United States And Peru Negotiate Free Trade Agreement

The United States and Peru have entered into a free trade agreement (FTA) that includes a
yarn-forward textile and apparel provision that will require textile and apparel products to be
made from components manufactured in the participating countries. It does not contain any of the
cumulation or tariff preference levels that have been opposed by US textile manufacturers in some
of the other FTAs.

In 2005, the United States imported $821 million worth of textiles and apparel from Peru and
had exports worth $21 million.

The agreement is particularly important to farmers in both countries, but there also are
elements affecting industrial and consumer products. Upon implementation of the agreement, 80
percent of consumer and industrial products and more than two-thirds of current US farm exports to
Peru will immediately become duty-free.

US Trade Representative Robert Portman said the Peru agreement is part of the administrations
strategy to “advance prosperity within our hemisphere.” He expressed the hope that Colombia and
Ecuador would soon join the agreement. As a participant in the Andean Trade Preference Act, Peru
already has considerable duty-free access to the US market, but that act expires this year. As a
result, the United States initiated negotiations in May 2004 on a new Andean agreement with Peru,
Colombia and Ecuador; and Bolivia has participated as an observer.

April 18, 2006