69–010 

Calendar No. 471 

110TH CONGRESS REPORT " ! SENATE 1st Session 110–249 

UNITED STATES-PERU TRADE PROMOTION AGREEMENT 

IMPLEMENTATION ACT 

DECEMBER 14, 2007.—Ordered to be printed 

Mr. BAUCUS, from the Committee on Finance, 

submitted the following 

R E P O R T 

together with 

ADDITIONAL VIEWS 

[To accompany S. 2113] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Finance, to which was referred the bill (S. 

2113) to implement the United States-Peru Trade Promotion 

Agreement, having considered the same, reports favorably thereon 

without amendment and recommends that the bill do pass. 

CONTENTS 

Page 

I. Report and Other Materials of the Committee .............................................. 2 

A. Report of the Committee on Finance ......................................................... 2 

B. Summary of Congressional Consideration of the Agreement .................. 2 

1. Background ............................................................................................ 2 

2. Trade Promotion Authority Procedures in General ........................... 3 

3. Notification Prior to Negotiations ........................................................ 3 

4. Notification of Intent To Enter Into an Agreement ........................... 4 

5. Development of the Implementing Legislation ................................... 4 

6. Formal Submission of the Agreement and Implementing Legislation ...................................................................................................... 5 

7. Committee Consideration ..................................................................... 5 

C. Trade Relations With Peru ......................................................................... 6 

1. United States-Peru Trade .................................................................... 6 

2. Tariffs and Trade Agreements ............................................................. 9 

3. U.S. International Trade Commission Study ...................................... 9 

D. Overview of the Agreement ........................................................................ 10 

1. Background ............................................................................................ 10 

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2. Office of the U.S. Trade Representative Summary of the Agreement .................................................................................................... 10 

E. General Description of the Bill to Implement the Agreement ................. 37 

Title I—Approval of, and General Provisions Relating to, the Agreement .................................................................................................... 38 

Title II—Customs Provisions .................................................................... 39 

Title III—Relief From Imports ................................................................. 43 

Title IV—Procurement .............................................................................. 48 

Title V—Trade in Timber Products of Peru ............................................ 48 

Title VI—Offsets ........................................................................................ 50 

F. Vote of the Committee in Reporting the Bill ............................................. 50 

II. Budgetary Impact of the Bill ........................................................................... 50 

III. Regulatory Impact of the Bill and Other Matters ......................................... 55 

IV. Additional Views ............................................................................................... 56 

V. Changes in Existing Law Made by the Bill, as Reported ............................. 59 

I. REPORT AND OTHER MATERIALS OF THE COMMITTEE 

A. REPORT OF THE COMMITTEE ON FINANCE

The Committee on Finance, to which was referred the bill (S. 

2113) to implement the United States-Peru Trade Promotion 

Agreement (Agreement), having considered the same, reports favorably thereon without amendment and recommends that the bill do 

pass. 

B. SUMMARY OF CONGRESSIONAL CONSIDERATION OF THE

AGREEMENT

1. Background 

On November 18, 2003, U.S. Trade Representative Robert B. 

Zoellick notified Congress of the Administration’s intent to negotiate a free trade agreement with Colombia, Peru, Ecuador, and 

Bolivia. Ambassador Zoellick consulted with the relevant congressional committees, including the Senate Committee on Finance, 

with respect to the initiation of negotiations. He also attended 

meetings of the Congressional Oversight Group on November 6, 

2003 and May 6, 2004 to discuss the initiation of negotiations. 

Negotiations with Colombia, Peru, and Ecuador were launched 

on May 18, 2004, with Bolivia participating as an observer. The 

United States and Peru subsequently decided to pursue a separate 

agreement, and U.S. Trade Representative Rob Portman announced that the United States and Peru had successfully concluded those negotiations on December 7, 2005. 

The President notified Congress of his intent to enter into the 

Agreement and published notice of his intent in the Federal Register on January 6 and January 10, 2006, respectively. On February 21, 2006, Ambassador Portman submitted to Congress the 

reports from 27 trade advisory groups commenting on the final text 

of the Agreement. The Office of the U.S. Trade Representative also 

made the reports publicly available on its website. Ambassador 

Portman and Peruvian Minister of Foreign Trade and Tourism 

Alfredo Ferrero Diez Canseco signed the Agreement on April 12, 

2006. 

On May 10, 2007, Congress and the Administration reached a bipartisan agreement on trade policy. As discussed further below in 

Section I.D., the May 10 bipartisan trade deal required 

groundbreaking changes to the labor, environmental, intellectual 

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sions of the Agreement. U.S. Trade Representative Susan Schwab 

and Peruvian Minister of Foreign Trade and Tourism Mercedes 

Araoz signed amendments to the Agreement to reflect those 

changes on June 24 and June 25, 2007. 

2. Trade promotion authority procedures in general 

Article I, section 8 of the Constitution of the United States vests 

Congress with the authority to regulate international trade. Congress has periodically delegated a portion of this authority to the 

President in order to advance the economic interests of the United 

States. This delegation represents a compact between Congress and 

the Administration, by which Congress guarantees it will vote on 

a trade agreement entered into by the Administration without 

amendment and the Administration guarantees close consultation 

with Congress during the negotiation of the trade agreement in 

order to achieve the objectives that Congress identifies. Thorough 

and timely consultation by the Administration with Congress is the 

essential bedrock upon which Congress’ delegation of constitutional 

authority rests. This longstanding compact, spanning decades, has 

resulted in the successful negotiation and implementation of numerous trade agreements that have contributed significantly to increased economic growth and prosperity in the United States. 

The most recent incarnation of this compact is found in the Bipartisan Trade Promotion Authority Act of 2002 (the Act), which 

was included in the Trade Act of 2002 (Pub. L. 107–210). The Act 

includes prerequisites for congressional consideration of a trade 

agreement under expedited procedures (known as Trade Promotion 

Authority (TPA) procedures), which are found in sections 2103 

through 2106 of the Act (19 U.S.C. §§ 303–3806) and section 151 of 

the Trade Act of 1974 (19 U.S.C. § 2191). Section 2103 of the Act 

authorizes the President to enter into reciprocal trade agreements 

with foreign countries to reduce or eliminate tariff or nontariff barriers and other trade-distorting measures. Section 2102 of the Act 

outlines the negotiating objectives that the President is to achieve 

if the President intends to use TPA procedures to implement a 

trade agreement. And section 151 of the Trade Act of 1974 sets 

forth expedited procedures for congressional consideration of a 

trade agreement without amendment. The President’s authority 

under section 2103 extends to trade agreements entered into on or 

before June 30, 2007. 

3. Notification prior to negotiations 

Under section 2104(a)(1) of the Act, the President must provide 

written notice to Congress at least 90 calendar days before initiating negotiations. On November 18, 2003, the U.S. Trade Representative notified Congress of the President’s intent to initiate 

negotiations with Peru. The negotiations were initiated on May 18, 

2004. Section 2104(a)(2) requires the President, before and after 

submission of the notice, to consult regarding the negotiations with 

the relevant congressional committees and the Congressional Oversight Group established under section 2107 of the Act. The Administration engaged in the requisite consultations with respect to this 

Agreement, including an appearance by the U.S. Trade Representative at meetings of the Congressional Oversight Group on November 6, 2003 and May 6, 2004. 

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4. Notification of intent to enter into an agreement 

Under section 2105(a)(1)(A) of the Act, the President must notify 

Congress at least 90 calendar days before entering into an agreement of his intent to enter into the agreement. On January 6, 

2006, the President notified Congress of his intent to enter into the 

United States-Peru Trade Promotion Agreement. The Agreement 

was signed on April 12, 2006, and amendments to the Agreement 

were signed on June 24 and June 25, 2007 to reflect the changes 

required by the May 10 bipartisan trade deal. 

5. Development of the implementing legislation 

Under TPA procedures, Congress and the Administration work 

together to produce legislation that implements a free trade agreement. Draft legislation is developed in close consultation between 

the Administration and the committees with jurisdiction over the 

laws that must be enacted or amended to implement the agreement. The committees may hold informal meetings to consider the 

draft legislation and to make non-binding recommendations to the 

Administration. The Administration then finalizes the implementing legislation for formal submission to Congress and referral 

to the committees of jurisdiction. These procedures are meant to 

ensure close cooperation between the executive and legislative 

branches of government to develop legislation that faithfully implements the agreement. Under TPA, the final legislation may include 

only those provisions that are necessary or appropriate to implement the agreement. 

The Senate Committee on Finance met in open executive session 

on July 27 and 31, 2006 to informally consider the original version 

of the draft implementing legislation for the Agreement. The Committee approved that version of the legislation on July 31, 2006 by 

a vote of 12 ayes, 7 nays, and 1 present. 

As noted above, however, Congress and the Administration 

reached agreement on May 10, 2007 on a package of changes to 

several free trade agreements, including the United States-Peru 

Trade Promotion Agreement. That deal necessitated changes to 

both the Agreement itself and the implementing legislation. 

As a result, the Committee on Finance met again in open executive session on September 21, 2007 to informally consider the revised draft implementing legislation. Two amendments were offered in Committee to the revised draft implementing legislation, 

both by Senator Hatch. The first amendment sought to add language to the implementing legislation providing that nothing in the 

Agreement or the legislation requires changes to U.S. federal or 

state labor laws. The amendment failed by recorded vote, 4 ayes, 

16 nays, a quorum being present. Ayes: Hatch, Kyl (proxy), Smith 

(proxy), Bunning (proxy). Nays: Baucus, Rockefeller, Conrad, 

Bingaman, Kerry, Lincoln, Wyden (proxy), Schumer, Stabenow, 

Cantwell, Salazar, Grassley, Snowe, Crapo, Roberts, Ensign. Senator Hatch’s second amendment sought to add language to the implementing legislation providing that nothing in the Agreement or 

the legislation prevents Peru from imposing strong intellectual 

property rights protections that are similar to the protections available in the United States. Senator Hatch’s second amendment also 

failed by recorded vote, 5 ayes, 15 nays, a quorum being present. 

Ayes: Hatch, Snowe, Kyl (proxy), Smith (proxy), Bunning (proxy). 

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Nays: Baucus, Rockefeller, Conrad, Bingaman, Kerry, Lincoln, 

Wyden (proxy), Schumer (proxy), Stabenow, Cantwell (proxy), 

Salazar, Grassley, Crapo, Roberts, Ensign. 

The Committee then approved the draft implementing legislation 

and draft Statement of Administrative Action, without amendment, 

by recorded vote, 18 ayes, 3 nays, a quorum being present. Ayes: 

Baucus, Rockefeller, Conrad, Bingaman, Kerry, Lincoln, Wyden 

(proxy), Schumer, Cantwell, Salazar, Grassley, Lott (proxy), Snowe, 

Smith (proxy), Bunning (proxy), Crapo, Roberts, Ensign. Nays: 

Stabenow, Hatch, Kyl (proxy). Separately, the Committee on Ways 

and Means in the House of Representatives approved the draft implementing legislation and draft Statement of Administrative Action without amendment on September 25, 2007 by voice vote, a 

quorum being present. 

6. Formal submission of the agreement and implementing legislation 

When the President formally submits a trade agreement to Congress under section 2105 of the Act, the President must include in 

the submission the final legal text of the agreement, together with 

implementing legislation, a Statement of Administrative Action describing regulatory and other changes to implement the agreement, 

a statement setting forth the reasons of the President regarding 

how and to what extent the agreement makes progress in achieving 

the applicable purposes, policies, priorities, and objectives set forth 

in the Act, and a statement setting forth the reasons of the President regarding how the agreement serves the interests of U.S. commerce. The implementing legislation is introduced in both Houses 

of Congress on the day it is submitted by the President and is referred to committees with jurisdiction over its provisions. 

On September 27, 2007, the President transmitted to Congress 

the final text of this Agreement, the implementing legislation, the 

Statement of Administrative Action, and the other supporting information required under section 2105 of the Act. The legislation 

was introduced that same day in both the House (H.R. 3688) and 

the Senate (S. 2113). 

To qualify for TPA procedures, the implementing legislation itself 

must contain provisions formally approving the agreement and the 

Statement of Administrative Action. And the implementing legislation must contain only those provisions necessary or appropriate to 

implement the Agreement. The implementing bill reported here—

which approves the Agreement and the accompanying Statement of 

Administrative Action and contains provisions necessary or appropriate to implement the Agreement into U.S. law—was referred to 

the Senate Committee on Finance. 

7. Committee consideration 

When the requirements of the Act are satisfied, implementing 

revenue bills, such as the United States-Peru Trade Promotion 

Agreement Implementation Act, are subject to the legislative procedures of section 151 of the Trade Act of 1974. The following schedule for congressional consideration applies under these procedures: 

(i) House committees have up to 45 calendar days in session in 

which to report the bill; any committee which does not do so in that 

period will be automatically discharged from further consideration. 

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(ii) A vote on final passage by the House must occur on or before 

the 15th calendar day in session after the committees report the 

bill or are discharged from further consideration. 

(iii) Senate committees must act within 15 calendar days in session of receiving the implementing revenue bill from the House or 

within 45 calendar days in session of Senate introduction of the implementing bill, whichever is later, or they will be discharged automatically. 

(iv) The full Senate then must vote within 15 calendar days in 

session on the implementing bill. 

Once the implementing bill has been formally submitted by the 

President and introduced, no amendments to the bill are in order 

in either House of Congress. Floor debate in each House is limited 

to no more than 20 hours, to be equally divided between those favoring the bill and those opposing the bill. 

The Committee on Finance met in open executive session on October 4, 2007 to consider favorably reporting S. 2113. At the meeting, the Committee favorably reported S. 2113 without amendment 

by voice vote, a quorum being present. 

C. TRADE RELATIONS WITH PERU

1. United States-Peru trade 

Peru accounts for a small percentage of overall U.S. trade—less 

than 1 percent—and was our 43rd largest export market in 2006. 

U.S. goods exports to Peru totaled $2.9 billion in 2006, up 27 percent from 2005. Corresponding U.S. imports from Peru totaled $5.9 

billion, up 15 percent. Minerals, particularly gold and refined copper, constitute approximately one-half of U.S. imports from Peru. 

Other significant imports include petroleum products, apparel, coffee, fruits, nuts, prepared vegetables, asparagus, fish, and wood. 

Principal U.S. exports to Peru include electrical and mechanical appliances and machinery, refined petroleum products, and organic 

chemicals. Bulk commodities such as wheat, corn, cotton, rice, and 

soybean oil and meal make up the greatest percentage of U.S. agricultural exports to Peru. 

The following tables summarize the top U.S. merchandise exports to Peru and the top U.S. merchandise imports from Peru in 

2005. 

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2. Tariffs and trade agreements 

Peru acceded to the World Trade Organization (WTO) on January 1, 1995, with an average bound tariff rate of 30.1 percent for 

all goods (30.8 percent for agricultural goods and 30.0 percent for 

nonagricultural goods). In 2006, Peru maintained an average applied tariff rate of 10.2 percent for all goods (13.6 percent for agricultural goods and 9.7 percent for nonagricultural goods). The 

United States, in contrast, provides duty-free treatment to most 

products from Peru. Ninety-eight percent of imports from Peru entered the United States duty free in 2006 under our most-favored 

nation tariff rates and the Andean Trade Preference Act (ATPA) 

and Generalized System of Preferences (GSP) preference programs. 

Given that the Agreement will greatly reduce this existing tariff 

asymmetry, the U.S. International Trade Commission (Commission) found that the Agreement likely will result in a much larger 

increase in U.S. exports to Peru than in U.S. imports from Peru. 

Peru is a member of the Andean Community, a customs union 

that includes Bolivia, Colombia, Ecuador, Peru, and Venezuela. It 

has also signed full or partial bilateral trade agreements with several countries, including Argentina, Bolivia, Brazil, Chile, Cuba, 

Mexico, Paraguay, Thailand, and Uruguay. It has signed bilateral 

investment treaties with even more countries, including Argentina, 

Australia, Bolivia, Chile, China, Colombia, Cuba, the Czech Republic, Denmark, Ecuador, El Salvador, Finland, France, Germany, 

Italy, Malaysia, the Netherlands, Norway, Paraguay, Portugal, Romania, Singapore, Spain, Sweden, Switzerland, Thailand, the 

United Kingdom, and Venezuela. Peru is also a member of the 

Asia-Pacific Economic Cooperation forum and the Latin American 

Integration Association, and it is an associate member of Mercosur. 

3. U.S. International Trade Commission Study 

In June 2006, the Commission released the results of its investigation (Investigation No. TA–2104–20) into the probable economic 

effect of the Agreement (USITC Pub. 3855). The Commission found 

that the expected growth in U.S. trade with Peru under the Agreement would likely have a small but positive impact on the U.S. 

economy, predicting a $2.1 billion increase in U.S. gross domestic 

product. The Commission indicated, however, that these benefits 

may be tempered by the relatively small size of Peru’s economy, its 

small share of total U.S. trade, and its existing duty-free access to 

the U.S. market under ATPA. 

