After House, Senate Votes 77 to 18 for Peru Trade Bill

The Senate gave decisive backing yesterday to a U.S.-Peru free-trade agreement, opening the way for expanded economic ties with the Andean nation and giving the administration a boost in its quest to shore up relations with Latin America.

The first bilateral trade deal approved by Congress this year is also the first under a new Democratic formula that requires negotiators to put labor rights and environmental standards on a par with tariff reductions, investor protections and other key elements of the accord.

The 77 to 18 Senate vote on the bill implementing the agreement followed a 285 to 132 House vote last month. The agreement will go into effect after the two countries adjust laws to conform to the deal.

U.S. trade with Peru is small scale, about $9 billion a year, but proponents of the agreement argued that it has real political benefits.

"There is a growing division in Latin America today," said Sen. Charles E. Grassley (R-Iowa), referring to the anti-U.S. campaign of Venezuelan President Hugo Ch¿vez. "We ought to help countries like Peru that are not going the direction of Venezuela."

President Bush said after the vote that he looked forward to signing the bill that would "level the playing field for American exporters and investors" and would signal "our firm support for those who share our values of freedom and democracy."

At an earlier news conference, Bush also urged Congress to act on another pending trade deal -- with Colombia -- saying that was a way to "make a difference in South America in terms of Venezuelan influence."

Opponents also looked to the bigger picture, blaming past trade pacts, particularly with China and Mexico, for rising trade deficits and the loss of U.S. manufacturing jobs. "One of the major reasons that the middle class in the United States is shrinking, poverty is increasing and the gap between the rich and the poor is growing wider is in fact due to our disastrous, unfettered, trade policy," Sen. Bernard Sanders (I-Vt.) said.

The accord has strong backing from such business groups as the U.S. Chamber of Commerce and the National Association of Manufacturers. It is opposed by labor and other groups who say the tougher labor and environmental standards won't be enforced and that Peruvian peasants won't be able to compete with cheaper American farm goods.

It would immediately eliminate duties on 80 percent of U.S. consumer and industrial product sales to Peru and most agriculture goods, and gradually phase out all tariffs. Almost all Peruvian goods already enjoy duty-free status under trade breaks the United States extends to Andean nations to boost their economies and provide alternatives to illicit drug production.

The free-trade agreement also provides protections for U.S. investors and intellectual property rights and expanded access to Peru's service markets. It commits both countries to adhering to fundamental labor rights formulated by the International Labor Organization and fulfilling obligations under multilateral environmental agreements.

The administration is also pressing Congress to act quickly on three other pending trade deals, with Colombia, Panama and South Korea. No action is possible this year and the Democratic Congress has shown no inclination to renew "fast track" authority, which gives the president the power to negotiate trade deals that Congress can approve or reject but cannot amend. The authority expired last summer.

In turn, the White House has threatened to veto Democratic-backed legislation to expand a program to retrain and aid workers displaced by global trade.