relief under Subtitle B; or (iii) subject to additional duties as 

an agricultural good under Section 202(b). 

Section 314 provides that no relief may be provided under this 

subtitle after ten years from the date the Peru FTA enters into 

force, unless the scheduled phase-out period for the article under 

the agreement is greater than ten years, in which case relief may 

not be provided for that article after the scheduled phase-out period ends. 

Section 315 authorizes the President to provide compensation to 

Peru consistent with Article 8.5 of the Peru FTA if relief is ordered. 

Section 316 provides for the treatment of confidential business 

information. 

Reason for change 

These provisions establish a mechanism for providing temporary 

import relief where a U.S. industry experiences injury or threat of 

injury by reason of increased import competition from Peru resulting from reduction or elimination of a duty under the Peru FTA. 

The Committee notes that the President is not required to provide 

relief if the relief will not provide greater economic and social benefits than costs and expects that the President will use this discretion only to the extent consistent with the letter, spirit and purpose 

of the safeguard provisions. The Committee intends that administration of this safeguard be consistent with U.S. obligations under 

Section A of Chapter Eight (Trade Remedies) of the Peru FTA. 

Subtitle B: Textile and Apparel Safeguard Measures 

SECTIONS 321–328

Present law 

No provision. 


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Explanation of provisions 

Sections 321–328 authorize the President to impose certain import relief measures when he determines that, as a result of the 

elimination or reduction of a duty provided under the Peru FTA, 

a Peruvian textile or apparel article is being imported into the 

United States in such increased quantities, in absolute terms or 

relative to the domestic market for that article, and under such 

conditions as to cause serious damage, or actual threat thereof, to 

the domestic industry. 

Section 321 provides that a request for safeguard relief under 

this subtitle may be filed with the President by an interested party. 

The President must review the request and determine whether to 

commence consideration of the request. Under Section 321(b), if the 

President determines that the request contains information necessary to warrant consideration on the merits, the President must 

provide notice stating that the request will be considered and seeking public comments on the request. 

Section 322(a) provides that the President shall determine, pursuant to a request by an interested party, whether, as a result of 

the elimination or reduction of a duty provided under the Peru 

FTA, a Peruvian textile or apparel article is being imported into 

the United States in such increased quantities, in absolute terms 

or relative to the domestic market for that article, and under such 

conditions as to cause serious damage, or actual threat thereof, to 

a domestic industry producing an article that is like, or directly 

competitive with, the imported article. The President must make 

this determination within 30 days after the completion of consultations held pursuant to Article 3.1.5 of the Agreement. 

Section 322(b) sets forth the relief that the President may provide, which is an increase in the rate of duty on the articles in 

question to a level that does not exceed the lesser of the existing 

NTR (MFN) rate or the NTR (MFN) rate of duty that was imposed 

on the day before the Agreement entered into force. 

Section 323 of the bill provides that the period of relief shall be 

no longer than two years. The period may be extended for an additional period not more than one year, if the President determines 

that continuation is necessary to remedy or prevent serious damage 

and to facilitate adjustment by the domestic industry and there is 

evidence the industry is making a positive adjustment. The aggregate period of relief, including any extension, may not exceed three 

years. 

Section 324 provides that relief may not be granted to an article 

under this subtitle if relief has previously been granted under this 

subtitle for that article, or the article is subject to import relief 

under Subtitle A of Title III of this bill or under Chapter 1 of Title 

II of the Trade Act of 1974. 

Under Section 325, after a safeguard expires, the rate of duty on 

the article that had been subject to the safeguard shall be the rate 

that would have been in effect, but for the safeguard action. 

Section 326 provides that the authority to provide safeguard relief under this subtitle expires five years after the date on which 

the Agreement enters into force. 

Section 327 authorizes the President to provide compensation to 

Peru if relief is ordered. 


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Section 328 provides for the treatment of confidential business 

information. 

Reason for change 

This provision implements the commitments under the Peru FTA 

relating to textile and apparel safeguard measures. The Committee 

intends that the provisions of subtitle B be administered in a manner that is transparent and that will serve as an example to our 

trading partners. In addition, the Committee encourages the President promptly to issue regulations on procedures for requesting 

such safeguard measures, for making determinations under section 

322(a), and for providing relief under section 322(b). 

Subtitle C: Cases Under Title II of the Trade Act of 1974 

SECTION 331: FINDINGS AND ACTION ON GOODS FROM PERU

Present law 

No provision. 

Explanation of provision 

Section 331(a) provides that if the ITC makes an affirmative determination, or a determination that the President may consider to 

be an affirmative determination, in a global safeguard investigation 

under Section 202(b) of the Trade Act of 1974, the ITC must find 

and report to the President whether Peruvian imports of the article 

that qualify as originating goods under the Peru FTA are a substantial cause of serious injury or threat thereof. Under Section 

331(b), if the ITC makes a negative finding under Section 331(a), 

the President may exclude any imports that are covered by the 

ITC’s finding from the global safeguard action. 

Reason for change 

This provision implements commitments under the Peru FTA relating to treatment of Peruvian imports in global safeguard investigations under Section 202(b) of the Trade Act of 1974. 

Title IV: Procurement 

SECTION 401: GOVERNMENT PROCUREMENT

Present law 

No provision. 

Explanation of provision 

Section 401 implements Chapter 9 of the Peru FTA and amends 

the definition of ‘‘eligible product’’ in Section 308(4)(A) of the Trade 

Agreements Act of 1979. As amended, Section 308(4)(A) will provide that an ‘‘eligible product’’ means a product or service of Peru 

that is covered under the Agreement for procurement by the 

United States. 

Reason for change 

This provision implements U.S. commitments under Chapter 9 of 

the Peru FTA (Government Procurement). 


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Title V: Trade in Timber Products of Peru 

SECTIONS 501–502

Present law 

No provision. 

Explanation of provision 

Sections 501–502 implement obligations set out in Annex 18.3.4 

to the Peru FTA (Annex on Forest Sector Governance). Section 

501(a) provides that, within 90 days of entry into force of the agreement, the President shall establish an interagency committee responsible for overseeing the implementation of the Annex on Forest 

Sector Governance. 

