Printer
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On April 12, 2006, the
United States and Peru signed the U.S.-Peru Trade Promotion Agreement (PTPA).
The PTPA achieves two key objectives: it makes agricultural trade more
of a two-way street, and it levels the playing field with U.S.
competitors in the Peruvian market.
Prior
to implementation, less than 2 percent of U.S. agricultural exports
enjoyed duty-free access to Peru. Most Peruvian agricultural tariffs
ranged up to 25 percent, with no assurance that Peru would not raise
tariffs to their WTO limits of 30-68 percent. Additionally, Peru
applied variable tariffs based on price bands on more than 40 products,
including corn, rice, dairy, and sugar. Under this price band system,
the tariffs on these products varied with world prices and ranged up to
Peru’s WTO bound rate of 68 percent.
As of
February 2009, the date of full implementation, U.S. exporters now
receive duty-free treatment on products accounting for nearly 90 percent
of current trade and will see all tariffs phased out for the remaining
products. Moreover, under the agreement, Peru immediately eliminate its
price band system.
Under
the Andean Trade Promotion and Drug Eradication Act (ATPDEA) legislation
passed through the Congress in 2002, the United States allows over 99
percent of Peru’s exports into the U.S. market duty-free. The PTPA
makes the preferential treatment permanent.
This agreement, which includes a
CAFTA-plus agricultural package, is seen as another key building block
in the U.S. strategy to advance free trade within the hemisphere.
Key Elements of the Agreement
Market Access.
No products were excluded from this agreement.
Liberalization of Peru’s market occurred through tariff elimination for
all commodities combined with zero-duty tariff-rate quotas (TRQs) on
commodities for which tariff elimination takes place over longer
periods. The agreement eliminates Peru’s use of Andean Price Bands
(variable tariffs), thereby ensuring that Peru stops applying high
duties.
Tariff Elimination.
Tariff phase-outs range from immediate duty-free access to 17 years.
Almost 60 percent of all agricultural tariff lines, accounting for
nearly 90 percent of trade, were eliminated on entry into force of the
agreement. Peru eliminated many tariffs within 5 years and most other
tariffs in 15 years. As a general rule, almost all tariffs will be
reduced in equal annual installments over the agreed phase-out period.
Tariff-Rate Quotas (TRQs).
For some products with longer tariff phase-outs, immediate market access
will be provided through the creation and annual expansion of TRQs
(zero-duty access for a specified quantity of imports). General
principles--and in some cases, specific commitments--on TRQ
administration will encourage full utilization of the TRQs.
Safeguards.
The agreement includes volume-based agricultural safeguards for a
limited number of products covered by TRQs. The safeguard triggers are
set as a percentage of the growing TRQ quantities. Increased tariffs
resulting from the triggering of the safeguard can only be maintained
for the remainder of the current calendar or marketing year. Safeguards
on agricultural products expire when the tariff has been phased out.
Sanitary and Phytosanitary
Measures. An SPS
Committee will be established to expedite resolution of technical
issues. The United States and Peru have worked to resolve sanitary and
phytosanitary (SPS) barriers to agricultural trade, including: complying
with the WTO regarding imports of beef and poultry products; continuing
to recognize the U.S. meat inspection system as equivalent to that of
Peru; modifying Peru’s import permit requirements for the import of
beef, pork, and poultry shipments; and agreeing to withdraw draft
standards for Peru’s imports of rice.
Export Subsidies.
The parties agree not to use export subsidies on products shipped into
each other’s market, except to compete with third party export
subsidies.
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Specific Products
Beef.