As noted above, the Commission also concluded that the Agreement likely will result in a much larger increase in U.S. exports 

to Peru than in U.S. imports from Peru. More specifically, it estimated that U.S. exports to Peru will increase by $1.1 billion while 

U.S. imports from Peru will increase by $439 million. It further estimated that the largest increases in U.S. exports, by value, will be 

in machinery and equipment; chemicals, rubber, and plastic products; electrical machinery; and wheat. And it found that the largest 

estimated increases in U.S. exports, by percent, will be in paddy 

rice and meat products. The Commission expected only three U.S. 

sectors—paddy rice, crops such as cut flowers and live plants and 

seeds, and metals such as gold, copper, and aluminum—to experience a decline by more than 0.10 percent in output or employment. 

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With respect to services, the Commission concluded that U.S. 

service firms will benefit from improved market access, national 

treatment, and regulatory transparency under the Agreement. The 

Commission noted, however, that these benefits will be moderated 

by the relatively small size of Peru’s economy and the relatively 

small and domestically-focused nature of its service sector. 

D. OVERVIEW OF THE AGREEMENT

1. Background 

The Agreement establishes a bilateral free trade area that eliminates tariffs on trade between the United States and Peru for all 

qualifying goods except sugar. The Agreement also liberalizes trade 

in services and contains provisions that address telecommunications, electronic commerce, intellectual property rights, labor, environment, government procurement, and investment issues. In addition, the Agreement contains provisions that promote bilateral 

consultation and cooperation, procedural and substantive due process, administrative and judicial review, transparency, and the rule 

of law. And it contains a mechanism for settling disputes that arise 

under the Agreement. The Agreement is intended to strengthen 

economic relations between the United States and Peru, create employment, raise the standard of living, enhance the competitiveness 

of firms, establish clear and mutually advantageous rules for bilateral trade, build on commitments in the WTO, and promote creativity and innovation. 

As noted above, Congress and the Administration reached a bipartisan agreement on trade policy on May 10, 2007. The United 

States and Peru signed amendments to the Agreement to reflect 

those changes on June 24 and June 25, 2007. As a result of the 

amendments, this Agreement has become the first U.S. free trade 

agreement to include (1) fully enforceable commitments by the parties to adopt, maintain, and enforce the five core international 

labor standards incorporated in the 1988 International Labor Organization Declaration on Fundamental Principles and Rights at 

Work; (2) fully enforceable commitments by the parties to adopt, 

maintain, and enforce their obligations under certain common multilateral environmental agreements and fully enforceable commitments by Peru to take specified steps to address illegal logging; (3) 

modifications to the intellectual property chapter that balance the 

need for access to medicines with patent protections for pharmaceutical products; (4) modifications to the government procurement 

chapter that allow the Parties to condition government contracts on 

adherence to core labor standards; (5) confirmation that the United 

States can prevent foreign companies from supplying services at 

U.S. ports if the United States deems such action necessary to protect our national security; and (6) confirmation that the Agreement 

accords foreign investors in the United States no greater substantive rights with regard to investor protections than U.S. investors in the United States. 

2. Office of the U.S. Trade Representative Summary of the Agreement 

The Office of the U.S. Trade Representative prepared a summary 

of the Agreement that was included among the documents transmmaher on PROD1PC69 with REPORTS

11 

mitted to Congress on September 27, 2007. This summary was distributed to Members of the Committee to aid in their consideration 

of the implementing legislation, and it is reprinted below: 

THE UNITED STATES-PERU TRADE PROMOTION 

AGREEMENT 

SUMMARY OF THE AGREEMENT

This summary briefly describes key provisions of the United 

States-Peru Trade Promotion Agreement (‘‘Agreement’’) that the 

United States has concluded with Peru and represents an authoritative expression of Administration views regarding the interpretation of the Agreement both for purposes of U.S. international obligations and domestic law. 

PREAMBLE

The Preamble to the Agreement provides the Parties’ underlying 

objectives in entering into the Agreement and provides context for 

the provisions that follow. It includes the following statement: 

‘‘AGREE that foreign investors are not hereby accorded 

greater substantive rights with respect to investment protections than domestic investors under domestic law 

where, as in the United States, protections of investor 

rights under domestic law equal or exceed those set forth 

in this Agreement’’. 

This statement would clarify that, as stated in the Bipartisan 

Trade Promotion Authority Act of 2002, foreign investors in the 

United States are not to be accorded greater substantive rights 

with respect to investment protections than United States investors 

in the United States. 

CHAPTER ONE: INITIAL PROVISIONS AND GENERAL DEFINITIONS

Section A of Chapter One sets out provisions establishing a free 

trade area and affirming the Parties’ existing rights and obligations with respect to each other under the Marrakesh Agreement 

Establishing the World Trade Organization (WTO) and other agreements to which they are party. 

Section B defines certain terms that recur in various chapters of 

the Agreement. 

CHAPTER TWO: NATIONAL TREATMENT AND MARKET ACCESS FOR

GOODS

Chapter Two and its relevant annexes and appendices set out the 

Agreement’s principal rules governing trade in goods. It requires 

each Party to treat products from the other Party in a non-discriminatory manner, provides for the phase-out and elimination of 

tariffs on ‘‘originating’’ goods (as defined in Chapter Four) traded 

between the Parties, and requires the elimination of a wide variety 

of non-tariff trade barriers that restrict or distort trade flows. 

Tariff Elimination. Chapter Two provides for the elimination of 

customs duties on originating goods traded between the Parties. 

Duties on most tariff lines covering industrial and consumer goods 

will be eliminated as soon as the Agreement enters into force. Dummaher on PROD1PC69 with REPORTS

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ties on other goods will be phased out over periods of up to 10 

years. Some agricultural goods will have longer periods for elimination of duties or be subject to other provisions, including, in some 

cases, the application of preferential tariff-rate quotas (TRQs). The 

General Notes to the U.S. and Peru Schedules to Annex 2.3 include 

detailed provisions on staging of tariff reductions and application 

of TRQs for certain agricultural goods. The Chapter provides that 

the Parties may agree to speed up tariff phase-outs on a productby-product basis after the Agreement takes effect. 

Waiver of Customs Duties. The Parties may not adopt new duty 

waivers or expand existing duty waivers conditioned on the fulfillment of a performance requirement. Chapter Two defines the term 

‘‘performance requirements’’ so as not to restrict a Party’s ability 

to provide duty drawback on goods imported from the other Party. 

Temporary Admission. The Parties agreed to provide duty-free 

temporary admission for certain products. Such items include professional equipment, goods for display or demonstration, and commercial samples. The Chapter also includes specific provisions on 

transit of vehicles and containers used in international traffic. 

Import/Export Restrictions, Fees, and Formalities. The Agreement clarifies that restrictions prohibited under the General Agreement on Tariffs and Trade (GATT) 1994 and this Agreement include export and import price requirements (except under antidumping and countervailing duty orders and undertakings) and import licensing conditioned on the fulfillment of a performance requirement. In addition, a Party must limit all fees and charges imposed on or in connection with importation or exportation to the 

approximate cost of services rendered. The United States agreed 

not to apply its merchandise processing fee on imports of originating goods. Peru agreed not to require a person of the United 

States to have or maintain a relationship with a ‘‘distributor’’ as a 

condition for allowing the importation of a good. 

Distinctive Products. Peru agreed to recognize Bourbon Whiskey 

and Tennessee Whiskey as ‘‘distinctive products’’ of the United 

States, meaning Peru will not permit the sale of any product as 

Bourbon Whiskey or Tennessee Whiskey unless it was manufactured in the United States in accordance with applicable laws and 

regulations. The United States agreed to recognize Pisco Peru ́ as 

a ‘‘distinctive product’’ of Peru. 

Committee on Trade in Goods. Chapter Two also establishes a 

Committee on Trade in Goods to consider matters arising under 

Chapters Two, Four, and Five. The functions of the Committee are 

to promote and address barriers to trade in goods and to provide 

advice and recommendations on trade capacity building with respect to matters those chapters cover. 

Agriculture 

TRQs. Chapter Two requires each government to administer 

TRQs in a manner that is transparent, non-discriminatory, responsive to market conditions, and minimally burdensome on trade. In 

addition, the Parties will make every effort to administer TRQs in 

a manner that allows importers to fully utilize import quotas. In 

addition, the Chapter provides that Parties may not condition application for, or utilization of, import licenses or quota allocations 

on the re-export of an agricultural good. 

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Export Subsidies. Each Party will eliminate export subsidies on 

agricultural goods destined for the other Party. Under Article 2.16, 

no Party may introduce or maintain an export subsidy on agricultural goods destined for the other Party unless the exporting Party 

believes that a third country is subsidizing its exports to that other 

Party. In such a case, the exporting Party may initiate consultations with the importing Party to develop measures the importing 

Party may adopt to counteract such subsidies. If the importing 

Party agrees to such measures, the exporting Party must refrain 

from applying export subsidies to its exports of the good to the importing Party. 

Safeguards. Chapter Two sets out a transitional agricultural 

safeguard mechanism that allows a Party to impose a temporary 

additional duty on specified agricultural products if imports exceed 

an established volume ‘‘trigger.’’ The safeguard measure will remain in force until the end of the calendar year (or marketing year 

in the case of rice imported by Peru) in which the measure applies. 

A Party may not apply an agricultural safeguard on a good after 

the date that the good is subject to duty-free treatment under the 

Party’s Schedule to Annex 2.3 of the Agreement. 

A Party may not apply a safeguard measure to a good that is already the subject of a safeguard measure under either Chapter 

Eight (Trade Remedies) of the Agreement or Article XIX of GATT 

1994 and the WTO Safeguards Agreement. All agricultural safeguard measures must be applied and maintained in a transparent 

manner and the Party applying such a measure must, on request, 

consult with the other Party concerning the application of the 

measure. 

Neither Party may impose safeguard duties pursuant to the 

WTO Agreement on Agriculture on originating goods. 

Sugar. The Agreement contains several unique features applicable to imports of sugar into the United States. First, imports under 

the TRQs provided for in the Agreement will be limited to the lesser of (i) the quantity established in the TRQ, or (ii) Peru’s trade 

surplus in specific sugar goods. (‘‘Peru’s trade surplus’’ is the 

amount by which Peru’s exports to all destinations exceed its imports from all sources in specified sugar and sweetener goods, except that Peru’s exports of sugar to the United States and its imports of high fructose corn syrup from the United States are not 

included in the calculation of its trade surplus.) The aggregate 

quantities established for the TRQ start at 9,000 metric tons in the 

first year and go up to 11,520 metric tons by year 15 of the Agreement. After year 15, the quantities increase by 180 metric tons per 

year. Second, in contrast to how it will treat other commodities 

subject to TRQs, the United States will not eliminate its over-quota 

duty on sugar imports under the Agreement. Lastly, the Agreement 

includes a mechanism that allows the United States, at its option, 

to provide some form of alternative compensation to Peruvian exporters in place of imports of sugar in any given year. 

Additional Provisions. Chapter Two provides for the creation of 

a Committee on Agricultural Trade. The Committee will be established within 180 days after the date the Agreement enters into 

force and will provide a forum for promoting cooperation in the implementation and administration of the Agreement, as well as for 

consultations on matters related to the agricultural provisions of 

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the Agreement. In addition, the Chapter provides that the Parties 

will consult on and review the operation of the Agreement as it relates to trade in chicken nine years after the Agreement enters into 

force. 

CHAPTER THREE: TEXTILES AND APPAREL

Tariff Elimination. Chapter Three provides for duties on all originating textile or apparel goods to be eliminated on the date the 

Agreement enters into force. 

Safeguards. The Chapter also establishes a transitional safeguard procedure for textile and apparel goods, under which an importing Party may temporarily impose additional duties up to the 

level of the normal trade relations (most-favored-nation) 

(NTR(MFN)) duty rates on imports of textile or apparel goods that 

cause, or threaten to cause, serious damage to a domestic industry 

as a result of the elimination or reduction of duties under the 

Agreement. An importing Party may impose a textile safeguard 

measure only once on the same textile or apparel good. The measure may not be in place for more than two years, or three years 

if the measure is extended. The ability to impose or maintain textile safeguards lapses five years after the Agreement enters into 

force. A Party may not apply a textile safeguard measure to a good 

while the good is subject to a safeguard measure under (i) Chapter 

Eight (Trade Remedies), or (ii) Article XIX of the GATT 1994 and 

the WTO Agreement on Safeguards. 

A Party imposing a safeguard measure under Chapter Three 

must provide the exporting Party with mutually agreed compensation in the form of trade concessions for textile or apparel goods 

that have a value substantially equivalent to the increased duties 

resulting from application of the safeguard measure. If the Parties 

cannot agree on compensation, the exporting Party may raise duties on any goods from the importing Party in an amount that has 

a value substantially equivalent to the increased duties resulting 

from application of the safeguard measure. 

Rules of Origin and Related Matters. A textile or apparel good 

will generally qualify as an ‘‘originating good’’ eligible to receive 

trade preferences under the Agreement only if all processing from 

the yarn stage to the final product (e.g., yarn-spinning, fabric production, cutting, and assembly) takes place in the United States, 

Peru, or both, or if there is an applicable change in tariff classification under the specific rules of origin contained in Annex 3–A of 

the Agreement. 

Chapter Three sets out special rules for determining whether a 

textile or apparel good is an ‘‘originating good,’’ including a de 

minimis exception for non-originating yarns or fibers, a process for 

designating inputs not available in commercial quantities, a rule 

for treatment of sets, an exception for use of certain nylon filament 

yarn, and consultation provisions. 

The de minimis rule applies to goods that ordinarily would not 

be considered originating goods because certain of their fibers or 

yarns do not undergo an applicable change in tariff classification. 

Under the rule, the Parties will consider a good to be ‘‘originating’’ if those fibers or yarns constitute ten percent or less of the total 

weight of the component of the good that determines origin. This 

special rule does not apply to goods containing elastomeric yarns. 

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15 

Annex 3–B of the Agreement sets out a list of fabrics, yarns, and 

fibers that the Parties have determined are not available in commercial quantities in a timely manner from producers in the 

United States and Peru. A textile or apparel good that includes the 

fabrics, yarns, or fibers included in this list will be treated as if it 

is ‘‘originating’’ for purposes of the specific rules of origin in Annex 

3–A of the Agreement, regardless of the actual origin of those inputs. Chapter Three establishes procedures under which the 

United States will determine whether additional fabrics, yarns, or 

fibers are not available in commercial quantities in the United 

States and Peru. The United States may also remove a fabric, yarn, 

or fiber from the list if it determines that the fabric, yarn, or fiber 

has become available in commercial quantities. 

Customs Cooperation. Chapter Three commits the Parties to cooperate in enforcing their laws related to trade in textile and apparel goods, to ensure the accuracy of claims of origin, and to prevent circumvention of the Parties’ laws or agreements relating to 

trade in textile and apparel goods. The Chapter also provides that, 

under certain circumstances, the exporting Party must conduct a 

verification to determine that a claim of origin is accurate, or to determine compliance with relevant laws. A verification may include 

visits to the premises of the exporter or producer of the goods in 

question. If there is insufficient information to make the relevant 

determination, or if an enterprise provides incorrect information, 

the importing Party may take appropriate action, which may include denying application of preferential tariff treatment or denying entry to the goods in question. Further, either Party may convene consultations to resolve technical or interpretive issues arising 

with respect to customs cooperation or may request technical assistance from the other Party in implementing the Chapter’s customs cooperation provisions. 

Duty Free Treatment for Certain Goods. Chapter Three provides 

for duty-free treatment for goods that the United States and Peru 

agree qualify as handmade, hand-loomed, or traditional folklore 

goods. 

CHAPTER FOUR: RULES OF ORIGIN AND ORIGIN PROCEDURES

To benefit from various trade preferences provided under the 

Agreement, including reduced duties, a good must qualify as an 

‘‘originating good’’ under the rules of origin set out in Chapter Four 

and Annex 4.1. These rules ensure that the special tariff and other 

benefits of the Agreement accrue primarily to firms or individuals 

that produce or manufacture goods in the Parties’ territories. 

Key Concepts. Chapter Four provides general criteria under 

which a good may qualify as an ‘‘originating good’’; 

• When the good is wholly obtained or produced in Peru, the 

United States, or both (e.g., crops grown or minerals extracted 

in the United States); or 

• When the good: (1) is manufactured or assembled from 

non-originating materials that undergo a specified change in 

tariff classification in Peru, the United States, or both; or (2) 

meets any applicable ‘‘regional value content’’ requirement (see 

below); and (3) satisfies all other requirements of Chapter 

Four, including Annex 4.1; or 

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16 

• When the good is produced in Peru, the United States, or 

both, entirely from ‘‘originating’’ materials. 