Section 501(b) authorizes the interagency committee to request 

the Government of Peru to conduct an audit to determine whether 

a particular producer or exporter in Peru is complying with all applicable Peruvian laws, regulations and measures governing the 

harvest of, and trade in, timber products. 

Section 501(c) also authorizes the interagency committee to request the Government of Peru to conduct a verification with respect to a particular shipment of timber products from Peru to the 

United States, to determine whether the exporter or producer of 

the products has complied with the applicable Peruvian laws, regulations and measures governing the harvest of, and trade in, timber products. The interagency committee may request that officials 

of an agency represented on the committee participate in a 

verification visit conducted by the Government of Peru. While a 

verification is pending, the interagency committee may direct U.S. 

Customs and Border Protection to detain the shipment that is the 

subject of the verification. If the Government of Peru has denied 

a request that a U.S. government official participate in a 

verification visit, the interagency committee may also direct U.S. 

Customs and Border Protection to deny entry to the shipment that 

is the subject of the verification. 

Upon receipt of a report of the results of a verification from the 

Government of Peru, the interagency committee shall determine 

whether it is appropriate to take any action with respect to the 

shipment that was the subject of the verification, or the products 

of the relevant producer or exporter. Under paragraph 7 of Section 

501(c), appropriate actions may include: (1) directing U.S. Customs 

and Border Protection to deny entry to the shipment, (2) directing 

U.S Customs and Border Protection to deny entry to any products 

of the producer or exporter derived from any tree species listed in 

Appendices to the Convention on International Trade in Endangered Species of Wild Fauna and Flora in those cases in which a 

producer or exporter is found to have knowingly provided false information to Peruvian or U.S. officials regarding a shipment, and 

(3) any other action the interagency committee determines to be 

appropriate. In determining the appropriate action to take, and duration thereof, the interagency committee must consider any relevant information available to it, including the verification report 

from the Government of Peru and any information obtained by U.S. 

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mittee to the Government of Peru or, if the Government of Peru 

conducts an audit and concludes that the subject of the audit has 

come into compliance with all applicable laws, regulations, and 

other measures of Peru governing the harvest of, and trade in, timber products, within 15 days after the Government of Peru submits 

the results of such an audit to the United States. 

If the Government of Peru fails to provide a verification report, 

the interagency committee may take such action with respect to 

the relevant exporter’s timber products as the committee considers 

appropriate, including any action described in paragraph 7 of Section 501(c). 

Section 501(d) provides for confidential treatment of documents 

or information received in the course of an audit under Section 

501(b) or a verification under Section 501(c). Section 501(e) directs 

the interagency committee to make publicly available in a timely 

manner any information on bilateral trade in timber products exchanged with Peru under paragraph 17 of Annex 18.3.4 of the Peru 

FTA. 

Section 501(f) addresses coordination with other laws, including 

with respect to the authority of various administering agencies and 

the effect on proceedings and determinations under other laws. 

Section 501(g) directs the Secretary of Agriculture, the Secretary 

of Homeland Security, the Secretary of the Interior, and the Secretary of the Treasury, in consultation with the interagency committee, to prescribe such regulations as are necessary to carry out 

Section 501. In addition, Section 501(h) provides that, within 90 

days of entry into force of the Peru FTA, the President shall consult with the Ways and Means and Finance Committees on the resources, including staffing, needed to implement Annex 18.3.4 of 

the Agreement. 

Section 502 directs the USTR, in consultation with the appropriate agencies, to report to the Ways and Means and Finance 

Committees regarding implementation of Annex 18.3.4 of the Peru 

FTA and activities related to forest sector governance carried out 

under the Environmental Cooperation Agreement entered into between the United States and Peru on July 24, 2006. Reports are 

to be provided by the end of each of the first and second years following entry into force of the Peru FTA and periodically thereafter. 

Reason for change 

These provisions implement obligations under Annex 18.3.4 to 

the Peru FTA (Annex on Forest Sector Governance). As noted 

above, this Annex, negotiated as a result of the May 10 Agreement, 

addresses the problem of illegal logging in Peru. Peru lies at the 

heart of the Tropical Andes and is one of the most biologically rich 

and diverse eco-regions in world. Illegal logging poses a severe 

threat to Peru’s irreplaceable plant and animal communities. The 

Committee notes the critical importance of stopping this practice of 

illegal logging. The Annex on Forest Sector Governance and Sections 501–502 of this Act provide groundbreaking new tools for the 

United States to use in that fight. The Committee expects that the 

President and the interagency committee will make the fullest possible use of these tools to ensure that the commitments under the 

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vian laws, regulations and measures governing the harvest of, and 

trade in, timber products is addressed. 

The Committee also notes the requirement under Section 502 for 

the USTR to report to the Ways and Means and Finance Committees regarding implementation of obligations under the Annex on 

Forest Sector Governance. Given the critical importance of addressing the problem of illegal logging, the Committee expects that the 

USTR will provide timely, frequent and thorough reports regarding 

implementation of the obligations both of Peru and the United 

States (for example, regarding the work of the interagency committee, regulations to implement the obligations under the agreement, cases considered by the interagency committee and the Peruvian authorities and their resolution, audits and verifications conducted, and other related matters). 

Title VI: Offsets 

SECTION 601: CUSTOMS USER FEES

Present law 

Section 13031 of the Consolidated Omnibus Budget Reconciliation Act of 1985 (‘‘COBRA’’) authorized the Secretary of the Treasury to collect certain service fees. Section 412 of the Homeland Security Act of 2002 authorized the Secretary of the Treasury to delegate such authority to the Secretary of Homeland Security. Provided for under 19 U.S.C. 58c, these fees include: Processing fees 

for air and sea passengers, commercial trucks, rail cars, private 

aircraft and vessels, commercial vessels, dutiable mail packages, 

barges and bulk carriers, merchandise, and Customs broker permits. COBRA was amended on several occasions. The current authorization for the collection of the passenger and conveyance processing fees is through September 30, 2014. The current authorization for the collection of the merchandise processing fees is through 

October 21, 2014. 

