On September 11, 2007, the Senate Finance Committee held an
initial hearing on the U.S.-Peru Trade Promotion Agreement. No
similar hearing has yet been scheduled by the House Ways and Means
Committee, but its chairman, Representative Charles Rangel (D-NY),
has said that the Peru trade agreement will be "a top priority" for
the committee in September. This is appropriate. Failure to
complete the agreement would empower Latin America's
anti-democratic "21st Century Socialism" movement and strike a blow
against pro-market, pro-democracy reformers in Peru and across
Latin America. Approving the agreement would protect vital U.S.
interests in the region and also send a strong message of hope to
the people of Peru as they recover from a devastating mid-August
earthquake that killed hundreds and caused millions of dollars in
The Socialist Threat
Today, U.S. values are under attack in Latin America.
Market-based democracy, which has been heavily promoted by the
United States in Central and South America over the past 20 years
with some success, is being assailed in the Andean region.
President Hugo Chavez of Venezuela, Cuban dictator Fidel Castro and
his brother Raul, and other hard Leftists in the region are seeking
to undermine U.S. influence while promoting 21st Century Socialism,
a throwback to the failed systems of Cuba and the Soviet Union.
This campaign by Chavez and the Castro brothers, fueled by
Venezuelan oil wealth, poses grave threats to the interests of the
United States and its friends and allies in the region.
The United States must respond to these challenges with robust
support for open markets and democratic governance. The U.S.
government should stand firmly with democratic reformers and
legitimately elected leaders, continuing to assist in the fight
against guerrilla groups (such as FARC in Colombia) and narcotics
trafficking. In addition, assistance to the region from the U.S.
Millennium Challenge Corporation should be ramped up to encourage
economic growth, reduce poverty, and promote development, all of
which would help to address stubborn income inequality. Stimulating
U.S. economic ties to the Andean region through expanded trade and
investment is a vital piece of the overall U.S. strategy. Expanding
trade ties with Peru, whose government is friendly to the U.S., is
clearly in the national security interest of the United States.
Peru (along with Bolivia, Colombia, and Ecuador) already has
nearly complete access to the U.S. market under the Andean Trade
Preference Act (ATPA) legislation. Indeed, over 90 percent of
Peru's exports to the United States currently enter duty-free. With
this entrée to the U.S. market, the Peruvian economy has
diversified, leading to healthy economic growth and job creation
and providing alternatives to coca production and guerrilla
activities, which have ravaged Peru in the past.
But these trade preferences will expire in early 2008 unless
Congress acts. Uncertainty over whether the preferences will
continue is presently hindering long-term investment and job
creation in Peru. Congressional approval of the bilateral U.S.
trade agreement with Peru would end this period of uncertainty and
boost investor confidence. It would also provide equal access for
U.S. producers to the Peruvian market and thereby benefit America's
economy and workers.
In addition, the trade deal could enhance U.S. energy security
by providing new supply sources from a friendly, nearby country.
Peru is already an important supplier of minerals (silver, gold,
copper, zinc, and lead) to the U.S. Within the next few years Peru
could also become a major supplier of liquefied natural gas (LNG).
Peru's proven reserves of gas and condensates are equivalent to
some 2.4 billion barrels of oil. Reducing American dependence on
energy from the volatile Middle East must be a top priority for the
Should Congress fail to approve the agreement as originally
negotiated with Peru, the door will be open to Chavez and other
populist demagogues as they pursue their damaging and aggressive
economic and political assault on the American values that have
produced unprecedented prosperity around the world. Failure to
approve the agreement would also undercut the courageous
pro-free-market leaders in Peru who have made the politically
difficult decision to stand with the United States while opposing
alternative regional models. Their political weakening would impact
other U.S. efforts, including anti-narcotics cooperation.
Twenty-First Century Socialism is the greatest challenge the
U.S. has faced in Latin America since the end of the Cold War.
Congress must act to protect both the American people and the
peoples of the Andean region from this destructive force.
James M. Roberts is
Research Fellow for Economic Freedom and Growth in the Center for
International Trade and Economics at The Heritage F