[Senate Report 110-249]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 471
110th Congress                                                   Report
                                 SENATE
 1st Session                                                    110-249

======================================================================



 
    UNITED STATES-PERU TRADE PROMOTION AGREEMENT IMPLEMENTATION ACT

                                _______
                                

               December 14, 2007.--Ordered to be printed

                                _______
                                

   Mr. Baucus, from the Committee on Finance, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 2113]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Finance, to which was referred the bill 
(S. 2113) to implement the United States-Peru Trade Promotion 
Agreement, having considered the same, reports favorably 
thereon without amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
 I.  Report and Other Materials of the Committee......................2
    A. Report of the Committee on Finance.............................2
    B. Summary of Congressional Consideration of the Agreement........2
        1. Background............................................     2
        2. Trade Promotion Authority Procedures in General.......     3
        3. Notification Prior to Negotiations....................     3
        4. Notification of Intent To Enter Into an Agreement.....     4
        5. Development of the Implementing Legislation...........     4
        6. Formal Submission of the Agreement and Implementing 
            Legislation..........................................     5
        7. Committee Consideration...............................     5
    C. Trade Relations With Peru......................................6
        1. United States-Peru Trade..............................     6
        2. Tariffs and Trade Agreements..........................     9
        3. U.S. International Trade Commission Study.............     9
    D. Overview of the Agreement.....................................10
        1. Background............................................    10
        2. Office of the U.S. Trade Representative Summary of the 
            Agreement............................................    10
    E. General Description of the Bill to Implement the Agreement....37
        Title I--Approval of, and General Provisions Relating to, 
            the Agreement........................................    38
        Title II--Customs Provisions.............................    39
        Title III--Relief From Imports...........................    43
        Title IV--Procurement....................................    48
        Title V--Trade in Timber Products of Peru................    48
        Title VI--Offsets........................................    50
    F. Vote of the Committee in Reporting the Bill...................50
II.  Budgetary Impact of the Bill....................................50
III. Regulatory Impact of the Bill and Other Matters.................55

IV.  Additional Views................................................56
 V.  Changes in Existing Law Made by the Bill, as Reported...........59

             I. REPORT AND OTHER MATERIALS OF THE COMMITTEE


                 A. Report of the Committee on Finance

    The Committee on Finance, to which was referred the bill 
(S. 2113) to implement the United States-Peru Trade Promotion 
Agreement (Agreement), having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

       B. Summary of Congressional Consideration of the Agreement


1. Background

    On November 18, 2003, U.S. Trade Representative Robert B. 
Zoellick notified Congress of the Administration's intent to 
negotiate a free trade agreement with Colombia, Peru, Ecuador, 
and Bolivia. Ambassador Zoellick consulted with the relevant 
congressional committees, including the Senate Committee on 
Finance, with respect to the initiation of negotiations. He 
also attended meetings of the Congressional Oversight Group on 
November 6, 2003 and May 6, 2004 to discuss the initiation of 
negotiations.
    Negotiations with Colombia, Peru, and Ecuador were launched 
on May 18, 2004, with Bolivia participating as an observer. The 
United States and Peru subsequently decided to pursue a 
separate agreement, and U.S. Trade Representative Rob Portman 
announced that the United States and Peru had successfully 
concluded those negotiations on December 7, 2005.
    The President notified Congress of his intent to enter into 
the Agreement and published notice of his intent in the Federal 
Register on January 6 and January 10, 2006, respectively. On 
February 21, 2006, Ambassador Portman submitted to Congress the 
reports from 27 trade advisory groups commenting on the final 
text of the Agreement. The Office of the U.S. Trade 
Representative also made the reports publicly available on its 
website. Ambassador Portman and Peruvian Minister of Foreign 
Trade and Tourism Alfredo Ferrero Diez Canseco signed the 
Agreement on April 12, 2006.
    On May 10, 2007, Congress and the Administration reached a 
bipartisan agreement on trade policy. As discussed further 
below in Section I.D., the May 10 bipartisan trade deal 
required groundbreaking changes to the labor, environmental, 
intellectual property, government procurement, services, and 
investment provisions of the Agreement. U.S. Trade 
Representative Susan Schwab and Peruvian Minister of Foreign 
Trade and Tourism Mercedes Araoz signed amendments to the 
Agreement to reflect those changes on June 24 and June 25, 
2007.

2. Trade promotion authority procedures in general

    Article I, section 8 of the Constitution of the United 
States vests Congress with the authority to regulate 
international trade. Congress has periodically delegated a 
portion of this authority to the President in order to advance 
the economic interests of the United States. This delegation 
represents a compact between Congress and the Administration, 
by which Congress guarantees it will vote on a trade agreement 
entered into by the Administration without amendment and the 
Administration guarantees close consultation with Congress 
during the negotiation of the trade agreement in order to 
achieve the objectives that Congress identifies. Thorough and 
timely consultation by the Administration with Congress is the 
essential bedrock upon which Congress' delegation of 
constitutional authority rests. This longstanding compact, 
spanning decades, has resulted in the successful negotiation 
and implementation of numerous trade agreements that have 
contributed significantly to increased economic growth and 
prosperity in the United States.
    The most recent incarnation of this compact is found in the 
Bipartisan Trade Promotion Authority Act of 2002 (the Act), 
which was included in the Trade Act of 2002 (Pub. L. 107-210). 
The Act includes prerequisites for congressional consideration 
of a trade agreement under expedited procedures (known as Trade 
Promotion Authority (TPA) procedures), which are found in 
sections 2103 through 2106 of the Act (19 U.S.C. Sec. Sec. 303-
3806) and section 151 of the Trade Act of 1974 (19 U.S.C. 
Sec. 2191). Section 2103 of the Act authorizes the President to 
enter into reciprocal trade agreements with foreign countries 
to reduce or eliminate tariff or nontariff barriers and other 
trade-distorting measures. Section 2102 of the Act outlines the 
negotiating objectives that the President is to achieve if the 
President intends to use TPA procedures to implement a trade 
agreement. And section 151 of the Trade Act of 1974 sets forth 
expedited procedures for congressional consideration of a trade 
agreement without amendment. The President's authority under 
section 2103 extends to trade agreements entered into on or 
before June 30, 2007.

3. Notification prior to negotiations

    Under section 2104(a)(1) of the Act, the President must 
provide written notice to Congress at least 90 calendar days 
before initiating negotiations. On November 18, 2003, the U.S. 
Trade Representative notified Congress of the President's 
intent to initiate negotiations with Peru. The negotiations 
were initiated on May 18, 2004. Section 2104(a)(2) requires the 
President, before and after submission of the notice, to 
consult regarding the negotiations with the relevant 
congressional committees and the Congressional Oversight Group 
established under section 2107 of the Act. The Administration 
engaged in the requisite consultations with respect to this 
Agreement, including an appearance by the U.S. Trade 
Representative at meetings of the Congressional Oversight Group 
on November 6, 2003 and May 6, 2004.

4. Notification of intent to enter into an agreement

    Under section 2105(a)(1)(A) of the Act, the President must 
notify Congress at least 90 calendar days before entering into 
an agreement of his intent to enter into the agreement. On 
January 6, 2006, the President notified Congress of his intent 
to enter into the United States-Peru Trade Promotion Agreement. 
The Agreement was signed on April 12, 2006, and amendments to 
the Agreement were signed on June 24 and June 25, 2007 to 
reflect the changes required by the May 10 bipartisan trade 
deal.

5. Development of the implementing legislation

    Under TPA procedures, Congress and the Administration work 
together to produce legislation that implements a free trade 
agreement. Draft legislation is developed in close consultation 
between the Administration and the committees with jurisdiction 
over the laws that must be enacted or amended to implement the 
agreement. The committees may hold informal meetings to 
consider the draft legislation and to make non-binding 
recommendations to the Administration. The Administration then 
finalizes the implementing legislation for formal submission to 
Congress and referral to the committees of jurisdiction. These 
procedures are meant to ensure close cooperation between the 
executive and legislative branches of government to develop 
legislation that faithfully implements the agreement. Under 
TPA, the final legislation may include only those provisions 
that are necessary or appropriate to implement the agreement.
    The Senate Committee on Finance met in open executive 
session on July 27 and 31, 2006 to informally consider the 
original version of the draft implementing legislation for the 
Agreement. The Committee approved that version of the 
legislation on July 31, 2006 by a vote of 12 ayes, 7 nays, and 
1 present.
    As noted above, however, Congress and the Administration 
reached agreement on May 10, 2007 on a package of changes to 
several free trade agreements, including the United States-Peru 
Trade Promotion Agreement. That deal necessitated changes to 
both the Agreement itself and the implementing legislation.
    As a result, the Committee on Finance met again in open 
executive session on September 21, 2007 to informally consider 
the revised draft implementing legislation. Two amendments were 
offered in Committee to the revised draft implementing 
legislation, both by Senator Hatch. The first amendment sought 
to add language to the implementing legislation providing that 
nothing in the Agreement or the legislation requires changes to 
U.S. federal or state labor laws. The amendment failed by 
recorded vote, 4 ayes, 16 nays, a quorum being present. Ayes: 
Hatch, Kyl (proxy), Smith (proxy), Bunning (proxy). Nays: 
Baucus, Rockefeller, Conrad, Bingaman, Kerry, Lincoln, Wyden 
(proxy), Schumer, Stabenow, Cantwell, Salazar, Grassley, Snowe, 
Crapo, Roberts, Ensign. Senator Hatch's second amendment sought 
to add language to the implementing legislation providing that 
nothing in the Agreement or the legislation prevents Peru from 
imposing strong intellectual property rights protections that 
are similar to the protections available in the United States. 
Senator Hatch's second amendment also failed by recorded vote, 
5 ayes, 15 nays, a quorum being present. Ayes: Hatch, Snowe, 
Kyl (proxy), Smith (proxy), Bunning (proxy). Nays: Baucus, 
Rockefeller, Conrad, Bingaman, Kerry, Lincoln, Wyden (proxy), 
Schumer (proxy), Stabenow, Cantwell (proxy), Salazar, Grassley, 
Crapo, Roberts, Ensign.
    The Committee then approved the draft implementing 
legislation and draft Statement of Administrative Action, 
without amendment, by recorded vote, 18 ayes, 3 nays, a quorum 
being present. Ayes: Baucus, Rockefeller, Conrad, Bingaman, 
Kerry, Lincoln, Wyden (proxy), Schumer, Cantwell, Salazar, 
Grassley, Lott (proxy), Snowe, Smith (proxy), Bunning (proxy), 
Crapo, Roberts, Ensign. Nays: Stabenow, Hatch, Kyl (proxy). 
Separately, the Committee on Ways and Means in the House of 
Representatives approved the draft implementing legislation and 
draft Statement of Administrative Action without amendment on 
September 25, 2007 by voice vote, a quorum being present.

6. Formal submission of the agreement and implementing legislation

    When the President formally submits a trade agreement to 
Congress under section 2105 of the Act, the President must 
include in the submission the final legal text of the 
agreement, together with implementing legislation, a Statement 
of Administrative Action describing regulatory and other 
changes to implement the agreement, a statement setting forth 
the reasons of the President regarding how and to what extent 
the agreement makes progress in achieving the applicable 
purposes, policies, priorities, and objectives set forth in the 
Act, and a statement setting forth the reasons of the President 
regarding how the agreement serves the interests of U.S. 
commerce. The implementing legislation is introduced in both 
Houses of Congress on the day it is submitted by the President 
and is referred to committees with jurisdiction over its 
provisions.
    On September 27, 2007, the President transmitted to 
Congress the final text of this Agreement, the implementing 
legislation, the Statement of Administrative Action, and the 
other supporting information required under section 2105 of the 
Act. The legislation was introduced that same day in both the 
House (H.R. 3688) and the Senate (S. 2113).
    To qualify for TPA procedures, the implementing legislation 
itself must contain provisions formally approving the agreement 
and the Statement of Administrative Action. And the 
implementing legislation must contain only those provisions 
necessary or appropriate to implement the Agreement. The 
implementing bill reported here--which approves the Agreement 
and the accompanying Statement of Administrative Action and 
contains provisions necessary or appropriate to implement the 
Agreement into U.S. law--was referred to the Senate Committee 
on Finance.

7. Committee consideration

    When the requirements of the Act are satisfied, 
implementing revenue bills, such as the United States-Peru 
Trade Promotion Agreement Implementation Act, are subject to 
the legislative procedures of section 151 of the Trade Act of 
1974. The following schedule for congressional consideration 
applies under these procedures:
    (i) House committees have up to 45 calendar days in session 
in which to report the bill; any committee which does not do so 
in that period will be automatically discharged from further 
consideration.
    (ii) A vote on final passage by the House must occur on or 
before the 15th calendar day in session after the committees 
report the bill or are discharged from further consideration.
    (iii) Senate committees must act within 15 calendar days in 
session of receiving the implementing revenue bill from the 
House or within 45 calendar days in session of Senate 
introduction of the implementing bill, whichever is later, or 
they will be discharged automatically.
    (iv) The full Senate then must vote within 15 calendar days 
in session on the implementing bill.
    Once the implementing bill has been formally submitted by 
the President and introduced, no amendments to the bill are in 
order in either House of Congress. Floor debate in each House 
is limited to no more than 20 hours, to be equally divided 
between those favoring the bill and those opposing the bill.
    The Committee on Finance met in open executive session on 
October 4, 2007 to consider favorably reporting S. 2113. At the 
meeting, the Committee favorably reported S. 2113 without 
amendment by voice vote, a quorum being present.

                      C. Trade Relations With Peru


1. United States-Peru trade

    Peru accounts for a small percentage of overall U.S. 
trade--less than 1 percent--and was our 43rd largest export 
market in 2006. U.S. goods exports to Peru totaled $2.9 billion 
in 2006, up 27 percent from 2005. Corresponding U.S. imports 
from Peru totaled $5.9 billion, up 15 percent. Minerals, 
particularly gold and refined copper, constitute approximately 
one-half of U.S. imports from Peru. Other significant imports 
include petroleum products, apparel, coffee, fruits, nuts, 
prepared vegetables, asparagus, fish, and wood. Principal U.S. 
exports to Peru include electrical and mechanical appliances 
and machinery, refined petroleum products, and organic 
chemicals. Bulk commodities such as wheat, corn, cotton, rice, 
and soybean oil and meal make up the greatest percentage of 
U.S. agricultural exports to Peru.
    The following tables summarize the top U.S. merchandise 
exports to Peru and the top U.S. merchandise imports from Peru 
in 2005.