De Minimis. Even if a good does not undergo a specified change 

in tariff classification, it will be treated as an originating good if 

the value of non-originating materials that do not undergo the required tariff shift does not exceed 10 percent of the adjusted value 

of the good, and the good otherwise meets the criteria of the Chapter. This de minimis exception does not apply to certain agricultural and textile goods. 

Regional Value Content. Some origin rules under the Agreement 

require that certain goods meet a regional value content test in 

order to qualify as ‘‘originating,’’ meaning that a specified percentage of the value of the good must be attributable to originating materials. In general, the Agreement provides two methods for calculating that percentage: (1) the ‘‘build-down method’’ (based on the 

value of non-originating materials used); and (2) the ‘‘build-up 

method’’ (based on the value of originating materials used). The regional value content of certain automotive goods, however, may be 

calculated on the basis of the net cost of the good. Finally, accessories, spare parts, and tools delivered with a good are considered 

part of the material making up the good so long as these items are 

not separately classified or invoiced and their quantities and values 

are customary. The de minimis rule does not apply in calculating 

regional value content. 

Claims for Preferential Treatment. Under the Chapter, importers 

who wish to claim preferential tariff treatment for particular goods 

must be prepared to submit, on the request of the importing Party’s customs authority, a statement explaining why the good qualifies as an originating good. A Party may only deny preferential 

treatment in writing, and must provide legal and factual findings. 

The Chapter establishes a procedure for filing claims for preferential treatment for up to one year after a good is imported and 

for seeking a refund of any excess duties paid. Chapter Four also 

provides that a Party will not penalize an importer if the importer 

promptly and voluntarily corrects an incorrect claim and pays any 

duties owed. 

Verification. Each Party must ensure that its customs authority 

is empowered to conduct verifications for purposes of determining 

whether a good is an originating good. Where an importing Party 

determines through a verification that an importer, exporter, or 

producer has engaged in a pattern of conduct in providing false or 

unsupported statements, declarations, or certifications that a good 

is an originating good, the Party may suspend preferential tariff 

treatment to identical goods from that importer, exporter, or producer until the importing Party determines that the importer, exporter, or producer is in compliance with the rules set out in the 

Chapter. 

Additional Rules. Chapter Four provides specific rules with respect to the treatment of (1) packing materials and containers; (2) 

indirect materials; (3) fungible goods; and (4) sets of goods for purposes of determining origin. The Chapter provides that a Party 

may not treat a good as originating if the good undergoes production outside the territories of the Parties or if, while being unloaded, reloaded, or preserved in or simply being shipped through 

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17 

toms authorities in the territory of that third country. Chapter 

Four also calls for the Parties to publish guidelines for interpreting, applying, and administering Chapter Four and the relevant provisions of Chapter Two. 

CHAPTER FIVE: CUSTOMS ADMINISTRATION AND TRADE FACILITATION

Chapter Five establishes rules designed to encourage transparency, predictability, and efficiency in the operation of each Party’s customs procedures and to provide for cooperation between the 

Parties on customs matters. 

General Principles. Chapter Five commits each Party to observe 

certain transparency obligations. Each Party must promptly publish its customs measures, including on the Internet, and, where 

possible, solicit public comments before amending its customs regulations. Each Party must also provide written advance rulings, on 

request, to its importers and to exporters and producers of the 

other Party, regarding whether a product qualifies as an ‘‘originating’’ good under the Agreement, as well as on other customs 

matters. In addition, each Party must guarantee importers access 

to both administrative and judicial review of customs decisions. 

The Parties must release goods from customs promptly and expeditiously clear express shipments. After the Agreement enters into 

force Peru will have one year to comply with the Chapter’s rules 

on release of goods; two years to comply with the Chapter’s express 

shipments obligations and certain of its transparency obligations; 

and three years to comply with the Chapter’s requirement to provide advance rulings. 

Cooperation. Chapter Five also is designed to enhance customs 

cooperation. It encourages the Parties to give each other advance 

notice of customs developments likely to affect the Agreement. The 

Chapter calls for the Parties to cooperate in securing compliance 

with each other’s customs measures related to the implementation 

and operation of the provisions of the Agreement governing importations and exportations. It includes specific provisions requiring 

the Parties to share customs information where a Party has a reasonable suspicion of unlawful activity relating to its laws and regulations governing importations. 

CHAPTER SIX: SANITARY AND PHYTOSANITARY MEASURES

Chapter Six defines the Parties’ obligations to each other regarding sanitary and phytosanitary (SPS) measures. It reflects the Parties’ understanding that implementation of existing obligations 

under the WTO Agreement on the Application of Sanitary and 

Phytosanitary Measures (SPS Agreement) is a shared objective. 

Nothing in the Agreement imposes new limitations on the United 

States in terms of maintaining high safety and inspection standards. 

Key Concepts. SPS measures are laws or regulations that protect 

human, animal, or plant life or health from certain risks, including 

plant- and animal-borne pests and diseases, additives, contaminants, toxins, or disease-causing organisms in food and beverages. 

Cooperation. Under Chapter Six, the Parties will establish an 

SPS Committee consisting of relevant trade and regulatory officials. The objectives of the Committee are to (i) help each Party to 

implement the WTO SPS Agreement; (ii) assist each Party to prommaher on PROD1PC69 with REPORTS

18 

tect human, animal, or plant life or health; (iii) enhance consultation and cooperation between the Parties on SPS matters; and (iv) 

address SPS measures affecting trade between the Parties. The 

Committee will also provide a forum for enhancing mutual understanding of each Party’s SPS measures and the regulatory processes that relate to those measures; consulting on SPS matters that 

may affect trade between the Parties; and consulting on issues, 

agendas, and positions for meetings of certain international organizations that address SPS matters. 

Dispute Settlement. No Party may invoke the Agreement’s dispute settlement procedures for a matter arising under Chapter Six. 

Instead, any dispute between the Parties involving an SPS measure must be resolved through the WTO. 

CHAPTER SEVEN: TECHNICAL BARRIERS TO TRADE

Chapter Seven builds on WTO rules related to technical barriers 

to trade to promote transparency, accountability, and cooperation 

between the Parties on regulatory issues. 

Key Concepts. The term ‘‘technical barriers to trade’’ (TBT) refers 

to barriers that may arise in preparing, adopting, or applying voluntary product standards, mandatory product standards (‘‘technical 

regulations’’), and procedures used to determine whether a particular good meets such standards, i.e., ‘‘conformity assessment’’ procedures. 

International Standards. The principles articulated in the WTO 

TBT Committee Decision on Principles for the Development of 

International Standards, Guides and Recommendations emphasize 

the need for openness and consensus in the development of international standards. Under Chapter Seven, the Parties will apply 

these principles and consult on pertinent matters under consideration by relevant international or regional bodies. 

Cooperation. Chapter Seven establishes a Committee on Technical Barriers to Trade through which the Parties will cooperate to 

reduce technical barriers and improve market access. The Committee’s specific functions will include: (i) enhancing cooperation in the 

development and improvement of standards, technical regulations, 

and conformity assessment procedures; (ii) facilitating sectoral cooperation between governmental and non-governmental conformity 

assessment bodies; (iii) exchanging information on developments in 

non-governmental, regional, and multilateral fora engaged in activities related to standards, technical regulations, and conformity 

assessment procedures; and (iv) consulting, at a Party’s request, on 

any matter arising under the Chapter. 

Conformity Assessment. Chapter Seven provides for a dialogue 

between the Parties on ways to facilitate the acceptance of conformity assessment results. Each Party will recognize conformity 

assessment bodies in the territory of the other Party on terms no 

less favorable than it accords conformity assessment bodies in its 

own territory. 

Transparency. Chapter Seven contains various transparency obligations, such as requiring each Party to: (i) allow persons of the 

other Party to participate in the development of technical regulations, standards, and conformity assessment procedures on a nondiscriminatory basis; (ii) transmit regulatory proposals notified 

under the WTO TBT Agreement directly to the other Party; (iii) demmaher on PROD1PC69 with REPORTS

19 

scribe in writing the objectives of and reasons for the proposed 

technical regulations or conformity assessment procedure; and (iv) 

consider comments on such proposals and respond in writing to significant comments it receives. Each Party must implement the 

Chapter’s transparency provisions as soon as practicable, and no 

later than three years after the Agreement enters into force. 

CHAPTER EIGHT: TRADE REMEDIES

Safeguards. Chapter Eight establishes a safeguard procedure 

that will be available to aid domestic industries that sustain or are 

threatened with serious injury due to increased imports resulting 

from tariff reduction or elimination under the Agreement. The 

Chapter does not affect the Parties’ rights or obligations under the 

WTO’s safeguard provisions (global safeguards) or under other 

WTO trade remedy rules. 

Chapter Eight authorizes each Party to impose temporary duties 

on an imported originating good if, as a result of the reduction or 

elimination of a duty under the Agreement, the good is being imported in such increased quantities and under such conditions as 

to constitute a substantial cause of serious injury, or threat of serious injury, to a domestic industry producing a ‘‘like’’ or ‘‘directly 

competitive’’ good. 

A safeguard measure may be applied on a good only during the 

Agreement’s ‘‘transition period’’ for phasing out duties on the good. 

A safeguard measure may take one of two forms—a temporary increase in duties to NTR (MFN) levels or a temporary suspension 

of duty reductions called for under the Agreement. A Party may 

not impose a safeguard measure under Chapter Eight more than 

once on any good. A safeguard measure may be in place for an initial period of up to two years. A Party may extend a measure for 

up to an additional two years, if it determines that the industry is 

adjusting and the measure remains necessary to facilitate adjustment and prevent or remedy serious injury. If a measure lasts 

more than one year, the Party must scale it back at regular intervals. 

If a Party imposes a safeguard measure, Chapter Eight requires 

it to provide offsetting trade compensation to the other Party whose 

goods are subject to the measure. If the Parties cannot agree on the 

amount or nature of the compensation, a Party entitled to compensation may unilaterally suspend ‘‘substantially equivalent’’

trade concessions that it has made to the importing Party. 

Global Safeguards. Chapter Eight maintains each Party’s right 

to take action against imports from all sources under Article XIX 

of GATT 1994 and the WTO Agreement on Safeguards. A Party 

may exclude imports of an originating good from another Party 

from a global safeguard measure if those imports are not a substantial cause of serious injury or do not create a threat of serious 

injury. A Party may not apply a safeguard measure under Chapter 

Eight at the same time that it applies a safeguard measure on the 

same good under the WTO Agreement on Safeguards. 

Antidumping and Countervailing Duties. Chapter Eight confirms 

that the Parties retain their rights and obligations under the WTO 

agreements relating to the application of antidumping and countervailing duties. Antidumping and countervailing duty measures may 

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20 

not be challenged under the Agreement’s dispute settlement procedures. 

CHAPTER NINE: GOVERNMENT PROCUREMENT

Chapter Nine provides comprehensive obligations requiring each 

Party to apply fair and transparent procurement procedures and 

rules and prohibiting each government and its procuring entities 

from discriminating in purchasing practices against goods, services, 

and suppliers from the other Party. The rules of Chapter Nine are 

broadly based on the rules of the WTO Agreement on Government 

Procurement. 

General Principles. Chapter Nine establishes a basic rule of ‘‘national treatment,’’ meaning that each Party’s procurement rules 

and the entities applying those rules must treat goods, services, 

and suppliers of such goods and services from the other Party in 

a manner that is ‘‘no less favorable’’ than their domestic counterparts. The Chapter also bars discrimination against locally established suppliers on the basis of foreign affiliation or ownership. 

Chapter Nine also provides rules aimed at ensuring a fair and 

transparent procurement process. 

Coverage and Thresholds. Chapter Nine applies to purchases and 

other means of obtaining goods and services valued above certain 

dollar thresholds by those government departments, agencies, and 

enterprises listed in each Party’s schedule. Specifically, the Chapter applies to procurements by listed agencies of the ‘‘central government,’’ which for the United States is the federal government, 

of goods and services valued at $193,000 or more and construction 

services valued at $7,407,000 or more. The equivalent thresholds 

for purchases by listed ‘‘sub-central’’ government entities (i.e., 

‘‘Gobiernos Regionales’’ for Peru and U.S. state government agencies) are $526,000 and $7,407,000, for goods and services and construction services, respectively. The Chapter’s thresholds for other 

covered entities are either $250,000 or $593,000 for goods and services, and $7,407,000 for construction services. All thresholds are 

subject to adjustment every two years for inflation. 

Transparency. Chapter Nine establishes rules designed to ensure 

transparency in procurement procedures. Each Party must publish 

its laws, regulations, and other measures governing procurement, 

along with any changes to those measures. Procuring entities must 

publish notices of procurement opportunities in advance. The Chapter also lists minimum information that such notices must include. 

Tendering Rules. Chapter Nine provides rules for setting deadlines on ‘‘tendering’’ (bidding on government contracts). It requires 

procuring entities to give suppliers all the information they need 

to prepare tenders, including the criteria that procuring entities 

will use to evaluate tenders. Entities must also, where appropriate, 

base their technical specifications (i.e., detailed descriptions of the 

goods or services to be procured) on performance-oriented criteria 

and international standards. Chapter Nine provides that procuring 

entities may not write technical specifications with the purpose or 

effect of creating an unnecessary obstacle to trade between the Parties while clarifying that an entity may adopt technical specifications to promote environmental conservation. The Chapter also 

clarifies that an entity may adopt technical specifications that require suppliers to comply with generally applicable laws regarding 

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21 

fundamental principles and rights at work and acceptable conditions of work with respect to minimum wages, hours of work, and 

occupational safety and health in the territory where they make 

the product or perform the service that the entity will purchase. It 

also sets out the circumstances under which procuring entities are 

allowed to use limited tendering, i.e., award a contract to a supplier without opening the procurement to all interested suppliers. 

Award Rules. Chapter Nine provides that to be considered for an 

award, a tender must be submitted by a qualified supplier. The 

tender must meet the criteria set out in the tender documentation, 

and procuring entities must base their award of contracts on those 

criteria. Procuring entities must publish information on awards, including the name of the supplier, a description of the goods or services procured, and the value of the contract. Chapter Nine also 

calls for each Party to ensure that suppliers may bring challenges 

against procurement decisions before independent reviewers. 

Additional Provisions. Chapter Nine builds on the anti-corruption provisions of Chapter Nineteen, including by requiring each 

Party to maintain procedures to declare suppliers that have engaged in fraudulent or other illegal actions in relation to procurement ineligible for participation in the Party’s procurement. It establishes procedures under which a Party may modify its coverage 

under the Chapter, such as when a Party privatizes an entity 

whose purchases are covered under the Chapter. It also provides 

that Parties may adopt or maintain measures necessary to protect: 

(1) public morals, order, or safety; (2) human, animal, or plant life 

or health, including environmental measures necessary to protect 

human, animal, or plant life or health; or (3) intellectual property. 

Parties may also adopt measures relating to goods or services of 

handicapped persons, philanthropic institutions, or prison labor. 

CHAPTER TEN: INVESTMENT

Chapter Ten establishes rules to protect investors from one Party 

against unfair or discriminatory government actions when they invest or attempt to invest in the other Party’s territory. The Chapter’s provisions reflect traditional standards incorporated in earlier 

U.S. bilateral investment treaties, previous free trade agreements, 

and customary international law. 

Key Concepts. Under Chapter Ten, the term ‘‘investment’’ covers 

all forms of investment, including enterprises, securities, debt, intellectual property rights, licenses, and contracts. It includes both 

investments existing when the Agreement enters into force and future investments. The term ‘‘investor of a Party’’ encompasses U.S. 

and Peruvian nationals as well as firms (including branches) established in one of the Parties. 

General Principles. Investors enjoy six basic protections: (1) right 

to non-discriminatory treatment relative both to domestic investors 

and investors of non-Parties; (2) limits on imposition by the host 

Party of ‘‘performance requirements’’; (3) right to free transfer of 

funds related to an investment; (4) protection from expropriation in 

conformity with customary international law; (5) right to the minimum standard of treatment of aliens required by customary international law; and (6) the right to hire key managerial personnel 

without regard to nationality. (As to this last protection, a Party 

may require that a majority of the board of directors be of a parmmaher on PROD1PC69 with REPORTS

22 

ticular nationality, as long as this does not prevent the investor 

from controlling its investment.) 

Sectoral Coverage and Non-Conforming Measures. With the exception of investments in or by regulated financial institutions 

(which are treated in Chapter Twelve), Chapter Ten generally applies to all sectors, including service sectors. However, each Party 

has listed in Annexes I and II particular sectors or measures for 

which it negotiated an exemption from the Chapter’s obligations relating to national treatment, NTR (MFN), performance requirements, or senior management and boards of directors (‘‘non-conforming measures’’). Annex I contains each Party’s list of existing 

non-conforming measures at the central and regional levels of government. The United States has scheduled an exemption from all 

aforementioned obligations for all existing state measures. All existing local measures are exempted for both Parties without the 

need to be listed. If a Party liberalizes any of these non-conforming 

Annex I measures, it must thereafter maintain the measure at 

least at that level of openness. In Annex II, each Party has listed 

sectors or activities in which it reserves the right to adopt or maintain future non-conforming measures. (Annexes I and II also include exemptions from Chapter Eleven. See below.) 

