U.S.-Peru Trade Promotion Agreement - Alaska Farmers Will Benefit

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FACT SHEET:
U.S.-Peru Trade Promotion Agreement - Alaska Farmers Will Benefit
September 2007

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The U.S.-Peru Trade Promotion Agreement (PTPA) provides increased market access to Alaska’s agricultural exports by making agricultural trade a two-way street and leveling the playing field with respect to third country competitors in the Peruvian market. With immediate elimination of duties on nearly 90 percent of current U.S. trade to Peru, the PTPA will provide Alaska producers and exporters the opportunity not only to preserve but to increase market share in Peru. The American Farm Bureau and over 40 other agricultural industry and farm groups strongly support the agreement stating that the agreement would benefit all U.S. agricultural sectors and allow the United States to become a competitive supplier of agricultural products to Peru.

Exports of farm products boost Alaska’s farm prices and income. Such exports support jobs both on and off the farm in food processing, storage, and transportation. Agricultural exports amounted to $4 million and made an important contribution to Alaska's farm cash receipts in 2006 that totaled $49 million.

Dairy. Providing the third largest source of state farm cash receipts, Alaska dairy producers benefit from the PTPA.

Under the PTPA, Peru will immediately eliminate its system of variable levies (price bands) facing U.S. exporters. Under the system, tariffs can be as high as the World Trade Organization (WTO) ceiling of 68 percent on some dairy products.
Peru will immediately eliminate tariffs on whey.
Both Peru and the United States will establish duty-free tariff-rate quotas (TRQs) for certain dairy products totaling 10,000 tons.
TRQs will grow by ten percent compounded annually, with certain dairy products subject to safeguards during the tariff phase-out period.
All Peruvian duties on dairy products will be eliminated within 17 years, with duties on some dairy products eliminated earlier.

The National Milk Producers Federation, the U.S. Dairy Export Council, the Grocery Manufacturers of America, the International Dairy Foods Association, and the Food Products Association publicly support the PTPA.

Potatoes and Potato Products. With $2.3 million in farm cash receipts in 2006, Alaska’s potato producers benefit from PTPA.

Peru will immediately eliminate all duties, which are currently as high as 25 percent (30 percent allowed by the WTO), on potatoes and potato products, including frozen french fries, potato flakes and potato chips.

The National Potato Council, the American Frozen Food Institute, the Grocery Manufacturers of America, and the Food Products Association publicly support the PTPA.

Beef. With $2 million of cash receipts in 2006, Alaska’s ranchers and beef industry benefit from the PTPA.

Peru will immediately eliminate the 25-percent duties (30-percent allowed by the WTO) on the beef products of most importance to the U.S. beef industry – Prime and Choice cuts.
U.S. exporters of variety meats (offals) will immediately receive duty-free access under a 10,000-ton TRQ that will grow six percent annually. The 12-percent over-quota tariff will be phased out over ten years.
Peru will provide immediate duty-free access for U.S. exports of standard quality beef through the establishment of an 800-ton TRQ that will grow six percent compounded annually. The 25-percent over-quota tariff will be phased out over 11 years.
The United States will phase out its beef tariffs over 15 years except for those tariffs that are already duty-free under the Andean Trade Promotion and Drug Eradication Act (ATPDEA). The PTPA will continue the duty-free treatment.
Peru agreed to continue to recognize the equivalence of the U.S. meat inspection and certification system to its own system.

The American Meat Institute, the National Cattlemen’s Beef Association, the National Renderers Association, the U.S. Meat Export Federation, the US Hides, Skin and Leather Association, U.S. Livestock Genetics Export, Inc., and the Pet Food Institute publicly support the PTPA.

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