2. Tariffs and trade agreements

    Peru acceded to the World Trade Organization (WTO) on 
January 1, 1995, with an average bound tariff rate of 30.1 
percent for all goods (30.8 percent for agricultural goods and 
30.0 percent for nonagricultural goods). In 2006, Peru 
maintained an average applied tariff rate of 10.2 percent for 
all goods (13.6 percent for agricultural goods and 9.7 percent 
for nonagricultural goods). The United States, in contrast, 
provides duty-free treatment to most products from Peru. 
Ninety-eight percent of imports from Peru entered the United 
States duty free in 2006 under our most-favored nation tariff 
rates and the Andean Trade Preference Act (ATPA) and 
Generalized System of Preferences (GSP) preference programs. 
Given that the Agreement will greatly reduce this existing 
tariff asymmetry, the U.S. International Trade Commission 
(Commission) found that the Agreement likely will result in a 
much larger increase in U.S. exports to Peru than in U.S. 
imports from Peru.
    Peru is a member of the Andean Community, a customs union 
that includes Bolivia, Colombia, Ecuador, Peru, and Venezuela. 
It has also signed full or partial bilateral trade agreements 
with several countries, including Argentina, Bolivia, Brazil, 
Chile, Cuba, Mexico, Paraguay, Thailand, and Uruguay. It has 
signed bilateral investment treaties with even more countries, 
including Argentina, Australia, Bolivia, Chile, China, 
Colombia, Cuba, the Czech Republic, Denmark, Ecuador, El 
Salvador, Finland, France, Germany, Italy, Malaysia, the 
Netherlands, Norway, Paraguay, Portugal, Romania, Singapore, 
Spain, Sweden, Switzerland, Thailand, the United Kingdom, and 
Venezuela. Peru is also a member of the Asia-Pacific Economic 
Cooperation forum and the Latin American Integration 
Association, and it is an associate member of Mercosur.

3. U.S. International Trade Commission Study

    In June 2006, the Commission released the results of its 
investigation (Investigation No. TA-2104-20) into the probable 
economic effect of the Agreement (USITC Pub. 3855). The 
Commission found that the expected growth in U.S. trade with 
Peru under the Agreement would likely have a small but positive 
impact on the U.S. economy, predicting a $2.1 billion increase 
in U.S. gross domestic product. The Commission indicated, 
however, that these benefits may be tempered by the relatively 
small size of Peru's economy, its small share of total U.S. 
trade, and its existing duty-free access to the U.S. market 
under ATPA.
    As noted above, the Commission also concluded that the 
Agreement likely will result in a much larger increase in U.S. 
exports to Peru than in U.S. imports from Peru. More 
specifically, it estimated that U.S. exports to Peru will 
increase by $1.1 billion while U.S. imports from Peru will 
increase by $439 million. It further estimated that the largest 
increases in U.S. exports, by value, will be in machinery and 
equipment; chemicals, rubber, and plastic products; electrical 
machinery; and wheat. And it found that the largest estimated 
increases in U.S. exports, by percent, will be in paddy rice 
and meat products. The Commission expected only three U.S. 
sectors--paddy rice, crops such as cut flowers and live plants 
and seeds, and metals such as gold, copper, and aluminum--to 
experience a decline by more than 0.10 percent in output or 
employment.
    With respect to services, the Commission concluded that 
U.S. service firms will benefit from improved market access, 
national treatment, and regulatory transparency under the 
Agreement. The Commission noted, however, that these benefits 
will be moderated by the relatively small size of Peru's 
economy and the relatively small and domestically-focused 
nature of its service sector.

                      D. Overview of the Agreement


1. Background

    The Agreement establishes a bilateral free trade area that 
eliminates tariffs on trade between the United States and Peru 
for all qualifying goods except sugar. The Agreement also 
liberalizes trade in services and contains provisions that 
address telecommunications, electronic commerce, intellectual 
property rights, labor, environment, government procurement, 
and investment issues. In addition, the Agreement contains 
provisions that promote bilateral consultation and cooperation, 
procedural and substantive due process, administrative and 
judicial review, transparency, and the rule of law. And it 
contains a mechanism for settling disputes that arise under the 
Agreement. The Agreement is intended to strengthen economic 
relations between the United States and Peru, create 
employment, raise the standard of living, enhance the 
competitiveness of firms, establish clear and mutually 
advantageous rules for bilateral trade, build on commitments in 
the WTO, and promote creativity and innovation.
    As noted above, Congress and the Administration reached a 
bipartisan agreement on trade policy on May 10, 2007. The 
United States and Peru signed amendments to the Agreement to 
reflect those changes on June 24 and June 25, 2007. As a result 
of the amendments, this Agreement has become the first U.S. 
free trade agreement to include (1) fully enforceable 
commitments by the parties to adopt, maintain, and enforce the 
five core international labor standards incorporated in the 
1988 International Labor Organization Declaration on 
Fundamental Principles and Rights at Work; (2) fully 
enforceable commitments by the parties to adopt, maintain, and 
enforce their obligations under certain common multilateral 
environmental agreements and fully enforceable commitments by 
Peru to take specified steps to address illegal logging; (3) 
modifications to the intellectual property chapter that balance 
the need for access to medicines with patent protections for 
pharmaceutical products; (4) modifications to the government 
procurement chapter that allow the Parties to condition 
government contracts on adherence to core labor standards; (5) 
confirmation that the United States can prevent foreign 
companies from supplying services at U.S. ports if the United 
States deems such action necessary to protect our national 
security; and (6) confirmation that the Agreement accords 
foreign investors in the United States no greater substantive 
rights with regard to investor protections than U.S. investors 
in the United States.

2. Office of the U.S. Trade Representative Summary of the Agreement

    The Office of the U.S. Trade Representative prepared a 
summary of the Agreement that was included among the documents 
transmitted to Congress on September 27, 2007. This summary was 
distributed to Members of the Committee to aid in their 
consideration of the implementing legislation, and it is 
reprinted below:

            THE UNITED STATES-PERU TRADE PROMOTION AGREEMENT


                        Summary of the Agreement

    This summary briefly describes key provisions of the United 
States-Peru Trade Promotion Agreement (``Agreement'') that the 
United States has concluded with Peru and represents an 
authoritative expression of Administration views regarding the 
interpretation of the Agreement both for purposes of U.S. 
international obligations and domestic law.

                                Preamble

    The Preamble to the Agreement provides the Parties' 
underlying objectives in entering into the Agreement and 
provides context for the provisions that follow. It includes 
the following statement:

          ``AGREE that foreign investors are not hereby 
        accorded greater substantive rights with respect to 
        investment protections than domestic investors under 
        domestic law where, as in the United States, 
        protections of investor rights under domestic law equal 
        or exceed those set forth in this Agreement''.

    This statement would clarify that, as stated in the 
Bipartisan Trade Promotion Authority Act of 2002, foreign 
investors in the United States are not to be accorded greater 
substantive rights with respect to investment protections than 
United States investors in the United States.

        CHAPTER ONE: INITIAL PROVISIONS AND GENERAL DEFINITIONS

    Section A of Chapter One sets out provisions establishing a 
free trade area and affirming the Parties' existing rights and 
obligations with respect to each other under the Marrakesh 
Agreement Establishing the World Trade Organization (WTO) and 
other agreements to which they are party.
    Section B defines certain terms that recur in various 
chapters of the Agreement.

      CHAPTER TWO: NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS

    Chapter Two and its relevant annexes and appendices set out 
the Agreement's principal rules governing trade in goods. It 
requires each Party to treat products from the other Party in a 
non-discriminatory manner, provides for the phase-out and 
elimination of tariffs on ``originating'' goods (as defined in 
Chapter Four) traded between the Parties, and requires the 
elimination of a wide variety of non-tariff trade barriers that 
restrict or distort trade flows.
    Tariff Elimination. Chapter Two provides for the 
elimination of customs duties on originating goods traded 
between the Parties. Duties on most tariff lines covering 
industrial and consumer goods will be eliminated as soon as the 
Agreement enters into force. Duties on other goods will be 
phased out over periods of up to 10 years. Some agricultural 
goods will have longer periods for elimination of duties or be 
subject to other provisions, including, in some cases, the 
application of preferential tariff-rate quotas (TRQs). The 
General Notes to the U.S. and Peru Schedules to Annex 2.3 
include detailed provisions on staging of tariff reductions and 
application of TRQs for certain agricultural goods. The Chapter 
provides that the Parties may agree to speed up tariff phase-
outs on a product-by-product basis after the Agreement takes 
effect.
    Waiver of Customs Duties. The Parties may not adopt new 
duty waivers or expand existing duty waivers conditioned on the 
fulfillment of a performance requirement. Chapter Two defines 
the term ``performance requirements'' so as not to restrict a 
Party's ability to provide duty drawback on goods imported from 
the other Party.
    Temporary Admission. The Parties agreed to provide duty-
free temporary admission for certain products. Such items 
include professional equipment, goods for display or 
demonstration, and commercial samples. The Chapter also 
includes specific provisions on transit of vehicles and 
containers used in international traffic.
    Import/Export Restrictions, Fees, and Formalities. The 
Agreement clarifies that restrictions prohibited under the 
General Agreement on Tariffs and Trade (GATT) 1994 and this 
Agreement include export and import price requirements (except 
under antidumping and countervailing duty orders and 
undertakings) and import licensing conditioned on the 
fulfillment of a performance requirement. In addition, a Party 
must limit all fees and charges imposed on or in connection 
with importation or exportation to the approximate cost of 
services rendered. The United States agreed not to apply its 
merchandise processing fee on imports of originating goods. 
Peru agreed not to require a person of the United States to 
have or maintain a relationship with a ``distributor'' as a 
condition for allowing the importation of a good.
    Distinctive Products. Peru agreed to recognize Bourbon 
Whiskey and Tennessee Whiskey as ``distinctive products'' of 
the United States, meaning Peru will not permit the sale of any 
product as Bourbon Whiskey or Tennessee Whiskey unless it was 
manufactured in the United States in accordance with applicable 
laws and regulations. The United States agreed to recognize 
Pisco Peru as a ``distinctive product'' of Peru.
    Committee on Trade in Goods. Chapter Two also establishes a 
Committee on Trade in Goods to consider matters arising under 
Chapters Two, Four, and Five. The functions of the Committee 
are to promote and address barriers to trade in goods and to 
provide advice and recommendations on trade capacity building 
with respect to matters those chapters cover.

Agriculture

    TRQs. Chapter Two requires each government to administer 
TRQs in a manner that is transparent, non-discriminatory, 
responsive to market conditions, and minimally burdensome on 
trade. In addition, the Parties will make every effort to 
administer TRQs in a manner that allows importers to fully 
utilize import quotas. In addition, the Chapter provides that 
Parties may not condition application for, or utilization of, 
import licenses or quota allocations on the re-export of an 
agricultural good.
    Export Subsidies. Each Party will eliminate export 
subsidies on agricultural goods destined for the other Party. 
Under Article 2.16, no Party may introduce or maintain an 
export subsidy on agricultural goods destined for the other 
Party unless the exporting Party believes that a third country 
is subsidizing its exports to that other Party. In such a case, 
the exporting Party may initiate consultations with the 
importing Party to develop measures the importing Party may 
adopt to counteract such subsidies. If the importing Party 
agrees to such measures, the exporting Party must refrain from 
applying export subsidies to its exports of the good to the 
importing Party.
    Safeguards. Chapter Two sets out a transitional 
agricultural safeguard mechanism that allows a Party to impose 
a temporary additional duty on specified agricultural products 
if imports exceed an established volume ``trigger.'' The 
safeguard measure will remain in force until the end of the 
calendar year (or marketing year in the case of rice imported 
by Peru) in which the measure applies. A Party may not apply an 
agricultural safeguard on a good after the date that the good 
is subject to duty-free treatment under the Party's Schedule to 
Annex 2.3 of the Agreement.
    A Party may not apply a safeguard measure to a good that is 
already the subject of a safeguard measure under either Chapter 
Eight (Trade Remedies) of the Agreement or Article XIX of GATT 
1994 and the WTO Safeguards Agreement. All agricultural 
safeguard measures must be applied and maintained in a 
transparent manner and the Party applying such a measure must, 
on request, consult with the other Party concerning the 
application of the measure.
    Neither Party may impose safeguard duties pursuant to the 
WTO Agreement on Agriculture on originating goods.
    Sugar. The Agreement contains several unique features 
applicable to imports of sugar into the United States. First, 
imports under the TRQs provided for in the Agreement will be 
limited to the lesser of (i) the quantity established in the 
TRQ, or (ii) Peru's trade surplus in specific sugar goods. 
(``Peru's trade surplus'' is the amount by which Peru's exports 
to all destinations exceed its imports from all sources in 
specified sugar and sweetener goods, except that Peru's exports 
of sugar to the United States and its imports of high fructose 
corn syrup from the United States are not included in the 
calculation of its trade surplus.) The aggregate quantities 
established for the TRQ start at 9,000 metric tons in the first 
year and go up to 11,520 metric tons by year 15 of the 
Agreement. After year 15, the quantities increase by 180 metric 
tons per year. Second, in contrast to how it will treat other 
commodities subject to TRQs, the United States will not 
eliminate its over-quota duty on sugar imports under the 
Agreement. Lastly, the Agreement includes a mechanism that 
allows the United States, at its option, to provide some form 
of alternative compensation to Peruvian exporters in place of 
imports of sugar in any given year.
    Additional Provisions. Chapter Two provides for the 
creation of a Committee on Agricultural Trade. The Committee 
will be established within 180 days after the date the 
Agreement enters into force and will provide a forum for 
promoting cooperation in the implementation and administration 
of the Agreement, as well as for consultations on matters 
related to the agricultural provisions of the Agreement. In 
addition, the Chapter provides that the Parties will consult on 
and review the operation of the Agreement as it relates to 
trade in chicken nine years after the Agreement enters into 
force.