Investor-State Disputes. Chapter Ten provides a mechanism for 

an investor of a Party to submit to binding international arbitration a claim for damages against another Party. The investor may 

assert that the Party has breached a substantive obligation under 

the Chapter or that the Party has breached an ‘‘investment agreement’’ with, or an ‘‘investment authorization’’ granted to, the investor or a covered investment that the investor owns or controls. ‘‘Investment agreements’’ and ‘‘investment authorizations’’ are arrangements between an investor and a host government based on 

contracts and authorizations, respectively. These terms are defined 

in Chapter Ten. 

Chapter Ten affords public access to information on investorState arbitrations conducted pursuant to the Agreement. For example, Chapter Ten requires that hearings will generally be open to 

the public and that key documents will be publicly available, with 

exceptions for confidential business information. The Chapter also 

authorizes tribunals to accept amicus submissions from the public. 

In addition, the Chapter includes provisions similar to those used 

in U.S. courts to dispose quickly of claims a tribunal finds to be 

frivolous. Finally, within three years after the Agreement enters 

into force, the Parties will consider whether to establish an appellate body, or similar mechanism, to review arbitral awards rendered by tribunals under the Chapter. 

Chapter Ten provides that, ‘‘except in rare circumstances,’’ nondiscriminatory regulatory actions designed and applied to meet legitimate public welfare objectives, such as public health, safety, 

and the environment, are not indirect expropriations. 

CHAPTER ELEVEN: CROSS-BORDER TRADE IN SERVICES

Chapter Eleven governs measures affecting cross-border trade in 

services between the Parties. Certain provisions also apply to 

measures affecting investments to supply services. 

Key Concepts. Under the Agreement, cross-border trade in services covers supply of a service: 

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23 

• From the territory of one Party into the territory of another Party (e.g., electronic delivery of services from the United 

States to Peru); • In the territory of a Party by a person of that Party to a 

person of another Party (e.g., a Peruvian company provides 

services to U.S. visitors in Peru); and • By a national of a Party in the territory of another Party 

(e.g., a U.S. lawyer provides legal services in Peru). 

Chapter Eleven should be read together with Chapter Ten (Investment), which establishes rules pertaining to the treatment of 

service firms that choose to provide their services through a local 

presence, rather than cross-border. Chapter Eleven applies where, 

for example, a service supplier is temporarily present in a territory 

of a Party and does not operate through a local investment. 

General Principles. Among Chapter Eleven’s core obligations are 

requirements to provide national treatment and NTR (MFN) treatment to service suppliers of the other Party. Thus, each Party must 

treat service suppliers of the other Party no less favorably than its 

own suppliers or those of any other country. This commitment applies to state and local governments as well as the federal government. The Chapter’s provisions apply to existing service suppliers 

as well as those who seek to supply services. The Chapter also includes a provision prohibiting the Parties from requiring firms to 

establish a local presence as a condition for supplying a service on 

a cross-border basis. In addition, certain types of market access restrictions on the supply of services (e.g., that limit the number of 

firms that may offer a particular service or that restrict or require 

specific types of legal structures or joint ventures with local companies in order to supply a service) are also barred. The Chapter’s 

market access rules apply both to services supplied on a cross-border basis and through a local investment. 

Sectoral Coverage and Non-Conforming Measures. Chapter Eleven applies across virtually all services sectors. The Chapter excludes financial services (which are addressed in Chapter Twelve), 

except that certain provisions of Chapter Eleven apply to investments in financial services that are not regulated as financial institutions and are covered by Chapter Ten (Investment). In addition, 

Chapter Eleven does not cover air transportation, although it does 

apply to specialty air services and aircraft repair and maintenance. 

Each Party has listed in Annexes I and II, measures or sectors 

for which it negotiated exemptions from Chapter Eleven’s core obligations (national treatment, NTR (MFN), local presence, and market access). Annex I contains the list of existing non-conforming 

measures at the central and regional level of government. The 

United States has scheduled an exemption from all aforementioned 

obligations for all existing state measures. All existing local measures are exempted for both Parties without the need to be listed. 

However, once a Party liberalizes any of these non-conforming 

Annex I measures, it must thereafter maintain the measure at 

least at that level of openness. Each Party has listed in Annex II 

sectors or activities in which it reserves the right to adopt or maintain future non-conforming measures. 

Specific Commitments. Chapter Eleven includes a comprehensive 

definition of express delivery services that requires each Party to 

provide national treatment, NTR (MFN) treatment, and additional 

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24 

benefits to express delivery services of the other Party. The Chapter provides that the Parties will try to maintain the level of market openness for express delivery services they provided on the 

date the Agreement was signed, and a Party may request consultations with the other if it believes the other Party is not maintaining that level of access. The Chapter also addresses the issue of 

postal monopolies directing revenues derived from monopoly postal 

services to confer an advantage on express delivery services. In addition, Peru has committed to eliminate a requirement that has 

prevented U.S.-owned companies in Peru from hiring the managers, professionals, and specialists of their choice for their operations in Peru. 

Transparency and Domestic Regulation. Provisions on transparency and domestic regulation complement the core rules of 

Chapter Eleven. The transparency rules apply to the development 

and application of regulations governing services. The Chapter’s 

rules on domestic regulation govern the operation of approval and 

licensing systems for service suppliers. Like the Chapter’s market 

access rules, its provisions on transparency and domestic regulation cover services supplied both on a cross-border basis and 

through a local investment. 

Exclusions. Chapter Eleven excludes any service supplied ‘‘in the 

exercise of governmental authority’’—that is, a service that is provided on a non-commercial and non-competitive basis. Chapter 

Eleven also does not apply to government subsidies. In addition, 

the Chapter makes clear that the Agreement does not impose any 

obligation on a Party with respect to its immigration measures, including admission or conditions of admission for temporary entry. 

CHAPTER TWELVE: FINANCIAL SERVICES

Chapter Twelve provides rules governing each Party’s treatment 

of: (1) financial institutions of the other Party; (2) investors of the 

other Party, and their investments, in financial institutions; and 

(3) cross-border trade in financial services. 

Key Concepts. The Chapter defines a ‘‘financial institution’’ as 

any financial intermediary or other institution authorized to do 

business and regulated or supervised as a financial institution 

under the law of the Party where it is located. A ‘‘financial service’’

is any service of a financial nature, including, for example, insurance, banking, securities, asset management, financial information 

and data processing services, and financial advisory services. 

General Principles. Chapter Twelve’s core obligations parallel 

those in Chapters Ten (Investment) and Eleven (Cross-Border 

Trade in Services). Specifically, Chapter Twelve imposes rules requiring national treatment and NTR (MFN) treatment, prohibits 

certain quantitative restrictions on market access of financial institutions, and bars restrictions on the nationality of senior management. As appropriate, these rules apply to measures affecting financial institutions, investors and investments in financial institutions of another Party, and services companies that are currently 

supplying and that seek to supply financial services on a cross-border basis. The rules do not apply to measures adopted or maintained by a Party relating to certain specified services and activities—for example, activities or services forming part of a public retirement plan or statutory system of social security—unless a Party 

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allows its financial institutions to compete with a public entity or 

a financial institution to supply such services and activities. 

Non-Conforming Measures. Similar to Chapters Ten and Eleven, 

each Party has listed in an annex (Annex III) particular measures 

for which it negotiated exemptions from the Chapter’s core obligations. Existing non-conforming U.S. state and local laws and regulations are exempted from these obligations. Once a Party, including a state or local government, liberalizes one of these non-conforming measures, however, it must, in most cases, maintain the 

measure at least at that new level of openness. 

Other Provisions. Chapter Twelve also includes provisions on regulatory transparency, ‘‘new’’ financial services, self-regulatory organizations, and the expedited availability of insurance products. 

Relationship to Other Chapters. Measures that a Party applies to 

financial services suppliers of the other Party, other than regulated 

financial institutions, that make or operate investments in the Party’s territory are covered principally by Chapter Ten (Investment) 

and certain provisions of Chapter Eleven (Cross-Border Trade in 

Services). In particular, the core obligations of Chapter Ten apply 

to such measures, as do the market access, transparency, and domestic regulation provisions of Chapter Eleven. Chapter Twelve incorporates by reference certain provisions of Chapter Ten, such as 

those relating to transfers and expropriation. 

CHAPTER THIRTEEN: COMPETITION POLICY, DESIGNATED MONOPOLIES, 

AND STATE ENTERPRISES

Recognizing that anticompetitive business conduct has the potential to restrict bilateral trade and investment, Chapter Thirteen 

calls for each government to proscribe such conduct. The Chapter 

also sets out basic procedural safeguards and rules ensuring 

against harmful conduct by government-designated monopolies and 

state enterprises. 

Competition Laws. Chapter Thirteen requires each Party to 

adopt or maintain laws prohibiting anticompetitive business conduct and to take appropriate action with respect to such conduct. 

It also requires each Party to maintain authorities responsible for 

enforcing their national competition laws. Chapter Thirteen affirms 

that the enforcement policy of each Party’s national competition authority is not to discriminate on the basis of nationality. It also obligates each Party to provide certain procedural protections for persons facing enforcement actions. Each Party will ensure that persons subject to sanctions or remedies for competition law violations 

will be provided a right to be heard and to present evidence, and 

to seek review by a court or independent tribunal. 

Designated Monopolies. There are specific rules governing instances in which a Party gives a private or national governmentowned entity a monopoly to provide or purchase a good or service. 

In particular, the Party must ensure that the entity: (1) abides by 

the Party’s obligations under the Agreement wherever it exercises 

authority delegated to it by the government in connection with the 

monopoly good or service; (2) purchases or sells the monopoly product in a manner consistent with commercial considerations; (3) does 

not discriminate against the other Party’s investments, goods, or 

service suppliers in the purchase or sale of the monopoly product; 

and (4) does not engage in anticompetitive practices in markets 

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26 

outside its monopoly mandate that harm the other Party’s investments. 

State Enterprises. Chapter Thirteen sets forth obligations regarding the Parties’ responsibilities for ‘‘state enterprises,’’ i.e., enterprises owned or controlled by a Party. Each Party must ensure that 

its state enterprises accord non-discriminatory treatment in the 

sale of their products to the other Party’s investments. 

Cooperation and Working Group. Chapter Thirteen provides for 

bilateral cooperation in relation to the enforcement of competition 

laws. In addition, the Parties will establish a working group to promote greater understanding and cooperation between the Parties 

with respect to the matters covered under the Chapter. 

Dispute Settlement. Many of the Chapter’s provisions are not subject to the Agreement’s dispute settlement procedures, including 

the provisions requiring a Party to adopt and enforce laws prohibiting anticompetitive business conduct and the provisions governing cooperation and consultations. The Chapter’s rules addressing designated monopolies and state enterprises, however, may be 

enforced through the Agreement’s State-to-State dispute settlement 

mechanism. 

CHAPTER FOURTEEN: TELECOMMUNICATIONS

Chapter Fourteen includes disciplines beyond those imposed 

under Chapters Ten (Investment) and Eleven (Cross-Border Trade 

in Services) on regulatory measures affecting telecommunications 

trade and investment between the Parties. It is designed to ensure 

that service suppliers of each Party have non-discriminatory access 

to public telecommunications networks in the territory of the other 

Party. In addition, the Chapter requires each Party to regulate its 

major telecommunications suppliers in ways that will ensure a 

level playing field for new entrants. Chapter Fourteen also seeks 

to ensure that telecommunications regulations are set by independent regulators applying transparent procedures, and is designed to encourage adherence to principles of deregulation and 

technological neutrality. 

Key Concepts. Under Chapter Fourteen, a ‘‘public telecommunications service’’ is any telecommunications service that a Party requires to be offered to the public generally. The term includes voice 

and data transmission services. It does not include the offering of 

‘‘information services’’ (e.g., services that enable users to create, 

store, or process information over a network). A ‘‘major supplier’’ is 

a company that, by virtue of its market position or control over certain facilities, can materially affect the terms of participation in the 

market. 

Competition. Chapter Fourteen establishes rules promoting effective competition in telecommunications services. It also provides 

flexibility to account for changes that may occur through new legislation or regulatory decisions. The Chapter includes commitments 

by each Party to: 

• Ensure that all service suppliers of the other Party that 

seek to access or use a public telecommunications network in 

the Party’s territory can do so on reasonable and non-discriminatory terms (e.g., Peru must ensure that its public phone companies do not provide preferential access to Peruvian banks or 

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27 

Internet service providers, to the detriment of U.S. competitors); 

• Give the other Party’s telecommunications suppliers, in 

particular, the right to interconnect their networks with public 

networks in the Party’s territory; 

• Ensure that telecommunications suppliers of the other 

Party enjoy the right to lease lines to supplement their own 

networks or, alternatively, purchase telecommunications services from domestic suppliers and resell them in order to build 

a customer base; and 

• Impose disciplines on the behavior of ‘‘major suppliers.’’

Regulation. The Chapter addresses key regulatory concerns that 

may create barriers to trade and investment in telecommunications 

services. In particular, the Parties: 

• Will adopt procedures that will help ensure that they 

maintain open and transparent telecommunications regulatory 

regimes, including requirements to publish interconnection 

agreements and service tariffs; 

• Will require their telecommunications regulators to resolve 

disputes between suppliers and provide foreign suppliers the 

right to seek judicial review of those decisions; 

• May elect to deregulate telecommunications services when 

competition emerges and certain standards are met; and 

• Will avoid impeding telecommunications suppliers from 

choosing technologies they consider appropriate for supplying 

their services. 

CHAPTER FIFTEEN: ELECTRONIC COMMERCE

Chapter Fifteen establishes rules designed to prohibit discriminatory regulation of electronic trade in digitally encoded products 

such as computer programs, video, images, and sound recordings. 

The provisions in this and other recent U.S. free trade agreements 

represent a major advance over previous international understandings on this subject. 

Customs Duties. Chapter Fifteen provides that a Party may not 

impose customs duties on digital products of another Party transmitted electronically and will determine the customs value of an 

imported carrier medium bearing a digital product based on the 

value of the carrier medium alone, without regard to the value of 

the digital product stored on the carrier medium. 

Non-Discrimination. The Parties will apply the principles of national treatment and NTR (MFN) treatment to trade in electronically-transmitted digital products. Thus, a Party may not discriminate against electronically-transmitted digital products on the 

grounds that they have a nexus to another country, either because 

they have undergone certain specific activities (e.g., creation, production, first sale) there or are associated with certain categories 

of persons of the other Party or a non-Party (e.g., authors, performers, producers). Nor may a Party provide less favorable treatment to digital products that have a nexus to the other Party than 

it gives to like products that have a nexus to a third country. The 

non-discrimination rules do not apply to non-conforming measures 

adopted under Chapters Ten (Investment), Eleven (Cross-Border 

Trade in Services), or Twelve (Financial Services). 

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Additional Provisions. Chapter Fifteen contains additional provisions relating to authentication, online consumer protection, and 

paperless trade administration. 

CHAPTER SIXTEEN: INTELLECTUAL PROPERTY RIGHTS

Chapter Sixteen complements and enhances existing international standards for the protection of intellectual property and 

the enforcement of intellectual property rights, consistent with U.S. 

law. 

General Provisions. Chapter Sixteen commits the Parties to ratify or accede to several agreements on intellectual property rights, 

including, by the date the Agreement enters into force, the WIPO 

Copyright Treaty, the Brussels Convention Relating to the Distribution of Programme-Carrying Satellite Signals, and the WIPO 

Performances and Phonograms Treaty, and, within specified periods, the International Convention for the Protection of New Varieties of Plants, the Trademark Law Treaty, and the Patent Cooperation Treaty. The United States is already a party to these 

Agreements. With very limited exceptions, Chapter Sixteen commits each Party to provide national treatment to the other Party’s 

nationals with respect to the enjoyment and protection of the intellectual property rights covered by the Chapter. 

Trademarks and Geographical Indications. Chapter Sixteen requires each Party to protect trademarks and geographical indications, including by refusing protection or recognition of a geographical indication that is likely to cause confusion with a preexisting trademark. The Chapter calls for trademarks to include 

collective marks and certification marks, and for geographical indications to be eligible for protection as marks. The Chapter also requires each Party to establish a system for registering trademarks 

that provides efficient and transparent procedures governing applications to protect trademarks and geographical indications. Furthermore, the Chapter requires each Party’s Internet domain name 

management system to include a dispute resolution procedure to 

address trademark cyber-piracy. 

