The U.S.-Peru Trade Promotion Agreement (PTPA) follows current U.S. free trade agreement (FTA) practice in containing two types of formal dispute settlement: (1) State-State, applicable to disputes between the Parties to the PTPA, and (2) investor-State, applicable to claims by an investor of one Party against the other Party for breach of PTPA investment obligations. Investor-State dispute settlement has been a key element of U.S. bilateral investment treaties, and with the inclusion of investment obligations in most U.S. FTAs, it has become a feature of these agreements as well. The dispute settlement provisions of the PTPA need to be considered in tandem with other PTPA obligations to understand the extent to which measures adopted or maintained by a PTPA Party may be the subject of dispute settlement under the agreement. Exceptions to PTPA obligations are also an element in assessing the scope of obligations undertaken by each Party. For example, general exceptions contained in World Trade Organization (WTO) agreements—namely, Article XX of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and Article XIV of the General Agreement on Trade in Services (GATS)—are incorporated into the PTPA for purposes of obligations involving trade in goods and services. The PTPA also contains an "essential security" exception, which, if invoked by a State Party in an investor-State arbitration or a general dispute settlement proceeding, will be found to apply. The United States-Peru Trade Promotion Agreement Implementation Act, which approves the PTPA and provides legislative authorities needed to carry it out, was signed into law December 14, 2007 ( P.L. 110-138 ). The Agreement entered into force on February 1, 2009. A protocol of amendment, signed June 24 and June 25, 2007, which revises the PTPA to incorporate certain provisions involving labor, the environment, intellectual property, government procurement, port security, and investment, entered into force on the same day. The additional language stems from a bipartisan agreement on trade policy between Congress and the Administration finalized on May 10, 2007 (often referred to as the May 10 agreement), setting out various provisions to be added to completed or substantially completed FTAs pending at the time. Aimed at, among other things, expanding and further integrating labor and environmental obligations into the FTA structure, the May 10 agreement provides that labor and environmental obligations in an FTA are to be subject to the same general dispute settlement provisions, enforcement mechanisms, and remedies for non-compliance as the agreement's commercial obligations. The same approach to labor and environmental disputes is found in U.S. free trade agreements with Colombia, Korea, and Panama, each of which continue to await approval by Congress. To date, no disputes have been initiated under the PTPA State-State dispute settlement mechanism. In general, resort to panels under FTA State-State dispute settlement has been uncommon and thus there has been relatively little experience with the operation of this mechanism over a range of agreements and issues. This may be the case because of FTA consultative arrangements that facilitate the informal resolution of disputes or questions over the scope of an agreement or its application in a particular instance before resort to more structured dispute settlement procedures is considered necessary. In addition, WTO dispute settlement is generally available where a dispute arises under both a WTO agreement and an FTA. On July 19, 2011, however, the Office of Trade and Labor Affairs (OTLA) of the U.S. Department of Labor accepted for review a petition by a Peruvian union representing tax agency workers filed under Chapter Seventeen of the PTPA, the agreement's labor chapter, alleging that Peru had violated the PTPA by failing to effectively recognize collective bargaining rights as required under Article 17.2.1 of the agreement. Article 17.5 of the PTPA permits individuals, firms, and other associations of a PTPA Party to file a submission with a PTPA Party on matters related to the labor chapter and directs Parties to review such submissions in accordance with domestic procedures. The aim of the OTLA review, which is expected to be completed within 180 days, is "to gather information so that OTLA can better understand the allegations therein and publicly report on the U.S. Government's views regarding whether the Government of Peru's actions were consistent with the obligations set forth in the Labor Chapter of the PTPA." The United States may request consultations with Peru under Chapter Seventeen and, if the parties fail to resolve the matter within 60 days of any such request, the United States may request further consultations under the PTPA dispute settlement chapter. The review could possibly lead to further State-State dispute settlement proceedings if efforts to settle the dispute through consultations are unsuccessful. To establish a violation of an obligation under Article 17.2.1, the United States must demonstrate that