                  CHAPTER THREE: TEXTILES AND APPAREL

    Tariff Elimination. Chapter Three provides for duties on 
all originating textile or apparel goods to be eliminated on 
the date the Agreement enters into force.
    Safeguards. The Chapter also establishes a transitional 
safeguard procedure for textile and apparel goods, under which 
an importing Party may temporarily impose additional duties up 
to the level of the normal trade relations (most-favored-
nation) (NTR(MFN)) duty rates on imports of textile or apparel 
goods that cause, or threaten to cause, serious damage to a 
domestic industry as a result of the elimination or reduction 
of duties under the Agreement. An importing Party may impose a 
textile safeguard measure only once on the same textile or 
apparel good. The measure may not be in place for more than two 
years, or three years if the measure is extended. The ability 
to impose or maintain textile safeguards lapses five years 
after the Agreement enters into force. A Party may not apply a 
textile safeguard measure to a good while the good is subject 
to a safeguard measure under (i) Chapter Eight (Trade 
Remedies), or (ii) Article XIX of the GATT 1994 and the WTO 
Agreement on Safeguards.
    A Party imposing a safeguard measure under Chapter Three 
must provide the exporting Party with mutually agreed 
compensation in the form of trade concessions for textile or 
apparel goods that have a value substantially equivalent to the 
increased duties resulting from application of the safeguard 
measure. If the Parties cannot agree on compensation, the 
exporting Party may raise duties on any goods from the 
importing Party in an amount that has a value substantially 
equivalent to the increased duties resulting from application 
of the safeguard measure.
    Rules of Origin and Related Matters. A textile or apparel 
good will generally qualify as an ``originating good'' eligible 
to receive trade preferences under the Agreement only if all 
processing from the yarn stage to the final product (e.g., 
yarn-spinning, fabric production, cutting, and assembly) takes 
place in the United States, Peru, or both, or if there is an 
applicable change in tariff classification under the specific 
rules of origin contained in Annex 3-A of the Agreement.
    Chapter Three sets out special rules for determining 
whether a textile or apparel good is an ``originating good,'' 
including a de minimis exception for non-originating yarns or 
fibers, a process for designating inputs not available in 
commercial quantities, a rule for treatment of sets, an 
exception for use of certain nylon filament yarn, and 
consultation provisions.
    The de minimis rule applies to goods that ordinarily would 
not be considered originating goods because certain of their 
fibers or yarns do not undergo an applicable change in tariff 
classification. Under the rule, the Parties will consider a 
good to be ``originating'' if those fibers or yarns constitute 
ten percent or less of the total weight of the component of the 
good that determines origin. This special rule does not apply 
to goods containing elastomeric yarns.
    Annex 3-B of the Agreement sets out a list of fabrics, 
yarns, and fibers that the Parties have determined are not 
available in commercial quantities in a timely manner from 
producers in the United States and Peru. A textile or apparel 
good that includes the fabrics, yarns, or fibers included in 
this list will be treated as if it is ``originating'' for 
purposes of the specific rules of origin in Annex 3-A of the 
Agreement, regardless of the actual origin of those inputs. 
Chapter Three establishes procedures under which the United 
States will determine whether additional fabrics, yarns, or 
fibers are not available in commercial quantities in the United 
States and Peru. The United States may also remove a fabric, 
yarn, or fiber from the list if it determines that the fabric, 
yarn, or fiber has become available in commercial quantities.
    Customs Cooperation. Chapter Three commits the Parties to 
cooperate in enforcing their laws related to trade in textile 
and apparel goods, to ensure the accuracy of claims of origin, 
and to prevent circumvention of the Parties' laws or agreements 
relating to trade in textile and apparel goods. The Chapter 
also provides that, under certain circumstances, the exporting 
Party must conduct a verification to determine that a claim of 
origin is accurate, or to determine compliance with relevant 
laws. A verification may include visits to the premises of the 
exporter or producer of the goods in question. If there is 
insufficient information to make the relevant determination, or 
if an enterprise provides incorrect information, the importing 
Party may take appropriate action, which may include denying 
application of preferential tariff treatment or denying entry 
to the goods in question. Further, either Party may convene 
consultations to resolve technical or interpretive issues 
arising with respect to customs cooperation or may request 
technical assistance from the other Party in implementing the 
Chapter's customs cooperation provisions.
    Duty Free Treatment for Certain Goods. Chapter Three 
provides for duty-free treatment for goods that the United 
States and Peru agree qualify as handmade, hand-loomed, or 
traditional folklore goods.

          CHAPTER FOUR: RULES OF ORIGIN AND ORIGIN PROCEDURES

    To benefit from various trade preferences provided under 
the Agreement, including reduced duties, a good must qualify as 
an ``originating good'' under the rules of origin set out in 
Chapter Four and Annex 4.1. These rules ensure that the special 
tariff and other benefits of the Agreement accrue primarily to 
firms or individuals that produce or manufacture goods in the 
Parties' territories.
    Key Concepts. Chapter Four provides general criteria under 
which a good may qualify as an ``originating good'';
           When the good is wholly obtained or produced 
        in Peru, the United States, or both (e.g., crops grown 
        or minerals extracted in the United States); or
           When the good: (1) is manufactured or 
        assembled from non-originating materials that undergo a 
        specified change in tariff classification in Peru, the 
        United States, or both; or (2) meets any applicable 
        ``regional value content'' requirement (see below); and 
        (3) satisfies all other requirements of Chapter Four, 
        including Annex 4.1; or
           When the good is produced in Peru, the 
        United States, or both, entirely from ``originating'' 
        materials.
    De Minimis. Even if a good does not undergo a specified 
change in tariff classification, it will be treated as an 
originating good if the value of non-originating materials that 
do not undergo the required tariff shift does not exceed 10 
percent of the adjusted value of the good, and the good 
otherwise meets the criteria of the Chapter. This de minimis 
exception does not apply to certain agricultural and textile 
goods.
    Regional Value Content. Some origin rules under the 
Agreement require that certain goods meet a regional value 
content test in order to qualify as ``originating,'' meaning 
that a specified percentage of the value of the good must be 
attributable to originating materials. In general, the 
Agreement provides two methods for calculating that percentage: 
(1) the ``build-down method'' (based on the value of non-
originating materials used); and (2) the ``build-up method'' 
(based on the value of originating materials used). The 
regional value content of certain automotive goods, however, 
may be calculated on the basis of the net cost of the good. 
Finally, accessories, spare parts, and tools delivered with a 
good are considered part of the material making up the good so 
long as these items are not separately classified or invoiced 
and their quantities and values are customary. The de minimis 
rule does not apply in calculating regional value content.
    Claims for Preferential Treatment. Under the Chapter, 
importers who wish to claim preferential tariff treatment for 
particular goods must be prepared to submit, on the request of 
the importing Party's customs authority, a statement explaining 
why the good qualifies as an originating good. A Party may only 
deny preferential treatment in writing, and must provide legal 
and factual findings. The Chapter establishes a procedure for 
filing claims for preferential treatment for up to one year 
after a good is imported and for seeking a refund of any excess 
duties paid. Chapter Four also provides that a Party will not 
penalize an importer if the importer promptly and voluntarily 
corrects an incorrect claim and pays any duties owed.
    Verification. Each Party must ensure that its customs 
authority is empowered to conduct verifications for purposes of 
determining whether a good is an originating good. Where an 
importing Party determines through a verification that an 
importer, exporter, or producer has engaged in a pattern of 
conduct in providing false or unsupported statements, 
declarations, or certifications that a good is an originating 
good, the Party may suspend preferential tariff treatment to 
identical goods from that importer, exporter, or producer until 
the importing Party determines that the importer, exporter, or 
producer is in compliance with the rules set out in the 
Chapter.
    Additional Rules. Chapter Four provides specific rules with 
respect to the treatment of (1) packing materials and 
containers; (2) indirect materials; (3) fungible goods; and (4) 
sets of goods for purposes of determining origin. The Chapter 
provides that a Party may not treat a good as originating if 
the good undergoes production outside the territories of the 
Parties or if, while being unloaded, reloaded, or preserved in 
or simply being shipped through a third country, the good does 
not remain under the control of customs authorities in the 
territory of that third country. Chapter Four also calls for 
the Parties to publish guidelines for interpreting, applying, 
and administering Chapter Four and the relevant provisions of 
Chapter Two.

      CHAPTER FIVE: CUSTOMS ADMINISTRATION AND TRADE FACILITATION

    Chapter Five establishes rules designed to encourage 
transparency, predictability, and efficiency in the operation 
of each Party's customs procedures and to provide for 
cooperation between the Parties on customs matters.
    General Principles. Chapter Five commits each Party to 
observe certain transparency obligations. Each Party must 
promptly publish its customs measures, including on the 
Internet, and, where possible, solicit public comments before 
amending its customs regulations. Each Party must also provide 
written advance rulings, on request, to its importers and to 
exporters and producers of the other Party, regarding whether a 
product qualifies as an ``originating'' good under the 
Agreement, as well as on other customs matters. In addition, 
each Party must guarantee importers access to both 
administrative and judicial review of customs decisions. The 
Parties must release goods from customs promptly and 
expeditiously clear express shipments. After the Agreement 
enters into force Peru will have one year to comply with the 
Chapter's rules on release of goods; two years to comply with 
the Chapter's express shipments obligations and certain of its 
transparency obligations; and three years to comply with the 
Chapter's requirement to provide advance rulings.
    Cooperation. Chapter Five also is designed to enhance 
customs cooperation. It encourages the Parties to give each 
other advance notice of customs developments likely to affect 
the Agreement. The Chapter calls for the Parties to cooperate 
in securing compliance with each other's customs measures 
related to the implementation and operation of the provisions 
of the Agreement governing importations and exportations. It 
includes specific provisions requiring the Parties to share 
customs information where a Party has a reasonable suspicion of 
unlawful activity relating to its laws and regulations 
governing importations.

            CHAPTER SIX: SANITARY AND PHYTOSANITARY MEASURES

    Chapter Six defines the Parties' obligations to each other 
regarding sanitary and phytosanitary (SPS) measures. It 
reflects the Parties' understanding that implementation of 
existing obligations under the WTO Agreement on the Application 
of Sanitary and Phytosanitary Measures (SPS Agreement) is a 
shared objective. Nothing in the Agreement imposes new 
limitations on the United States in terms of maintaining high 
safety and inspection standards.
    Key Concepts. SPS measures are laws or regulations that 
protect human, animal, or plant life or health from certain 
risks, including plant- and animal-borne pests and diseases, 
additives, contaminants, toxins, or disease-causing organisms 
in food and beverages.
    Cooperation. Under Chapter Six, the Parties will establish 
an SPS Committee consisting of relevant trade and regulatory 
officials. The objectives of the Committee are to (i) help each 
Party to implement the WTO SPS Agreement; (ii) assist each 
Party to protect human, animal, or plant life or health; (iii) 
enhance consultation and cooperation between the Parties on SPS 
matters; and (iv) address SPS measures affecting trade between 
the Parties. The Committee will also provide a forum for 
enhancing mutual understanding of each Party's SPS measures and 
the regulatory processes that relate to those measures; 
consulting on SPS matters that may affect trade between the 
Parties; and consulting on issues, agendas, and positions for 
meetings of certain international organizations that address 
SPS matters.
    Dispute Settlement. No Party may invoke the Agreement's 
dispute settlement procedures for a matter arising under 
Chapter Six. Instead, any dispute between the Parties involving 
an SPS measure must be resolved through the WTO.

               CHAPTER SEVEN: TECHNICAL BARRIERS TO TRADE

    Chapter Seven builds on WTO rules related to technical 
barriers to trade to promote transparency, accountability, and 
cooperation between the Parties on regulatory issues.
    Key Concepts. The term ``technical barriers to trade'' 
(TBT) refers to barriers that may arise in preparing, adopting, 
or applying voluntary product standards, mandatory product 
standards (``technical regulations''), and procedures used to 
determine whether a particular good meets such standards, i.e., 
``conformity assessment'' procedures.
    International Standards. The principles articulated in the 
WTO TBT Committee Decision on Principles for the Development of 
International Standards, Guides and Recommendations emphasize 
the need for openness and consensus in the development of 
international standards. Under Chapter Seven, the Parties will 
apply these principles and consult on pertinent matters under 
consideration by relevant international or regional bodies.
    Cooperation. Chapter Seven establishes a Committee on 
Technical Barriers to Trade through which the Parties will 
cooperate to reduce technical barriers and improve market 
access. The Committee's specific functions will include: (i) 
enhancing cooperation in the development and improvement of 
standards, technical regulations, and conformity assessment 
procedures; (ii) facilitating sectoral cooperation between 
governmental and non-governmental conformity assessment bodies; 
(iii) exchanging information on developments in non-
governmental, regional, and multilateral fora engaged in 
activities related to standards, technical regulations, and 
conformity assessment procedures; and (iv) consulting, at a 
Party's request, on any matter arising under the Chapter.
    Conformity Assessment. Chapter Seven provides for a 
dialogue between the Parties on ways to facilitate the 
acceptance of conformity assessment results. Each Party will 
recognize conformity assessment bodies in the territory of the 
other Party on terms no less favorable than it accords 
conformity assessment bodies in its own territory.
    Transparency. Chapter Seven contains various transparency 
obligations, such as requiring each Party to: (i) allow persons 
of the other Party to participate in the development of 
technical regulations, standards, and conformity assessment 
procedures on a non-discriminatory basis; (ii) transmit 
regulatory proposals notified under the WTO TBT Agreement 
directly to the other Party; (iii) describe in writing the 
objectives of and reasons for the proposed technical 
regulations or conformity assessment procedure; and (iv) 
consider comments on such proposals and respond in writing to 
significant comments it receives. Each Party must implement the 
Chapter's transparency provisions as soon as practicable, and 
no later than three years after the Agreement enters into 
force.

                     CHAPTER EIGHT: TRADE REMEDIES

    Safeguards. Chapter Eight establishes a safeguard procedure 
that will be available to aid domestic industries that sustain 
or are threatened with serious injury due to increased imports 
resulting from tariff reduction or elimination under the 
Agreement. The Chapter does not affect the Parties' rights or 
obligations under the WTO's safeguard provisions (global 
safeguards) or under other WTO trade remedy rules.
    Chapter Eight authorizes each Party to impose temporary 
duties on an imported originating good if, as a result of the 
reduction or elimination of a duty under the Agreement, the 
good is being imported in such increased quantities and under 
such conditions as to constitute a substantial cause of serious 
injury, or threat of serious injury, to a domestic industry 
producing a ``like'' or ``directly competitive'' good.
    A safeguard measure may be applied on a good only during 
the Agreement's ``transition period'' for phasing out duties on 
the good. A safeguard measure may take one of two forms--a 
temporary increase in duties to NTR (MFN) levels or a temporary 
suspension of duty reductions called for under the Agreement. A 
Party may not impose a safeguard measure under Chapter Eight 
more than once on any good. A safeguard measure may be in place 
for an initial period of up to two years. A Party may extend a 
measure for up to an additional two years, if it determines 
that the industry is adjusting and the measure remains 
necessary to facilitate adjustment and prevent or remedy 
serious injury. If a measure lasts more than one year, the 
Party must scale it back at regular intervals.
    If a Party imposes a safeguard measure, Chapter Eight 
requires it to provide offsetting trade compensation to the 
other Party whose goods are subject to the measure. If the 
Parties cannot agree on the amount or nature of the 
compensation, a Party entitled to compensation may unilaterally 
suspend ``substantially equivalent'' trade concessions that it 
has made to the importing Party.
    Global Safeguards. Chapter Eight maintains each Party's 
right to take action against imports from all sources under 
Article XIX of GATT 1994 and the WTO Agreement on Safeguards. A 
Party may exclude imports of an originating good from another 
Party from a global safeguard measure if those imports are not 
a substantial cause of serious injury or do not create a threat 
of serious injury. A Party may not apply a safeguard measure 
under Chapter Eight at the same time that it applies a 
safeguard measure on the same good under the WTO Agreement on 
Safeguards.
    Antidumping and Countervailing Duties. Chapter Eight 
confirms that the Parties retain their rights and obligations 
under the WTO agreements relating to the application of 
antidumping and countervailing duties. Antidumping and 
countervailing duty measures may not be challenged under the 
Agreement's dispute settlement procedures.

