Bush signs free trade deal with Peru into law: An alternative analysis and perspective

Peru will loom slightly larger than usual in the headlines in U.S. newspapers this weekend after President George W. Bush signed into law a free trade agreement between the two nations.

The bill passed following a contentious feud in Congress that ended only after Republicans agreed to Democratic demands to include labor union protection and environmental standards, both in the Peru deal and in future trade pacts.

Bush said before signing Friday that he is hopeful the Peru deal will pave the way for approval of deals with Panama, Colombia and South Korea before he leaves office in 2009. And President Alan Garcia assured Bush that his government will make good on its pledge that the trade deal will favor Peru’s poor, particularly “the population in the Andes and their small enterprises.”

“You should be sure, as well as the members of the Congress and the American people, that in Peru this treaty would not exclude the poorest of the Peruvian workers,” Garcia said moments before Bush signed the pact. “On the contrary; using the words of the great Abraham Lincoln, it will be a free trade agreement of the people, by the people, and for the people.”

But not everyone in Peru is comforted by that assurance.

Weeks before the House approved the deal on Nov. 8 in a 285-132 vote, David Bayer, a former deputy executive officer for USAID in Lima until 2002, sent out the following appeal. He wrote it from his home in Ica, the coastal city devastated by the magnitude-8 earthquake last August (it is reprinted here with David’s permission):

What is wrong with the Peruvian-US Free Trade Agreement (FTA)?

Chapter X is the most insidious part of the US-Peru-FTA in terms of its damage to the vast majority of Peruvians. The GRADE analysis ( a conservative NGO) points out the the poor and extreme poor in Peru will get poorer with the implementation of the FTA:

Chapter X boils down to this: when the FTA is signed, everything favorable to the big private corporations and multinationals gets “frozen in time” or “shielded.” If the companies are exonerated from taxes (as is the case with the Peruvian agro-exporters) or have a special low-tax regime (as is the case with 80 percent of the major Peruvian mining companies) THEN NONE OF THESE PRIVILIGES CAN BE CHANGED by the national, regional or local government without violating Chapter X .

These changes which may emerge with a new government will be defined as “illegal or illict expropriation of corporate earnings.” The corporations will take the government involved to international court and win handily.

In the case of Ica, it will condemn Ica to a disaster far beyond the recent earthquake. It is a big lie to claim that Congress should pass the FTA to help Ica after the earthquake. The FTA will be absolute poison for Ica. The agro-exporters in the Ica Valley are planting asparagus and Red Globe grapes which use 3 to 7 times the amount of water which the traditional grapes use or alternative crops like olives or dates, which would be more appropriate for the desert climate of Ica.

One of the foremost experts on Ica’s water supply has told me:

“There is a constant overdraft of 1.26 cubic meters of water per second from the Ica water table. This means that the Ica Valley water supply will dry up within 10 to 15 years unless this is reversed NOW.

When I was a Peace Corps Volunteer in Ica in 1964, you could hit water at 3 meters in the land between Pisco and Ica called the Pampa of Villacuri. Later when the agro-export boom started in the early 1990s, you could hit it at 60 meters. Now you need to go down to 80 meters. In the Ica Valley, you may have to go down as deep as 105 meters today, 2007.”

THE ICA WATER SUPPLY IS being dried up by the Agro-Exporters and with the approval of the FTA, we shall loose all leverage to force them to stop planting asparagus and Red Globe grapes. I have in front of me an article from Gestion (3 September 2007, p. 11) where the Director of the National Institute of Natural Resources (INRENA), Enrique Salazar, states that in Ica ” you cannot plant another hectarea of land due to the over-drafting of the aquifer and the agro-exporters are overdrafting the water supply, reducing the capacity of wells to extract water.”

In the same article, the response of the leading representative of the agro-exporters, Jorge Chepote, talks about increasing the water supply with new irrigation projects.

But — and this is the punch line — he never talks about changing crops or stopping the planting of asparagus and Red Globe grapes.

Chapter X of the FTA will shield all these agro-exporters, and the new U.S. companies which may partner or buy them up, FROM ANY CHANGES IN THE CROPS. The governments will have lost their legislative powers to reverse the over-draft on the Ica water supply.

The Ica Technical Administrator for the Water District will have absolutely no authority to “push” the agro-exporters in the direction of changing to less water intensive crops. The agro-exporters have a plan for this “short-term” unsustainable development model: pick up and move to another valley which one of the biggest companies is doing right now.

The FTA, in this sense, will promote the next ICA DISASTER, namely, its DROUGHT and full desertification. The area of Ocucaje or southern tail of the Valley suffered an 85-day period without water this year due to the overdrafting of the water table(Voz de Ica, 3 August 2007, p.2).

THE U.S. Embassy and Mission has not been honest or forthcoming with Congress: the U.S. Congress does not know the following:

1- Every mining area in Peru is under seige by the farming communities around the mines which are drying up water supplies and poisoning the water and air. On 31 August 2007, the Washington, D.C., InterAmerican Commission on Human Rights(CIDH) has presented a Court demand against the Peruvian State, charging that the miners and 30,000 population around La Oroya mines, run by the U.S. subsidary, Doe Run, are breathing sulfer dioxide which is 300 times the minimum permitted by the World Health Organization. Of the 60 cases presented before CIDH, 30 are children intoxicated by the lead emanating from the Oroya mines.

