The U.S. – Peru Trade Promotion Agreement :

Protecting Investors Rights To Exploit Animals & The Environment

by T. Matheson

As neoliberalism spreads throughout the Americas, Peru is next on the list with a proposed free trade agreement (FTA) with the United States. In an already overexploited region, Peru’s delicate environment and diverse wildlife are facing an even greater risk to their existence by this new bilateral trade agreement. Animal agriculture, fishing, mining, lumber, oil drilling, and wildlife hunting will all increase as the country is “developed.” An increase in one of these areas, let alone all of them, will further habitat destruction and exploitation of sentient and already endangered animals. This agreement is a serious detriment to the welfare of animals in Peru and, if approved, it will most likely have long-lasting consequences that cannot be rectified. This essay will focus on the harm that will be caused to animals in particular (there are many important labor and environmental costs inherent in this agreement as well, so this essay should not be considered all inclusive).

U.S. Poultry Exports To Increase

Poultry exports to Peru are one of three industries expected to benefit the most, by percent, from the implementation of the FTA. Currently, Peru applies high tariffs to any foreign imports of poultry. Peru has agreed to allow up to 12, 000 tons of chicken ‘dark meat,’ without tarrifs as well as increase it annually by 960 tons until it will reach nearly 24,000 tons within 10 years[i]. Poultry is the main protein source for Peruvians and, though they do have some large producers, the majority of chicken is raised by small scale farmer especially in coastal areas[ii]. A study of Andean poultry-raising found that the majority of these chickens are free range and live among the residents of the communities[iii]. Though these people are poor, they say they do not raise chickens merely for economic reasons, but that they have an aversion to the hormones and chemicals used in factory farmed chickens and egg production. Meanwhile, the U.S. Grains Council, a strong supporter of the Peru FTA, has been meeting with the Peruvian Poultry Association (APA) to promote egg consumption “with a goal to increase it by 40 percent over the next 10 years[iv].” Peru has agreed to provide a market for 800,000 metric tons of grain to supply their large poultry producers. It is in the best interests of the U.S. grain industry to expand factory farming in Peru in order to sell more of their grain to Peru as livestock feed. The impact created from flooding the Peruvian market with cheap chicken from the U.S. as well as pressure from the grain and APA coalition to increase demand could have a number of negative results. Peruvians consumption of cheap factory-farmed chicken from the U.S. will increase, replacing the consumption of locally raised free range chickens. The other result is that that through the help of U.S. Grains Council to increase consumption of chickens and eggs, more factory farms will be created in Peru to supply the demand and increase profits. Lastly, many Peruvians depend on agriculture as their main livelihood. Human rights groups believe the FTA will result in job loss in the agricultural sector as the U.S. exports gain Peruvian market access[v]. Florida Fair Trade says that “Peruvian farm organizations and religious leaders express certainty that the agricultural rules…will push hundreds of thousands of small farmers into bankruptcy[vi].” There is a trend in countries where FTAs are passed in which the displaced, rural poor move to the cities. Rather than raising their own animals, these people will provide a market for cheap U.S. imports of factory-farmed meat and eggs that are sold in the cities. In addition, the transport of meat products across borders requires much more resources, such as fuel, than it does to creat food locally and is therefore less sustainable.

Agreement Lowers Sanitary Measures

In recent years, Peru had banned importing poultry from the U.S. because of our Sanitary and Phytosanitary (SPS) measures, which they thought were not up to par due to some incidences of avian influenza and Newcastle Disease[vii]. In 2004, avian flu was detected in a flock of 7,000 chickens in Texas as well as in New Jersey, Maryland and Delaware. In addition, there was a case of transmission to a human in New York a year before[viii]. The United States currently has embargos on countries, mostly Asian, where avian flu is present in domestic poultry. It is hypocritical for the United States to put embargos in place for some countries while calling Peru’s ban unscientific[ix], especially when the U.S. has documented cases of bird flu. Under the Peru FTA, this market will be reopened and Peru will accept USDA standards. This should be seen as a lowering of global sanitary measures. Over 70% of protein consumed in Peru comes from bird-raising[x]. The transmission of bird flu to Peru could be disastrous and effect public health, agriculture and sustainable rural development.

Animal Fighting Not Prohibited

Though it may seem like a highly specific issue, Peru does take part in animal fighting as entertainment which is legal there. Bullfighting and cockfighting are popular and considered cultural tradition. Under the trade in live animals section of Peru’s tariff schedule is listed pure bred and breeding animals “for fighting[xi].” The Peru FTA will remove any tariffs for poultry and beef. The live animals that the U.S. exports to Peru can be used for fighting since it is legal and this includes cockfighting and bullfighting. As to humane laws protecting animals from cruelty, “Peruvian legislation specifically exempts bull fighting, cock fighting, and activities that have been deemed cultural from these provisions[xii].” HSUS claims that cockfighting has been linked to the spread of Newcastle Disease in poultry[xiii]. Unfortunately, there are no measures in the Peru FTA to ban animal fighting or prevent our exported livestock from being used in this manner once it reaches Peruvian territory. In addition, if Peruvian animal welfarists were to propose a law against importing animals for fighting, the Peru FTA would allow industry corporations to challenge the prohibition as a trade barrier.