                  CHAPTER NINE: GOVERNMENT PROCUREMENT

    Chapter Nine provides comprehensive obligations requiring 
each Party to apply fair and transparent procurement procedures 
and rules and prohibiting each government and its procuring 
entities from discriminating in purchasing practices against 
goods, services, and suppliers from the other Party. The rules 
of Chapter Nine are broadly based on the rules of the WTO 
Agreement on Government Procurement.
    General Principles. Chapter Nine establishes a basic rule 
of ``national treatment,'' meaning that each Party's 
procurement rules and the entities applying those rules must 
treat goods, services, and suppliers of such goods and services 
from the other Party in a manner that is ``no less favorable'' 
than their domestic counterparts. The Chapter also bars 
discrimination against locally established suppliers on the 
basis of foreign affiliation or ownership. Chapter Nine also 
provides rules aimed at ensuring a fair and transparent 
procurement process.
    Coverage and Thresholds. Chapter Nine applies to purchases 
and other means of obtaining goods and services valued above 
certain dollar thresholds by those government departments, 
agencies, and enterprises listed in each Party's schedule. 
Specifically, the Chapter applies to procurements by listed 
agencies of the ``central government,'' which for the United 
States is the federal government, of goods and services valued 
at $193,000 or more and construction services valued at 
$7,407,000 or more. The equivalent thresholds for purchases by 
listed ``sub-central'' government entities (i.e., ``Gobiernos 
Regionales'' for Peru and U.S. state government agencies) are 
$526,000 and $7,407,000, for goods and services and 
construction services, respectively. The Chapter's thresholds 
for other covered entities are either $250,000 or $593,000 for 
goods and services, and $7,407,000 for construction services. 
All thresholds are subject to adjustment every two years for 
inflation.
    Transparency. Chapter Nine establishes rules designed to 
ensure transparency in procurement procedures. Each Party must 
publish its laws, regulations, and other measures governing 
procurement, along with any changes to those measures. 
Procuring entities must publish notices of procurement 
opportunities in advance. The Chapter also lists minimum 
information that such notices must include.
    Tendering Rules. Chapter Nine provides rules for setting 
deadlines on ``tendering'' (bidding on government contracts). 
It requires procuring entities to give suppliers all the 
information they need to prepare tenders, including the 
criteria that procuring entities will use to evaluate tenders. 
Entities must also, where appropriate, base their technical 
specifications (i.e., detailed descriptions of the goods or 
services to be procured) on performance-oriented criteria and 
international standards. Chapter Nine provides that procuring 
entities may not write technical specifications with the 
purpose or effect of creating an unnecessary obstacle to trade 
between the Parties while clarifying that an entity may adopt 
technical specifications to promote environmental conservation. 
The Chapter also clarifies that an entity may adopt technical 
specifications that require suppliers to comply with generally 
applicable laws regarding fundamental principles and rights at 
work and acceptable conditions of work with respect to minimum 
wages, hours of work, and occupational safety and health in the 
territory where they make the product or perform the service 
that the entity will purchase. It also sets out the 
circumstances under which procuring entities are allowed to use 
limited tendering, i.e., award a contract to a supplier without 
opening the procurement to all interested suppliers.
    Award Rules. Chapter Nine provides that to be considered 
for an award, a tender must be submitted by a qualified 
supplier. The tender must meet the criteria set out in the 
tender documentation, and procuring entities must base their 
award of contracts on those criteria. Procuring entities must 
publish information on awards, including the name of the 
supplier, a description of the goods or services procured, and 
the value of the contract. Chapter Nine also calls for each 
Party to ensure that suppliers may bring challenges against 
procurement decisions before independent reviewers.
    Additional Provisions. Chapter Nine builds on the anti-
corruption provisions of Chapter Nineteen, including by 
requiring each Party to maintain procedures to declare 
suppliers that have engaged in fraudulent or other illegal 
actions in relation to procurement ineligible for participation 
in the Party's procurement. It establishes procedures under 
which a Party may modify its coverage under the Chapter, such 
as when a Party privatizes an entity whose purchases are 
covered under the Chapter. It also provides that Parties may 
adopt or maintain measures necessary to protect: (1) public 
morals, order, or safety; (2) human, animal, or plant life or 
health, including environmental measures necessary to protect 
human, animal, or plant life or health; or (3) intellectual 
property. Parties may also adopt measures relating to goods or 
services of handicapped persons, philanthropic institutions, or 
prison labor.

                        CHAPTER TEN: INVESTMENT

    Chapter Ten establishes rules to protect investors from one 
Party against unfair or discriminatory government actions when 
they invest or attempt to invest in the other Party's 
territory. The Chapter's provisions reflect traditional 
standards incorporated in earlier U.S. bilateral investment 
treaties, previous free trade agreements, and customary 
international law.
    Key Concepts. Under Chapter Ten, the term ``investment'' 
covers all forms of investment, including enterprises, 
securities, debt, intellectual property rights, licenses, and 
contracts. It includes both investments existing when the 
Agreement enters into force and future investments. The term 
``investor of a Party'' encompasses U.S. and Peruvian nationals 
as well as firms (including branches) established in one of the 
Parties.
    General Principles. Investors enjoy six basic protections: 
(1) right to non-discriminatory treatment relative both to 
domestic investors and investors of non-Parties; (2) limits on 
imposition by the host Party of ``performance requirements''; 
(3) right to free transfer of funds related to an investment; 
(4) protection from expropriation in conformity with customary 
international law; (5) right to the minimum standard of 
treatment of aliens required by customary international law; 
and (6) the right to hire key managerial personnel without 
regard to nationality. (As to this last protection, a Party may 
require that a majority of the board of directors be of a 
particular nationality, as long as this does not prevent the 
investor from controlling its investment.)
    Sectoral Coverage and Non-Conforming Measures. With the 
exception of investments in or by regulated financial 
institutions (which are treated in Chapter Twelve), Chapter Ten 
generally applies to all sectors, including service sectors. 
However, each Party has listed in Annexes I and II particular 
sectors or measures for which it negotiated an exemption from 
the Chapter's obligations relating to national treatment, NTR 
(MFN), performance requirements, or senior management and 
boards of directors (``non-conforming measures''). Annex I 
contains each Party's list of existing non-conforming measures 
at the central and regional levels of government. The United 
States has scheduled an exemption from all aforementioned 
obligations for all existing state measures. All existing local 
measures are exempted for both Parties without the need to be 
listed. If a Party liberalizes any of these non-conforming 
Annex I measures, it must thereafter maintain the measure at 
least at that level of openness. In Annex II, each Party has 
listed sectors or activities in which it reserves the right to 
adopt or maintain future non-conforming measures. (Annexes I 
and II also include exemptions from Chapter Eleven. See below.)
    Investor-State Disputes. Chapter Ten provides a mechanism 
for an investor of a Party to submit to binding international 
arbitration a claim for damages against another Party. The 
investor may assert that the Party has breached a substantive 
obligation under the Chapter or that the Party has breached an 
``investment agreement'' with, or an ``investment 
authorization'' granted to, the investor or a covered 
investment that the investor owns or controls. ``Investment 
agreements'' and ``investment authorizations'' are arrangements 
between an investor and a host government based on contracts 
and authorizations, respectively. These terms are defined in 
Chapter Ten.
    Chapter Ten affords public access to information on 
investor-State arbitrations conducted pursuant to the 
Agreement. For example, Chapter Ten requires that hearings will 
generally be open to the public and that key documents will be 
publicly available, with exceptions for confidential business 
information. The Chapter also authorizes tribunals to accept 
amicus submissions from the public. In addition, the Chapter 
includes provisions similar to those used in U.S. courts to 
dispose quickly of claims a tribunal finds to be frivolous. 
Finally, within three years after the Agreement enters into 
force, the Parties will consider whether to establish an 
appellate body, or similar mechanism, to review arbitral awards 
rendered by tribunals under the Chapter.
    Chapter Ten provides that, ``except in rare 
circumstances,'' nondiscriminatory regulatory actions designed 
and applied to meet legitimate public welfare objectives, such 
as public health, safety, and the environment, are not indirect 
expropriations.

             CHAPTER ELEVEN: CROSS-BORDER TRADE IN SERVICES

    Chapter Eleven governs measures affecting cross-border 
trade in services between the Parties. Certain provisions also 
apply to measures affecting investments to supply services.
    Key Concepts. Under the Agreement, cross-border trade in 
services covers supply of a service:
           From the territory of one Party into the 
        territory of another Party (e.g., electronic delivery 
        of services from the United States to Peru);
           In the territory of a Party by a person of 
        that Party to a person of another Party (e.g., a 
        Peruvian company provides services to U.S. visitors in 
        Peru); and
           By a national of a Party in the territory of 
        another Party (e.g., a U.S. lawyer provides legal 
        services in Peru).
    Chapter Eleven should be read together with Chapter Ten 
(Investment), which establishes rules pertaining to the 
treatment of service firms that choose to provide their 
services through a local presence, rather than cross-border. 
Chapter Eleven applies where, for example, a service supplier 
is temporarily present in a territory of a Party and does not 
operate through a local investment.
    General Principles. Among Chapter Eleven's core obligations 
are requirements to provide national treatment and NTR (MFN) 
treatment to service suppliers of the other Party. Thus, each 
Party must treat service suppliers of the other Party no less 
favorably than its own suppliers or those of any other country. 
This commitment applies to state and local governments as well 
as the federal government. The Chapter's provisions apply to 
existing service suppliers as well as those who seek to supply 
services. The Chapter also includes a provision prohibiting the 
Parties from requiring firms to establish a local presence as a 
condition for supplying a service on a cross-border basis. In 
addition, certain types of market access restrictions on the 
supply of services (e.g., that limit the number of firms that 
may offer a particular service or that restrict or require 
specific types of legal structures or joint ventures with local 
companies in order to supply a service) are also barred. The 
Chapter's market access rules apply both to services supplied 
on a cross-border basis and through a local investment.
    Sectoral Coverage and Non-Conforming Measures. Chapter 
Eleven applies across virtually all services sectors. The 
Chapter excludes financial services (which are addressed in 
Chapter Twelve), except that certain provisions of Chapter 
Eleven apply to investments in financial services that are not 
regulated as financial institutions and are covered by Chapter 
Ten (Investment). In addition, Chapter Eleven does not cover 
air transportation, although it does apply to specialty air 
services and aircraft repair and maintenance.
    Each Party has listed in Annexes I and II, measures or 
sectors for which it negotiated exemptions from Chapter 
Eleven's core obligations (national treatment, NTR (MFN), local 
presence, and market access). Annex I contains the list of 
existing non-conforming measures at the central and regional 
level of government. The United States has scheduled an 
exemption from all aforementioned obligations for all existing 
state measures. All existing local measures are exempted for 
both Parties without the need to be listed. However, once a 
Party liberalizes any of these non-conforming Annex I measures, 
it must thereafter maintain the measure at least at that level 
of openness. Each Party has listed in Annex II sectors or 
activities in which it reserves the right to adopt or maintain 
future non-conforming measures.
    Specific Commitments. Chapter Eleven includes a 
comprehensive definition of express delivery services that 
requires each Party to provide national treatment, NTR (MFN) 
treatment, and additional benefits to express delivery services 
of the other Party. The Chapter provides that the Parties will 
try to maintain the level of market openness for express 
delivery services they provided on the date the Agreement was 
signed, and a Party may request consultations with the other if 
it believes the other Party is not maintaining that level of 
access. The Chapter also addresses the issue of postal 
monopolies directing revenues derived from monopoly postal 
services to confer an advantage on express delivery services. 
In addition, Peru has committed to eliminate a requirement that 
has prevented U.S.-owned companies in Peru from hiring the 
managers, professionals, and specialists of their choice for 
their operations in Peru.
    Transparency and Domestic Regulation. Provisions on 
transparency and domestic regulation complement the core rules 
of Chapter Eleven. The transparency rules apply to the 
development and application of regulations governing services. 
The Chapter's rules on domestic regulation govern the operation 
of approval and licensing systems for service suppliers. Like 
the Chapter's market access rules, its provisions on 
transparency and domestic regulation cover services supplied 
both on a cross-border basis and through a local investment.
    Exclusions. Chapter Eleven excludes any service supplied 
``in the exercise of governmental authority''--that is, a 
service that is provided on a non-commercial and non-
competitive basis. Chapter Eleven also does not apply to 
government subsidies. In addition, the Chapter makes clear that 
the Agreement does not impose any obligation on a Party with 
respect to its immigration measures, including admission or 
conditions of admission for temporary entry.

                   CHAPTER TWELVE: FINANCIAL SERVICES

    Chapter Twelve provides rules governing each Party's 
treatment of: (1) financial institutions of the other Party; 
(2) investors of the other Party, and their investments, in 
financial institutions; and (3) cross-border trade in financial 
services.
    Key Concepts. The Chapter defines a ``financial 
institution'' as any financial intermediary or other 
institution authorized to do business and regulated or 
supervised as a financial institution under the law of the 
Party where it is located. A ``financial service'' is any 
service of a financial nature, including, for example, 
insurance, banking, securities, asset management, financial 
information and data processing services, and financial 
advisory services.
    General Principles. Chapter Twelve's core obligations 
parallel those in Chapters Ten (Investment) and Eleven (Cross-
Border Trade in Services). Specifically, Chapter Twelve imposes 
rules requiring national treatment and NTR (MFN) treatment, 
prohibits certain quantitative restrictions on market access of 
financial institutions, and bars restrictions on the 
nationality of senior management. As appropriate, these rules 
apply to measures affecting financial institutions, investors 
and investments in financial institutions of another Party, and 
services companies that are currently supplying and that seek 
to supply financial services on a cross-border basis. The rules 
do not apply to measures adopted or maintained by a Party 
relating to certain specified services and activities--for 
example, activities or services forming part of a public 
retirement plan or statutory system of social security--unless 
a Party allows its financial institutions to compete with a 
public entity or a financial institution to supply such 
services and activities.
    Non-Conforming Measures. Similar to Chapters Ten and 
Eleven, each Party has listed in an annex (Annex III) 
particular measures for which it negotiated exemptions from the 
Chapter's core obligations. Existing non-conforming U.S. state 
and local laws and regulations are exempted from these 
obligations. Once a Party, including a state or local 
government, liberalizes one of these non-conforming measures, 
however, it must, in most cases, maintain the measure at least 
at that new level of openness.
    Other Provisions. Chapter Twelve also includes provisions 
on regulatory transparency, ``new'' financial services, self-
regulatory organizations, and the expedited availability of 
insurance products.
    Relationship to Other Chapters. Measures that a Party 
applies to financial services suppliers of the other Party, 
other than regulated financial institutions, that make or 
operate investments in the Party's territory are covered 
principally by Chapter Ten (Investment) and certain provisions 
of Chapter Eleven (Cross-Border Trade in Services). In 
particular, the core obligations of Chapter Ten apply to such 
measures, as do the market access, transparency, and domestic 
regulation provisions of Chapter Eleven. Chapter Twelve 
incorporates by reference certain provisions of Chapter Ten, 
such as those relating to transfers and expropriation.