Peru’s WTO tariff bindings on beef are currently 30 percent, with
applied tariff rates ranging from 0 to 25 percent. Under the agreement,
the United States secured immediate duty-free treatment on the products
most important to the U.S. beef industry; i.e., high quality USDA Prime
and Choice cuts. All other tariffs on beef and beef products are
eliminated within 15 years, earlier in a number of cases. For Standard
Quality beef, the agreement also provides for an 800-ton TRQ with
6-percent annual growth and a 25-percent above-quota tariff phased out
over 12 years. Additionally, there is a 10,000-ton beef offal TRQ with
6-percent growth and a 12-percent above-quota tariff phased out over 10
years. Peru will have the right to use safeguards on Standard Quality
beef if imports surge.
Regarding SPS measures, Peru reopened its market to U.S. boneless beef
and certain offals on April 12 and agreed to fully open to U.S. beef and
beef products other than specified risk materials no later than May 31,
2006. Peru agreed to continue to recognize the equivalence of the U.S.
meat inspection system and to accept beef shipments accompanied by a
USDA FSIS Export Certificate of Wholesomeness with content of the
certificate agreed between the two countries.
The 26-percent U.S. tariff on beef imports will be phased out over 15
years.
Pork.
Peru’s WTO tariff
bindings on pork are 30 percent, with applied tariff rates ranging from
0 to 25 percent. The agreement provides for tariff phase-out in 10 years
or less on all pork products, with many key pork tariffs eliminated in 5
years.
Regarding SPS measures, Peru agreed to continue to recognize the
equivalence of the U.S. meat inspection system and to accept pork
shipments accompanied by a USDA FSIS Export Certificate of Wholesomeness
with content of the certificate agreed between the two countries.
Under the ATPDEA, U.S. tariffs on pork imports from Peru are currently
zero. The PTPA continues the zero-duty treatment.
Poultry.
Peru’s WTO tariff bindings on poultry are currently 30 percent, with
applied tariff rates ranging from 4 to 25 percent. The United States
secured a 12,000-ton TRQ at zero duty with 8- percent annual compound
growth for chicken leg quarters. Under the deal, the 25-percent
above-quota tariff will begin phase-out after an 8-year grace period and
will be completely eliminated in 17 years. Peru will have access to
safeguards on chicken leg quarters in the event of import surges during
the 17-year tariff phase-out period. Phase-out tariffs on other poultry
products range from 2 to 10 years.
Regarding SPS measures, Peru agreed to fully reopen its markets to U.S.
poultry and products from all states. Peru also agreed to continue to
recognize the equivalence of the U.S. poultry meat inspection system and
to accept poultry shipments accompanied by a USDA FSIS Export
Certificate of Wholesomeness with content of the certificate agreed
between the two countries.
Under the ATPDEA, U.S. tariffs on imports from Peru are currently zero.
The PTPA continues the zero-duty treatment.
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Dairy.
Peru’s WTO tariff bindings on dairy products range from 30 to 68
percent, with applied tariffs on many products subject to price bands
that can range up to the WTO bound rates. Tariffs on whey were
eliminated upon entry into force. Additionally, U.S. exporters have
access to six dairy TRQs, all at zero duty, under this agreement. A
4,630-ton TRQ with 12-percent annual compound growth was agreed for milk
powder. The out-of-quota base rate ranges from 25 to 35 percent. Tariffs
will be phased out from these rates after a 10-year grace period and
will be completely eliminated in 17 years. The TRQ for cheese was set at
2,500 tons with a 12-percent annual compound growth rate and an
out-of-quota base of 25 percent phased out starting after 10 years, with
elimination in 17 years. The 25-percent out-of-quota base tariff rates
for yogurt, butter, and ice cream are set to be phased out in 15 years.
TRQs for these products are set at 70 tons, 500 tons, and 300 tons,
respectively. Finally, the processed dairy products TRQ is set at 2,000
tons with a 10-percent annual compound growth rate and an out-of-quota
base tariff rate of 17 percent phased out over 15 years. Peru will phase
out all other dairy lines between 5 and 15 years. Peru can use
safeguards on concentrated milk products, yogurt, butter, and cheese.