Description of proposal 

The proposal extends the passenger and conveyance processing 

fees and the merchandise processing fees authorized under COBRA 

through December 13, 2014. 

Reason for change 

The Committee believes it is appropriate to extend the passenger 

and conveyance processing fees and the merchandise processing 

fees authorized under COBRA. 

SECTION 602: TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES

Present law 

In general, corporations are required to make quarterly estimated tax payments of their income tax liability. For a corporation 

whose taxable year is a calendar year, these estimated tax payments must be made by April 15, June 15, September 15, and December 15. 

Under present law, in the case of a corporation with assets of at 

least $1 billion, the payments due in July, August, and September, 


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2012, shall be increased to 115 percent of the payment otherwise 

due and the next required payment shall be reduced accordingly. 

Explanation of provision 

The provision increases the percentage by 0.75 of a percentage 

point, from 115 percent to 115.75 percent. 

Reason for change 

The Committee believes it is appropriate to adjust the corporate 

estimated tax payments. 

III. VOTES OF THE COMMITTEE 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the following statements are made concerning the vote of the Committee on Ways and Means in its consideration of the bill H.R. 3688. 

Motion to Report the Bill 

The bill, H.R. 3688, was ordered favorably reported by a roll call 

vote of 39 yeas to 0 nays (with a quorum being present). The vote 

was as follows: 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Rangel ............................ X ........... ............. Mr. McCrery .......................... X ........... .............

Mr. Stark ............................... X ........... ............. Mr. Herger ............................ X ........... .............

Mr. Levin ............................... X ........... ............. Mr. Camp ............................. X ........... .............

Mr. McDermott ...................... X ........... ............. Mr. Ramstad ........................ X ........... .............

Mr. Lewis (GA) ...................... X ........... ............. Mr. Johnson .......................... X ........... .............

Mr. Neal ................................ X ........... ............. Mr. English ........................... X ........... .............

Mr. McNulty ........................... X ........... ............. Mr. Weller ............................. ........... ........... .............

Mr. Tanner ............................ X ........... ............. Mr. Hulshof .......................... X ........... .............

Mr. Becerra ........................... X ........... ............. Mr. Lewis (KY) ...................... X ........... .............

Mr. Doggett ........................... X ........... ............. Mr. Brady ............................. X ........... .............

Mr. Pomeroy .......................... X ........... ............. Mr. Reynolds ........................ X ........... .............

Ms. Tubbs Jones ................... X ........... ............. Mr. Ryan ............................... X ........... .............

Mr. Thompson ....................... X ........... ............. Mr. Cantor ............................ X ........... .............

Mr. Larson ............................. X ........... ............. Mr. Linder ............................. X ........... .............

Mr. Emanuel ......................... X ........... ............. Mr. Nunes ............................. X ........... .............

Mr. Blumenauer .................... X ........... ............. Mr. Tiberi .............................. X ........... .............

Mr. Kind ................................ X ........... ............. Mr. Porter ............................. X ........... .............

Mr. Pascrell ........................... X ........... .............

Ms. Berkley ........................... ........... ........... .............

Mr. Crowley ........................... X ........... .............

Mr. Van Hollen ...................... X ........... .............

Mr. Meek ............................... X ........... .............

Ms. Schwartz ........................ X ........... .............

Mr. Davis .............................. X ........... .............

IV. BUDGET EFFECTS 

A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS

In compliance with clause 3(d)(2) of the rule XIII of the Rules of 

the House of Representatives, the following statement is made concerning the effects on the budget of this bill, H.R. 3688, as reported: The Committee agrees with the estimate prepared by the 

Congressional Budget Office (‘‘CBO’’) which is included below. 


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B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX

EXPENDITURES

In compliance with subdivision 3(c)(2) of rule XIII of the Rules 

of the House of Representatives, the Committee states that the provisions of H.R. 3688 would reduce customs duty receipts due to 

lower tariffs imposed on goods from Peru. 

C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET

OFFICE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, requiring a cost estimate prepared by 

CBO, the following report prepared by CBO is provided. 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE

Washington, DC, November 2, 2007. 

Hon. CHARLES B. RANGEL, 

Chairman, Committee on Ways and Means, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3688, the United StatesPeru Trade Promotion Agreement Implementation Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Zachary Epstein. 

Sincerely, 

ROBERT A. SUNSHINE

(For Peter R. Orszag, Director). 

Enclosure. 

H.R. 3688—United States-Peru Trade Promotion Agreement Implementation Act 

Summary: H.R. 3688 would approve the free trade agreement between the government of the United States and the government of 

Peru that was entered into on April 12, 2006. It would provide for 

tariff reductions and other changes in law related to implementation of the agreement. It also would shift some corporate income 

tax payments between fiscal years. 

The Congressional Budget Office (CBO) and the Joint Committee 

on Taxation (JCT) estimate that enacting the legislation would reduce revenues by $20 million in 2008, increase revenues by $292 

million over the 2008–2012 period, and reduce revenues by $423 

million over the 2008–2017 period. CBO estimates that enacting 

H.R. 3688 also would increase direct spending by $4 million in 

2008 and by $27 million over the 2008–2012 period, and reduce direct spending by $443 million over the 2008–2017 period. Further, 

CBO estimates that implementing the legislation would result in 

new discretionary spending of less than $500,000 per year, assuming the availability of appropriated funds. 

CBO and JCT have determined that the bill contains no intergovernmental mandates as defined in the Unfunded Mandates Reform Act (UMRA). CBO has determined that the non-tax provisions 

of the bill contain private-sector mandates with costs that would 

greatly exceed the annual threshold established in UMRA for private-sector mandates ($131 million in 2007, adjusted annually for 


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inflation) in fiscal year 2015. JCT has determined that the tax provision of the bill (section 602) contains no private-sector mandate 

as defined in UMRA. 