CHAPTER THIRTEEN: COMPETITION POLICY, DESIGNATED MONOPOLIES, AND STATE 
                              ENTERPRISES

    Recognizing that anticompetitive business conduct has the 
potential to restrict bilateral trade and investment, Chapter 
Thirteen calls for each government to proscribe such conduct. 
The Chapter also sets out basic procedural safeguards and rules 
ensuring against harmful conduct by government-designated 
monopolies and state enterprises.
    Competition Laws. Chapter Thirteen requires each Party to 
adopt or maintain laws prohibiting anticompetitive business 
conduct and to take appropriate action with respect to such 
conduct. It also requires each Party to maintain authorities 
responsible for enforcing their national competition laws. 
Chapter Thirteen affirms that the enforcement policy of each 
Party's national competition authority is not to discriminate 
on the basis of nationality. It also obligates each Party to 
provide certain procedural protections for persons facing 
enforcement actions. Each Party will ensure that persons 
subject to sanctions or remedies for competition law violations 
will be provided a right to be heard and to present evidence, 
and to seek review by a court or independent tribunal.
    Designated Monopolies. There are specific rules governing 
instances in which a Party gives a private or national 
government-owned entity a monopoly to provide or purchase a 
good or service. In particular, the Party must ensure that the 
entity: (1) abides by the Party's obligations under the 
Agreement wherever it exercises authority delegated to it by 
the government in connection with the monopoly good or service; 
(2) purchases or sells the monopoly product in a manner 
consistent with commercial considerations; (3) does not 
discriminate against the other Party's investments, goods, or 
service suppliers in the purchase or sale of the monopoly 
product; and (4) does not engage in anticompetitive practices 
in markets outside its monopoly mandate that harm the other 
Party's investments.
    State Enterprises. Chapter Thirteen sets forth obligations 
regarding the Parties' responsibilities for ``state 
enterprises,'' i.e., enterprises owned or controlled by a 
Party. Each Party must ensure that its state enterprises accord 
non-discriminatory treatment in the sale of their products to 
the other Party's investments.
    Cooperation and Working Group. Chapter Thirteen provides 
for bilateral cooperation in relation to the enforcement of 
competition laws. In addition, the Parties will establish a 
working group to promote greater understanding and cooperation 
between the Parties with respect to the matters covered under 
the Chapter.
    Dispute Settlement. Many of the Chapter's provisions are 
not subject to the Agreement's dispute settlement procedures, 
including the provisions requiring a Party to adopt and enforce 
laws prohibiting anticompetitive business conduct and the 
provisions governing cooperation and consultations. The 
Chapter's rules addressing designated monopolies and state 
enterprises, however, may be enforced through the Agreement's 
State-to-State dispute settlement mechanism.

                  CHAPTER FOURTEEN: TELECOMMUNICATIONS

    Chapter Fourteen includes disciplines beyond those imposed 
under Chapters Ten (Investment) and Eleven (Cross-Border Trade 
in Services) on regulatory measures affecting 
telecommunications trade and investment between the Parties. It 
is designed to ensure that service suppliers of each Party have 
non-discriminatory access to public telecommunications networks 
in the territory of the other Party. In addition, the Chapter 
requires each Party to regulate its major telecommunications 
suppliers in ways that will ensure a level playing field for 
new entrants. Chapter Fourteen also seeks to ensure that 
telecommunications regulations are set by independent 
regulators applying transparent procedures, and is designed to 
encourage adherence to principles of deregulation and 
technological neutrality.
    Key Concepts. Under Chapter Fourteen, a ``public 
telecommunications service'' is any telecommunications service 
that a Party requires to be offered to the public generally. 
The term includes voice and data transmission services. It does 
not include the offering of ``information services'' (e.g., 
services that enable users to create, store, or process 
information over a network). A ``major supplier'' is a company 
that, by virtue of its market position or control over certain 
facilities, can materially affect the terms of participation in 
the market.
    Competition. Chapter Fourteen establishes rules promoting 
effective competition in telecommunications services. It also 
provides flexibility to account for changes that may occur 
through new legislation or regulatory decisions. The Chapter 
includes commitments by each Party to:
           Ensure that all service suppliers of the 
        other Party that seek to access or use a public 
        telecommunications network in the Party's territory can 
        do so on reasonable and non-discriminatory terms (e.g., 
        Peru must ensure that its public phone companies do not 
        provide preferential access to Peruvian banks or 
        Internet service providers, to the detriment of U.S. 
        competitors);
           Give the other Party's telecommunications 
        suppliers, in particular, the right to interconnect 
        their networks with public networks in the Party's 
        territory;
           Ensure that telecommunications suppliers of 
        the other Party enjoy the right to lease lines to 
        supplement their own networks or, alternatively, 
        purchase telecommunications services from domestic 
        suppliers and resell them in order to build a customer 
        base; and
           Impose disciplines on the behavior of 
        ``major suppliers.''
    Regulation. The Chapter addresses key regulatory concerns 
that may create barriers to trade and investment in 
telecommunications services. In particular, the Parties:
           Will adopt procedures that will help ensure 
        that they maintain open and transparent 
        telecommunications regulatory regimes, including 
        requirements to publish interconnection agreements and 
        service tariffs;
           Will require their telecommunications 
        regulators to resolve disputes between suppliers and 
        provide foreign suppliers the right to seek judicial 
        review of those decisions;
           May elect to deregulate telecommunications 
        services when competition emerges and certain standards 
        are met; and
           Will avoid impeding telecommunications 
        suppliers from choosing technologies they consider 
        appropriate for supplying their services.

                  CHAPTER FIFTEEN: ELECTRONIC COMMERCE

    Chapter Fifteen establishes rules designed to prohibit 
discriminatory regulation of electronic trade in digitally 
encoded products such as computer programs, video, images, and 
sound recordings. The provisions in this and other recent U.S. 
free trade agreements represent a major advance over previous 
international understandings on this subject.
    Customs Duties. Chapter Fifteen provides that a Party may 
not impose customs duties on digital products of another Party 
transmitted electronically and will determine the customs value 
of an imported carrier medium bearing a digital product based 
on the value of the carrier medium alone, without regard to the 
value of the digital product stored on the carrier medium.
    Non-Discrimination. The Parties will apply the principles 
of national treatment and NTR (MFN) treatment to trade in 
electronically-transmitted digital products. Thus, a Party may 
not discriminate against electronically-transmitted digital 
products on the grounds that they have a nexus to another 
country, either because they have undergone certain specific 
activities (e.g., creation, production, first sale) there or 
are associated with certain categories of persons of the other 
Party or a non-Party (e.g., authors, performers, producers). 
Nor may a Party provide less favorable treatment to digital 
products that have a nexus to the other Party than it gives to 
like products that have a nexus to a third country. The non-
discrimination rules do not apply to non-conforming measures 
adopted under Chapters Ten (Investment), Eleven (Cross-Border 
Trade in Services), or Twelve (Financial Services).
    Additional Provisions. Chapter Fifteen contains additional 
provisions relating to authentication, online consumer 
protection, and paperless trade administration.

             CHAPTER SIXTEEN: INTELLECTUAL PROPERTY RIGHTS

    Chapter Sixteen complements and enhances existing 
international standards for the protection of intellectual 
property and the enforcement of intellectual property rights, 
consistent with U.S. law.
    General Provisions. Chapter Sixteen commits the Parties to 
ratify or accede to several agreements on intellectual property 
rights, including, by the date the Agreement enters into force, 
the WIPO Copyright Treaty, the Brussels Convention Relating to 
the Distribution of Programme-Carrying Satellite Signals, and 
the WIPO Performances and Phonograms Treaty, and, within 
specified periods, the International Convention for the 
Protection of New Varieties of Plants, the Trademark Law 
Treaty, and the Patent Cooperation Treaty. The United States is 
already a party to these Agreements. With very limited 
exceptions, Chapter Sixteen commits each Party to provide 
national treatment to the other Party's nationals with respect 
to the enjoyment and protection of the intellectual property 
rights covered by the Chapter.
    Trademarks and Geographical Indications. Chapter Sixteen 
requires each Party to protect trademarks and geographical 
indications, including by refusing protection or recognition of 
a geographical indication that is likely to cause confusion 
with a preexisting trademark. The Chapter calls for trademarks 
to include collective marks and certification marks, and for 
geographical indications to be eligible for protection as 
marks. The Chapter also requires each Party to establish a 
system for registering trademarks that provides efficient and 
transparent procedures governing applications to protect 
trademarks and geographical indications. Furthermore, the 
Chapter requires each Party's Internet domain name management 
system to include a dispute resolution procedure to address 
trademark cyber-piracy.
    Copyright and Related Rights. Chapter Sixteen obligates the 
Parties to provide broad protection for copyright and related 
rights, affirming and building on rights set out in several 
international agreements. For instance, each Party must provide 
copyright protection for the life of the author plus 70 years 
(for works measured by a person's life), or 70 years (for 
corporate works). The Chapter clarifies that the right to 
reproduce literary and artistic works, recordings, and 
performances encompasses temporary copies, an important 
principle in the digital realm. It also calls for each Party to 
provide a right of communication to the public, which will 
further ensure that the right holder has the exclusive right to 
authorize making protected works available online. The Chapter 
specifically requires each Party to protect the rights of 
performers and producers of phonograms.
    To curb copyright piracy, the Chapter requires government 
agencies of the Parties to use only legitimate computer 
software, setting an example for the private sector. The 
Chapter also includes provisions on anti-circumvention, under 
which the Parties commit to prohibit tampering with technology 
used to protect copyrighted works. In addition, Chapter Sixteen 
sets out obligations with respect to the liability of Internet 
service providers in connection with copyright infringements 
that take place over their networks. Finally, recognizing the 
importance of satellite broadcasts, Chapter Sixteen provides 
that each Party will protect encrypted program- carrying 
satellite signals. It obligates the Parties to extend 
protection to the signals themselves, as well as to the content 
contained in the signals.
    Patents. Chapter Sixteen also includes a variety of 
provisions for the protection of patents. The Parties agree to 
make patents available for any invention, subject to limited 
exclusions, and confirm the availability of patents for new 
uses or methods of using a known product. To guard against 
arbitrary revocation of patents, each Party must limit the 
grounds for revoking a patent to the grounds that would have 
justified a refusal to grant the patent. Under Chapter Sixteen, 
each Party must make best efforts to process patent 
applications and marketing approval applications expeditiously. 
With respect to most products, a Party must adjust the patent 
term to compensate for unreasonable delays that occur while 
granting a patent. For pharmaceutical products, a Party may 
provide for such adjustments if there is an unreasonable delay 
in granting a patent or providing marketing approval for a 
product.
    Certain Regulated Products. Chapter Sixteen includes 
additional specific provisions relating to pharmaceuticals and 
agricultural chemicals. Among other things, the Chapter 
protects test data that a company submits in seeking marketing 
approval for such products by precluding other firms from 
relying on the data. It provides specific periods for such 
protection--normally five years for pharmaceuticals and ten 
years for agricultural chemicals. This means, for example, that 
during the period of protection, test data that a company 
submits for approval of a new agricultural chemical product 
cannot be used without that company's consent in granting 
approval to market a combination product. If a Party bases its 
decision to approve a pharmaceutical product for marketing in 
its territory on a marketing approval the other Party has 
granted for that product, and it approves the product within 
six months after the company applies for the approval in the 
Party, the period of test data protection will be counted from 
the date the other Party approved the product. The Chapter's 
rules governing test data protection for pharmaceutical 
products are subject to a public health exception. The Chapter 
also requires the Parties to implement procedures for the 
expeditious adjudication of disputes concerning the validity or 
infringement of a patent, a transparent system to provide 
notice to a patent holder that another person is seeking to 
market an approved pharmaceutical product during the term of a 
patent, and sufficient time and opportunity for a patent holder 
to seek, prior to the marketing of an allegedly infringing 
product, available remedies for an infringing product.
    Public Health. Chapter Sixteen expresses the Parties' 
understanding that its obligations do not and should not 
prevent a Party from taking measures to protect public health 
by promoting access to medicines for all.
    Enforcement Provisions. Chapter Sixteen also creates 
obligations with respect to the enforcement of intellectual 
property rights in civil proceedings, in criminal proceedings, 
and at the border. For example, the Parties, in determining 
damages in civil proceedings involving copyright infringement 
or trademark counterfeiting, must take into account the value 
of the legitimate goods as well as the infringer's profits, and 
must also provide for damages based on a fixed range (i.e., 
``statutory damages''), as an option that the right holder can 
elect instead of actual damages.
    Chapter Sixteen further provides that the Parties' law 
enforcement agencies must have authority to seize suspected 
pirated and counterfeit goods, the equipment used to make or 
transmit them, and documentary evidence. Each Party must give 
its courts authority to order the forfeiture and/or destruction 
of such items. Chapter Sixteen also provides that each Party 
must apply criminal penalties against counterfeiting and 
piracy, including end-user piracy.
    Chapter Sixteen also requires each Party to empower its law 
enforcement agencies to take enforcement action at the border 
against pirated or counterfeit goods without waiting for a 
formal complaint.
    Transition Periods. Most obligations in the Chapter take 
effect on the date the Agreement enters into force. However, 
Peru may delay giving effect to certain specified obligations 
for periods ranging from one year to three years after that 
date.

