Emergency Committee For American Trade

ECAT Bulletin on Peru TPA and Investment

PERU TPA INVESTMENT CHAPTER STRONGLY BENEFITS U.S. FARMERS, MANUFACTURERS, SERVICE PROVIDERS AND THEIR WORKERS

Investment Chapter Is Essential for the United States to Benefit from Peru’s Market Opening

The investment chapter of the U.S.-Peru trade agreement is essential for U.S. farmers, manufacturers, service providers and their workers to realize fully the agreement’s benefits, by ensuring U.S. enterprises:

§ Can set up distribution networks to export successfully into the Peruvian market. Notably, nearly half of all U.S. exports go to U.S. foreign subsidiaries worldwide.

§ Can fully benefit from the elimination of services barriers, by providing important financial and other services directly to Peruvian consumers through branch and affiliate offices.

§ Can set up networks to research and develop products that meet local tastes and increase sales.

§ Are protected against discrimination, arbitrary and capricious government actions.

§ Are provided with an objective and fair forum to address unfair government actions. It is important to note that arbitrators in investor-state panels are highly experienced individuals from academia, the judiciary and other parts of government and the legal community. Arbitrators have included former Congressman and Federal Circuit Judge Abner Mikva, former Secretary of State Warren Christopher and former International Court Chief Justice Stephen Schwebel.

U.S. Investment Overseas Spurs U.S. Productivity and Economic and Wage Growth

U.S. activities overseas by globally-engaged U.S. companies have been demonstrated in study-after-study, including ECAT’s own Global Investments, American Returns (GIAR) (1998) and the 1999 Update, to complement, rather than substitute for, economic activity in the United States in areas determinative of productivity. For example, globally-engaged U.S. firms:

§ export more,

§ expend more on U.S. research and development and physical capital investments, and

§ pay their U.S. workers more

than purely domestic firms.

The protections found in the investment chapter of the Peru TPA are fully based on U.S. legal principles and practice, including the Takings, Due Process and Equal Protection clauses of the U.S. Constitution, as well as U.S. laws, such as the Administrative Procedure Act. While foreign investors can already avail themselves of the strong protections accorded under U.S. law, this chapter is most important for U.S. investors in Peru that require these strong provisions and the rule of law they promote to protect against discriminatory and unfair government acts.

ECAT POSITION: ECAT strongly supports Congressional approval and implementation of the U.S.-Peru TPA to promote new economic opportunities and broader U.S. interests in the Western Hemisphere.

Attached Document(s): ECAT Bulletin on Investment and Peru TPA.pdf