Estimated cost to the Federal Government: The estimated budgetary impact of the legislation over the 2008–2017 period is shown 

in the following table. The cost of this legislation falls within budget function 750 (administration of justice). 


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By fiscal year, in millions of dollars— 

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008- 2012 2008- 2017 

CHANGES IN REVENUES 

Free Trade Agreement .................................................... ¥20 ¥35 ¥37 ¥39 ¥41 ¥44 ¥47 ¥50 ¥53 ¥56 ¥173 ¥423 

Payment of Corporate Estimated Tax ............................ 0 0 0 0 465 ¥465 0 0 0 0 465 0 Total Changes in Revenues ........................................... ¥20 ¥35 ¥37 ¥39 424 ¥509 ¥47 ¥50 ¥53 ¥56 292 ¥423 

CHANGES IN DIRECT SPENDING 

Customs User Fees: 

Estimated Budget Authority .................................. 4 5 6 6 6 7 7 ¥484 0 0 27 ¥443 

Estimated Outlays ................................................. 4 5 6 6 6 7 7 ¥484 0 0 27 ¥443 

Sources: Congressional Budget Office and Joint Committee on Taxation. 


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Basis of estimate: 

Revenues 

Under the United States-Peru agreement, tariffs on U.S. imports 

from Peru would be phased out over time. The tariffs would be 

phased out for individual products at varying rates according to 

one of several different timetables ranging from immediate elimination on the date the agreement enters into force to gradual elimination over 10 years. 

According to the U.S. International Trade Commission, the 

United States collected about $5 million in customs duties in 2006 

on $6 billion of imports from Peru. However, since 1991, imports 

to the United States from Peru have been subject to reduced tariff 

rates in accordance with the Andean Trade Preference Act (ATPA), 

which was expanded in legislation enacted in 2002, and is currently scheduled to expire on February 29, 2008. The ATPA overlaps to a large extent with the free trade agreement that would be 

implemented by this bill. As a result, enacting the bill would effectively extend the ATPA for Peru after February 29, 2008, while 

also lowering tariff rates not covered by the ATPA. Based on expected imports from Peru, CBO estimates that implementing the 

tariff schedule outlined in the U.S.-Peru agreement would reduce 

revenues by $20 million in 2008, by $173 million over the 2008–

2012 period, and by $423 million over the 2008–2017 period, net 

of income and payroll tax offsets. 

This estimate includes the effects of increased imports from Peru 

that would result from the reduced prices of imported products in 

the United States, reflecting the lower tariff rates. It is likely that 

some of the increase in U.S. imports from Peru would displace imports from other countries. In the absence of specific data on the 

extent of this substitution effect, CBO assumes that an amount 

equal to one-half of the increase in U.S. imports from Peru would 

displace imports from other countries. 

H.R. 3688 would also shift payments of corporate estimated taxes 

between 2012 and 2013. For corporations with at least $1 billion 

in assets, the bill would increase the portion of corporate estimated 

payments due from July through September of 2012. JCT estimates 

that this change would increase revenues by $465 billion in 2012 

and decrease revenues by $465 billion in 2013. 

Direct spending 

Under current law, customs user fees will expire either after October 7, 2014 (for COBRA fees) or after October 21, 2014 (for merchandise processing fees). Such fees are recorded in the budget as 

offsetting receipts (a credit against direct spending). H.R. 3688 

would extend both COBRA fees and merchandise processing fees 

through December 13, 2014. CBO estimates that this provision 

would increase offsetting receipts by $485 million in fiscal year 

2015. 

In addition, the bill would exempt certain goods imported from 

Peru from merchandise processing fees. Based on the value of 

goods imported from Peru in 2007, CBO estimates that implementing this provision would reduce fee collections by about $4 

million in fiscal year 2008 and by about $42 million over the 2008–


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2015 period. There would be no effects after December 13, 2014, because fees expire after that date. 

Spending subject to appropriation 

Title I of the bill would authorize the appropriation of necessary 

funds for the Department of Commerce to pay the United States’

share of the costs of the dispute settlement procedures established 

by the agreement. Based on information from the agency, CBO estimates that implementing this provision would cost less than 

$500,000 per year, subject to the availability of appropriated funds. 

Title III would authorize the International Trade Commission 

(ITC) to conduct investigations, if petitioned, into whether Peruvian imports might threaten or cause serious injury to domestic 

competitors. The ITC would report to the President on its findings 

and determinations, and if necessary, recommend the appropriate 

amount of import relief. Based on information from the agency, 

CBO estimates that implementing these provisions would cost less 

than $500,000 per year, subject to the availability of appropriated 

funds. 

Title V would require the United States Trade Representative to 

prepare a report for Congress regarding activities carried out to 

promote legal trade in timber products as stipulated in the agreement. CBO estimates that complying with this reporting requirement also would cost less than $500,000 per year. 

Estimated impact on state, local, and tribal governments: CBO 

and JCT have determined that the provisions of H.R. 3688 contain 

no intergovernmental mandates as defined in UMRA. 

Estimated impact on the private sector: CBO has determined 

that the non-tax provisions of H.R. 3688 would impose private-sector mandates, as defined in UMRA, by extending the customs user 

fees and by enforcing new record-keeping requirements on exporters of goods to Peru. The aggregate costs of those mandates would 

greatly exceed the annual threshold established in UMRA for private-sector mandates ($131 million in 2007, adjusted annually for 

inflation) in 2015. JCT has determined that the tax provision of the 

bill (section 602) contains no private-sector mandate as defined in 

UMRA. 

Customs user fees 

The bill would extend through December 13, 2014 the customs 

user fees that are scheduled to expire on October 7, 2014 or October 21, 2014. These fees are used to fund the processing costs of 

the U.S. Customs Service. CBO estimates that the aggregate cost 

to the private sector to comply with this mandate relative to the 

case where the mandate is allowed to expire would be about $485 

million in fiscal year 2015. 