                        CHAPTER SEVENTEEN: LABOR

    Chapter Seventeen sets out the Parties' commitments and 
undertakings regarding trade-related labor rights.
    Fundamental Labor Rights. Each Party commits to adopt and 
maintain in its statutes, regulations, and practice certain 
enumerated labor rights, as stated in the 1998 ILO Declaration 
on Fundamental Principles and Rights at Work and Its Follow Up. 
Specifically, these are (1) freedom of association; (2) the 
effective recognition of the right to collective bargaining; 
(3) the elimination of all forms of forced or compulsory labor; 
(4) the effective abolition of child labor and, for purposes of 
the Agreement, a prohibition on the worst forms of child labor; 
and (5) the elimination of discrimination in respect of 
employment and occupation. In order to establish a violation of 
this obligation, a Party must demonstrate that the other Party 
has failed to comply in a manner affecting trade or investment 
between the Parties. Neither Party may waive or otherwise 
derogate from its statutes or regulations implementing this 
obligation in a manner affecting bilateral trade or investment 
where the waiver or derogation would be inconsistent with one 
of the enumerated rights. For the United States, the Chapter's 
provisions regarding fundamental labor rights apply to federal 
law only.
    Effective Enforcement. Each Party commits not to fail to 
effectively enforce its labor laws on a sustained or recurring 
basis in a manner affecting trade or investment between the 
Parties. The Chapter defines ``labor laws'' to include the ILO 
fundamental labor rights, laws providing for acceptable 
conditions of work with respect to minimum wages, hours of 
work, and occupational safety and health, and laws providing 
labor protections for children and minors. For the United 
States, ``labor laws'' includes federal statutes and 
regulations addressing these areas, but it does not cover state 
or local labor laws.
    Procedural Guarantees. The Parties commit to afford 
procedural guarantees that ensure workers and employers have 
access to fair, equitable, and transparent access to labor 
tribunals or courts. To this end, each Party must ensure that 
workers and employers have access to tribunals for the 
enforcement of its labor laws that comply with due process of 
law and that decisions of such tribunals are in writing, made 
publicly available, and based on information or evidence in 
respect of which the parties were offered the opportunity to be 
heard. In addition, hearings in such proceedings must be open 
to the public, except where the administration of justice 
otherwise requires. Each Party also commits to make remedies 
available to ensure the enforcement of its labor laws. Such 
remedies might include orders, fines, penalties, or temporary 
workplace closures.
    Dispute Settlement. Chapter Seventeen provides for 
cooperative consultations as a first step if a Party considers 
that the other Party is not complying with its obligations 
under the Chapter. The complaining Party may, after an initial 
60-day consultation period under Chapter Seventeen, invoke the 
Agreement's general dispute settlement mechanism by requesting 
additional consultations or a meeting of the Agreement's 
cabinet-level Free Trade Commission under the provisions of 
Chapter Twenty-One (Dispute Settlement). If the Commission is 
unable to resolve the dispute, the matter may be referred to a 
dispute settlement panel.
    Institutional Arrangements, Cooperation and Capacity 
Building. Chapter Seventeen establishes a cabinet-level Labor 
Affairs Council to oversee the Chapter's implementation and to 
provide a forum for consultations and cooperation on labor 
matters. The Chapter requires each Party to designate a contact 
point for communications with the other Party and the public 
regarding the Chapter. Each Party's contact point must provide 
transparent procedures for the submission, receipt, and 
consideration of communications from persons of a Party 
relating to the Chapter.
    The Chapter also creates a labor cooperation and capacity 
building mechanism through which the Parties will work together 
to address labor matters of common interest. In particular, the 
mechanism will assist the Parties to establish priorities for, 
and carry out, cooperation and capacity building activities 
relating to such topics as: the effective application of 
fundamental labor rights; legislation and practice relating to 
compliance with ILO Convention 182 on the worst forms of child 
labor; strengthening labor inspection systems and the 
institutional capacity of labor administrations and tribunals; 
mechanisms for supervising compliance with laws and regulations 
pertaining to working conditions; and the elimination of gender 
discrimination in employment.

                     CHAPTER EIGHTEEN: ENVIRONMENT

    Chapter Eighteen sets out the Parties' commitments and 
undertakings regarding environmental protection. Chapter 
Eighteen builds on the environmental provisions of other recent 
U.S. free trade agreements, including the Dominican Republic-
Central America-United States Free Trade Agreement.
    General Principles. Each Party must strive to ensure that 
its environmental laws provide for high levels of environmental 
protection and continue to improve its respective levels of 
environmental protection. Each Party also commits not to waive 
or otherwise derogate from its environmental laws to weaken or 
reduce the levels of environmental protection in a manner 
affecting trade or investment between the Parties other than 
pursuant to a provision in its environmental law providing for 
waivers or derogations. Chapter Eighteen further includes 
commitments to enhance cooperation between the Parties in 
environmental matters and encourages the Parties to develop 
voluntary, market-based mechanisms as one means for achieving 
and sustaining high levels of environmental protection.
    Multilateral Environmental Agreements. The Parties 
recognize that multilateral environment agreements (MEAs) to 
which they are parties play an important role globally and 
domestically in protecting the environment and that their 
respective implementation of these agreements is critical to 
achieve each Party's environmental objectives. Accordingly, the 
Chapter includes a provision requiring each Party to adopt, 
maintain, and implement laws, regulations, and all other 
measures to fulfill its obligations under certain multilateral 
environmental agreements (``covered agreements'') to which both 
governments are parties. To establish a violation of this 
obligation a Party must demonstrate that the other Party has 
failed to comply in a manner affecting bilateral trade or 
investment.
    Chapter Eighteen provides that in the event of any 
inconsistency between a Party's obligations under the Agreement 
and a covered agreement, the Party must seek to balance its 
obligation under both agreements, but this will not preclude a 
Party from taking measures to comply with the MEA as long as 
the measure's primary purpose is not to impose a disguised 
restriction on trade.
    Effective Enforcement. Each Party commits not to fail to 
effectively enforce its environmental laws, and its laws, 
regulations, and other measures to fulfill its obligations 
under the covered agreements, on a sustained or recurring basis 
in a manner affecting trade or investment between the Parties. 
For the United States, ``environmental laws'' comprise 
environmental statutes and regulations enforceable by the 
federal government.
    Procedural Matters. Each Party commits to make judicial, 
quasi-judicial, or administrative proceedings available to 
sanction or remedy violations of its environmental laws. Each 
Party must ensure that such proceedings are fair, equitable, 
and transparent, and, to this end, comply with due process of 
law and are open to the public, except where the administration 
of justice otherwise requires. The Chapter requires each Party 
to ensure that interested persons may request the Party's 
competent authorities to investigate alleged violations of its 
environmental laws and that each Party's competent authorities 
give such requests due consideration. Each Party also commits 
to make appropriate and effective remedies available for 
violations of its environmental laws. Such remedies may 
include, for example, fines, injunctions, or requirements to 
take remedial action or pay for the cost of containing or 
cleaning up pollution.
    Environmental Performance. Each Party agrees to encourage 
the development and use of flexible, voluntary, and incentive-
based mechanisms for environmental protection, and to encourage 
the development and improvement of performance goals and 
indicators for measuring environmental performance as well as 
flexible means for achieving such goals, as appropriate and in 
accordance with its law.
    Institutional Arrangements and Cooperation. Chapter 
Eighteen establishes a senior-level Environment Affairs 
Council. The Council will oversee and provide periodic reports 
to the Free Trade Commission on the Chapter's implementation. 
The Council will provide for the public to participate in its 
work, including by providing an opportunity at each Council 
meeting, unless the Parties otherwise agree, for the public to 
express views on how the Chapter is being implemented. Each 
Party must also take into account public views on environmental 
cooperation activities. In addition, to facilitate cooperation 
efforts, the Parties have signed a separate environmental 
cooperation agreement.
    Public Participation and Submissions. Each Party commits to 
provide for the receipt and consideration of submissions from 
persons of a Party on matters related to implementation of the 
Chapter and to convene a national advisory committee to provide 
views on matters related to the implementation of the Chapter. 
In addition, the Chapter provides that any person of a Party 
may file a submission with a secretariat asserting that a Party 
has failed to effectively enforce its environmental laws. The 
secretariat will review the submission according to specified 
criteria and in appropriate cases recommend to the 
Environmental Affairs Council that a factual record concerning 
the matter be developed. The secretariat will prepare a factual 
record if a member of the Environmental Affairs Council 
instructs it to do so. The Council will consider the record 
and, where appropriate, provide recommendations to an 
environmental cooperation commission that will be created under 
a related environmental cooperation agreement. U.S. persons who 
consider that the United States is failing to effectively 
enforce its environmental laws may invoke the comparable public 
submissions process under the North American Agreement on 
Environmental Cooperation. The Parties will designate the 
secretariat and make related arrangements through a separate 
understanding.
    Biological Diversity. The Parties recognize the importance 
of biological diversity, restate their commitment to 
encouraging and promoting its protection, and agree to enhance 
their cooperative efforts with respect to biological diversity. 
A specific article on biological diversity has been included in 
the Environment Chapter.
    Dispute Settlement. Chapter Eighteen provides for 
cooperative consultations as a first step if a Party considers 
that the other Party is not complying with its obligations 
under the Chapter. The complaining Party may, after an initial 
60-day consultation period under the Chapter, invoke the 
Agreement's general dispute settlement mechanism by requesting 
additional consultations or a meeting of the Agreement's 
cabinet-level Free Trade Commission under Chapter Twenty-One 
(Dispute Settlement). If the Commission is unable to resolve 
the dispute, the matter may be referred to a dispute settlement 
panel. In addition, Chapter Eighteen provides that when an 
issue relating to a Party's obligations under a covered 
agreement arises in a dispute settlement proceeding, the panel 
hearing the matter must consult with any entity authorized 
under the covered agreement to address the issue and defer to 
the extent appropriate in light of its nature and status to any 
interpretive guidance under the covered agreement regarding the 
issue.
    Forest Sector Governance. Chapter Eighteen includes an 
annex that provides for concrete steps that the Parties will 
take to enhance forest sector governance in Peru and promote 
legal trade in timber products, including commitments that Peru 
must implement within 18 months from the date the Agreement 
enters into force. The annex sets forth audit and verification 
procedures for purposes of ensuring that exports of timber 
products from Peru to the United States are in compliance with 
Peru's applicable laws, regulations, and other measures 
governing the harvest of, and trade in, timber products. The 
annex also authorizes the United States to bar or temporarily 
hold imports of Peruvian timber products in certain 
circumstances, such as when Peruvian and U.S. officials develop 
information indicating that a Peruvian producer may not have 
complied with Peruvian law. The annex establishes a Sub-
Committee on Forest Sector Governance under both the Committee 
on Trade in Goods and the Environmental Affairs Council.

                     CHAPTER NINETEEN: TRANSPARENCY

    Section A of Chapter Nineteen sets out requirements 
designed to foster openness, transparency, and fairness in the 
adoption and application of measures on matters covered by the 
Agreement. It requires that each Party must promptly publish 
all laws, regulations, procedures, and administrative rulings 
of general application concerning subjects covered by the 
Agreement, or otherwise make them available. It requires that, 
to the extent possible, Parties publish proposed regulations in 
advance and give interested persons a reasonable opportunity to 
comment. Wherever possible, each Party must provide reasonable 
notice to the other Party's nationals and enterprises that are 
directly affected by an agency process, including an 
adjudication, rulemaking, licensing, determination, and 
approval process. A Party is to afford such persons a 
reasonable opportunity to present facts and arguments prior to 
any final administrative action, when time, the nature of the 
process, and the public interest permit.
    Chapter Nineteen also provides for independent review and 
appeal of final administrative actions. Appeal rights must 
include a reasonable opportunity to present arguments and to 
obtain a decision based on evidence in the administrative 
record.
    In Section B of Chapter Nineteen, the Parties affirm their 
commitment to prevent and combat corruption, including bribery 
in international trade and investment. To this end, each Party 
is obligated to make it a criminal offense to offer or accept a 
bribe in exchange for favorable government action in matters 
affecting international trade or investment. The Parties must 
also endeavor to protect persons who, in good faith, report 
acts of bribery or corruption and to work together to encourage 
and support initiatives in relevant international fora to 
prevent bribery and corruption.

  CHAPTER TWENTY: ADMINISTRATION OF THE AGREEMENT AND TRADE CAPACITY 
                                BUILDING

    Chapter Twenty creates a Free Trade Commission to supervise 
the implementation and overall operation of the Agreement. The 
Commission comprises the Parties' trade ministers and will meet 
annually. The Commission will assist in the resolution of any 
disputes that may arise under the Agreement. The Commission may 
issue interpretations of the Agreement and agree to accelerate 
duty elimination on particular products and adjust the 
Agreement's product-specific rules of origin.
    Each Party must designate an office to provide 
administrative assistance to dispute settlement panels and 
perform such other functions as the Commission may direct.
    Chapter Twenty also establishes a Committee on Trade 
Capacity Building comprising representatives of each Party. The 
overall objective of the Committee is to assist Peru to 
implement the Agreement and adjust to liberalized bilateral 
trade. Particular functions of the Committee include: 
prioritizing trade capacity building projects; inviting 
international donor institutions, private sector entities, and 
non-governmental organizations to assist in the development and 
implementation of trade capacity building projects; and 
monitoring and assessing progress in implementing those 
projects.

                 CHAPTER TWENTY-ONE: DISPUTE SETTLEMENT

    Chapter Twenty-One sets out detailed procedures for the 
resolution of disputes between the Parties over compliance with 
the Agreement. Those procedures emphasize amicable settlements, 
relying wherever possible on bilateral cooperation and 
consultations. When disputes arise under provisions common to 
the Agreement and other agreements (e.g., the WTO agreements), 
the complaining government may choose a forum for resolving the 
matter that is set forth in any valid agreement between the 
Parties. The selected forum will be the exclusive venue for 
resolving that dispute.
    Consultations. A Party may request consultations with the 
other Party on any actual or proposed measure that it believes 
might affect the operation of the Agreement. If the Parties 
cannot resolve the matter through consultations within a 
specified period (normally 60 days), any consulting Party may 
refer the matter to the Free Trade Commission, which will 
attempt to resolve the dispute.
    Panel Procedures. If the Commission cannot resolve the 
dispute within a specified period (normally 30 days), any 
consulting Party may refer the matter, if it involves an actual 
measure, to a panel comprising independent experts that the 
Parties select. The Parties will set rules to protect 
confidential information, provide for open hearings and public 
release of submissions, and allow an opportunity for the panel 
to accept submissions from non-governmental entities in the 
Parties' territories.
    Unless the Parties agree otherwise, a panel is to present 
its initial report within 120 days after the last panelist is 
selected. Once the panel presents its initial report containing 
findings of fact and a determination on whether a Party has met 
its obligations, the Parties will have the opportunity to 
provide written comments to the panel. When the panel receives 
these comments, it may reconsider its report and make any 
further examination that it considers appropriate. Within 30 
days after it presents its initial report, the panel will 
submit its final report. The Parties will then seek to agree on 
how to resolve the dispute, normally in a way that conforms to 
the panel's determinations and recommendations. Subject to 
protection of confidential information, the panel's final 
report will be made available to the public 15 days after the 
Parties receive it.
    Suspension of Benefits. If the Parties cannot resolve the 
dispute after they receive the panel's final report, the 
Parties will seek to agree on acceptable trade compensation. If 
they cannot agree on compensation, or if the complaining Party 
believes the defending Party has failed to implement an agreed 
resolution, the complaining Party may provide notice that it 
intends to suspend trade benefits equivalent in effect to those 
it considers were impaired, or may be impaired, as a result of 
the disputed measure.
    If the defending Party considers that the proposed level of 
benefits to be suspended is ``manifestly excessive,'' or 
believes that it has modified the disputed measure to make it 
conform to the Agreement, it may request the panel to reconvene 
and decide the matter. The panel must issue its determination 
no later than 90 days after the request is made (or 120 days if 
the panel is reviewing both the level of the proposed 
suspension and a modification of the measure).
    The complaining Party may suspend trade benefits up to the 
level that the panel sets or, if the panel has not been asked 
to determine the level, up to the amount that the complaining 
Party has proposed. The complaining Party cannot suspend 
benefits, however, if the defending Party provides notice that 
it will pay an annual monetary assessment to the other Party. 
The amount of the assessment will be established by agreement 
of the Parties or, failing that, will be set at 50 percent of 
the level of trade concessions the complaining Party was 
authorized to suspend.
    Compliance Review Mechanism. If, at any time, the defending 
Party believes it has made changes in its laws or regulations 
sufficient to comply with its obligations under the Agreement, 
it may refer the matter to the panel. If the panel agrees, the 
dispute ends and the complaining Party must withdraw any 
offsetting measures it has put in place. Concurrently, the 
defending government will be relieved of any obligation to pay 
a monetary assessment.
    The Parties will review the operation of the compliance 
procedures either five years after the Agreement enters into 
force or within six months after benefits have been suspended 
or assessments paid in five proceedings initiated under this 
Agreement, which ever occurs first.
    Settlement of Private Disputes. The Parties will encourage 
the use of arbitration and other alternative dispute resolution 
mechanisms to settle international commercial disputes between 
private parties. Each Party must provide appropriate procedures 
for the recognition and enforcement of arbitral awards, for 
example by complying with the 1958 United Nations Convention on 
the Recognition and Enforcement of Foreign Arbitral Awards or 
the 1975 Inter-American Convention on International Commercial 
Arbitration.