Copyright and Related Rights. Chapter Sixteen obligates the Parties to provide broad protection for copyright and related rights, affirming and building on rights set out in several international 

agreements. For instance, each Party must provide copyright protection for the life of the author plus 70 years (for works measured 

by a person’s life), or 70 years (for corporate works). The Chapter 

clarifies that the right to reproduce literary and artistic works, recordings, and performances encompasses temporary copies, an important principle in the digital realm. It also calls for each Party 

to provide a right of communication to the public, which will further ensure that the right holder has the exclusive right to authorize making protected works available online. The Chapter specifically requires each Party to protect the rights of performers and 

producers of phonograms. 

To curb copyright piracy, the Chapter requires government agencies of the Parties to use only legitimate computer software, setting 

an example for the private sector. The Chapter also includes provisions on anti-circumvention, under which the Parties commit to 

prohibit tampering with technology used to protect copyrighted 

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29 

spect to the liability of Internet service providers in connection 

with copyright infringements that take place over their networks. 

Finally, recognizing the importance of satellite broadcasts, Chapter 

Sixteen provides that each Party will protect encrypted programcarrying satellite signals. It obligates the Parties to extend protection to the signals themselves, as well as to the content contained 

in the signals. 

Patients. Chapter Sixteen also includes a variety of provisions for 

the protection of patents. The Parties agree to make patents available for any invention, subject to limited exclusions, and confirm 

the availability of patents for new uses or methods of using a 

known product. To guard against arbitrary revocation of patents, 

each Party must limit the grounds for revoking a patent to the 

grounds that would have justified a refusal to grant the patent. 

Under Chapter Sixteen, each Party must make best efforts to process patent applications and marketing approval applications expeditiously. With respect to most products, a Party must adjust the 

patent term to compensate for unreasonable delays that occur 

while granting a patent. For pharmaceutical products, a Party may 

provide for such adjustments if there is an unreasonable delay in 

granting a patent or providing marketing approval for a product. 

Certain Regulated Products. Chapter Sixteen includes additional 

specific provisions relating to pharmaceuticals and agricultural 

chemicals. Among other things, the Chapter protects test data that 

a company submits in seeking marketing approval for such products by precluding other firms from relying on the data. It provides 

specific periods for such protection—normally five years for pharmaceuticals and ten years for agricultural chemicals. This means, 

for example, that during the period of protection, test data that a 

company submits for approval of a new agricultural chemical product cannot be used without that company’s consent in granting approval to market a combination product. If a Party bases its decision to approve a pharmaceutical product for marketing in its territory on a marketing approval the other Party has granted for that 

product, and it approves the product within six months after the 

company applies for the approval in the Party, the period of test 

data protection will be counted from the date the other Party approved the product. The Chapter’s rules governing test data protection for pharmaceutical products are subject to a public health exception. The Chapter also requires the Parties to implement procedures for the expeditious adjudication of disputes concerning the 

validity or infringement of a patent, a transparent system to provide notice to a patent holder that another person is seeking to 

market an approved pharmaceutical product during the term of a 

patent, and sufficient time and opportunity for a patent holder to 

seek, prior to the marketing of an allegedly infringing product, 

available remedies for an infringing product. 

Public Health. Chapter Sixteen expresses the Parties’ understanding that its obligations do not and should not prevent a Party 

from taking measures to protect public health by promoting access 

to medicines for all. 

Enforcement Provisions. Chapter Sixteen also creates obligations 

with respect to the enforcement of intellectual property rights in 

civil proceedings, in criminal proceedings, and at the border. For 

example, the Parties, in determining damages in civil proceedings 

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30 

involving copyright infringement or trademark counterfeiting, must 

take into account the value of the legitimate goods as well as the 

infringer’s profits, and must also provide for damages based on a 

fixed range (i.e., ‘‘statutory damages’’), as an option that the right 

holder can elect instead of actual damages. 

Chapter Sixteen further provides that the Parties’ law enforcement agencies must have authority to seize suspected pirated and 

counterfeit goods, the equipment used to make or transmit them, 

and documentary evidence. Each Party must give its courts authority to order the forfeiture and/or destruction of such items. Chapter 

Sixteen also provides that each Party must apply criminal penalties against counterfeiting and piracy, including end-user piracy. 

Chapter Sixteen also requires each Party to empower its law enforcement agencies to take enforcement action at the border 

against pirated or counterfeit goods without waiting for a formal 

complaint. 

Transition Periods. Most obligations in the Chapter take effect on 

the date the Agreement enters into force. However, Peru may delay 

giving effect to certain specified obligations for periods ranging 

from one year to three years after that date. 

CHAPTER SEVENTEEN: LABOR

Chapter Seventeen sets out the Parties’ commitments and undertakings regarding trade-related labor rights. 

Fundamental Labor Rights. Each Party commits to adopt and 

maintain in its statutes, regulations, and practice certain enumerated labor rights, as stated in the 1998 ILO Declaration on Fundamental Principles and Rights at Work and Its Follow Up. Specifically, these are (1) freedom of association; (2) the effective recognition of the right to collective bargaining; (3) the elimination of all 

forms of forced or compulsory labor; (4) the effective abolition of 

child labor and, for purposes of the Agreement, a prohibition on the 

worst forms of child labor; and (5) the elimination of discrimination 

in respect of employment and occupation. In order to establish a 

violation of this obligation, a Party must demonstrate that the 

other Party has failed to comply in a manner affecting trade or investment between the Parties. Neither Party may waive or otherwise derogate from its statutes or regulations implementing this 

obligation in a manner affecting bilateral trade or investment 

where the waiver or derogation would be inconsistent with one of 

the enumerated rights. For the United States, the Chapter’s provisions regarding fundamental labor rights apply to federal law only. 

Effective Enforcement. Each Party commits not to fail to effectively enforce its labor laws on a sustained or recurring basis in a 

manner affecting trade or investment between the Parties. The 

Chapter defines ‘‘labor laws’’ to include the ILO fundamental labor 

rights, laws providing for acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety 

and health, and laws providing labor protections for children and 

minors. For the United States, ‘‘labor laws’’ includes federal statutes and regulations addressing these areas, but it does not cover 

state or local labor laws. 

Procedural Guarantees. The Parties commit to afford procedural 

guarantees that ensure workers and employers have access to fair, 

equitable, and transparent access to labor tribunals or courts. To 

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31 

this end, each Party must ensure that workers and employers have 

access to tribunals for the enforcement of its labor laws that comply with due process of law and that decisions of such tribunals are 

in writing, made publicly available, and based on information or 

evidence in respect of which the parties were offered the opportunity to be heard. In addition, hearings in such proceedings must 

be open to the public, except where the administration of justice 

otherwise requires. Each Party also commits to make remedies 

available to ensure the enforcement of its labor laws. Such remedies might include orders, fines, penalties, or temporary workplace 

closures. 

Dispute Settlement. Chapter Seventeen provides for cooperative 

consultations as a first step if a Party considers that the other 

Party is not complying with its obligations under the Chapter. The 

complaining Party may, after an initial 60-day consultation period 

under Chapter Seventeen, invoke the Agreement’s general dispute 

settlement mechanism by requesting additional consultations or a 

meeting of the Agreement’s cabinet-level Free Trade Commission 

under the provisions of Chapter Twenty-One (Dispute Settlement). 

If the Commission is unable to resolve the dispute, the matter may 

be referred to a dispute settlement panel. 

Institutional Arrangements, Cooperation and Capacity Building. 

Chapter Seventeen establishes a cabinet-level Labor Affairs Council to oversee the Chapter’s implementation and to provide a forum 

for consultations and cooperation on labor matters. The Chapter requires each Party to designate a contact point for communications 

with the other Party and the public regarding the Chapter. Each 

Party’s contact point must provide transparent procedures for the 

submission, receipt, and consideration of communications from persons of a Party relating to the Chapter. 

The Chapter also creates a labor cooperation and capacity building mechanism through which the Parties will work together to address labor matters of common interest. In particular, the mechanism will assist the Parties to establish priorities for, and carry 

out, cooperation and capacity building activities relating to such 

topics as: the effective application of fundamental labor rights; legislation and practice relating to compliance with ILO Convention 

182 on the worst forms of child labor; strengthening labor inspection systems and the institutional capacity of labor administrations 

and tribunals; mechanisms for supervising compliance with laws 

and regulations pertaining to working conditions; and the elimination of gender discrimination in employment. 

CHAPTER EIGHTEEN: ENVIRONMENT

Chapter Eighteen sets out the Parties’ commitments and undertakings regarding environmental protection. Chapter Eighteen 

builds on the environmental provisions of other recent U.S. free 

trade agreements, including the Dominican Republic-Central America-United States Free Trade Agreement. 

General Principles. Each Party must strive to ensure that its environmental laws provide for high levels of environmental protection and continue to improve its respective levels of environmental 

protection. Each Party also commits not to waive or otherwise derogate from its environmental laws to weaken or reduce the levels of 

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32 

ment between the Parties other than pursuant to a provision in its 

environmental law providing for waivers or derogations. Chapter 

Eighteen further includes commitments to enhance cooperation between the Parties in environmental matters and encourages the 

Parties to develop voluntary, market-based mechanisms as one 

means for achieving and sustaining high levels of environmental 

protection. 

Multilateral Environmental Agreements. The Parties recognize 

that multilateral environment agreements (MEAs) to which they 

are parties play an important role globally and domestically in protecting the environment and that their respective implementation 

of these agreements is critical to achieve each Party’s environmental objectives. Accordingly, the Chapter includes a provision requiring each Party to adopt, maintain, and implement laws, regulations, and all other measures to fulfill its obligations under certain 

multilateral environmental agreements (‘‘covered agreements’’) to 

which both governments are parties. To establish a violation of this 

obligation a Party must demonstrate that the other Party has 

failed to comply in a manner affecting bilateral trade or investment. 

Chapter Eighteen provides that in the event of any inconsistency 

between a Party’s obligations under the Agreement and a covered 

agreement, the Party must seek to balance its obligation under 

both agreements, but this will not preclude a Party from taking 

measures to comply with the MEA as long as the measure’s primary purpose is not to impose a disguised restriction on trade. 

Effective Enforcement. Each Party commits not to fail to effectively enforce its environmental laws, and its laws, regulations, and 

other measures to fulfill its obligations under the covered agreements, on a sustained or recurring basis in a manner affecting 

trade or investment between the Parties. For the United States, 

‘‘environmental laws’’ comprise environmental statutes and regulations enforceable by the federal government. 

Procedural Matters. Each Party commits to make judicial, quasijudicial, or administrative proceedings available to sanction or remedy violations of its environmental laws. Each Party must ensure 

that such proceedings are fair, equitable, and transparent, and, to 

this end, comply with due process of law and are open to the public, except where the administration of justice otherwise requires. 

The Chapter requires each Party to ensure that interested persons 

may request the Party’s competent authorities to investigate alleged violations of its environmental laws and that each Party’s 

competent authorities give such requests due consideration. Each 

Party also commits to make appropriate and effective remedies 

available for violations of its environmental laws. Such remedies 

may include, for example, fines, injunctions, or requirements to 

take remedial action or pay for the cost of containing or cleaning 

up pollution. 

Environmental Performance. Each Party agrees to encourage the 

development and use of flexible, voluntary, and incentive-based 

mechanisms for environmental protection, and to encourage the development and improvement of performance goals and indicators 

for measuring environmental performance as well as flexible means 

for achieving such goals, as appropriate and in accordance with its 

law. 

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Institutional Arrangements and Cooperation. Chapter Eighteen 

establishes a senior-level Environment Affairs Council. The Council 

will oversee and provide periodic reports to the Free Trade Commission on the Chapter’s implementation. The Council will provide 

for the public to participate in its work, including by providing an 

opportunity at each Council meeting, unless the Parties otherwise 

agree, for the public to express views on how the Chapter is being 

implemented. Each Party must also take into account public views 

on environmental cooperation activities. In addition, to facilitate cooperation efforts, the Parties have signed a separate environmental 

cooperation agreement. 

Public Participation and Submissions. Each Party commits to 

provide for the receipt and consideration of submissions from persons of a Party on matters related to implementation of the Chapter and to convene a national advisory committee to provide views 

on matters related to the implementation of the Chapter. In addition, the Chapter provides that any person of a Party may file a 

submission with a secretariat asserting that a Party has failed to 

effectively enforce its environmental laws. The secretariat will review the submission according to specified criteria and in appropriate cases recommend to the Environmental Affairs Council that 

a factual record concerning the matter be developed. The secretariat will prepare a factual record if a member of the Environmental Affairs Council instructs it to do so. The Council will consider the record and, where appropriate, provide recommendations 

to an environmental cooperation commission that will be created 

under a related environmental cooperation agreement. U.S. persons 

who consider that the United States is failing to effectively enforce 

its environmental laws may invoke the comparable public submissions process under the North American Agreement on Environmental Cooperation. The Parties will designate the secretariat and 

make related arrangements through a separate understanding. 

Biological Diversity. The Parties recognize the importance of biological diversity, restate their commitment to encouraging and promoting its protection, and agree to enhance their cooperative efforts 

with respect to biological diversity. A specific article on biological 

diversity has been included in the Environment Chapter. 

Dispute Settlement. Chapter Eighteen provides for cooperative 

consultations as a first step if a Party considers that the other 

Party is not complying with its obligations under the Chapter. The 

complaining Party may, after an initial 60-day consultation period 

under the Chapter, invoke the Agreement’s general dispute settlement mechanism by requesting additional consultations or a meeting of the Agreement’s cabinet-level Free Trade Commission under 

Chapter Twenty-One (Dispute Settlement). If the Commission is 

unable to resolve the dispute, the matter may be referred to a dispute settlement panel. In addition, Chapter Eighteen provides that 

when an issue relating to a Party’s obligations under a covered 

agreement arises in a dispute settlement proceeding, the panel 

hearing the matter must consult with any entity authorized under 

the covered agreement to address the issue and defer to the extent 

appropriate in light of its nature and status to any interpretive 

guidance under the covered agreement regarding the issue. 

Forest Sector Governance. Chapter Eighteen includes an annex 

that provides for concrete steps that the Parties will take to enmmaher on PROD1PC69 with REPORTS

34 

hance forest sector governance in Peru and promote legal trade in 

timber products, including commitments that Peru must implement 

within 18 months from the date the Agreement enters into force. 

The annex sets forth audit and verification procedures for purposes 

of ensuring that exports of timber products from Peru to the 

United States are in compliance with Peru’s applicable laws, regulations, and other measures governing the harvest of, and trade in, 

timber products. The annex also authorizes the United States to 

bar or temporarily hold imports of Peruvian timber products in certain circumstances, such as when Peruvian and U.S. officials develop information indicating that a Peruvian producer may not 

have complied with Peruvian law. The annex establishes a SubCommittee on Forest Sector Governance under both the Committee 

on Trade in Goods and the Environmental Affairs Council. 

CHAPTER NINETEEN: TRANSPARENCY

Section A of Chapter Nineteen sets out requirements designed to 

foster openness, transparency, and fairness in the adoption and application of measures on matters covered by the Agreement. It requires that each Party must promptly publish all laws, regulations, 

procedures, and administrative rulings of general application concerning subjects covered by the Agreement, or otherwise make 

them available. It requires that, to the extent possible, Parties publish proposed regulations in advance and give interested persons a 

reasonable opportunity to comment. Wherever possible, each Party 

must provide reasonable notice to the other Party’s nationals and 

enterprises that are directly affected by an agency process, including an adjudication, rulemaking, licensing, determination, and approval process. A Party is to afford such persons a reasonable opportunity to present facts and arguments prior to any final administrative action, when time, the nature of the process, and the public interest permit. 

Chapter Nineteen also provides for independent review and appeal of final administrative actions. Appeal rights must include a 

reasonable opportunity to present arguments and to obtain a decision based on evidence in the administrative record. 

In Section B of Chapter Nineteen, the Parties affirm their commitment to prevent and combat corruption, including bribery in 

international trade and investment. To this end, each Party is obligated to make it a criminal offense to offer or accept a bribe in exchange for favorable government action in matters affecting international trade or investment. The Parties must also endeavor to 

protect persons who, in good faith, report acts of bribery or corruption and to work together to encourage and support initiatives in 

relevant international fora to prevent bribery and corruption. 

CHAPTER TWENTY: ADMINISTRATION OF THE AGREEMENT AND TRADE

CAPACITY BUILDING

Chapter Twenty creates a Free Trade Commission to supervise 

the implementation and overall operation of the Agreement. The 

Commission comprises the Parties’ trade ministers and will meet 

annually. The Commission will assist in the resolution of any disputes that may arise under the Agreement. The Commission may 

issue interpretations of the Agreement and agree to accelerate duty 

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elimination on particular products and adjust the Agreement’s 

product-specific rules of origin. 

Each Party must designate an office to provide administrative 

assistance to dispute settlement panels and perform such other 

functions as the Commission may direct. 