Record-keeping requirement 

The bill also would require any person exporting goods to Peru 

who is required to complete a certificate of origin to keep all documents that relate to the origin of goods being certified for at least 

five years after the date of certification. CBO estimates that the 

cost of that record-keeping requirement for the private sector would 

be minimal. 


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Previous CBO estimate: On October 24, 2007, CBO transmitted 

a cost estimate of S. 2113, an identically titled bill ordered reported 

by the Senate Committee on Finance on October 4, 2007. The provisions of S. 2113 and H.R. 3688 are identical, as are CBO’s estimates. 

Estimate prepared by: Federal revenues: Andrew Langan, 

Zachary Epstein; Direct spending: Mark Grabowicz; Spending subject to appropriation: Susan Willie, Sunita D’Monte; Impact on 

state, local, and tribal governments: Neil Hood; Impact on the private sector: Jacob Kuipers. 

Estimate approved by: G. Thomas Woodward, Assistant Director 

for Tax Analysis; Theresa Gullo, Deputy Assistant Director for 

Budget Analysis. 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE 

RULES OF THE HOUSE 

A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

With respect to clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives (relating to oversight findings), the Committee, based on public hearing testimony and information from 

the Administration, concluded that it is appropriate and timely to 

consider H.R. 3688 as reported. 

B. SUMMARY OF FINDINGS AND RECOMMENDATIONS OF THE

GOVERNMENT REFORM AND OVERSIGHT COMMITTEE

With respect to clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the performance goals and objectives of 

the part of this legislation that authorizes funding are for (a) the 

payment of the U.S. share of the expenses incurred in dispute settlement proceedings established under Chapter 21 of the Peru FTA 

and (b) the establishment and operation of an office within the Department of Commerce responsible for providing assistance to the 

panels in such proceedings. 

C. CONSTITUTIONAL AUTHORITY STATEMENT

With respect to clause 3(d)(1) of rule XIII of the Rules of the 

House of Representatives, relating to Constitutional Authority, the 

Committee states that the Committee’s action in reporting the bill 

is derived from Article 1 of the Constitution, Section 8 (‘The Congress shall have power to lay and collect taxes, duties, imposts and 

excises, to pay the debts and to provide for * * * the general Welfare of the United States.’). 

D. INFORMATION RELATION TO UNFUNDED MANDATES

This information is provided in accordance with section 423 of 

the Unfunded Mandates Act of 1995 (P.L. 104–4) (‘‘UMRA’’). The 

Committee has determined that the non-tax provisions of the bill 

do impose federal mandates on the private sector by extending the 

customs user fees and by enforcing new record-keeping requirements on exporters of goods to Peru. The aggregate costs of those 

mandates will exceed the annual threshold established in UMRA 

for private-sector mandates ($131 million in 2007, adjusted annually for inflation) in 2015. 


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The Committee has determined that the bill does not impose a 

federal intergovernmental mandate on State, local, or tribal governments. 

E. LIMITED TAX BENEFITS

Pursuant to clause 9 of rule XXI of the Rules of the House of 

Representatives, the Ways and Means Committee has determined 

that the bill as reported contains no congressional earmarks, limited tax benefits, or limited tariff benefits within the meaning of 

that Rule. 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS 

REPORTED 

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

SECTION 13031 OF THE CONSOLIDATED OMNIBUS 

BUDGET RECONCILIATION ACT OF 1985 

SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES. 

(a) * * * 

(b) LIMITATIONS ON FEES.—(1) * * * 

* * * * * * * 

(18) No fee may be charged under subsection (a) (9) or (10) with 

respect to goods that qualify as originating goods under section 203 

of the United States-Peru Trade Promotion Agreement Implementation Act. Any service for which an exemption from such fee is provided by reason of this paragraph may not be funded with money 

contained in the Customs User Fee Account. 

* * * * * * * 

(j) EFFECTIVE DATES.—(1) * * * 

* * * * * * * 

(3)(A) Fees may not be charged under paragraphs (9) and (10) of 

subsection (a) after øOctober 21, 2014¿ December 13, 2014. 

(B)(i) Subject to clause (ii), Fees may not be charged under paragraphs (1) through (8) of subsection (a) after øOctober 7, 2014¿ December 13, 2014. 

* * * * * * * 

TARIFF ACT OF 1930 

* * * * * * * 

SEC. 508. RECORDKEEPING. 

(a) * * * 

* * * * * * * 

(h) CERTIFICATIONS OF ORIGIN FOR GOODS EXPORTED UNDER THE

UNITED STATES-PERU TRADE PROMOTION AGREEMENT.—

(1) DEFINITIONS.—In this subsection: 


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(A) RECORDS AND SUPPORTING DOCUMENTS.—The term ‘‘records and supporting documents’’ means, with respect to 

an exported good under paragraph (2), records and documents related to the origin of the good, including— (i) the purchase, cost, and value of, and payment for, 

the good; 

(ii) the purchase, cost, and value of, and payment 

for, all materials, including indirect materials, used in 

the production of the good; and 

(iii) the production of the good in the form in which 

it was exported. 

(B) PTPA CERTIFICATION OF ORIGIN.—The term ‘‘PTPA 

certification of origin’’ means the certification established 

under article 4.15 of the United States-Peru Trade Promotion Agreement that a good qualifies as an originating 

good under such Agreement. 

(2) EXPORTS TO PERU.—Any person who completes and issues 

a PTPA certification of origin for a good exported from the 

United States shall make, keep, and, pursuant to rules and regulations promulgated by the Secretary of the Treasury, render 

for examination and inspection all records and supporting documents related to the origin of the good (including the certification or copies thereof). 

(3) RETENTION PERIOD.—The person who issues a PTPA certification of origin shall keep the records and supporting documents relating to that certification of origin for a period of at 

least 5 years after the date on which the certification is issued. 

ø(h)¿ (i) PENALTIES.—Any person who fails to retain records and 

supporting documents required by subsection ø(f) or (g)¿ (f), (g), or 

(h) or the regulations issued to implement øeither such subsection¿ 

any such subsection shall be liable for the greater of— (1) * * * 

* * * * * * * 

SEC. 514. PROTEST AGAINST DECISIONS OF THE CUSTOMS SERVICE. 

