December 7, 2005

U.S., Peru reach free trade agreement

By Doug Palmer

WASHINGTON (Reuters) - The United States and Peru have
reached a free trade agreement, following an all-night
negotiating session that capped 18 months of talks, a U.S.
trade official said on Wednesday.

No immediate details were available on the terms of the
pact, which is intended to tear down trade barriers between the
two countries and expand economic ties. However, the U.S. Trade
Representative's office was expected to make a formal
announcement later on Wednesday.

Peruvian President Alejandro Toledo scheduled a press
conference in Lima to discuss the deal.

Peru's largest farm union swiftly condemned the agreement
and said it was planning a national strike against it. Farmers
worry that U.S. farm goods will flood Peruvian markets and put
its producers out of businesses.

"This is terrible news for Peru's farmers. Our government
and negotiators have handed over our agricultural sector to the
United States, which will cause around 1.7 million farm job
losses in Peru," said Luis Zuniga, president of CONVEAGRO.

Peruvian officials have previously expressed fears a free
trade pact would push up the price of medicines. The United
Nations says many of Peru's poor die from treatable illnesses
because they cannot obtain, or pay for, drugs.

"We believe it will increase the price of medicines by more
than $150 million over the first five years of the treaty,
putting drugs out of reach of many poor Peruvians," said Victor
Loza, president of Peru's Medical Federation, which represents
13,000 doctors in the Andean nation.

Others were less pessimistic.

"This trade agreement will be highly positive for Peru
because we will be tapping one of the world's biggest markets.
But it is a challenge for Peruvian companies because they'll
have to be competitive to be able to make it in the U.S.
market," said Henry Alvarez, senior analyst at Lima-based
consultancy Maximixe.

Washington has been negotiating a free trade pact with Peru
since May 2004 as part of a broader regional effort including
Colombia and Ecuador.

Negotiating teams from all three countries were in
Washington last month to try finish the deal, but Peru came
closest and talks with that country resumed on Monday.

The deal gives U.S. negotiators a boost heading into world
trade talks next week in Hong Kong, which have also been hung
up on agricultural issues.

The agreement also increases pressure on Colombia to finish
its deal with the United States. U.S. industry officials say
they are pessimistic Ecuador will finish its talks soon.

Deputy U.S. Trade Representative Sue Schwab told reporters
after a speech that negotiators had worked all night, but
refused to say what the last issues were. The talks had been
hung up on agricultural market access and copyright and patent
protection issues heading into this week's meetings.

(Additional reporting by Robin Emmott, Marco Aquino, Tania
Mellado in Lima)