U.S. Beef & Pork Exports To Increase

The other largest increase in U.S. exports, by percent, will be pork products. Removal of high tariffs will expand U.S. market penetration and create a competitive advantage for U.S. pork products in Peru. There will be a “significant, positive effect on total U.S. exports of beef and pork to peru[xiv].” Currently, their beef and poultry industries are made of “small and indigenous producers that produce for household and local consumption[xv].” The National Pork Producers Council (NPPC) strongly supports the agreement saying that when the FTA is fully implemented will be extremely beneficial to U.S. pork producers increasing exports and U.S. hog prices by 83 percent per head. Producer profits are estimated to increase by 7 percent. This is of concern because the influx of cheap imports of pork “will seriously affect a huge number of Peruvian national producers[xvi].” Pork is the least consumed meat in Peru[xvii] mostly because it is considered less healthy[xviii] though the USITC expects that the low price of U.S. pork will compete with the local poultry and fish causing an increase in consumption[xix].

In 2004 and 2005, Peru banned much of U.S. beef due to the incidence of mad cow disease. The Peru FTA will reopen the market by acceptance of USDA SPS measures and it is expected to set a precedent for future FTAs[xx]. The National Cattlemen’s Beef Association (NCBA) strongly supports the FTA and says that it will allow us to provide beef there at a lower price, giving U.S. grain-fed, feedlot cattle an advantage over the local producers which are primarily grass-fed[xxi]. Animal advocates may consider grain-fed cattle production crueler than grass-fed since the former spends less time living outdoors before slaughter.

PERU and the United States Violate CITES and Endangered Species Act

The Peru FTA does not increase the tariff of US imports of big leaf mahogany which has been recommended by TRAFFIC in order to conserve these threatened forests[xxii]. In fact, the United States is already facing a lawsuit by environmental and Peruvian groups that charge the U.S. is in violation of both the Endangered Species Act and the Convention on International Trade in Endangered Species (CITES) for continuing the importation of mahogany from Peru[xxiii]. A Duke University study found that the Peruvian government was not enforcing national forestry laws and logging bans, that there was widespread illegal logging in national parks amongst indigenous communities, that Peruvian countries are mixing illegal and legal timber together for export, and that loggers have been shooting and killing indigenous people who try to protect their forests with bows and arrows[xxiv]. U.S. Fish & Wildlife is accused of having a lax attitude by accepting invalid export permits for mahogany and Defenders of Wildlife have stated, “This wood is illegal as a matter of both U.S. and international law. It is illegal to trade in it, to import it, and to possess it. Even so, the Bush administration has done nothing to stop Peruvian mahogany from entering the country[xxv]”

Intensive and illegal harvesting is driven by U.S. demand and felling of trees require more road building through forests contributing to habitat destruction[xxvi]. The roads are later converted into farmlands, further exacerbating the problem and threatening even more animal and plant species. CITES lists big leaf mahogany as an endangered species and requires export regulations through permits. The Peru FTA’s environmental provisions only require the enforcement of previously existing environmental laws. However, Peru has not passed or implemented sufficient laws to regulate illegal harvesting. “ ‘Millions of dollars worth of Peruvian mahogany enters U.S. ports every year in violation of U.S. and international law,’ said Ari Hershowitz of the Natural Resources Defense Council, a Washington-based environmental group.” Peru is now the main source for international trade in mahogany and the United States consumes eighty percent[xxvii]. Peruvian experts have stated that 30-40% of all lumber logged, transported, and traded is illegal[xxviii].

Lack of Environmental Enforcement and Investor Regulation Destroy Wildlife & Habitat

A conservation site claims that “Illegal loggers steal into the Amazon, extract trees from the forest web, hunt monkeys and birds, and leave behind clearings soon filled by settlers, road builders and farmers[xxix].” In Madre De Dios, the Mississippi based Newman Lumber Company entered into a joint contract with an Amazonian milling company and took part in “illegal logging in prohibited areas, accumulated small-scale logging concessions as a means to evade large-scale logging prohibitions, constructed unauthorized logging roads, and violated a prohibition on operations by foreign-owned companies within 50 km of border[xxx].” Investigations and legal battles have shown government corruption and a lack of environmental law enforcement as well as the government’s initial unquestioning acceptance of the foreign investment. When the state finally halted the logging activity, the US embassy and Trent Lott lobbied on behalf of Newman Lumber. Under the new FTA, foreign investors will be able to challenge environmental laws in “secret international arbitration”[xxxi] as well as apply the new FTA rules to previous investor agreements. It may create an opportunity for Newman Lumber and the U.S. embassy to challenge Peru’s ban on their mahogany logging in Madre De Dios.

Logging Leads To Habitat Destruction and Wildlife Hunting

Much of the logging occurs in the Tahuamanu Rainforest, which is the habitat to endangered species such as the giant otter, the squirrel monkey, and the macaw[xxxii]. These protected forests where illegal logging occurs are in areas that are considered irreplaceable biological hotspots and Tahuamanu is listed as one of the twelve most threatened wildlands in the Americas by the NRDC[xxxiii]. They are home to thousands of species of butterflies, birds, endangered and endemic wildlife such as the giant river otter, the giant anteater, and the yellow-spotted side neck turtle. A 1996 study found that loggers were causing the extermination of local populations of animals in the Madre De Dios, the same area where the American Newman Lumber Company was illegally logging. Subsistence hunting was resulting in the local extermination of large mammal populations[xxxiv]. Over 86,000 wild animals were killed by lumber personnel including over 54,000 long-haired spider monkeys and red howler monkeys. The study stated that, “local extinction is inevitable for some species if this rate of extraction is maintained” and that overhunting is causing an inverse in mammalian biomass and leads to landscape changes in habitats and fauna. Fifty-two percent of the hunted animals are mammals while 47 percent are birds. The Peru FTA does not require countries to abide by international environmental agreements such as CITES.