(a) * * * 

* * * * * * * 

(i) DENIAL OF PREFERENTIAL TARIFF TREATMENT UNDER THE

UNITED STATES-PERU TRADE PROMOTION AGREEMENT.—If U.S. 

Customs and Border Protection or U.S. Immigration and Customs 

Enforcement of the Department of Homeland Security finds indications of a pattern of conduct by an importer, exporter, or producer 

of false or unsupported representations that goods qualify under the 

rules of origin provided for in section 203 of the United States-Peru 

Trade Promotion Agreement Implementation Act, U.S. Customs and 

Border Protection, in accordance with regulations issued by the Secretary of the Treasury, may suspend preferential tariff treatment 

under the United States-Peru Trade Promotion Agreement to entries 

of identical goods covered by subsequent representations by that importer, exporter, or producer until U.S. Customs and Border Protection determines that representations of that person are in conformity 

with such section 203. 

* * * * * * * 


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SEC. 520. REFUNDS AND ERRORS. 

(a) * * * 

* * * * * * * 

(d) GOODS QUALIFYING UNDER FREE TRADE AGREEMENT RULES

OF ORIGIN.—Notwithstanding the fact that a valid protest was not 

filed, the Customs Service may, in accordance with regulations prescribed by the Secretary, reliquidate an entry to refund any excess 

duties (including any merchandise processing fees) paid on a good 

qualifying under the rules of origin set out in section 202 of the 

North American Free Trade Agreement Implementation Act, section 202 of the United States-Chile Free Trade Agreement Implementation Act, section 203 of the Dominican Republic-Central 

America-United States Free Trade Agreement Implementation Act, 

øor¿ section 202 of the United States-Oman Free Trade Agreement 

Implementation Act øfor which¿, or section 203 of the United 

States-Peru Trade Promotion Agreement Implementation Act for 

which no claim for preferential tariff treatment was made at the 

time of importation if the importer, within 1 year after the date of 

importation, files, in accordance with those regulations, a claim 

that includes—

(1) * * * 

* * * * * * * 

SEC. 592. PENALTIES FOR FRAUD, GROSS NEGLIGENCE, AND NEGLIGENCE. 

(a) * * * 

* * * * * * * 

(c) MAXIMUM PENALTIES.— (1) * * * 

* * * * * * * 

(10) PRIOR DISCLOSURE REGARDING CLAIMS UNDER THE

UNITED STATES–PERU TRADE PROMOTION AGREEMENT.—An importer shall not be subject to penalties under subsection (a) for 

making an incorrect claim that a good qualifies as an originating good under section 203 of the United States-Peru Trade 

Promotion Agreement Implementation Act if the importer, in accordance with regulations issued by the Secretary of the Treasury, promptly and voluntarily makes a corrected declaration 

and pays any duties owing with respect to that good. 

ø(10)¿ (11) SEIZURE.—If the Secretary has reasonable cause 

to believe that a person has violated the provisions of subsection (a) and that such person is insolvent or beyond the jurisdiction of the United States or that seizure is otherwise essential to protect the revenue of the United States or to prevent the introduction of prohibited or restricted merchandise 

into the customs territory of the United States, then such merchandise may be seized and, upon assessment of a monetary 

penalty, forfeited unless the monetary penalty is paid within 

the time specified by law. Within a reasonable time after any 

such seizure is made, the Secretary shall issue to the person 

concerned a written statement containing the reasons for the 

seizure. After seizure of merchandise under this subsection, 

the Secretary may, in the case of restricted merchandise, and 

shall, in the case of any other merchandise (other than prohibVerDate Aug 31 2005 14:07 Nov 06, 2007 Jkt 069006 PO 00000 Frm 00033 Fmt 6659 Sfmt 6601 E:\HR\OC\HR421.XXX HR421

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34 

ited merchandise), return such merchandise upon the deposit 

of security not to exceed the maximum monetary penalty which 

may be assessed under subsection (c). 

* * * * * * * 

(i) FALSE CERTIFICATIONS OF ORIGIN UNDER THE UNITED STATES- PERU TRADE PROMOTION AGREEMENT.— (1) IN GENERAL.—Subject to paragraph (2), it is unlawful for 

any person to certify falsely, by fraud, gross negligence, or negligence, in a PTPA certification of origin (as defined in section 

508(h)(1)(B) of this Act) that a good exported from the United 

States qualifies as an originating good under the rules of origin 

provided for in section 203 of the United States-Peru Trade Promotion Agreement Implementation Act. The procedures and 

penalties of this section that apply to a violation of subsection 

(a) also apply to a violation of this subsection. 

(2) PROMPT AND VOLUNTARY DISCLOSURE OF INCORRECT INFORMATION.—No penalty shall be imposed under this subsection 

if, promptly after an exporter or producer that issued a PTPA 

certification of origin has reason to believe that such certification contains or is based on incorrect information, the exporter or producer voluntarily provides written notice of such 

incorrect information to every person to whom the certification 

was issued. 

(3) EXCEPTION.—A person shall not be considered to have violated paragraph (1) if—

(A) the information was correct at the time it was provided in a PTPA certification of origin but was later rendered incorrect due to a change in circumstances; and 

(B) the person promptly and voluntarily provides written 

notice of the change in circumstances to all persons to 

whom the person provided the certification. 

* * * * * * * 

SECTION 202 OF THE TRADE ACT OF 1974 

SEC. 202. INVESTIGATIONS, DETERMINATIONS, AND RECOMMENDATIONS BY COMMISSION. 

