CIAO DATE: 02/2010
October 2009
American Enterprise Institute for Public Policy Research
Bilateral free trade agreements have been the major means of opening markets over the last decade, but they have been attacked on two fronts. Critics of trade liberalization dislike them for obvious reasons. However, some advocates of trade liberalization also dislike them because they are seen as distracting from the goal of worldwide free trade. This latter group tends to misinterpret what free trade agreements do and the broader benefits they can bring. This study aims to explore those broader benefits through an in-depth look at the case of Peru. In particular, it seeks to shed light on some of the debates about free trade agreements by asking what the Peruvians sought to achieve through the FTA. Were they seeking new access to the United States market? Or were they using the agreement as a vehicle to strengthen economic and governance reforms? Although these explanations have been offered for FTA participants around the world, there are some reasons why Peru offers a particularly interesting application. Not only did Peru suffer through past periods of economic mismanagement and poor governance, but the current President, Alan Garcia, previously presided over one of the worst episodes. The FTA with the United States offered one of the only ways that the Peruvian government could commit itself credibly to pursuing a broad range of better policies. Further, if we are interested in what countries hoped to achieve in pursuing an FTA, Peru offers the freshest set of expectations available, still untainted by much subsequent experience with the operation of the agreement.
Resource link: The United States-Peru Trade Promotion Agreement [PDF] - 256K