Chapter Twenty also establishes a Committee on Trade Capacity 

Building comprising representatives of each Party. The overall objective of the Committee is to assist Peru to implement the Agreement and adjust to liberalized bilateral trade. Particular functions 

of the Committee include: prioritizing trade capacity building 

projects; inviting international donor institutions, private sector entities, and non-governmental organizations to assist in the development and implementation of trade capacity building projects; and 

monitoring and assessing progress in implementing those projects. 

CHAPTER TWENTY-ONE: DISPUTE SETTLEMENT

Chapter Twenty-One sets out detailed procedures for the resolution of disputes between the Parties over compliance with the 

Agreement. Those procedures emphasize amicable settlements, relying wherever possible on bilateral cooperation and consultations. 

When disputes arise under provisions common to the Agreement 

and other agreements (e.g., the WTO agreements), the complaining 

government may choose a forum for resolving the matter that is set 

forth in any valid agreement between the Parties. The selected 

forum will be the exclusive venue for resolving that dispute. 

Consultations. A Party may request consultations with the other 

Party on any actual or proposed measure that it believes might affect the operation of the Agreement. If the Parties cannot resolve 

the matter through consultations within a specified period (normally 60 days), any consulting Party may refer the matter to the 

Free Trade Commission, which will attempt to resolve the dispute. 

Panel Procedures. If the Commission cannot resolve the dispute 

within a specified period (normally 30 days), any consulting Party 

may refer the matter, if it involves an actual measure, to a panel 

comprising independent experts that the Parties select. The Parties 

will set rules to protect confidential information, provide for open 

hearings and public release of submissions, and allow an opportunity for the panel to accept submissions from non-governmental 

entities in the Parties’ territories. 

Unless the Parties agree otherwise, a panel is to present its initial report within 120 days after the last panelist is selected. Once 

the panel presents its initial report containing findings of fact and 

a determination on whether a Party has met its obligations, the 

Parties will have the opportunity to provide written comments to 

the panel. When the panel receives these comments, it may reconsider its report and make any further examination that it considers 

appropriate. Within 30 days after it presents its initial report, the 

panel will submit its final report. The Parties will then seek to 

agree on how to resolve the dispute, normally in a way that conforms to the panel’s determinations and recommendations. Subject 

to protection of confidential information, the panel’s final report 

will be made available to the public 15 days after the Parties receive it. 

Suspension of Benefits. If the Parties cannot resolve the dispute 

after they receive the panel’s final report, the Parties will seek to 

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agree on acceptable trade compensation. If they cannot agree on 

compensation, or if the complaining Party believes the defending 

Party has failed to implement an agreed resolution, the complaining Party may provide notice that it intends to suspend trade 

benefits equivalent in effect to those it considers were impaired, or 

may be impaired, as a result of the disputed measure. 

If the defending Party considers that the proposed level of benefits to be suspended is ‘‘manifestly excessive,’’ or believes that it 

has modified the disputed measure to make it conform to the 

Agreement, it may request the panel to reconvene and decide the 

matter. The panel must issue its determination no later than 90 

days after the request is made (or 120 days if the panel is reviewing both the level of the proposed suspension and a modification of 

the measure). 

The complaining Party may suspend trade benefits up to the 

level that the panel sets or, if the panel has not been asked to determine the level, up to the amount that the complaining Party has 

proposed. The complaining Party cannot suspend benefits, however, 

if the defending Party provides notice that it will pay an annual 

monetary assessment to the other Party. The amount of the assessment will be established by agreement of the Parties or, failing 

that, will be set at 50 percent of the level of trade concessions the 

complaining Party was authorized to suspend. 

Compliance Review Mechanism. If, at any time, the defending 

Party believes it has made changes in its laws or regulations sufficient to comply with its obligations under the Agreement, it may 

refer the matter to the panel. If the panel agrees, the dispute ends 

and the complaining Party must withdraw any offsetting measures 

it has put in place. Concurrently, the defending government will be 

relieved of any obligation to pay a monetary assessment. 

The Parties will review the operation of the compliance procedures either five years after the Agreement enters into force or 

within six months after benefits have been suspended or assessments paid in five proceedings initiated under this Agreement, 

which ever occurs first. 

Settlement of Private Disputes. The Parties will encourage the 

use of arbitration and other alternative dispute resolution mechanisms to settle international commercial disputes between private 

parties. Each Party must provide appropriate procedures for the 

recognition and enforcement of arbitral awards, for example by 

complying with the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards or the 1975 

Inter-American Convention on International Commercial Arbitration. 

CHAPTER TWENTY-TWO: EXCEPTIONS

Chapter Twenty-Two sets out provisions that generally apply to 

the entire Agreement. Article XX of the GATT 1994 and its interpretive notes are incorporated into and made part of the Agreement, mutatis mutandis, and apply to those Chapters related to 

treatment of goods. Likewise, for the purposes of Chapters Eleven 

(Cross-Border Trade in Services), Fourteen (Telecommunications), 

and Fifteen (Electronic Commerce), GATS Article XIV (including its 

footnotes) is incorporated into and made part of the Agreement. For 

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both goods and services, the Parties understand that these exceptions include certain environmental measures. 

Essential Security. Chapter Twenty-Two makes clear that nothing in the Agreement prevents a Party from taking actions it considers necessary to protect its essential security interests, and specifically provides that an arbitration panel must apply the essential 

security exception if a Party invokes it. With respect to non-conforming measures relating to port activities listed by Peru and the 

United States in Annex I and II, respectively, each Party has clarified that the landside aspects of port activities are subject to the 

Agreement’s essential security exception. 

Taxation. An exception for taxation limits the field of tax measures subject to the Agreement. For example, the exception generally provides that the Agreement does not affect a Party’s rights 

or obligations under any tax convention. The exception sets out certain circumstances under which tax measures are subject to the 

Agreement’s: (1) national treatment obligation for goods; (2) national treatment and NTR (MFN) obligations for services; (3) prohibitions on performance requirements; and (4) expropriation rules. 

Disclosure of Information. The Chapter also provides that a 

Party may withhold information from the other Party where such 

disclosure would impede domestic law enforcement, otherwise be 

contrary to the public interest, or prejudice the legitimate commercial interests of particular enterprises. 

CHAPTER TWENTY-THREE: FINAL PROVISIONS

Chapter Twenty-Three provides that (i) the annexes, appendices, 

and footnotes are part of the Agreement, (ii) the Parties may 

amend the Agreement subject to the legal requirements of each 

Party, and (iii) the English and Spanish texts are both authentic. 

It also provides for consultations if any provision of the WTO 

Agreement that the Parties have incorporated into the Agreement 

is amended. 

Chapter Twenty-Three establishes the procedures for the Agreement to enter into force and terminate. The Chapter provides that 

any other country or group of countries may accede to the Agreement on terms and conditions that are agreed with the Parties and 

approved according to each Party’s legal requirements. 

E. GENERAL DESCRIPTION OF THE BILL TO IMPLEMENT THE

AGREEMENT

Sec. 1. Short title; table of contents 

This section provides that the short title of the act implementing 

the Agreement is the ‘‘United States-Peru Trade Promotion Agreement Implementation Act’’ (Implementation Act). Section 1 also 

provides the table of contents for the Implementation Act. 

Sec. 2. Purposes 

This section provides that the purposes of the Implementation 

Act are to approve and implement the Agreement, to strengthen 

and develop economic relations between the United States and 

Peru, to establish free trade between the United States and Peru 

through the reduction and elimination of barriers to trade in goods 

and services and to investment, and to lay the foundation for furmmaher on PROD1PC69 with REPORTS

38 

ther cooperation to expand and enhance the benefits of the Agreement. 

Sec. 3. Definitions 

This section defines the terms ‘‘Agreement,’’ ‘‘Commission,’’

‘‘HTS,’’ and ‘‘Textile or apparel good’’ for purposes of the Implementation Act. 

TITLE I—APPROVAL OF, AND GENERAL PROVISIONS 

RELATING TO, THE AGREEMENT 

Sec. 101. Approval and entry into force of the Agreement 

This section provides congressional approval for the Agreement 

and its accompanying Statement of Administrative Action. Section 

101 also provides that, if the President determines that Peru has 

taken measures necessary to comply with obligations that take effect at the time the Agreement enters into force, the President may 

exchange notes with Peru providing for the entry into force of the 

Agreement with respect to the United States on or after January 

1, 2008. 

Sec. 102. Relationship of the Agreement to United States and state 

law 

This section establishes the relationship between the Agreement 

and U.S. law. Section 102 clearly states that no provision of the 

Agreement will be given effect if it is inconsistent with any federal 

law. 

Section 102 also provides that only the United States may bring 

a court action to resolve a conflict between a state law and the 

Agreement. And it precludes any private right of action against the 

federal government, state or local governments, or a private party 

based on the provisions of the Agreement. 

Sec. 103. Implementing actions in anticipation of entry into force 

and initial regulations 

This section provides that, following the enactment of the Implementation Act, the President may proclaim such actions, and other 

appropriate officers of the federal government may issue such regulations, as may be necessary to ensure that provisions of the legislation that take effect on the date the Agreement enters into force 

are appropriately implemented on that date. Section 103 further 

provides that, with respect to any action proclaimed by the President that is not subject to the consultation and layover provisions 

contained in section 104, such action may not take effect before the 

15th day after the date on which the text of the proclamation is 

published in the Federal Register. The 15-day restriction is waived, 

however, to the extent that it would prevent an action from taking 

effect on the date the Agreement enters into force. Section 103 also 

provides that, to the maximum extent feasible, initial regulations 

necessary or appropriate to carry out the actions required by the 

Implementation Act or proposed in the Statement of Administrative Action shall be issued within 1 year after the date on which 

the Agreement enters into force. In accordance with the Statement 

of Administrative Action, any agency unable to issue a regulation 

within 1 year must report to the relevant Congressional commitmmaher on PROD1PC69 with REPORTS

39 

tees, at least 30 days prior to the end of the 1-year period, the reasons for the delay and the expected date for issuance of the regulation. 

Sec. 104. Consultation and layover provisions for, and effective date 

of, proclaimed actions 

This section sets forth consultation and layover steps that must 

precede the President’s implementation of any action by proclamation that is subject to the requirements of this section. Under the 

consultation and layover provisions, the President must obtain advice regarding the proposed action from the Commission and from 

the appropriate advisory committees established under section 135 

of the Trade Act of 1974 (19 U.S.C. § 2155). The President must 

also submit to the Senate Committee on Finance and the House 

Committee on Ways and Means a report that sets forth the action 

proposed, the reasons for the proposed action, and the advice of the 

appropriate advisory committees and the Commission. Section 104 

sets aside a 60-day period following the date of transmittal of the 

report for the President to consult with the Senate Committee on 

Finance and the House Committee on Ways and Means on the proposed action. 

Sec. 105. Administration of dispute settlement proceedings 

This section authorizes the President to establish or designate 

within the Department of Commerce an office responsible for providing administrative assistance to dispute settlement panels established under Chapter 21 of the Agreement. Section 105 also authorizes the appropriation of funds to support this office. 

Sec. 106. Arbitration of claims 

This section authorizes the United States to use binding arbitration to resolve certain claims against the United States pursuant 

to the Investor-State Dispute Settlement procedures set forth in 

section B of Chapter 10 of the Agreement. 

Sec. 107. Effective dates; effect of termination 

This section provides that the provisions of the Implementation 

Act and the amendments made by it take effect on the date on 

which the Agreement enters into force, except for sections 1 

through 3 and Title I, which take effect on the date of enactment 

of the Implementation Act. Section 107 also provides that the provisions of the Implementation Act and the amendments to other 

statutes made by it will cease to have effect on the date on which 

the Agreement terminates. 

TITLE II—CUSTOMS PROVISIONS 

Sec. 201. Tariff modifications 

Section 201(a) authorizes the President to implement by proclamation the modification or continuation of any duty, imposition of 

any additional duties, or the continuation of duty-free or excise 

treatment that the President determines to be necessary or appropriate to carry out or apply Articles 2.3, 2.5, 2.6, 3.3.13, and Annex 

2.3 of the Agreement. In addition, section 201(a) requires the President to terminate the designation of Peru as a beneficiary develmmaher on PROD1PC69 with REPORTS

40 

oping country for purposes of the GSP program on the date the 

Agreement enters into force. 

Section 201(b) authorizes the President, subject to the consultation and layover provisions of section 104, to proclaim the modification or continuation of any duty, the modification of the staging of 

any duty elimination, the imposition of additional duties, or the 

continuation of duty-free or excise treatment that the President determines to be necessary or appropriate to maintain the general 

level of reciprocal and mutually advantageous concessions with respect to Peru provided by the Agreement. 

Section 201(c) authorizes the President, with respect to any good 

for which the base rate of duty in the Tariff Schedule of the United 

States to Annex 2.3 of the Agreement is a specific or compound 

rate of duty, to substitute for the base rate an ad valorem rate that 

the President determines to be equivalent to the base rate. 

Section 201(d) authorizes the President, in implementing the tariff rate quotas set forth in the Agreement, to take actions necessary 

to ensure that imports of agricultural goods do not disrupt the orderly marketing of commodities in the United States. 

Sec. 202. Additional duties on certain agricultural goods 

Section 202 implements the agricultural safeguard provisions of 

the Agreement. Section 202(a) defines the terms ‘‘applicable NTR 

(MFN) rate of duty,’’ ‘‘schedule rate of duty,’’ and ‘‘safeguard good’’ for purposes of section 202. Section 202(b) requires the Secretary 

of the Treasury (Secretary) to impose additional duties on imports 

of certain Peruvian agricultural goods if the Secretary determines 

that, prior to such importation, the total volume of the imported 

good in a calendar year exceeds 130 percent of the volume provided 

for that good in the Schedule of the United States to Annex 2.3 of 

the Agreement. Section 202(c) provides that the Secretary may not 

impose an additional duty 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 Implementation Act or under the 

safeguard procedures set out in chapter 1 of title II of the Trade 

Act of 1974. Finally, Section 202(d) provides that the additional duties shall cease to apply to a good on the date on which duty-free 

treatment must be provided to that good under the Schedule of the 

United States to Annex 2.3 of the Agreement. 

Sec. 203. Rules of origin 

Section 203 implements the general rules of origin set forth in 

Chapter 4 of the Agreement. These rules define the circumstances 

under which a good imported from Peru qualifies as an originating 

good and is thus eligible for preferential tariff treatment under the 

Agreement. 

Section 203(a) establishes the Harmonized Tariff Schedule of the 

United States (HTS) as the basis of any tariff classification. It also 

provides that any cost or value referred to in section 203 shall be 

recorded and maintained in accordance with the generally accepted 

accounting principles applicable in the territory of the country in 

which the good is produced. 

Section 203(b) provides that a good is an originating good if it 

falls within one of three specified categories. First, a good qualifies 

as an originating good if it is wholly obtained or produced entirely 

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41 

in the territory of Peru, the United States, or both. Second, a good 

qualifies as an originating good if the good is produced in the territory of Peru, the United States, or both, and the 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 and to meet other requirements specified in Annex 3–A or 

Annex 4.1 of the Agreement. Third, and finally, a good qualifies as 

an originating good if the good is produced entirely in the territory 

of Peru, the United States, or both, exclusively from materials that 

fall within the first two categories. 

The remainder of section 203 sets forth specific rules related to 

determining whether a good meets the Agreement’s specific requirements to qualify as an originating good. Section 203(c) implements provisions in Annex 4.1 of the Agreement that require certain goods to have a specified percentage of ‘‘regional value content’’ to qualify as originating goods. It prescribes alternative methods for calculating regional value content, as well as a specific 

method that must be used in the case of certain automotive goods. 

Section 203(d) addresses how materials are to be valued for purposes of calculating the regional value content of a good under subsection 203(c) and for purposes of applying the de minimis rules 

under subsection 203(f). Section 203(e) provides a rule of accumulation for originating materials from the territory of Peru or the 

United States that are used in the production of a good in the territory of the other country. Section 203(f) provides that a good is not 

disqualified as an originating good if it contains de minimis quantities of non-originating materials that do not undergo a change in 

tariff classification. Section 203(g) addresses how to determine 

whether fungible goods and materials qualify as originating or nonoriginating under the Agreement. Section 203(h) provides rules for 

the treatment of accessories, spare parts, or tools that are delivered 

with a good. Sections 203(i) and (j) address the treatment of packaging materials and containers for retail sale and for shipment in 

determining whether a good qualifies as an originating good. Section 203(k) provides that indirect materials shall be treated as originating materials without regard to where they are produced. Section 203(l) provides rules for the treatment of goods that undergo 

further production in a third country or that otherwise transit 

through a third country. And section 203(m) provides rules for the 

treatment of goods classifiable as sets. 

