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Tue. October 16, 2018
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U.S.-Peru Free Trade Agreement: One Year Later
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By Adam Kott Just short of one year ago Congress overwhelmingly passed a free trade agreement between the United States and Peru. The reasons for the free trade agreement varied for each country. To the United States, Peru represented a potential ally in a region that has increasingly looked elsewhere for international relations. In Peru the free trade agreement (FTA) was implemented with the goal of developing its economy further through increased foreign investment. The long-term effects of the agreement have yet to be seen but one can look at the political and economic situation of the Andean nation to predict if the goals of the agreement will be met. As previously mentioned, one of the main goals of the United States was to create a stable ally of in Latin America. Centuries of being the regional hegemon has left the people of South America suspicious and wary of the United States. As globalization has allowed for capital and ideas to circumnavigate the world, U.S. influence in the region has decreased greatly. Today, Latin America has begun to look inward for support and stability. This push for self-sufficiency has resulted in the creation of such organizations as UNASUR, MERCOSUR, and the Andean Community. The creation of these organizations have promoted greater relations between the nations of Central and South America and decreased the overall influence of the United States. Looking outward as well, Latin America has slowly begun to take notice of Asian and European nations. Over the past few years China and Russia have cultivated a relationship with these nations in order to expand economic interests. U.S. politicians have viewed the entrance of China and Russia into the hemisphere as a threat to their own nation’s dominance in the area and have since moved towards free trade agreements in order to combat this. Additionally, by re-enforcing capitalism through free trade, the United States hopes to encourage its trading partners to become a more modern, democratic state. Those familiar with this region of the world know that the United States has always held an interest in the political structure of its hemispheric neighbors and it appears that this trend will continue in the future. The effects of the free trade agreement in Peru have been mixed. Despite a growth rate of 8% last year the domestic tranquility of the nation remains tenuous at best. Peruvian farmers are now forced to compete with cheap American agricultural products that benefit from government subsidies. As a result of this, protesters nationwide have called for President Alan Garcia to resign. Political turmoil aside, Peru has still seen some advances overall. One recent economic rating by The Heritage Foundation declared that Peru has seen increases in fiscal and trade freedoms alongside a decrease in government corruption. Furthermore, inflation and food prices have remained relatively low and stable. Since the FTA has passed, the Peruvian state has modernized in a number of ways, including 92 legislative decrees that range from environmental protection to civil service reform. In spite of these positive trends, over 44% of the country still lives below the poverty line, with 30% of its citizens living on less than $2 a day. Many are underwhelmed by the influence that the free trade agreement has had on foreign investment. Overall, the agreement has left much to be desired for, and it appears that the average U.S. citizen has benefitted much greater from the FTA than the everyday Peruvian. The long-term consequences of the agreement have yet to be seen but one can only expect to see more mixed results in the future. Hopefully those negotiating agreements with nations such as Colombia and Panama will learn from the lessons of the U.S.-Peru FTA and create a better result for the citizens of each nation.

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