(a) PETITIONS AND ADJUSTMENT PLANS.— (1) * * * 

* * * * * * * 

(8) The procedures concerning the release of confidential 

business information set forth in section 332(g) of the Tariff 

Act of 1930 shall apply with respect to information received by 

the Commission in the course of investigations conducted 

under this chapter, part 1 of title III of the North American 

Free Trade Agreement Implementation Act, title II of the 

United States-Jordan Free Trade Area Implementation Act, 

title III of the United States-Chile Free Trade Agreement Implementation Act, title III of the United States-Singapore Free 

Trade Agreement Implementation Act, title III of the United 

States-Australia Free Trade Agreement Implementation Act, 

title III of the United States-Morocco Free Trade Agreement 

Implementation Act, title III of the Dominican Republic-CenVerDate Aug 31 2005 14:07 Nov 06, 2007 Jkt 069006 PO 00000 Frm 00034 Fmt 6659 Sfmt 6601 E:\HR\OC\HR421.XXX HR421

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tral America-United States Free Trade Agreement Implementation Act, title III of the United States-Bahrain Free Trade 

Agreement Implementation Act, øand¿ title III of the United 

States-Oman Free Trade Agreement Implementation Act, and 

title III of the United States-Peru Trade Promotion Agreement 

Implementation Act. The Commission may request that parties 

providing confidential business information furnish nonconfidential summaries thereof or, if such parties indicate that the 

information in the submission cannot be summarized, the reasons why a summary cannot be provided. If the Commission 

finds that a request for confidentiality is not warranted and if 

the party concerned is either unwilling to make the information public or to authorize its disclosure in generalized or summarized form, the Commission may disregard the submission. 

* * * * * * * 

SECTION 308 OF THE TRADE AGREEMENTS ACT OF 1979 

SEC. 308. DEFINITIONS. 

As used in this title—

(1) * * * 

* * * * * * * 

(4) ELIGIBLE PRODUCTS.—

(A) IN GENERAL.—The term ‘‘eligible product’’ means, 

with respect to any foreign country or instrumentality that 

is—

(i) * * * 

* * * * * * * 

(v) a party to a free trade agreement that entered 

into force with respect to the United States after December 31, 2005, and before July 2, 2006, a product or 

service of that country or instrumentality which is covered under the free trade agreement for procurement 

by the United States; øor¿ 

(vi) a party to the United States-Oman Free Trade 

Agreement, a product or service of that country or instrumentality which is covered under that Agreement 

for procurement by the United Statesø.¿; or 

(vii) a party to the United States-Peru Trade Promotion Agreement, a product or service of that country 

or instrumentality which is covered under that agreement for procurement by the United States. 

* * * * * * * 

SECTION 401 OF THE TAX INCREASE PREVENTION AND 

RECONCILIATION ACT OF 2005 

SEC. 401. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES. 

Notwithstanding section 6655 of the Internal Revenue Code of 

1986—


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(1) in the case of a corporation with assets of not less than $1,000,000,000 (determined as of the end of the preceding taxable year)— (A) * * * 

(B) the amount of any required installment of corporate 

estimated tax which is otherwise due in July, August, or 

September of 2012 shall be ø115 percent¿ 115.75 percent 

of such amount, 

* * * * * * * 


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(37) 

VII. VIEWS 

ADDITIONAL VIEWS ON H.R. 3688, THE ‘‘UNITED STATESPERU TRADE PROMOTION AGREEMENT IMPLEMENTATION ACT’’

A. INTRODUCTION

We are pleased to join with our colleagues across the aisle to 

support the Peru Trade Promotion Agreement (PTPA). We write 

these additional views to: (1) put the debate on the United StatesPeru Trade Promotion Agreement (PTPA) in the context of our 

complete trade agenda; (2) highlight some of the commercial benefits of the PTPA for American businesses, workers, farmers, ranchers, and consumers; and (3) explain why the PTPA and the other 

pending Free Trade Agreements (FTA) with Colombia and Panama 

are so important for promoting stability and economic development 

in these countries and in Latin America, not to mention the importance of the pending FTA with our 7th largest trading partner, 

Korea. 

B. PERU AND THE ENTIRE U.S. TRADE AGENDA

On May 10, 2007, Congressional Republicans and the Administration agreed to a ‘‘bipartisan trade deal’’ with Congressional 

Democrats to consider trade agreements on a bipartisan basis and 

improve our trading partners’ standards for labor, environmental, 

intellectual property rights, port security, and investment. We believe that agreement is a good and fair compromise that takes into 

account the concerns of all parties. The breakthrough addresses 

concerns about labor, the environment, and other issues without 

compromising American sovereignty or jeopardizing future trade 

agreements. It will improve our trading partners’ standards on 

labor, environmental regulation, intellectual property, port security, and investment. In short, this agreement balances long-standing concerns of Democrats and Republicans with a continuing bipartisan commitment to free trade, which has improved the economy and raised standards of living here in the United States and 

around the world. The text of the agreement is now reflected in all 

of our pending free trade agreements (Peru, Colombia, Panama, 

and Korea). We strongly believe that this agreement should pave 

the way for moving forward on all of the pending free trade agreements without delay. 

In June 2007, Peru’s legislature overwhelmingly approved a Protocol of Amendment to the PTPA reflecting the terms of the May 

10th deal; Peru had already approved the original PTPA last year. 

Over the last few months, Peru has been implementing all of the 

required labor obligations described below in the PTPA, despite the 


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unprecedented demand by Congressional Democrats that a U.S. 

FTA partner do so before Congressional consideration. 

As amended by the May 10th deal, the PTPA will do the following: • The PTPA requires the parties to comply with internationally 

recognized core labor standards, as defined by the 1998 ILO Declaration on Fundamental Principles and Rights at Work, to which 

the United States is already in compliance. Peru, under the leadership of President Garcia and former President Toledo, has consistently been making massive strides in the last several years to improve its labor conditions, and the PTPA reaffirms Peru’s commitment and cements these improvements within the context of the 

agreement. At the same time, U.S. federal and state laws are protected. • The PTPA will improve environmental enforcement in Peru 

with no new obligations for the United States. The United States 

and Peru commit to enforce their own domestic environmental laws 

and also seven multilateral environment agreements to which the 

United States is already a party in full compliance. The PTPA also 

establishes a process to prevent the imports of illegally harvested 

mahogany from Peru. 