Section 203(n) defines various terms used in section 203. Section 

203(o) authorizes the President to proclaim the specific rules of origin set forth in Annex 3–A and Annex 4.1 of the Agreement and 

to modify certain rules of origin in the Agreement by proclamation 

subject to the consultation and layover provisions of section 104. 

Sec. 204. Customs user fees 

This section provides for the immediate elimination of the merchandise processing fee for goods qualifying as originating goods 

under the Agreement. Processing of goods qualifying as originating 

goods will be financed from the General Fund of the Treasury. 

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42 

Sec. 205. Disclosure of incorrect information; false certifications of 

origin; denial of preferential tariff treatment 

Section 205(a) amends section 592 of the Tariff Act of 1930 (19 

U.S.C. § 1592) to impose penalties on an importer, exporter, or producer that makes an invalid claim for preferential tariff treatment 

under the Agreement through negligence, gross negligence, or 

fraud, unless the importer, exporter, or producer, after discovering 

that the claim is invalid, promptly and voluntarily corrects the 

claim and pays any customs duties owed. Section 205(b) amends 

section 514 of the Tariff Act of 1930 (19 U.S.C. § 1514) to provide 

that, if an importer, exporter, or producer has engaged in a pattern 

of conduct in providing false representations that a good qualifies 

as originating, the United States may suspend preferential tariff 

treatment under the Agreement to identical goods covered by any 

subsequent representations that the person may make. 

Sec. 206. Reliquidation of entries 

Section 206 amends section 520(d) of the Tariff Act of 1930 (19 

U.S.C. § 1520(d)) to allow an importer to claim preferential tariff 

treatment for an originating good within 1 year of importation, 

even if no such claim was made at the time of the importation. 

Sec. 207. Recordkeeping requirements 

Section 207 amends section 508 of the Tariff Act of 1930 (19 

U.S.C. § 1508) to establish recordkeeping requirements for U.S. exporters and producers that issue certifications of origin for goods 

exported to Peru. 

Sec. 208. Enforcement relating to trade in textile or apparel goods 

This section authorizes the President to apply anti-circumvention 

provisions concerning trade in textile and apparel goods. Pursuant 

to article 3.2 of the Agreement, the Secretary may request that the 

Government of Peru conduct a verification to determine the compliance of exporters and producers with applicable customs laws, regulations, and procedures regarding trade in textile or apparel 

goods, and to determine the accuracy of a claim of origin for a textile or apparel good. Section 208(a) provides that the President may 

direct the Secretary to take ‘‘appropriate action’’ while the 

verification is being conducted. Under section 208(b), such appropriate action includes detaining, suspending preferential tariff 

treatment of, or denying entry to, any textile or apparel good that 

the person subject to the verification has produced or exported or 

for which a claim has been made that is the subject of the 

verification if the Secretary determines there is insufficient information to support a claim for such treatment. 

Section 208(c) permits the President to direct the Secretary to 

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

Section 208(d) defines ‘‘appropriate action’’ to include the denial of 

preferential treatment or entry to textile or apparel goods that the 

person subject to the verification has exported or produced until 

such time as the Secretary receives information sufficient to prove 

compliance or until an earlier date as the President may direct. 

Finally, section 208(e) permits the Secretary to publish the name 

of any person that the Secretary determines has engaged in circumvention of applicable laws, regulations, or procedures affecting 

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43 

trade in textile or apparel goods or has failed to demonstrate that 

it produces, or is capable of producing, textile or apparel goods. 

Sec. 209. Regulations 

Section 209 authorizes the Secretary to prescribe regulations necessary to carry out the rules of origin and customs user fee provisions in the Implementation Act and to carry out the President’s 

proclamation authority under section 203(o). 

TITLE III—RELIEF FROM IMPORTS 

Sec. 301. Definitions 

This section defines the terms ‘‘Peruvian article’’ and ‘‘Peruvian 

textile or apparel article’’ for purposes of this title. Section 301(1) 

defines ‘‘Peruvian article’’ as an article that qualifies as an originating good under section 203(b) of the Implementation Act. And 

section 301(2) defines ‘‘Peruvian textile or apparel article’’ as a 

good listed in the Annex to the WTO Agreement on Textiles and 

Clothing, other than a good listed in Annex 3–C of the Agreement, 

that is a Peruvian article. 

SUBTITLE A—RELIEF FROM IMPORTS BENEFITING FROM THE

AGREEMENT

Subtitle A of title III implements the bilateral safeguard provisions set out in Chapter Eight of the Agreement. It authorizes the 

President, after an investigation and affirmative determination by 

the Commission, to suspend duty reductions or impose duties temporarily up to NTR (MFN) rates on a ‘‘Peruvian article’’ when, as 

a result of the reduction or elimination of a duty under the Agreement, the article 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 that produces a like or directly competitive good. The 

standards and procedures set out in this subtitle closely parallel 

the procedures for global safeguards set forth in sections 201 

through 204 of the Trade Act of 1974 (19 U.S.C. §§ 2251–2254). 

Sec. 311. Commencing of action for relief 

Section 311(a) requires an entity that is representative of an industry to file a petition with the Commission to commence a bilateral safeguard investigation. Section 311(a) defines an entity to include a trade association, firm, certified or recognized union, or a 

group of workers. 

Section 311(b) provides that, upon the filing of a petition, the 

Commission shall promptly initiate an investigation to determine 

whether, as a result of the reduction or elimination of a duty provided for under the Agreement, a Peruvian article is being imported into the United States in such increased quantities and 

under such conditions that imports of the Peruvian article constitute a substantial cause of serious injury, or threat of serious injury, to the domestic industry producing an article that is like, or 

directly competitive with, the imported article. 

Section 311(c) extends certain provisions (both substantive and 

procedural) contained in subsections (b), (c), and (i) of section 202 

of the Trade Act of 1974 (19 U.S.C. § 2252(b), (c), and (i)), which 

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44 

apply to global safeguard investigations, to any bilateral safeguard 

initiated under the Agreement. These provisions include, inter alia, 

the requirement that the Commission publish notice of the commencement of an investigation; the requirement that the Commission hold a public hearing at which interested parties and consumers have the right to be present and to present evidence; the 

factors to be taken into account by the Commission in making its 

determinations; and authorization for the Commission to promulgate regulations providing access to confidential business information under protective order to authorized representatives of interested parties in an investigation. 

Section 311(d) precludes the initiation of a bilateral safeguard investigation with respect to any Peruvian article for which import 

relief has already been provided under subtitle A. 

Sec. 312. Commission action on petition 

Section 312(a) establishes deadlines for Commission action following the initiation of a bilateral safeguard investigation. Section 

312(b) applies certain statutory provisions regarding an equally divided vote by the Commission in a global safeguard investigation 

under section 202 of the Trade Act of 1974 (19 U.S.C. § 2252) to 

Commission determinations and findings under this section. If the 

Commission renders an affirmative injury determination or a determination that the President may treat as an affirmative determination in the event of an equally divided vote by the Commission, section 312(c) requires the Commission to find and recommend to the President the amount of import relief that is necessary to remedy or prevent the injury and to facilitate the efforts 

of the domestic industry to make a positive adjustment to import 

competition. Section 312(d) requires the Commission to submit a 

report to the President regarding its determination and specifies 

the information that the Commission must include in the report. 

Upon submitting the report to the President, section 312(e) requires the Commission to promptly release the report to the public, 

except for any confidential information contained therein, and to 

publish a summary of the report in the Federal Register. 

Sec. 313. Provision of relief 

Section 313(a) directs the President, not later than 30 days after 

receiving the report from the Commission, to provide relief from 

imports of the article subject to an affirmative determination by 

the Commission, or a determination that the President treats as affirmative, to the extent that the President determines is necessary 

to remedy or prevent the injury and to facilitate the efforts of the 

domestic industry to make a positive adjustment to import competition. Section 313(b), however, provides that the President need not 

provide import relief if the President determines that the import 

relief will not provide greater economic and social benefits than 

costs. 

Section 313(c) specifies the nature of the import relief that the 

President may impose, which includes the suspension of any further reduction in the rate of duty imposed on the article in question under Annex 2.3 of the Agreement and an increase in the rate 

of duty imposed on such article to a level that does not exceed the 

lesser of (1) the NTR (MFN) duty rate at the time the import relief 

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45 

is provided; or (2) the NTR (MFN) duty rate on the day before the 

Agreement enters into force. Section 313(c) also requires the President to provide for the progressive liberalization of import relief at 

regular intervals during the period of its application if that period 

exceeds one year. 

Section 313(d) limits any import relief that the President imposes 

in a bilateral safeguard action to no more than 4 years in the aggregate. The initial period of import relief that the President imposes may not exceed 2 years. The President may extend the relief 

up to an additional 2 years, however, if (1) the Commission makes 

an affirmative determination, or a determination that the President treats as affirmative, that import relief continues to be necessary to remedy or prevent serious injury and that there is evidence that the domestic industry is making a positive adjustment 

to import competition; and (2) the President makes a determination 

to the same effect. 

Section 313(e) specifies the duty rate to be applied to Peruvian 

articles after termination of a safeguard action. On the termination 

of import relief, the rate of duty for the remainder of the calendar 

year shall be the rate that was scheduled to have been in effect one 

year after the initial provision of import relief. For the rest of the 

duty phase-out period, the President may set the duty either at the 

rate called for under the Schedule of the United States to Annex 

2.3 of the Agreement or in a manner that eliminates the duty in 

equal annual stages ending on the date set out in that Schedule. 

Section 313(f) precludes the application of import relief pursuant 

to the bilateral safeguard provisions with respect to any Peruvian 

article that is (1) subject to import relief under the global safeguard 

provisions in chapter 1 of title II of the Trade Act of 1974 (19 

U.S.C. §§ 2251 et seq.); (2) subject to import relief under subtitle B 

of title III of the Implementation Act; or (3) subject to an additional 

duty assessment under section 202(b) of the Implementation Act. 

Sec. 314. Termination of relief authority 

This section provides that the President’s authority to impose import relief under the bilateral safeguard expires 10 years after the 

date on which the Agreement enters into force. If, however, the period for elimination of duties on a particular article exceeds 10 

years, relief may be provided for that article until the date on 

which the duty elimination period ends. 

Sec. 315. Compensation authority 

This section authorizes the President, under section 123 of the 

Trade Act of 1974 (19 U.S.C. § 2133), to grant new concessions to 

Peru as compensation for the imposition of import relief pursuant 

to the bilateral safeguard. 

Sec. 316. Confidential business information 

This section applies the same procedures for the treatment and 

release of confidential business information by the Commission in 

a global safeguard investigation under chapter 1 of title II of the 

Trade Act of 1974 (19 U.S.C. §§ 2251 et seq.) to investigations 

under title III of the Implementation Act. 

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46 

SUBTITLE B—TEXTILE AND APPAREL SAFEGUARD MEASURES

Subtitle B of title III implements the Agreement’s textile and apparel safeguard. 

Sec. 321. Commencement of action for relief 

Section 321(a) requires an interested party to file a request with 

the President in order to commence action for relief under the textile and apparel safeguard. Upon the filing of a request, the President must review the request to determine, from information presented in the request, whether to commence consideration of the 

request on its merits. Section 321(b) provides that, if the President 

determines that the request contains the information necessary for 

the request to be considered on the merits, the President must publish notice in the Federal Register stating that the request will be 

considered and seeking public comments on the request. The notice 

must contain a summary of the request and the dates by which 

comments and rebuttals must be received. 

The Committee notes our regulatory processes should be administered in an open and transparent manner that can serve as a 

model for our trading partners. For example, the Committee understands that, in addition to publishing a summary of a request for 

safeguard relief, the President plans to make the full text of the 

request available on the U.S. Department of Commerce’s International Trade Administration website, subject to the protection of 

confidential business information, if any. The Committee encourages this and similar efforts to enhance government transparency. 

Sec. 322. Determination and provision of relief 

Section 322 sets out the procedures to be followed in considering 

a request filed under section 321. If a positive determination is 

made under section 321(b), section 322(a) requires the President to 

determine whether, as a result of the elimination of a duty under 

the Agreement, a Peruvian textile or apparel article is being imported into the United States in such increased quantities 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. Section 322(a) also 

provides that, in making such a determination, the President shall 

examine the effect of increased imports on the domestic industry’s 

output, productivity, capacity utilization, inventories, market 

share, exports, wages, employment, domestic prices, profits and 

losses, and investment, none of which is necessarily decisive. Finally, section 322(a) provides that the President shall not consider 

changes in consumer preference or technology as factors supporting 

a determination of serious damage or actual threat thereof. 

Section 322(b) authorizes the President, in the event of an affirmative determination of serious damage or actual threat thereof, 

to provide import relief to the extent that the President determines 

is necessary to remedy or prevent the serious damage and to facilitate adjustment by the domestic industry. Section 322(b) also specifies the nature of the import relief that the President may impose, 

which consists of an increase in the rate of duty imposed on the 

article to a level that does not exceed the lesser of (1) the NTR 

(MFN) duty rate in place for the textile or apparel article at the 

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47 

time the import relief is provided, or (2) the NTR (MFN) duty rate 

for that article on the day before the Agreement enters into force. 

Sec. 323. Period of relief 

Section 323 limits any import relief that the President imposes 

under the textile and apparel safeguard to no more than 3 years 

in the aggregate. Section 323(a) provides that the initial period of 

import relief that the President imposes may not exceed 2 years. 

Under section 323(b), however, the President may extend the relief 

up to 1 additional year if the President determines that (1) the import relief continues to be necessary to remedy or prevent serious 

damage and to facilitate adjustment by the domestic industry to 

import competition, and (2) there is evidence that the domestic industry is, in fact, adjusting to import competition. 

Sec. 324. Articles exempt from relief 

This section precludes the President from providing import relief 

under the textile and apparel safeguard with respect to a Peruvian 

article if import relief previously has been provided under subtitle 

B of title III of the Implementation Act or if the article is subject 

to import relief under subtitle A of title III of the Implementation 

Act or under the global safeguard provisions in chapter 1 of title 

II of the Trade Act of 1974 (19 U.S.C. §§ 2251 et seq.). 

Sec. 325. Rate after termination of import relief 

This section provides that the duty rate applicable to a textile or 

apparel article after termination of the import relief shall be the 

duty rate that would have been in effect for that article, but for the 

provision of such relief, on the date on which the relief terminates. 

Sec. 326. Termination of relief authority 

This section provides that the President’s authority to impose import relief under the textile and apparel safeguard expires 5 years 

after the date on which the Agreement enters into force. 

Sec. 327. Compensation authority 

This section authorizes the President, under section 123 of the 

Trade Act of 1974 (19 U.S.C. § 2133), to grant new concessions to 

Peru as compensation for the imposition of import relief pursuant 

to the textile and apparel safeguard. 

Sec. 328. Confidential business information 

This section precludes the President from releasing information 

received in a textile and apparel safeguard proceeding that the 

President considers to be confidential business information unless 

the party submitting the confidential business information had notice, at the time of submission, that the information would be released by the President, or the party subsequently consents to the 

release of the information. This section also provides that, to the 

extent a party submits confidential business information to the 

President, the party shall also submit a nonconfidential version of 

the information in which the confidential business information is 

summarized or, if necessary, deleted. 

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48 

SUBTITLE C—CASES UNDER TITLE II OF THE TRADE ACT OF 1974 

Subtitle C of title III implements the global safeguard provisions 

of the Agreement. It authorizes the President, in granting global 

import relief under the global safeguard provisions in sections 201 

through 204 of the Trade Act of 1974 (19 U.S.C. §§ 2251–2254), to 

exclude imports of originating articles from the relief when certain 

conditions are present. 

Sec. 331. Findings and action on goods of Peru 

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

treat as an affirmative determination, in a global safeguard investigation initiated under chapter 1 of title II of the Trade Act of 

1974 (19 U.S.C. §§ 2251 et seq.), the Commission must find and report to the President whether imports of the article from Peru that 

qualify as originating goods under section 203(b) of the Implementation Act are a substantial cause of serious injury or threat thereof. Section 331(b) provides that, if the Commission makes a negative finding under section 331(a), the President may exclude the 

Peruvian articles from the global safeguard action. 

TITLE IV—PROCUREMENT 

Sec. 401. Eligible products 

This section amends section 308(4)(A) of the Trade Agreements 

Act of 1979 (19 U.S.C. § 2518(4)(A)) to implement the government 

procurement provisions of the Agreement. 

TITLE V—TRADE IN TIMBER PRODUCTS OF PERU 

Annex 18.3.4 of the Agreement requires Peru to take certain actions to enhance its forest sector governance and promote legal 

trade in timber products. The Annex also authorizes the United 

States to take steps to ensure that timber products of Peru that are 

exported to the United States comply with Peruvian law governing 

the harvest of, and trade in, those products. 

