New Law in Peru Violates Free Trade Agreement with U.S.

WASHINGTON, D.C.—On July 3, the Peruvian Congress approved bill 3627, which has now become Law 30230, a suite of measures that rolls back environmental regulations and violates Peruvian obligations under the U.S.-Peru Free Trade Agreement (FTA).

“The new law prioritizes immediate gain for corporations over sustainable development for all Peruvians,” said Julia Urrunaga, EIA’s Peru Country Director. “Weakening environmental protections to make it easier for companies to exploit natural resources such as timber and minerals in an irresponsible way is short-sighted.”

“Peruvians are already losing significant tax revenue from illegal natural resource extraction as companies ravage the environment with impunity,” Urrunaga added. “This law weakens the government’s ability to sanction businesses that do serious environmental damage.”

Supported by President Ollanta Humala and promoted by Minister of Finance and Economy Luis Miguel Castilla, the measures are intended to increase private investment in Peru. The majority of proposed changes to environmental regulations weaken existing standards and are oriented toward promotion of oil and fuel extraction.

Minister of Agriculture Juan Manuel Benites announced recently that the government will also re-launch forest concessions, a process that will be facilitated by the newly adopted measures, in order to “bring private investment [to the forest sector] and promote forest plantations and the planting of alternative crops such as palm oil.”

“The Government of Peru is backtracking on its international commitments to protect the environment in favor of short-term profit and a blinkered development agenda,” said Annalise Romoser, Latin America Program Coordinator for EIA. “The new law is a blow to the Peruvian environment and to U.S. taxpayers. Over the last eight years the U.S. has invested millions of dollars to improve environmental standards in Peru and to strengthen capacity within the Ministry of Environment—the very ministry stripped of capacity and oversight by the new law.”

President Humala argues that weakening environmental protections will boost economic growth by increasing private investment. Prior to passage of the law, he stated that the measures were being presented to Congress because, "There is an existing set of limitations to private investment being carried out at the speed we Peruvians need."

However, Peru has experienced economic growth rates over the last few years and projections indicate growth will continue into 2015. Mining companies, in particular, are set to benefit from the law which reinstates measures similar to those established in the1990s to attract investments and shield companies from rigorous environmental standards.

Passing by eleven votes, the law is criticized by Peruvian civil society, environmental and indigenous organizations, and the United Nations. The law has also been criticized by organizations from other sectors for including provisions that provide tax debt forgiveness to the largest companies in Peru, in addition to weakening labor standards.

EIA calls on both President Humala to withdraw support for the law, and on the U.S government to revisit trade relationships with Peru in light of its violation of obligations under the FTA.

UPDATE: Over 100 civil society organizations from Peru and around the world have signed onto a [letter asking President Humala to reject the set of economic policies], known as the “Paquetazo de Castilla,” which weaken the environmental protections in the country and violate the free trade agreement with the United States.

ACTUALIZACION: Más de 100 organizaciones de la sociedad civil peruana e internacional han firmado una [carta solicitando al Presidente Humala rechazar el paquete] de políticas económicas, conocido como el “Paquetazo de Castilla,” que debilitan las protecciones ambientales en el país y violan el tratado de libre comercio con los Estados Unidos.

Background

The U.S.-Peru FTA, which entered in to force in 2009, includes binding environmental obligations subject to dispute resolution. Article 18.3.2. of the agreement states, “The Parties recognize that it is inappropriate to encourage trade or investment by weakening or reducing the protections afforded in their respective environmental laws. Accordingly, a Party shall not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such laws in a manner that weakens or reduces the protections afforded in those laws in a manner affecting trade or investment between the Parties."

Contact:
Washington, D.C.: Maggie Dewane, Communications and Press Officer, (202) 483-6621, mdewane@eia.global.org
Lima, Peru: Julia Urrunaga, Peru Country Director julia@eia-global.org

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