Regarding access to the U.S. market, the United States agreed to
establish TRQs for: cheese (2,500 tons, 12-percent annual compound
growth, out-of-quota tariff reduced starting after 10 years with
elimination in 17 years); condensed and evaporated milk (6,000 tons,
12-percent annual compound growth, out-of-quota tariff reduced starting
after 10 years with elimination in 17 years); and processed dairy
products (2,000 tons, 10-percent annual compound growth, out-of-quota
tariff reduced starting in 15 years). The United States can use
safeguards for cheese, and condensed and evaporated milk.
Vegetables.
Peru’s WTO tariff bindings on
vegetables are 30 percent, with applied tariff rates up to 25 percent.
The United States has duty-free access on most vegetable products.
Tariffs for almost all others will be phased out over 5 years.
Under the ATPDEA, U.S. tariffs on
almost all imports from Peru are currently zero, including asparagus.
The PTPA continues the zero-duty treatment. Additionally, the United
States provides immediate duty-free access on certain fresh and canned
olive lines.
Potatoes and Products.
Peru’s WTO tariff bindings on potatoes and potato products are 30
percent, with applied tariff rates ranging from 0 to 25 percent. All
fresh potato lines and almost all processed potato lines, including
frozen french-fries, dehydrated and chips, now receive immediate
duty-free access to Peru .
Fruits and Tree Nuts. Peru’s
WTO tariff bindings on fruits and tree nuts are 30 percent, with applied
tariff rates of 25 percent. Most fruits including fresh grapes, raisins,
apples, pears, cherries, peaches, and plums, and tree nuts such as
almonds and pistachios, now receive duty-free access to Peru. Almost all
other tariffs on fruits and tree nuts will be completely phased out in 5
years.
Under the ATPDEA, U.S. tariffs on imports from Peru are currently zero.
The PTPA continues the zero-duty treatment.
Dry Peas, Beans, and Lentils.
Peru’s WTO tariff bindings on dry peas, beans, and lentils are
30 percent, with applied tariff rates that range from 0 to 25 percent.
Most pulses no enjoy duty-free treatment. The tariff phase-out for all
other products will be 5 years or less.
Under the ATPDEA, U.S. tariffs on imports from Peru are currently zero.
The PTPA continues the zero-duty treatment.
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Wheat and Barley.
Peru’s WTO tariff bindings
on wheat and barley range from 30 to 68 percent with applied tariff
rates subject to price bands, ranging from 0 up to the WTO bound rate
depending on world prices. Tariffs on wheat, wheat flour, barley, and
many other wheat and barley products went to zero immediately upon
implementation. Most other tariffs for these products will be phased-out
over 5 years with some phased out in 10 years.
Under the ATPDEA, U.S. tariffs on imports from Peru are currently zero.
The PTPA continues the zero-duty treatment.
Feed Grains
Yellow Corn.
Peru’s WTO tariff binding on yellow corn is 68 percent with the applied
tariff rates subject to prices bands and therefore ranging from 0
percent up to the WTO bound rate, depending on world prices. The
agreement includes a 500,000-ton TRQ with a 6-percent annual compound
growth rate. The out-of-quota tariff is capped at 25 percent and phased
out over 12 years.
White Corn.
Peru’s WTO tariff binding on white corn is 68 percent, and the applied
tariff rate is 17 percent. Under the agreement, U.S white corn is duty
free in 10 years.
Sorghum.
Peru’s WTO tariff binding on grain sorghum is 30 percent. Currently,
sorghum is subject to Peru’s price band system. Peru will eliminate the
tariff entirely in 5 years.
Corn Products. Peru’s
WTO tariff bindings on corn products range from 30 to 68 percent.
Applied tariff rates range from 0 to 25 percent on some products, with
others subject to Peru’s price bands. Tariffs range from 0 percent up to
the WTO bound rate, depending on world prices. The phase-out for tariffs
on other corns and corn products was set for 10 years or less.