Sec. 501. Enforcement relating to trade in timber products of Peru 

Section 501 requires the President to establish an interagency 

committee within 90 days after the Agreement enters into force to 

oversee the implementation of Annex 18.3.4. Section 501 also describes requests and determinations that the committee may make 

relating to audits and verifications pursuant to the Annex, and it 

authorizes the committee to request verifications and take appropriate enforcement measures, including directing U.S. Customs and 

Border Protection to apply import measures of the type and in the 

circumstances contemplated under the Annex. 

In particular, section 501(b) authorizes the committee to ask the 

Government of Peru to conduct an audit to determine whether a 

particular producer or exporter in Peru is complying with Peruvian 

laws governing the harvest of, and trade in, timber products. The 

committee, under section 501(c), may also ask the Government of 

Peru to conduct a verification with respect to a particular shipment 

of timber products from Peru to determine whether the producer or 

exporter of the products complied with such laws. Section 501(c) 

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49 

also authorizes the committee to request permission from the Government of Peru for officials of an agency represented on the committee to participate in a verification visit. Pending the results of 

the verification, the committee may direct U.S. Customs and Border Protection to detain the shipment subject to the verification or, 

if the Government of Peru has denied a request by the Committee 

to participate in a verification visit, to deny entry to the shipment. 

After the Government of Peru provides a report to the committee 

describing the results of the verification, section 501(c) provides 

that the committee must determine whether action is appropriate. 

Such actions may include (1) directing U.S. Customs and Border 

Protection to deny entry to the shipment that was the subject of 

the verification; (2) directing U.S. Customs and Border Protection 

to deny entry to products of the producer or exporter subject to the 

verification that were derived from any tree species listed in Appendices to the Convention on International Trade in Endangered 

Species of Wild Fauna and Flora if the producer or exporter has 

knowingly provided false information to U.S. or Peruvian officials; 

or (3) any other action the committee considers appropriate. If the 

Government of Peru fails to provide a verification report, the committee may take such action with respect to the relevant exporter’s 

timber products as the committee considers appropriate. 

Section 501(d) provides that neither the committee nor any agency represented on the committee may disclose documents or information received in the course of an audit under section 501(b) or 

a verification under section 501(c) without the specific permission 

of the Government of Peru. Section 501(e), however, directs the 

committee to make publicly available in a timely manner any information on bilateral trade in timber products exchanged with Peru 

under paragraph 17 of the Annex. 

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

with respect to the administration of the Endangered Species Act 

of 1973 (16 U.S.C. §§ 1531 et seq.) and the Lacey Act Amendments 

of 1981 (16 U.S.C. §§ 3371 et seq.), the authority of various administering agencies under any other law, and the effect on proceedings and determinations under any law administered by those 

agencies. 

Section 501(g) requires the Secretaries of Agriculture, Homeland 

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

section 501. And section 501(h) requires the President to consult 

with the Senate Committee on Finance and the House Committee 

on Ways and Means, within 90 days after the Agreement enters 

into force and as appropriate thereafter, on the resources needed 

to implement the Annex. 

Sec. 502. Report to Congress 

This section requires the U.S. Trade Representative, in consultation with other appropriate agencies, to provide periodic reports to 

the Senate Committee on Finance and the House Committee on 

Ways and Means on the steps the United States and Peru have 

taken to carry out the Annex and on activities related to forest sector governance carried out under the Environmental Cooperation 

Agreement that the United States and Peru negotiated concurrently with the United State-Peru Trade Promotion Agreement. 

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50 

TITLE VI—OFFSETS 

Sec. 601. Customs user fees 

Section 601(a) amends section 13031(j)(3)(A) of the Consolidated 

Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 

§ 58c(j)(3)(A)) to extend the collection of merchandise processing 

fees from October 21, 2014 to December 13, 2014. 

Section 601(b) amends section 13031(j)(3)(B)(i) of the Consolidated Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 

§ 58c(j)(3)(B)(i)) to extend the collection of passenger and conveyance processing fees from October 7, 2014 to December 13, 2014. 

Sec. 602. Time for payment of corporate estimated taxes 

This section amends section 401(l) of the Tax Increase Prevention 

and Reconciliation Act of 2005 (26 U.S.C. § 6655 note) to increase 

the portion of corporate estimated tax payments due in July, August, and September of 2012 for corporations with at least $1 billion in assets from 115 percent to 115.75 percent of the payment 

otherwise due. 

F. VOTE OF THE COMMITTEE IN REPORTING THE BILL

In compliance with section 133 of the Legislative Reorganization 

Act of 1946, the Committee states that on October 4, 2007, S. 2113 

was ordered favorably reported, without amendment, by voice vote, 

a quorum being present. 

II. BUDGETARY IMPACT OF THE BILL 

S. 2113—United States-Peru Trade Promotion Agreement Implementation Act 

Summary: S. 2113 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 S. 2113 also would increase direct spending by $4 million in 2008 and 

by $27 million over the 2008–2012 period, and reduce direct spend- ing 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 reviewed the nontax provisions of S. 

2113 and determined that the extension of customs user fees and 

the imposition of new record-keeping requirements on exporters of 

goods to Peru are private-sector mandates as defined in UMRA. We 

estimate that the aggregate costs of those mandates would greatly 

exceed the annual threshold established in UMRA for private secmmaher on PROD1PC69 with REPORTS

51 

tor mandates ($131 million in 2007, adjusted annually for 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 

CHANGES IN REVENUES 

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

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

CHANGES IN DIRECT SPENDING 

Customs User Fees: 

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

Sources: Congressional Budget Office and Joint Committee on Taxation. 


mmaher on PROD1PC69 with REPORTS
53 

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. 

S. 2113 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). S. 2113 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–

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

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54 

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 S. 2113 contain no 

intergovernmental mandates as defined in UMRA. 

Estimated impact on the private sector: CBO has determined 

that the non-tax provisions of S. 2113 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 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 would be minimal. 

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. 

mmaher on PROD1PC69 with REPORTS

55 

Estimate approved by: G. Thomas Woodward, Assistant Director 

for Tax Analysis; Theresa Gullo, Deputy Assistant Director for 

Budget Analysis. 

III. REGULATORY IMPACT OF THE BILL AND OTHER 

MATTERS 

Pursuant to the requirements of paragraph 11(b) of Rule XXVI 

of the Standing Rules of the Senate, the Committee states that the 

bill will not significantly regulate any individuals or businesses, 

will not affect the personal privacy of individuals, and will result 

in no significant additional paperwork. 

The following information is provided in accordance with section 

423 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. 

L. No. 104–04). The Committee has reviewed the provisions of S. 

2113 as approved by the Committee on October 4, 2007. In accordance with the requirements of Pub. L. No. 104–04, the Committee 

has determined that the bill contains no intergovernmental mandates, as defined in the UMRA, and will not affect the budgets of 

State, local, or tribal governments. The Committee has determined 

that the bill does impose private-sector mandates, as defined in the 

UMRA, by extending customs user fees and by imposing 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 fiscal year 2015. Although 

the aggregate cost to the private sector of the record-keeping requirements will be minimal, the aggregate cost of the extension of 

customs fees will amount to approximately $485 million in fiscal 

year 2015. 

mmaher on PROD1PC69 with REPORTS

(56) 

IV. ADDITIONAL VIEWS OF SENATOR ORRIN G. HATCH 

The changes in the Peruvian Agreement to the intellectual property rights (IPR) and labor chapters will become more relevant 

when we as a nation begin to negotiate future free trade agreements with deserving nations. 

The labor chapter of U.S.-Peru Free Trade Agreement could put 

U.S. Federal and State labor laws at significant risk. Several provisions of the labor chapter of the US-Peru trade agreement create 

an unacceptable risk that the United States will be required to 

change important provisions of U.S. Federal and state labor law or 

be subject to trade sanctions. Given that the purpose of the May 

10th agreement was to ensure that Peru adopted strong labor provisions, not the United States, Congress’ implementation of this 

agreement should provide an explicit safe harbor for US labor law. 

The Peru FTA Requirement to Adopt ‘‘Fundamental Labor 

Rights’’ Puts Right-to-Work, Freedom of Association and other 

Major US Labor Provisions at Significant Risk. Article 17.2 of the 

Peru FTA requires both Peru and the United States to ‘‘adopt and 

maintain in its statutes and regulations, and practices there under, 

the following rights as stated in the International Labor Organization ILO Declaration on Fundamental Principles and Rights at 

Work and its Follow-up (1998) (ILO Declaration) where it affects 

trade between the countries. These rights are freedom of association, recognition of collective bargaining, elimination of forced/ compulsory labor, effective abolition of child labor, prohibition of worst 

forms of child labor, and elimination of employment discrimination. 

The Peru FTA does not provide any definition of these fundamental rights, leaving the interpretation of what constitutes ‘‘freedom of association’’ or ‘‘collective bargaining’’ to a dispute settlement panel appointed by the US and Peruvian governments. 

Given the agreement’s reference to the ILO Declaration, it is 

widely expected that such a dispute settlement panel would in fact 

look at and rely at least partially on the standards of the relevant 

ILO core conventions associated with these rights, much as the ILO 

does each year in its follow-up reports required by the ILO Declaration. The recent push by House Democrats to have Peru enact very 

detailed changes to its treatment of contract laborers as part of its 

implementation of the agreement—an issue not specifically addressed in the Peru FTA—confirms the wide range of issues subject 

to this chapter. 

The United States, which has only ratified two of the eight ILO 

core conventions, faces substantial risk that a panel will find that 

US labor law violates the Peru FTA, requiring the US to change 

its law or face trade sanctions. Key US laws subject to that risk 

include: 

• State right-to-work rules, which standard labor market 

analysis and several other countries (such as Canada) find immmaher on PROD1PC69 with REPORTS

57 

poses an improper restraint on the ability of workers to bargain collectively or to strike (as non-union workers have the 

authority to vote on whether to strike); • U.S. prohibitions on the admission to unions of persons 

connected with the Communist Party or the Klu Klux Klan 

given that ILO standards require the admission of all applicants; • U.S. prohibitions in the National Labor Relations Act 

(NLRA) on the inclusion of supervisors in union, which is required by ILO conventions; • Exclusive bargaining rights provided under the NLRA, 

which are in conflict with ILO standards requiring minority 

unions be allowed to function; • Various federal and state laws that place reasonable and 

balanced limits on the right to strike, which are in conflict 

with the ILO conventions’ prohibition on virtually all restrictions on the right to strike; • U.S. laws permitting the permanent replacement of striking workers, which the ILO has indicated may pose a risk to 

the effective enforcement of the right of collective bargaining 

when it occurs on an extensive basis; • Fair Labor Standards Act minimum age of 14 and state 

laws where there are no minimum ages for children working 

in agriculture contravenes the ILO Minimum Age convention; 

and • Lack of equal remuneration or comparable worth rules. 

It is very unfortunate that the Peru FTA is likely to require state 

labor law changes as well. By requiring the adoption of these rights 

at the federal level, the Peru FTA in combination with the US Constitution’s Supremacy Clause (Art. VI, section 2) is also expected to 

require any changes made at the federal level to preempt conflicting state law. As a result, state right-to-work rules or lower 

minimum age standards would face significant risk of being overturned by dispute settlement panels. 

The Peru FTA requires parties to promote migrant worker 

rights. Annex 17.6 requires the United States and Peru to engage 

in a wide range of capacity building work. While much of it could 

be useful, its obligation to promote migrant rights, without regard 

to the legal status of a migrant, creates a troubling requirement 

that the United States would be promoting rights for illegal immigrants at odds with Congress’ direction. 

For years, I have been a steadfast supporter of fair intellectual 

property laws that are appropriately enforced. The Constitution 

itself provides for the creation of intellectual property and it has 

been the process used by brilliant U.S. innovators to develop, market, and sale groundbreaking new products for years. In the sea of 

red trade deficits we have faced for so many years now, IP and the 

innovative U.S. products that use its protection have been one of 

the few areas where the U.S. has a trade surplus. 

Traditionally, trade agreements have strengthened American innovation abroad. However, with the newly renegotiated text found 

within the U.S.-Peru FTA’s IPR chapter we see that we have 

walked back from the rigorous IPR protections found in previous 

agreements in favor of weakened provisions. These changes mainly 

mmaher on PROD1PC69 with REPORTS

58 

affect one of America’s most productive industries, that of pharmaceuticals. 

The U.S. Peru FTA weakens IP protection in three ways: 

First, the agreement does away with patent linkage. Linkage requires a country, before it approves a generic medicine for sale, to 

ensure that the brand-name medicine is no longer under patent. 

Without linkage, governments can help facilitate patent infringement. Linkage doesn’t hinder access to medicines and it’s not about 

compulsory licensing. It’s about protection of basic patent rights. 

The proposed changes replace this simple enforcement procedure 

with a complex one. I don’t see what that accomplishes. 

Second, the changes shorten the period of data exclusivity for innovative medicines, authorizing a shorter period than we require 

here in the United States. This change is not only unfair to U.S. 

innovators but devalues the incentive for launching new drugs in 

developing countries. Here’s why. In developing countries, it is 

often difficult to enforce patent rights. But data protection is effective and relatively easy to administer. It often provides the only 

real protection biopharmaceutical companies have when they invest 

significant resources to launch new products. You take away the 

protection and you take away the incentive to launch. It’s hard 

enough to get companies to launch medicines quickly in these countries because the markets are so small. If you shrink data protection, you effectively shrink the market even further. 

Finally, the new template no longer requires countries to add 

time to patent terms for pharmaceuticals to make up for undue 

delays in marketing approval or patent grant. We require patent 

restoration here in the United States, so why not abroad? Because, 

critics argue, patent terms are long enough as they are. But without patent term restoration, we actually go the other direction. 

Without patent term restoration, the effective patent term could actually shrink significantly. 

From what I understand, the Democrats insisted on the changes 

to the IPR Chapter in order to grant greater access to medicines 

for developing nations. What is ironic to me is that these changes 

will do just the opposite. 

All of these changes were ostensibly part of an effort to promote 

access to medicines to poor people. A noble goal. But what’s so absurd about this is that the changes may actually have the opposite 

effect, and harm U.S. competitiveness in the process. 

Why would we backtrack on IPR? Some may say that we are rich 

enough so that we can afford to give away the fruits of our ingenuity. But that’s like saying we are rich enough to voluntarily close 

down our factories so that our competitors can have a chance. We 

don’t have that luxury. 

Some say backtracking on IPR is necessary to help the poor and 

sick. That, too, is wrong. IPR is all about incentives. If you protect 

IPR, then people will have a stronger incentive to develop new and 

innovative products and bring them to market faster. If you don’t 

protect IPR, then those incentives are greatly diminished. Here is 

what we might expect with weak IPR protection: 

There would be less incentive to launch products early in developing countries. Innovative companies would have less reason to 

mmaher on PROD1PC69 with REPORTS

59 

show up when their technology could immediately be copied and 

sold by others who made no contribution to the R&D. 

If there were fewer brand-name launches, there would be fewer 

generics. As brand-name medicines go off patent, generic medicine 

companies can rely on the safety approvals and market secured by 

the research-based companies, making more generics available to 

more people. Without the brand name company securing the safety 

approvals and creating the market, fewer generics can enter the 

marketplace, and fewer people will get the medicines they need. 

As a result, the poor would not have access the newest and most 

effective medicines. It is easy and convenient to use IPR as a scapegoat for poor health care systems. The reality is that access to 

medicines is helped, not hindered, by strong IPR protections. Problems in access to medicines are most often due to other factors, 

such as poor infrastructure, taxes, tariffs, an ineffective health care 

system, and different government funding priorities. By pointing at 

IPR, we divert attention from these much more critical problems. 

In sum, the changes we have foisted upon Peru are harmful not 

only to U.S. interests, but also to the very interests they purport 

to serve. 

I applaud the USTR and her staff on their hard work in negotiating this agreement, especially in the area of Intellectual Property 

Rights however, I know there are several Senators in this body 

who represent states that contain numerous innovative companies 

that benefit from strong intellectual property laws and enforcement. While the overall agreement strengthens American IPR—it 

does so in a way that is not as vigorous as agreements in the past. 

Millions of jobs across the Country depend on these laws. 

I know first hand that many countries around the world would 

like nothing more than to see the U.S. intellectual property laws 

and enforcement diminished. Why? Because they want to exploit 

us. 

They want to be able to steal our inventions. 

They want to be able to rip-off our best and brightest ideas. They 

want our taxpayers to fund billions of dollars of extremely important research and then take it from us for free. 

The American people should know that there are significant 

problems with the Peruvian Agreement and that Congress has 

passed an agreement which should provide neither a template, nor 

a model, for future trade agreements. 

ORRIN G. HATCH. 

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

REPORTED 

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, 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): 

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60 

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: 

(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 regmmaher on PROD1PC69 with REPORTS

61 

ulations 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. 

* * * * * * * 

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 

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62 

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 prohibited 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 STATESPERU 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 

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63 

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-Central 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. 

* * * * * * * 

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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—

(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 115 percent 115.75 percent of 

such amount, 

* * * * * * * 

Æ 

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