In the latest international court case, the highland community of Carhuancho has denounced the Garcia Government and the Ica Regional Government before the Latin American Water Court in San Jose, Costa Rica. The demand has been accepted by the Court. The goal is to stop the Ingahuasi Water Project which would dry up the wetlands in the high Sierras of Huancavelica. The project has not been approved by the highland communities (see OIT-169 below in 3-C). Both Peruvian governments have been notified of the Court demand against them). All of the above underscores the fact that the Garcia government has no respect for the environment, does not enforce its own weak laws and has every intention of violating the addendums to the FTA related to climate change, drought and desertification, the Ramsar agreement signed by Peru to protect the wetlands, and biodiversity. The U.S. Embassy is hoping that this information never gets out to the U.S. press or Congress.

2- The sub-contracting of workers “off the books” is a common practice by all the companies which will be benefited by the FTA. This is called “tercerizacion” in Peru or “services.” The Shougong Mine to the south of Ica needs some 1200 workers. For more than 15 years, only 200 have been on the company’s books. The other 1,000 have been “off the books,” brought in by a labor contractor or “service.” These “services’ generally do not pay overtime, minimum wage, health benefits or vacations. THIS IS THE PERUVIAN TYPICAL employment model, especially for all those companies which will benefit from the FTA. Ninety percent of the agro-exporters in the Ica area use this system. Garcia promised to increase labor inspectors for the 90 ag companies in the Valley which employ some 42,000 workers. There were two inspectors in May 2006 when Garcia was elected. There are two today. The U.S. Embassy people hid this employment pattern from Congress, understating its percentage by talking about 20 to 10 percent when the “services” supply 80 percent of the workers for these companies. Due to these anti-labor practices, a worker in the agro-export sector earns an average wage of 500 soles per month or less than $ 7 USD daily for 12 hour shifts. The Peruvian government calculates that the monthly costs for family are 1,300 soles, some 800 soles more than what the average worker earns.

3- The FTA would never be approved by a democratic referendum in Peru. This is why the Peruvian-Garcia government and all the big business associations oppose a referendum. In this sense, the FTA process is totally ANTI-DEMOCRATIC. It is being imposed on the Peruvian population by a small elite. People voted for Garcia because he promised to review and stop the TLC. But he lied as is his habit.

The government is so afraid of popular participation in the approval process that it is actively violating three Peruvian laws to prevent the Ayabaca Province municipalities from having a popular vote (referendum) on accepting the Majaz mining project in their Province. The laws which permit the people to vote on these issues are:

A- the Organic Municipal Law No. 27972.

B- the Law Protecting the Right of Citizen Participation and Control No. 26300, now part of the Peruvian Constitution.

C- International Labor Organization 169 Agreement which Peru signed which requires that any project near or in a community must get 2/3 approval by the community members (in Spanish known as OIT 169).

The Ayabaca municipalities plan to have a “popular consultation” (consulta popular or Referendum) on 16 September 2007 — next week. The Garcia government — Garcia himself — has declared the “consultation” illegal and has forced the National Elections Council not to cooperative and requested the Judicial System to take legal action against the elected officials who are promoting the “popular consultation.” The Garcia government has so far refused to provide extra police for the Sept. 16 process, claiming that if violence breaks out, it will be the fault of the organizers of the referendum. It has declared beforehand that the results will have no validity.

The University of Texas report by Fidel Torres, Kenneth Young, Blance Leo, Julio Postigo and Martha Bustamante points out that the mining concessions of Majaz, Miski Mayo and others in the Piura Region will threaten its biodiversity and rivers. The “popular consultation” by the Ayabaca communities is solidly based on a real concern for environmental protection (La Republica, 5 September 2007, p. 8).

Garcia promotes the ideas that (1) the communities have no rights to say anything about the mining projects in their areas and (2) environmental contamination is of secondary importance next to the need for investment and business expansion.

The Garcia government is not interested in developing democracy: its major dynamic is to expand the rights of a small group of national and international corporations and their profits.The U.S. Mission and Embassy in Peru has carefully covered up these facts. Or should we say: they have the same mission as the Garcia government — promoting outrageous corporate profits over concern for people’s human rights and the environment?

In this sense, it is not unfair to state that the Garcia government represents a civilian-military dictatorship. It intends to keep imposing the Neo-Colonial development model (called euphemistically “Neo-Liberalism”) on the population and shielding the military from being brought to court for human rights violations (promoting impunity). By approving the FTA, the U.S. reverts back to its historical role of supporting unpopular and dictatorial governments, helping them to implement undemocratic policies and processes. In this case, the so-called concern for the reduction of poverty by the U.S. becomes a bitter joke.

David Bayer
Former U.S. Peace Corps Volunteer, Ica, Peru (1964-66)
and Deputy Executive Officer, USAID, Lima Peru (1993-2002)

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