*Date: January 9, 2009*

With Peru and the Bush administration stepping up their efforts to implement the U.S.-Peru bilateral free trade agreement, the House Ways and Means Committee has weighed in with new questions on whether Peru has implemented the relevant FTA labor rights provisions, according to sources.

Ways and Means has expressed doubts to the Bush administration and the Peruvian government that Peru’s labor laws as they now stand fully reflect the obligations of the May 10, 2007 agreement between the Bush administration and congressional Democrats, these sources said. So far, Ways and Means has not received satisfactory answers, they said.

Key among the issues raised by Ways and Means is whether the Peruvian labor laws passed this summer live up to the commitment that employers will not be able to use subcontracting arrangements to circumvent labor rights obligations and the right to unionize, they said.

For example, Peru made a firm commitment to ensure that such subcontractors, or so-called outsourcing firms, must be legitimate employers, not a sham company used simply to disguise the true employer, one source said. Peru agreed that the subcontractors needed to have their own material resources, according to the source.

But under the latest version of Peru’s labor law, these companies would not have to own their own equipment, the source said.

Other labor issues raised by the Ways and Means Committee focus on whether the Peruvian micro-enterprise law provides an effective remedy for unlawful dismissal of workers for union activity in accordance with the International Labor Organization.

Ways and Means is seeking evidence that the May 2007 commitments have been implemented in a legally binding way, not simply by verbal assurances that this is the case. As part of that effort, staff has been working over the last five weeks to understand the interaction between the new labor laws passed in 2008 and existing laws, in order to get the comprehensive picture of what labor rights obligations are established.

Non-governmental sources this week also said there are several outstanding issues on labor rights, environmental protection and intellectual property rights issues that need to be resolved in order for Peru to live up to the May 2007 commitments.

But these NGO sources expressed fear that there could be a formal announcement from the White House in a matter of days that Peru has implemented all its obligations under the FTA.

Based on comments by Peruvian and U.S. government officials, they said the Bush administration wants to officially announce that the FTA is ready to enter into force by Jan. 15, the last day Peru’s congress is scheduled to be in session and just five days before President Bush leaves office.

The NGO sources pointed to Peruvian press reports that Mercedes Araoz, Peru’s minister of foreign trade and tourism, said the FTA between the U.S. and Peru would be ready to be implemented by Jan. 15. A Jan. 7 article in/ El Comercio/, a Peruvian newspaper, cited anonymous sources “close to” the Office of the U.S. Trade Representative that a formal announcement about entry into force of the FTA could come from the White House within days.

A spokesman for USTR on Jan. 7 would only say that U.S. and Peruvian officials are “working hard” to complete the FTA.

One non-governmental source speculated that the Bush administration would declare that the FTA has been implemented even if all the terms of the May 10 agreement were not met. “It may be a political decision to get it done,” the source said. “They want to clear the deck of the FTAs that have been ratified but not implemented so they can rack up a couple of FTA wins before they leave office.”

Another source said “the question is how far short of the mark” the administration will be when it makes that announcement.

Last month, members of Peru’s congress agreed to extend their legislative session by a month to Jan. 15 in order to resolve the outstanding issues needed to implement the FTA (/Inside U.S. Trade/, Dec. 26). However, members of Peru’s congress have not resolved many of those outstanding issues since then.

For example, no vote by Peru’s congress has taken place or is scheduled on Legislative Decree 1090, a new forestry law and potentially the most significant environmental issue that remains outstanding.

The decree would redefine as much as 60 percent of Peruvian lands now considered forest to make it easier for the Peruvian government to sell those lands for development, according to an environmental source. Similarly, no vote has taken place on a completely new forestry law, which restores that definition, strengthens forest protections and makes it more difficult for the government to sell forest lands, the source said.

The source said there was “no way” the vote to repeal or alter these decrees could take place before the end of the legislative session on Jan. 15, but that the U.S. and Peruvian governments may announce the FTA is ready to enter into force even if no vote takes place.

“This is turning into a completely political game,” the environmental source said. “If they certify [the FTA before Bush leaves office], it’s not going to be because it’s completely ready, in my opinion.”

At least two legislative decrees dealing with intellectual property rights, including one that would revise the country’s intellectual property regime, have still not been repealed or fixed to the standards of the May 10 agreement, sources said. --/ Brian Scheid
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