Emergency Committee For American Trade

ECAT Bulletin on Peru TPA and Government Procurement

Trade Agreement Expands Procurement Opportunities for U.S. Manufacturers, Service Providers and their Workers

The procurement chapter of the Peru Trade Promotion Agreement (TPA) includes strong commitments that will promote a more open, transparent and fair framework for U.S. manufacturers and service providers to participate in Peru’s government procurements. Such provisions will create important new economic opportunities for a wide array of U.S. manufacturers and service providers and their workers.

For Peru, this chapter will help promote the efficient use of scarce government resources as it will be able to procure the highest-quality goods and services in a non-discriminatory, pro-competitive manner.

The Peru TPA Procurement Chapter Fosters Broader U.S. National Interests in Peru

The government procurement provisions of the Peru TPA require Peru to adopt a more transparent and accountable government procurement system at the central and sub-central level, fostering improved rule of law throughout the country. In particular, provisions requiring advance public notice of procurements, fair and non-discriminatory criteria for bids and objective awards of contracts are critical anti-corruption provisions that are important to U.S. and Peru’s broader national interests.

The Peru TPA Creates No Major Risk of Outsourcing U.S. Government Contracts

Concerns that the government procurement chapter of this agreement poses a signficant threat to U.S. companies and their workers are misplaced. At present, there are likely few Peruvian firms that could compete in the U.S. procurement market. As well, U.S. negotiators ensure that key parts of U.S. law, including those that promote U.S. procurements for the military or for small businesses are preserved.

Concerns that European or other countries could take advantage of these provisions to find a back-door way into the U.S. government-procurement market reveal a misunderstanding of how the procurement system works. European, Japanese and other major developed countries can already participate in major U.S. government procurements (except where exceptions are made), just as U.S. manufacturers and service providers participate in those countries’ major procurements.

Nor is there is any loophole for third-country goods to enter the U.S. procurement market. The Peru TPA limits the procurement benefits to “goods and services” of the other Party, relying on specific rule-of-origin provisions to ensure that goods made in a third country cannot qualify for the benefits of the Peru TPA. This means that U.S. workers producing goods in a facility in Michigan or another state, whether for a U.S.-headquartered or foreign-headquartered company, will have their products treated in Peru in a non-discriminatory manner. The same will be true in the United States for Peruvian and other foreign-invested enterprises in Peru that rely on Peruvian workers and Peruvian products. The language included in the Peru TPA is important to ensure that all U.S. workers can benefit from the new opportunities the agreement creates.

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 Procurement and the Peru TPA.pdf