• The PTPA balances the interest in access to medicines in Peru 

with need to encourage development and sales of innovative medicines. 

• The PTPA allows the United States to prevent an investor 

from providing port security services if the U.S. essential security 

is threatened. 

• The PTPA recognizes that foreign investors in the United 

States will not be accorded greater investment protections than 

U.S. investors in the United States. 

C. NEW MARKET OPPORTUNITIES FOR AMERICAN BUSINESSES AND

WORKERS

The PTPA promises to provide significant economic benefits to 

American businesses, workers, farmers, ranchers, and consumers. 

The United States already provides duty-free access to almost all 

imports from Peru under the Andean Trade Preferences and Drug 

Eradication Act. However, Peru continues to maintain significant 

tariffs and other barriers to U.S. exports of goods and services. 

U.S. exports to Peru currently face an average tariff of 8% and 

many exports face tariffs of up to 70 percent. Additionally, U.S. 

service sector firms are subject to employment and investment restrictions in Peru. The PTPA will remedy the unequal treatment 

faced by U.S. exporters. Immediately upon implementation the average tariff faced by U.S. exports will decline by 72%. The U.S. 

International Trade Commission estimates that the market access 

provisions of the PTPA alone will increase U.S. exports by $1.1 billion. Because the PTPA also improves access for U.S. services exports and investment, the actual increase in U.S. exports should be 

much larger. Indeed, U.S. exports to every country with which the 

United States has implemented a free trade agreement under 

Trade Promotion Authority has exceeded the ITC’s estimate. 

The PTPA will benefit small and medium sized American businesses that rely on Peru as an important export market. While 


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39 

small and medium size businesses account for 29% of total U.S. exports, they account for 38% of U.S. exports to Peru. The PTPA will 

benefit America’s farmers and ranchers, as more than two-thirds of 

Peru’s tariffs on U.S. agriculture exports are removed immediately. 

The PTPA will also improve the position of U.S. businesses competing in Peru against imports from third-countries. Peru maintains: preferential trading programs with several of its South 

American neighbors. The PTPA turns this disadvantage into an advantage, as U.S. firms will receive even better market access. For 

example, U.S. exporters of wheat and white corn currently pay a 

17% tariff in Peru, while Argentina pays only 3.4% and controls 

two-thirds of Peru’s market. The PTPA will eliminate the 17% tariff on U.S. exports, while Argentina will still be subject to the 3.4% 

duty. 

The implementation of PTPA will further the positive economic 

impact of free trade agreements on U.S. businesses and workers. 

The U.S. trade balance with the twelve countries with which free 

trade agreements were implemented under TPA have improved by 

162 percent, swinging from a deficit to a surplus of $13.9 billion. 

The implantation of the PTPA, and the free trade agreements with 

Colombia, Panama, and Korea, will continue to increase U.S. exports and improve the U.S. trade balance. 

D. PROMOTING STABILITY AND ECONOMIC DEVELOPMENT IN PERU AND

LATIN AMERICA

Peru has resisted the efforts of Venezuela’s authoritarian President Hugo Chavez to wage a war of words and ideas in Latin 

America against the United States. Chavez has promoted restricting free markets and increasing the role of the state in the economy, and his demagogic actions ultimately harm the people he purports to help by eliminating investment and job creation. His troubling and short-sighted economic policies would leave Latin American economies in ruins and condemn the people to a generation of 

poverty. Peru’s market-oriented policies under former President Toledo and current President Garcia have made that country one of 

the world’s fastest-growing emerging economies. 

Chavez blatantly tried to intervene in Peru’s democratic elections, espousing sentiments against the United States and the 

principles for which America stands—democracy, free markets, liberty. On June 4, 2006, Peruvian voters decisively rejected Chavez’s 

candidate in Peru, Ollanta Humala, and instead chose Alan Garcia 

to be their next President. The election was a clear sign of support 

from the people of Peru that they reject Chavez’s fiery populism 

and instead support continuing Peru’s current policies of economic 

engagement with the United States and market reform. 

On June 28, 2006, Peru’s legislature followed the direction set by 

its electorate and overwhelmingly approved the PTPA by a vote of 

79–14, with the full support of members of then President-elect 

Garcia’s political party. On June 27, 2007, Peru’s legislature voted 

to approve a Protocol of Amendment to the PTPA, reflecting the 

May 10th bipartisan trade deal, by a vote of 70 to 38. It is past 

time for the U.S. Congress to respond positively to these strong Peruvian actions by immediately passing the PTPA by a strong bipartisan vote. 


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The PTPA and the pending FTAs with Panama and Colombia are 

an important part of promoting democracy and economic stability 

in Latin America. Congressional passage and implementation of all 

three of these FTAs will help these countries continue to provide 

a positive alternative to the efforts by Venezuelan President Hugo 

Chavez to restrict free markets and increase the role of the state 

in Latin America. Not giving these PTAs the broad, bipartisan, and 

immediate support they deserve from the U.S. Congress would only 

strengthen the hand of Chavez, support radical policies in neighboring Bolivia and Ecuador, and undermine U.S. foreign policy in 

the region. 

E. CONCLUSION

We are glad that, more than five and a half months after Congressional Democrats agreed to the May 10th ‘‘bipartisan trade 

deal’’ with the Administration and Congressional Republicans we 

are finally moving the PTPA to the House floor. But we would note 

that the majority has made no commitments on the other three 

pending FTAs with Colombia, Panama, and Korea. It is time for us 

to act on these FTAs as well. Each day we fail to do so delays the 

ability of our businesses, workers, farmers, ranchers, and consumers to begin to reap the same types of commercial benefits and 

legal protections that they will vis-•E2-vis Peru. 

JIM MCCRERY. 

WALLY HERGER. 

JIM RAMSTAD. 

JERRY WELLER. 

KENNY HULSHOF. 

RON LEWIS. 

KEVIN BRADY. 

PAUL RYAN. 

ERIC CANTOR. 

PAT TIBERI. 

JON PORTER. 

Æ 


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