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Has Free Trade with Peru Weakened the Rights of Working People?

This week, the U.S. ambassador to Peru, Brian A. Nichols, discussed the impact of the U.S.-Peru Free Trade Agreement (FTA) in an interview but failed to acknowledge that the increase in exports from Peru to the United States has not created decent work opportunities for Peruvian workers. Increased production has not resulted in higher wages, respect on the job or greater social mobility; instead, export industries have been characterized by poverty wages and rampant labor rights violations.

Nichols told Worldfolio:

The U.S.-Peru FTA was a huge step forward in terms of setting the stage for increased investment in Peru, diversifying Peru’s product mix and increasing agricultural trade in particular….When you look at products like avocado, asparagus, blueberries and grapes, those were things that were not a significant part of the U.S. market before and have grown since the FTA.

Unfortunately, the agricultural products from Peru that are increasingly lining America's shelves are directly linked to human rights abuses. The same is true in other export industries like apparel. In July, Peruvian unions and the International Labor Rights Forum (ILRF) filed a complaint under the FTA’s labor chapter detailing rampant health and safety violations, retaliation for trying to organize or join a union and the fraudulent use of seasonal and temporary contracts to trap workers in a cycle of poverty. One of the cases discussed in the complaint involves a Walmart supplier called Camposol. After the local union led a strike to demand compliance with their own collective bargaining agreement and Peruvian labor law, the company allegedly filed a frivolous criminal case against the strike leaders. Camposol has simply ignored fines and orders to rectify violations, reflecting a broader lack of institutional commitment to enforce labor rights.  

When the United States and Peru signed the FTA, they both committed to uphold fundamental labor rights. But Peru has since engaged in a series of measures to weaken already fragile worker protections, and labor relations in the country are at an all-time low. Peru’s minimum wage is the second lowest in South America, and even this miserly standard is not consistently enforced. Peru’s workers are not being allowed to share in the gains from trade, while companies use the lack of enforcement to produce at artificially low prices. Exporters gain an unfair advantage, also known as social dumping, the precise problem labor chapters are supposed to address. 

Meanwhile, the United States has done little to ensure that multinationals headquartered in its territory prevent labor and other human rights abuses in their supply chains. Nichols inadvertently acknowledged the influence the United States has, and by failing to use that leverage, it is failing working families in Peru and consumers here at home.

Nichols also praised the improvement to environmental protections as a result of this agreement, but in reality the FTA has exacerbated conflicts over access to resources and community consultation that have too often resulted in violence and tragedy. Despite making commitments to improve enforcement in areas like illegal logging, violations actually have increased. Industries like logging and extractives have been involved in land grabs and contamination, prompting waves of migration. These industries also promote precarious, unsafe working conditions and crack down of workers who try to fight back. Hundreds of mine workers were fired after a strike earlier this year.

Peru is one of 12 countries involved in ongoing negotiations for the Trans-Pacific Partnership trade and investment deal (known as the TPP). If Peru enters the TPP without improving labor standards and enforcement in full compliance with the pact’s terms, all of the talk of “high labor standards” in the TPP will prove meaningless. Global corporations will have yet another tool to drive down wages and deny fundamental rights to workers.  

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