Peru has failed to adopt or maintain a law, regulation or practice in a manner that affects trade or investment between the Parties. PTPA requirements and procedures for disputes arising under the PTPA labor chapter are discussed in greater detail later in this report. In addition, a notice of intent to initiate an arbitration under the PTPA investor-State dispute settlement provisions was submitted by the U.S. firm Renco Group, Inc., in late December 2010. The firm, which alleges that Peru violated investment agreements and PTPA investment obligations with regard to its treatment of a metallurgical smeltering and refining operation run by a Renco affiliate in Peru, reportedly filed its arbitral claim in April 2011. As a rule, investor-State cases under FTAs have been more frequent than State-State cases, with claims under the North American Free Trade Agreement (NAFTA) being the most common. NAFTA investor-State cases have been brought against each of the three agreement Parties; in addition, five cases have been filed by U.S. investors under the Dominican Republic-Central America-United States Free Trade Agreement (DR-CAFTA): one against the Dominican Republic, two against El Salvador, and two against Guatemala. To date, no investor-State claims have been filed under other U.S. FTAs. State-State or general dispute settlement is set out in Chapter Twenty-One of the PTPA, which applies to disputes involving the interpretation or application of the Agreement or wherever a Party considers (1) that an actual or proposed measure of the other Party is or would be inconsistent with the PTPA, (2) that the other Party has violated the PTPA, or (3) that one or more of enumerated PTPA benefits owed it by the other Party—for example, a tariff reduction—is being nullified or impaired by a measure of the other Party that not inconsistent with the agreement. Dispute settlement begins with a consultation request by the complaining Party, to which the other Party must promptly respond. During such consultations, each Party is expected to provided "sufficient information to enable a full examination of how the actual or proposed measure or other matter may affect the operation and application" of the PTPA. If the dispute is not resolved within 60 days of the initial request (15 days for matters involving perishable products) or another period that the Parties may agree upon, either Party may request a meeting of the U.S.-Peru Free Trade Commission, an administrative body established under the agreement consisting of cabinet-level officials of the Parties or their designees. If the Commission decides to convene, its aim is to promptly resolve the dispute. To assist the Parties in doing so, the Commission may: (a) call on such technical advisers or create such working groups or expert groups as it  deems necessary; (b) have recourse to good offices, conciliation, or mediation; (c) make recommendations. If the consulting Parties fail to resolve a matter within 30 days after the Commission has convened, or if the Commission has decided not to convene, within 75 days after the initial request for consultations (30 days if perishable goods are concerned), or another agreed-upon period, any consulting Party that participated in or requested a meeting of the Commission, may request that an arbitral panel be established. An arbitral panel is automatically established upon delivery of a request to the other Party. Panels consist of three members. The complaining and defending Parties appoint one panelist each. If either fails to do so, the panelist is to be selected by lot from the roster of panelists established under the agreement. The Parties are expected to agree on a third panelist to chair the panel, but if they cannot agree, the chair will be selected by lot from roster members who are not nationals of either of the disputing Parties. Panel selection is subject to timelines set out in the agreement. Unless the disputing Parties agree otherwise, the panel is to present its initial report to the disputing parties within 120 days after the last panelist is selected. The report is to contain (1) findings of facts and (2) the panel's determination as to whether a disputing Party is in compliance with its PTPA obligations, or whether a measure is causing nullification or impairment of PTPA benefits, as the case may be (or any other panel determination that has been requested). The report must also contain recommendations for resolving the dispute if requested by the Parties. After considering any written comments or requests for clarifications by the Parties, the panel will issue its final report. The final report is due 30 days after the initial report is presented unless the Parties agree otherwise. On receiving the final report, the disputing Parties are to agree on the resolution of the dispute, which should normally conform with the panel's findings and recommendations. If the panel has found that the defending Party "has not conformed" with its PTPA obligations, the resolution, "wherever possible, shall be to eliminate the non-conformity."