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FTA means deeper poverty in Peru

GMO’s arrive. Democracy doesn’t.

Inti Montenegro de Wit

During his final month in office, Peruvian President Alejandro Toledo introduced a bilateral free trade agreement (FTA) with the United States to Peru’s national legislature where it was overwhelmingly approved for ratification. Toledo and Peruvian business groups say the FTA will lead to increased prosperity in Peru, where over fifty percent of the population lives below the poverty line.

However, a recent study by GRADE, a Lima-based public policy research institute, predicts that the poorest of the poor-Quechua and Aymara subsistence farmers in the rural highlands-will suffer rather than benefit from the trade deal. Although Peru’s economy as a whole will enjoy a $417 million increase in its first year, these gains will be directed almost exclusively at the urban sector, which will benefit by $575 million, whereas the rural sector will lose $158 million. [1] The findings of this report echo impact analyses conducted in Colombia and Ecuador, who are negotiating similar FTAs with the US. [2]

These studies which focus on who wins and who loses when subsidized US crops are not kept at bay by trade barriers tell only part of the story of the damage to developing countries caused by FTAs. More than being “just about trade,” US FTAs are also stringent commitments to investment and intellectual property rights (IPR’s) which, in developing countries, are at odds with public health, safety, and the environment. [3]

Poor indigenous farmers in Peru have expressed particular concern regarding the IPR commitments established by the US-Peru FTA, which would legalize the patenting of genetic resources and traditional knowledge that have long been used and developed in indigenous communities. With the FTA, Peru snubs Andean law and accepts the US demand to “make all reasonable efforts” to start patenting plants and to never go back on this policy once in place. The Andean Community-a trade block linking Bolivia, Peru, Ecuador, and Colombia-currently outlaws the patenting of plants.

Nor does the US-Peru FTA obligate the US patent office to require applicants seeking plant patents to include “disclosure requirements.” Drawn from the UN Convention on Biological Diversity and valid in the Andean Community, such requirements would force applicants to declare where they got their materials or knowledge from, prove that they received permission to use them, and make arrangements to share benefits with their original owners. If included in trade deals, these requirements would channel some benefits to biodiversity-rich developing countries, even while undermining the rights of indigenous peoples who protest that their plants and knowledge should never be patented in the first place. [4]

The rules, trade-related and otherwise, that US FTAs bring to the global trading system are even more ruthless than those conceived in the World Trade Organization (WTO). To a limited extent, WTO rules provide breathing room for the poor while pressing for lower trade barriers. Missing from US FTAs, for example, are the WTO’s “special and differential treatment” provisions that allow developing countries exemption from tariff reductions and longer implementation periods for essential products. Also, the WTO’s Trade Related Aspects of Intellectual Property Rights (TRIPS), which amounts to a globalization of IPR law, includes limited exceptions to patent protection on medicines when public health must take precedent. Developing countries have recently proposed that TRIPS be amended to also include “disclosure requirements” for patent applications. [5]

The FTA and GMO’s

An issue that has received less attention is the implications of the FTA for the entry of genetically modified organisms (GMO’s) into Peru. Consumers around the world, particularly in the European Union and Japan, have adamantly rejected GMO’s which pose potential dangers to the environment and human health. Meanwhile, agricultural biotechnology companies are eager to enter new markets.

Peru is the fourth most biodiverse country in the world and is the center of origin of the potato. If allowed to enter Peru, GMO’s could endanger diverse native crop varieties including potato, yucca, tomato, and corn, as well as those of industrial importance like cotton, all of which are currently subject to genetic engineering in the US. The cultures and livelihoods of over 6 million indigenous subsistence farmers in Peru’s rural highlands depend on healthy native crops and ecosystems. Of course, the consumption of GM foods could endanger the health of all Peruvians, rich and poor.

Peru has signed and ratified the Biosafety Protocol, an international agreement which gives countries the option of banning imports of GMO’s. However, the US-Peru FTA, by synchronizing Peru’s sanitary and fitosanitary regulatory measures with those in the US, implies the deregulation of GMO’s. Furthermore, since the US is not a signatory to the Protocol, it is under no obligation to adhere to labeling and other “biosafety measures” required by the agreement. Along with the FTA, the only legal catalyst needed for GMO’s to flood into Peru is national legislation outdating Peru’s weakly-implemented 1999 “Law for the Prevention of Risks from the Use of Biotechnology” which stresses the risks of GMO’s and how to prevent them.

Such legislation was recently approved by Peru’s Congress. The “Law to Promote the Use of Modern Biotechnology in Peru” is expected to be authorized by newly sworn-in President Alan Garcia as soon as August.