                     CHAPTER TWENTY-TWO: EXCEPTIONS

    Chapter Twenty-Two sets out provisions that generally apply 
to the entire Agreement. Article XX of the GATT 1994 and its 
interpretive notes are incorporated into and made part of the 
Agreement, mutatis mutandis, and apply to those Chapters 
related to treatment of goods. Likewise, for the purposes of 
Chapters Eleven (Cross-Border Trade in Services), Fourteen 
(Telecommunications), and Fifteen (Electronic Commerce), GATS 
Article XIV (including its footnotes) is incorporated into and 
made part of the Agreement. For both goods and services, the 
Parties understand that these exceptions include certain 
environmental measures.
    Essential Security. Chapter Twenty-Two makes clear that 
nothing in the Agreement prevents a Party from taking actions 
it considers necessary to protect its essential security 
interests, and specifically provides that an arbitration panel 
must apply the essential security exception if a Party invokes 
it. With respect to non-conforming measures relating to port 
activities listed by Peru and the United States in Annex I and 
II, respectively, each Party has clarified that the landside 
aspects of port activities are subject to the Agreement's 
essential security exception.
    Taxation. An exception for taxation limits the field of tax 
measures subject to the Agreement. For example, the exception 
generally provides that the Agreement does not affect a Party's 
rights or obligations under any tax convention. The exception 
sets out certain circumstances under which tax measures are 
subject to the Agreement's: (1) national treatment obligation 
for goods; (2) national treatment and NTR (MFN) obligations for 
services; (3) prohibitions on performance requirements; and (4) 
expropriation rules.
    Disclosure of Information. The Chapter also provides that a 
Party may withhold information from the other Party where such 
disclosure would impede domestic law enforcement, otherwise be 
contrary to the public interest, or prejudice the legitimate 
commercial interests of particular enterprises.

                 CHAPTER TWENTY-THREE: FINAL PROVISIONS

    Chapter Twenty-Three provides that (i) the annexes, 
appendices, and footnotes are part of the Agreement, (ii) the 
Parties may amend the Agreement subject to the legal 
requirements of each Party, and (iii) the English and Spanish 
texts are both authentic. It also provides for consultations if 
any provision of the WTO Agreement that the Parties have 
incorporated into the Agreement is amended.
    Chapter Twenty-Three establishes the procedures for the 
Agreement to enter into force and terminate. The Chapter 
provides that any other country or group of countries may 
accede to the Agreement on terms and conditions that are agreed 
with the Parties and approved according to each Party's legal 
requirements.

     E. General Description of the Bill To Implement the Agreement


Sec. 1. Short title; table of contents

    This section provides that the short title of the act 
implementing the Agreement is the ``United States-Peru Trade 
Promotion Agreement Implementation Act'' (Implementation Act). 
Section 1 also provides the table of contents for the 
Implementation Act.

Sec. 2. Purposes

    This section provides that the purposes of the 
Implementation Act are to approve and implement the Agreement, 
to strengthen and develop economic relations between the United 
States and Peru, to establish free trade between the United 
States and Peru through the reduction and elimination of 
barriers to trade in goods and services and to investment, and 
to lay the foundation for further cooperation to expand and 
enhance the benefits of the Agreement.

Sec. 3. Definitions

    This section defines the terms ``Agreement,'' 
``Commission,'' ``HTS,'' and ``Textile or apparel good'' for 
purposes of the Implementation Act.

TITLE I--APPROVAL OF, AND GENERAL PROVISIONS RELATING TO, THE AGREEMENT


Sec. 101. Approval and entry into force of the Agreement

    This section provides congressional approval for the 
Agreement and its accompanying Statement of Administrative 
Action. Section 101 also provides that, if the President 
determines that Peru has taken measures necessary to comply 
with obligations that take effect at the time the Agreement 
enters into force, the President may exchange notes with Peru 
providing for the entry into force of the Agreement with 
respect to the United States on or after January 1, 2008.

Sec. 102. Relationship of the Agreement to United States and state law

    This section establishes the relationship between the 
Agreement and U.S. law. Section 102 clearly states that no 
provision of the Agreement will be given effect if it is 
inconsistent with any federal law.
    Section 102 also provides that only the United States may 
bring a court action to resolve a conflict between a state law 
and the Agreement. And it precludes any private right of action 
against the federal government, state or local governments, or 
a private party based on the provisions of the Agreement.

Sec. 103. Implementing actions in anticipation of entry into force and 
        initial regulations

    This section provides that, following the enactment of the 
Implementation Act, the President may proclaim such actions, 
and other appropriate officers of the federal government may 
issue such regulations, as may be necessary to ensure that 
provisions of the legislation that take effect on the date the 
Agreement enters into force are appropriately implemented on 
that date. Section 103 further provides that, with respect to 
any action proclaimed by the President that is not subject to 
the consultation and layover provisions contained in section 
104, such action may not take effect before the 15th day after 
the date on which the text of the proclamation is published in 
the Federal Register. The 15-day restriction is waived, 
however, to the extent that it would prevent an action from 
taking effect on the date the Agreement enters into force. 
Section 103 also provides that, to the maximum extent feasible, 
initial regulations necessary or appropriate to carry out the 
actions required by the Implementation Act or proposed in the 
Statement of Administrative Action shall be issued within 1 
year after the date on which the Agreement enters into force. 
In accordance with the Statement of Administrative Action, any 
agency unable to issue a regulation within 1 year must report 
to the relevant Congressional committees, at least 30 days 
prior to the end of the 1-year period, the reasons for the 
delay and the expected date for issuance of the regulation.

Sec. 104. Consultation and layover provisions for, and effective date 
        of, proclaimed actions

    This section sets forth consultation and layover steps that 
must precede the President's implementation of any action by 
proclamation that is subject to the requirements of this 
section. Under the consultation and layover provisions, the 
President must obtain advice regarding the proposed action from 
the Commission and from the appropriate advisory committees 
established under section 135 of the Trade Act of 1974 (19 
U.S.C. Sec. 2155). The President must also submit to the Senate 
Committee on Finance and the House Committee on Ways and Means 
a report that sets forth the action proposed, the reasons for 
the proposed action, and the advice of the appropriate advisory 
committees and the Commission. Section 104 sets aside a 60-day 
period following the date of transmittal of the report for the 
President to consult with the Senate Committee on Finance and 
the House Committee on Ways and Means on the proposed action.

Sec. 105. Administration of dispute settlement proceedings

    This section authorizes the President to establish or 
designate within the Department of Commerce an office 
responsible for providing administrative assistance to dispute 
settlement panels established under Chapter 21 of the 
Agreement. Section 105 also authorizes the appropriation of 
funds to support this office.

Sec. 106. Arbitration of claims

    This section authorizes the United States to use binding 
arbitration to resolve certain claims against the United States 
pursuant to the Investor-State Dispute Settlement procedures 
set forth in section B of Chapter 10 of the Agreement.

Sec. 107. Effective dates; effect of termination

    This section provides that the provisions of the 
Implementation Act and the amendments made by it take effect on 
the date on which the Agreement enters into force, except for 
sections 1 through 3 and Title I, which take effect on the date 
of enactment of the Implementation Act. Section 107 also 
provides that the provisions of the Implementation Act and the 
amendments to other statutes made by it will cease to have 
effect on the date on which the Agreement terminates.

                      TITLE II--CUSTOMS PROVISIONS


Sec. 201. Tariff modifications

    Section 201(a) authorizes the President to implement by 
proclamation the modification or continuation of any duty, 
imposition of any additional duties, or the continuation of 
duty-free or excise treatment that the President determines to 
be necessary or appropriate to carry out or apply Articles 2.3, 
2.5, 2.6, 3.3.13, and Annex 2.3 of the Agreement. In addition, 
section 201(a) requires the President to terminate the 
designation of Peru as a beneficiary developing country for 
purposes of the GSP program on the date the Agreement enters 
into force.
    Section 201(b) authorizes the President, subject to the 
consultation and layover provisions of section 104, to proclaim 
the modification or continuation of any duty, the modification 
of the staging of any duty elimination, the imposition of 
additional duties, or the continuation of duty-free or excise 
treatment that the President determines to be necessary or 
appropriate to maintain the general level of reciprocal and 
mutually advantageous concessions with respect to Peru provided 
by the Agreement.
    Section 201(c) authorizes the President, with respect to 
any good for which the base rate of duty in the Tariff Schedule 
of the United States to Annex 2.3 of the Agreement is a 
specific or compound rate of duty, to substitute for the base 
rate an ad valorem rate that the President determines to be 
equivalent to the base rate.
    Section 201(d) authorizes the President, in implementing 
the tariff rate quotas set forth in the Agreement, to take 
actions necessary to ensure that imports of agricultural goods 
do not disrupt the orderly marketing of commodities in the 
United States.

Sec. 202. Additional duties on certain agricultural goods

    Section 202 implements the agricultural safeguard 
provisions of the Agreement. Section 202(a) defines the terms 
``applicable NTR (MFN) rate of duty,'' ``schedule rate of 
duty,'' and ``safeguard good'' for purposes of section 202. 
Section 202(b) requires the Secretary of the Treasury 
(Secretary) to impose additional duties on imports of certain 
Peruvian agricultural goods if the Secretary determines that, 
prior to such importation, the total volume of the imported 
good in a calendar year exceeds 130 percent of the volume 
provided for that good in the Schedule of the United States to 
Annex 2.3 of the Agreement. Section 202(c) provides that the 
Secretary may not impose an additional duty on a good if, at 
the time of entry, the good is subject to a safeguard measure 
under the procedures set out in subtitle A of title III of the 
Implementation Act or under the safeguard procedures set out in 
chapter 1 of title II of the Trade Act of 1974. Finally, 
Section 202(d) provides that the additional duties shall cease 
to apply to a good on the date on which duty-free treatment 
must be provided to that good under the Schedule of the United 
States to Annex 2.3 of the Agreement.

Sec. 203. Rules of origin

    Section 203 implements the general rules of origin set 
forth in Chapter 4 of the Agreement. These rules define the 
circumstances under which a good imported from Peru qualifies 
as an originating good and is thus eligible for preferential 
tariff treatment under the Agreement.
    Section 203(a) establishes the Harmonized Tariff Schedule 
of the United States (HTS) as the basis of any tariff 
classification. It also provides that any cost or value 
referred to in section 203 shall be recorded and maintained in 
accordance with the generally accepted accounting principles 
applicable in the territory of the country in which the good is 
produced.
    Section 203(b) provides that a good is an originating good 
if it falls within one of three specified categories. First, a 
good qualifies as an originating good if it is wholly obtained 
or produced entirely in the territory of Peru, the United 
States, or both. Second, a good qualifies as an originating 
good if the good is produced in the territory of Peru, the 
United States, or both, and the materials used to produce the 
good that are not themselves originating goods are transformed 
in such a way as to cause their tariff classification to change 
and to meet other requirements specified in Annex 3-A or Annex 
4.1 of the Agreement. Third, and finally, a good qualifies as 
an originating good if the good is produced entirely in the 
territory of Peru, the United States, or both, exclusively from 
materials that fall within the first two categories.
    The remainder of section 203 sets forth specific rules 
related to determining whether a good meets the Agreement's 
specific requirements to qualify as an originating good. 
Section 203(c) implements provisions in Annex 4.1 of the 
Agreement that require certain goods to have a specified 
percentage of ``regional value content'' to qualify as 
originating goods. It prescribes alternative methods for 
calculating regional value content, as well as a specific 
method that must be used in the case of certain automotive 
goods. Section 203(d) addresses how materials are to be valued 
for purposes of calculating the regional value content of a 
good under subsection 203(c) and for purposes of applying the 
de minimis rules under subsection 203(f). Section 203(e) 
provides a rule of accumulation for originating materials from 
the territory of Peru or the United States that are used in the 
production of a good in the territory of the other country. 
Section 203(f) provides that a good is not disqualified as an 
originating good if it contains de minimis quantities of non-
originating materials that do not undergo a change in tariff 
classification. Section 203(g) addresses how to determine 
whether fungible goods and materials qualify as originating or 
non-originating under the Agreement. Section 203(h) provides 
rules for the treatment of accessories, spare parts, or tools 
that are delivered with a good. Sections 203(i) and (j) address 
the treatment of packaging materials and containers for retail 
sale and for shipment in determining whether a good qualifies 
as an originating good. Section 203(k) provides that indirect 
materials shall be treated as originating materials without 
regard to where they are produced. Section 203(l) provides 
rules for the treatment of goods that undergo further 
production in a third country or that otherwise transit through 
a third country. And section 203(m) provides rules for the 
treatment of goods classifiable as sets.
    Section 203(n) defines various terms used in section 203. 
Section 203(o) authorizes the President to proclaim the 
specific rules of origin set forth in Annex 3-A and Annex 4.1 
of the Agreement and to modify certain rules of origin in the 
Agreement by proclamation subject to the consultation and 
layover provisions of section 104.

Sec. 204. Customs user fees

    This section provides for the immediate elimination of the 
merchandise processing fee for goods qualifying as originating 
goods under the Agreement. Processing of goods qualifying as 
originating goods will be financed from the General Fund of the 
Treasury.

Sec. 205. Disclosure of incorrect information; false certifications of 
        origin; denial of preferential tariff treatment

    Section 205(a) amends section 592 of the Tariff Act of 1930 
(19 U.S.C. Sec. 1592) to impose penalties on an importer, 
exporter, or producer that makes an invalid claim for 
preferential tariff treatment under the Agreement through 
negligence, gross negligence, or fraud, unless the importer, 
exporter, or producer, after discovering that the claim is 
invalid, promptly and voluntarily corrects the claim and pays 
any customs duties owed. Section 205(b) amends section 514 of 
the Tariff Act of 1930 (19 U.S.C. Sec. 1514) to provide that, 
if an importer, exporter, or producer has engaged in a pattern 
of conduct in providing false representations that a good 
qualifies as originating, the United States may suspend 
preferential tariff treatment under the Agreement to identical 
goods covered by any subsequent representations that the person 
may make.