Under the ATPDEA, U.S. tariffs on
imports from Peru are currently zero. The PTPA continues the zero-duty
treatment.
Rice.
Peru’s WTO tariff bindings on rice range from 30 to 68 percent, with
applied tariff rates subject to price bands and therefore ranging from 0
percent up to the WTO bound rate, depending on world prices. The United
States obtained a 74,000-ton TRQ on a milled rice-equivalent basis with
an annual compound growth rate of 6 percent. Milled, brown, and rough
rice can be imported under the TRQ. The out-of-quota tariff is capped at
52 percent and will begin to be phased out after a grace period of 8
years and will be completely eliminated in 17 years. Safeguards will be
available if there are import surges. The rice flour tariff will reach
zero in 5 years and tariffs for bran, sharps, and other milled rice
residues will be phased out in 10 years. Regarding standards, Peru
agreed to withdraw proposed rice standards and to provide no less
favorable treatment than that applied to like Peruvian product.
Under the ATPDEA, U.S. tariffs on imports from Peru are currently zero.
The PTPA continues the zero-duty treatment.
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Soybeans and Soybean
Products.
Peru’s WTO tariff bindings on soybeans and soybean products are 30
percent, with applied tariff rates ranging from 0 to 12 percent. Tariffs
on soy beans, soy meal and flour, and crude soybean oil were eliminated
on entry into force of the agreement. Additionally, the United States
has a 7,000-ton TRQ on refined soybean oil with an annual compound
growth rate of 5 percent. The out-of-quota tariff is capped at 52
percent and will be phased out over 10 years.
Under the ATPDEA, U.S. tariffs imports from Peru are currently zero. The
PTPA continues the zero-duty treatment.
Peanuts.
Peru’s WTO tariff bindings on peanuts are at 30 percent, with applied
tariff rates of 25 percent. Upon entry into force, peanut tariffs were
eliminated immediately.
The United States has agreed to phase out the peanuts and peanut
products over 15 years.
Sugar.
Peru’s WTO tariff bindings on sugar and sweeteners range from 30 to 68
percent, with some applied tariff rates ranging from 4 to 25 percent.
Other products are subject to Peru’s price band system and with tariffs
ranging up to the WTO bound level. Under the agreement, all tariffs will
be eliminated within 10 years, and in many cases, eliminated earlier,
including 5 years for high fructose corn syrup.
The United States agreed to provide Peru a 9,000-ton sugar TRQ with 2
percent simple annual growth. Peru must be a net exporter to be able to
export this additional tonnage. There is also a sugar compensation
mechanism that enables the United States to provide compensation in lieu
of accepting imports under the zero-duty treatment. The United States
also provided Peru a non-growing 2,000-ton TRQ for specialty sugar.
Processed Products.
Peru’s WTO tariff bindings on processed products are 30 percent, with
applied tariff rates ranging from 4 to 25 percent. Under the agreement,
the majority of products are now duty-free. All others will enter free
of tariffs in 10 years or less.
Under the ATPDEA, U.S. tariffs on imports from Peru are currently zero.
The PTPA continues the zero-duty treatment.
Tobacco.
Peru’s WTO tariff bindings on tobacco are 30 percent, with applied
tariffs ranging from 12 to 25 percent. Burley tobacco will receive
duty-free treatment under the agreement and all other tobacco products
will enter Peru without tariffs in 5 years.
Under the ATPDEA, U.S. tariffs on some tobacco products, including
cigarettes, from Peru are currently zero. The PTPA continues the
zero-duty treatment. Additionally, the United States will eliminate
duties on other tobacco items within 15 years.
Cotton.
Peru’s WTO tariff bindings on cotton are 30 percent, with applied tariff
rates of 12 percent. Under the agreement, Peru will eliminate cotton
tariffs immediately.
The United States agreed to eliminate all cotton tariffs upon entry into
force of the agreement.
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U.S.-Peru
Trade Promotion Agreement Page