The director of the Science and Technology Commission (CONCYTEC), the government entity in charge of regulating Peru’s biotechnology framework, has indicated that the elaboration of this new law was heavily influenced by a prestigious Peruvian scientist with close ties to leading multinational agricultural biotechnology corporation, Monsanto. [6] In 2004, Thailand, too, cracked under corporate pressure to revoke its ban on GMO’s during its now finalized FTA negotiations with the US. [7]

The FTA and Democracy

With corporations guiding the pen on domestic policy making in Peru, one can only imagine the extent of corporate influence on policy making that is bilateral-the FTA. [8]

Equally as clear is what voices have not been allowed influence. Independent news sources in Peru have reported on the bias of major Peruvian newspapers which downplayed the magnitude of peasant strikes during the weeks leading up to the congressional vote on the trade deal. [9] “The media are linked to economically powerful groups that have not only muted criticism but have even demonized conflict within the democratic process over fundamental questions like the viability of the economic model,” said one panelist during a June roundtable discussion at a Lima-based research center, the Peruvian Studies Institute. [10]

Last November, in an effort to give Peru’s poor the opportunity to decide the fate of the FTA, a national civil society campaign called “Así No” managed to collect the 46,000 signatures needed to make Congress vote on a bill to put the decision to a referendum. In June, Congress rejected the proposal and whatever last chance existed for those most affected by the FTA to exercise their democratic right to stop it.

Ironically, a defense of the rights of Peru’s poor is now being mounted not in Peru’s Congress, where the deal met overwhelming approval, but by congressional Democrats in the United States. A number of civil society groups in the US hope Democrats will vote down the agreement. On the same day that the FTA was signed in Washington, Public Citizen, a consumer advocacy non-profit, hosted a press call panelled by a Peruvian health expert, a Peruvian labor expert, and a Peruvian Archbishop, to begin lobbying efforts against US ratification. [11] In May, the League of United Latin American Citizens (LULAC), the oldest Hispanic Organization in the US, drafted a resolution urging Congress to reject the agreement.

Democrats, although having supported the ratification of numerous trade agreements in the past, have expressed concern that the US-Peru FTA will promote instability in the region by adversely affecting Peru in the fields of agriculture, intellectual property, and labor. [12] Democratic opposition to the agreement has rallied around the latter issue, which they seek to resolve by ammending the FTA to uphold International Labor Organization (ILO) labor standards. The decision on the FTAs ratification is on hold until Congress resumes session on September 4th.

The knock out punch delivered to Peru’s poor is unlikely to be significantly dampened by whatever amendments, if any, Democrats manage to work into the agreement. Bracing for the inevitable, one local indigenous organization in Cusco, Peru, The Association of Potato Park Communities (ACPP), is spearheading a campaign to lobby their regional government to declare Cusco a GMO-free zone. [13]

The current work of the ACPP also includes collaboration with indigenous communities across the region to approve a home-grown variety of FTAs based on the Andean principle of reciprocity. Promoting a trade that is truly free, these agreements between indigenous communities would ban GMO’s, assert the rights of indigenous peoples over their resources, and guarantee the local traditions of seed saving and barter within biological corridors that link the communities together. Needless to say, the ACPP’s task is made more formidable following the FTAs green light on plant patents and GMO’s.

While Congress is on summer recess, one can only hope that more than a smattering of conscientios US citizens will call their representatives and complain about the FTA. However, the poor masses of Peru-those most affected by what Congress decides to do-have no one to turn to. Democracy seems to be going on in a far away place and for a select few. With the FTA expected to be ratified in the US later this year, the downtrodden in Peru who are already bending over backwards to protect their cultures and environment will have no choice but to bend over a little more. They will bear the brunt of an assault by the corporate forces of the world’s most powerful nation.


[1Vulnurabilidad de los hogares peruanos ante el TLC by Javier Escobal y Carmen Ponce:

[2For Colombia See: Colombian Agriculture and the FTA with the United States, Columbian Ministry of Agriculture (July 2004); For Ecuador See: Los Impactos Diferenciados del Tratado de Libre Comercio Ecuador - Estados Unidos de Norte America sobre la agricultura de Ecuador, UN Economic Commission for Latin America and the Caribbean (ECLAC) (January 2005).

[3For a full account of how developing countries lack the legal infrastructure in place in the US to intepret the FTA in such a way as to reflect the general interplay between IPR rules and exceptions which strikes a balance between the rights of IPR holders and consumers see: “Intellectual Property Provisons of Bilateral and Regional Trade Agreements in Light of US federal law,” Frederick M. Abbott:

[4IIFB Opening/Closing Statements at CBD WG on ABS 2006;

[5Gerhardsen, Tove Iren S. “Developing countries propose TRIPS amendment on disclosure,”

[6For information on how to read a copy of the CONCYTEC director’s comments contact: Asociación Andes;

[7“Policy Reversal: Greenlight for GMO’s,” The Nation, Bangkok; 21 August 2004:

[8The US Trade Representative, as mandated by Congress, must clear FTAs through a series of advisory councils that are made up of major US corporations.

[9“Perú: Los Diarios y el Paro Agrario Contra el TLC,” Raúl Wiener:

[10“Rapporteur’s report on a Round Table Discussion at the Instituto de Estudios Peruanos (IEP), Lima, June9, 2006.

[11Opposition to US-Peru Free Trade Agreement Press Call, April 12, 2006:

[12Letter from 24 members of Congress to USTR about the Andean FTA

[13The ACPP is the governing body of the Potato Park, a conservation area comprised of and run by six Quechua communities dedicated to protecting their biological and cultural heritage.