Sec. 206. Reliquidation of entries

    Section 206 amends section 520(d) of the Tariff Act of 1930 
(19 U.S.C. Sec. 1520(d)) to allow an importer to claim 
preferential tariff treatment for an originating good within 1 
year of importation, even if no such claim was made at the time 
of the importation.

Sec. 207. Recordkeeping requirements

    Section 207 amends section 508 of the Tariff Act of 1930 
(19 U.S.C. Sec. 1508) to establish recordkeeping requirements 
for U.S. exporters and producers that issue certifications of 
origin for goods exported to Peru.

Sec. 208. Enforcement relating to trade in textile or apparel goods

    This section authorizes the President to apply anti-
circumvention provisions concerning trade in textile and 
apparel goods. Pursuant to article 3.2 of the Agreement, the 
Secretary may request that the Government of Peru conduct a 
verification to determine the compliance of exporters and 
producers with applicable customs laws, regulations, and 
procedures regarding trade in textile or apparel goods, and to 
determine the accuracy of a claim of origin for a textile or 
apparel good. Section 208(a) provides that the President may 
direct the Secretary to take ``appropriate action'' while the 
verification is being conducted. Under section 208(b), such 
appropriate action includes detaining, suspending preferential 
tariff treatment of, or denying entry to, any textile or 
apparel good that the person subject to the verification has 
produced or exported or for which a claim has been made that is 
the subject of the verification if the Secretary determines 
there is insufficient information to support a claim for such 
treatment.
    Section 208(c) permits the President to direct the 
Secretary to take ``appropriate action'' after a verification 
has been completed. Section 208(d) defines ``appropriate 
action'' to include the denial of preferential treatment or 
entry to textile or apparel goods that the person subject to 
the verification has exported or produced until such time as 
the Secretary receives information sufficient to prove 
compliance or until an earlier date as the President may 
direct.
    Finally, section 208(e) permits the Secretary to publish 
the name of any person that the Secretary determines has 
engaged in circumvention of applicable laws, regulations, or 
procedures affecting trade in textile or apparel goods or has 
failed to demonstrate that it produces, or is capable of 
producing, textile or apparel goods.

Sec. 209. Regulations

    Section 209 authorizes the Secretary to prescribe 
regulations necessary to carry out the rules of origin and 
customs user fee provisions in the Implementation Act and to 
carry out the President's proclamation authority under section 
203(o).

                     TITLE III--RELIEF FROM IMPORTS


Sec. 301. Definitions

    This section defines the terms ``Peruvian article'' and 
``Peruvian textile or apparel article'' for purposes of this 
title. Section 301(1) defines ``Peruvian article'' as an 
article that qualifies as an originating good under section 
203(b) of the Implementation Act. And section 301(2) defines 
``Peruvian textile or apparel article'' as a good listed in the 
Annex to the WTO Agreement on Textiles and Clothing, other than 
a good listed in Annex 3-C of the Agreement, that is a Peruvian 
article.

     Subtitle A--Relief From Imports Benefiting From the Agreement

    Subtitle A of title III implements the bilateral safeguard 
provisions set out in Chapter Eight of the Agreement. It 
authorizes the President, after an investigation and 
affirmative determination by the Commission, to suspend duty 
reductions or impose duties temporarily up to NTR (MFN) rates 
on a ``Peruvian article'' when, as a result of the reduction or 
elimination of a duty under the Agreement, the article is being 
imported into the United States in such increased quantities 
and under such conditions as to be a substantial cause of 
serious injury or threat of serious injury to a domestic 
industry that produces a like or directly competitive good. The 
standards and procedures set out in this subtitle closely 
parallel the procedures for global safeguards set forth in 
sections 201 through 204 of the Trade Act of 1974 (19 U.S.C. 
Sec. Sec. 2251-2254).

Sec. 311. Commencing of action for relief

    Section 311(a) requires an entity that is representative of 
an industry to file a petition with the Commission to commence 
a bilateral safeguard investigation. Section 311(a) defines an 
entity to include a trade association, firm, certified or 
recognized union, or a group of workers.
    Section 311(b) provides that, upon the filing of a 
petition, the Commission shall promptly initiate an 
investigation to determine whether, as a result of the 
reduction or elimination of a duty provided for under the 
Agreement, a Peruvian article is being imported into the United 
States in such increased quantities and under such conditions 
that imports of the Peruvian article constitute a substantial 
cause of serious injury, or threat of serious injury, to the 
domestic industry producing an article that is like, or 
directly competitive with, the imported article.
    Section 311(c) extends certain provisions (both substantive 
and procedural) contained in subsections (b), (c), and (i) of 
section 202 of the Trade Act of 1974 (19 U.S.C. Sec. 2252(b), 
(c), and (i)), which apply to global safeguard investigations, 
to any bilateral safeguard initiated under the Agreement. These 
provisions include, inter alia, the requirement that the 
Commission publish notice of the commencement of an 
investigation; the requirement that the Commission hold a 
public hearing at which interested parties and consumers have 
the right to be present and to present evidence; the factors to 
be taken into account by the Commission in making its 
determinations; and authorization for the Commission to 
promulgate regulations providing access to confidential 
business information under protective order to authorized 
representatives of interested parties in an investigation.
    Section 311(d) precludes the initiation of a bilateral 
safeguard investigation with respect to any Peruvian article 
for which import relief has already been provided under 
subtitle A.

Sec. 312. Commission action on petition

    Section 312(a) establishes deadlines for Commission action 
following the initiation of a bilateral safeguard 
investigation. Section 312(b) applies certain statutory 
provisions regarding an equally divided vote by the Commission 
in a global safeguard investigation under section 202 of the 
Trade Act of 1974 (19 U.S.C. Sec. 2252) to Commission 
determinations and findings under this section. If the 
Commission renders an affirmative injury determination or a 
determination that the President may treat as an affirmative 
determination in the event of an equally divided vote by the 
Commission, section 312(c) requires the Commission to find and 
recommend to the President the amount of import relief that is 
necessary to remedy or prevent the injury and to facilitate the 
efforts of the domestic industry to make a positive adjustment 
to import competition. Section 312(d) requires the Commission 
to submit a report to the President regarding its determination 
and specifies the information that the Commission must include 
in the report. Upon submitting the report to the President, 
section 312(e) requires the Commission to promptly release the 
report to the public, except for any confidential information 
contained therein, and to publish a summary of the report in 
the Federal Register.

Sec. 313. Provision of relief

    Section 313(a) directs the President, not later than 30 
days after receiving the report from the Commission, to provide 
relief from imports of the article subject to an affirmative 
determination by the Commission, or a determination that the 
President treats as affirmative, to the extent that the 
President determines is necessary to remedy or prevent the 
injury and to facilitate the efforts of the domestic industry 
to make a positive adjustment to import competition. Section 
313(b), however, provides that the President need not provide 
import relief if the President determines that the import 
relief will not provide greater economic and social benefits 
than costs.
    Section 313(c) specifies the nature of the import relief 
that the President may impose, which includes the suspension of 
any further reduction in the rate of duty imposed on the 
article in question under Annex 2.3 of the Agreement and an 
increase in the rate of duty imposed on such article to a level 
that does not exceed the lesser of (1) the NTR (MFN) duty rate 
at the time the import relief is provided; or (2) the NTR (MFN) 
duty rate on the day before the Agreement enters into force. 
Section 313(c) also requires the President to provide for the 
progressive liberalization of import relief at regular 
intervals during the period of its application if that period 
exceeds one year.
    Section 313(d) limits any import relief that the President 
imposes in a bilateral safeguard action to no more than 4 years 
in the aggregate. The initial period of import relief that the 
President imposes may not exceed 2 years. The President may 
extend the relief up to an additional 2 years, however, if (1) 
the Commission makes an affirmative determination, or a 
determination that the President treats as affirmative, that 
import relief continues to be necessary to remedy or prevent 
serious injury and that there is evidence that the domestic 
industry is making a positive adjustment to import competition; 
and (2) the President makes a determination to the same effect.
    Section 313(e) specifies the duty rate to be applied to 
Peruvian articles after termination of a safeguard action. On 
the termination of import relief, the rate of duty for the 
remainder of the calendar year shall be the rate that was 
scheduled to have been in effect one year after the initial 
provision of import relief. For the rest of the duty phase-out 
period, the President may set the duty either at the rate 
called for under the Schedule of the United States to Annex 2.3 
of the Agreement or in a manner that eliminates the duty in 
equal annual stages ending on the date set out in that 
Schedule.
    Section 313(f) precludes the application of import relief 
pursuant to the bilateral safeguard provisions with respect to 
any Peruvian article that is (1) subject to import relief under 
the global safeguard provisions in chapter 1 of title II of the 
Trade Act of 1974 (19 U.S.C. Sec. Sec. 2251 et seq.); (2) 
subject to import relief under subtitle B of title III of the 
Implementation Act; or (3) subject to an additional duty 
assessment under section 202(b) of the Implementation Act.

Sec. 314. Termination of relief authority

    This section provides that the President's authority to 
impose import relief under the bilateral safeguard expires 10 
years after the date on which the Agreement enters into force. 
If, however, the period for elimination of duties on a 
particular article exceeds 10 years, relief may be provided for 
that article until the date on which the duty elimination 
period ends.

Sec. 315. Compensation authority

    This section authorizes the President, under section 123 of 
the Trade Act of 1974 (19 U.S.C. Sec. 2133), to grant new 
concessions to Peru as compensation for the imposition of 
import relief pursuant to the bilateral safeguard.

Sec. 316. Confidential business information

    This section applies the same procedures for the treatment 
and release of confidential business information by the 
Commission in a global safeguard investigation under chapter 1 
of title II of the Trade Act of 1974 (19 U.S.C. Sec. Sec. 2251 
et seq.) to investigations under title III of the 
Implementation Act.

           Subtitle B--Textile and Apparel Safeguard Measures

    Subtitle B of title III implements the Agreement's textile 
and apparel safeguard.

Sec. 321. Commencement of action for relief

    Section 321(a) requires an interested party to file a 
request with the President in order to commence action for 
relief under the textile and apparel safeguard. Upon the filing 
of a request, the President must review the request to 
determine, from information presented in the request, whether 
to commence consideration of the request on its merits. Section 
321(b) provides that, if the President determines that the 
request contains the information necessary for the request to 
be considered on the merits, the President must publish notice 
in the Federal Register stating that the request will be 
considered and seeking public comments on the request. The 
notice must contain a summary of the request and the dates by 
which comments and rebuttals must be received.
    The Committee notes our regulatory processes should be 
administered in an open and transparent manner that can serve 
as a model for our trading partners. For example, the Committee 
understands that, in addition to publishing a summary of a 
request for safeguard relief, the President plans to make the 
full text of the request available on the U.S. Department of 
Commerce's International Trade Administration website, subject 
to the protection of confidential business information, if any. 
The Committee encourages this and similar efforts to enhance 
government transparency.

Sec. 322. Determination and provision of relief

    Section 322 sets out the procedures to be followed in 
considering a request filed under section 321. If a positive 
determination is made under section 321(b), section 322(a) 
requires the President to determine whether, as a result of the 
elimination of a duty under the Agreement, a Peruvian textile 
or apparel article is being imported into the United States in 
such increased quantities and under such conditions as to cause 
serious damage, or actual threat thereof, to a domestic 
industry producing an article that is like, or directly 
competitive with, the imported article. Section 322(a) also 
provides that, in making such a determination, the President 
shall examine the effect of increased imports on the domestic 
industry's output, productivity, capacity utilization, 
inventories, market share, exports, wages, employment, domestic 
prices, profits and losses, and investment, none of which is 
necessarily decisive. Finally, section 322(a) provides that the 
President shall not consider changes in consumer preference or 
technology as factors supporting a determination of serious 
damage or actual threat thereof.
    Section 322(b) authorizes the President, in the event of an 
affirmative determination of serious damage or actual threat 
thereof, to provide import relief to the extent that the 
President determines is necessary to remedy or prevent the 
serious damage and to facilitate adjustment by the domestic 
industry. Section 322(b) also specifies the nature of the 
import relief that the President may impose, which consists of 
an increase in the rate of duty imposed on the article to a 
level that does not exceed the lesser of (1) the NTR (MFN) duty 
rate in place for the textile or apparel article at the time 
the import relief is provided, or (2) the NTR (MFN) duty rate 
for that article on the day before the Agreement enters into 
force.

Sec. 323. Period of relief

    Section 323 limits any import relief that the President 
imposes under the textile and apparel safeguard to no more than 
3 years in the aggregate. Section 323(a) provides that the 
initial period of import relief that the President imposes may 
not exceed 2 years. Under section 323(b), however, the 
President may extend the relief up to 1 additional year if the 
President determines that (1) the import relief continues to be 
necessary to remedy or prevent serious damage and to facilitate 
adjustment by the domestic industry to import competition, and 
(2) there is evidence that the domestic industry is, in fact, 
adjusting to import competition.

Sec. 324. Articles exempt from relief

    This section precludes the President from providing import 
relief under the textile and apparel safeguard with respect to 
a Peruvian article if import relief previously has been 
provided under subtitle B of title III of the Implementation 
Act or if the article is subject to import relief under 
subtitle A of title III of the Implementation Act or under the 
global safeguard provisions in chapter 1 of title II of the 
Trade Act of 1974 (19 U.S.C. Sec. Sec. 2251 et seq.).

Sec. 325. Rate after termination of import relief

    This section provides that the duty rate applicable to a 
textile or apparel article after termination of the import 
relief shall be the duty rate that would have been in effect 
for that article, but for the provision of such relief, on the 
date on which the relief terminates.

Sec. 326. Termination of relief authority

    This section provides that the President's authority to 
impose import relief under the textile and apparel safeguard 
expires 5 years after the date on which the Agreement enters 
into force.

Sec. 327. Compensation authority

    This section authorizes the President, under section 123 of 
the Trade Act of 1974 (19 U.S.C. Sec. 2133), to grant new 
concessions to Peru as compensation for the imposition of 
import relief pursuant to the textile and apparel safeguard.

Sec. 328. Confidential business information

    This section precludes the President from releasing 
information received in a textile and apparel safeguard 
proceeding that the President considers to be confidential 
business information unless the party submitting the 
confidential business information had notice, at the time of 
submission, that the information would be released by the 
President, or the party subsequently consents to the release of 
the information. This section also provides that, to the extent 
a party submits confidential business information to the 
President, the party shall also submit a nonconfidential 
version of the information in which the confidential business 
information is summarized or, if necessary, deleted.

       Subtitle C--Cases Under Title II of the Trade Act of 1974

    Subtitle C of title III implements the global safeguard 
provisions of the Agreement. It authorizes the President, in 
granting global import relief under the global safeguard 
provisions in sections 201 through 204 of the Trade Act of 1974 
(19 U.S.C. Sec. Sec. 2251-2254), to exclude imports of 
originating articles from the relief when certain conditions 
are present.

Sec. 331. Findings and action on goods of Peru

    Section 331(a) provides that, if the Commission makes an 
affirmative determination, or a determination that the 
President may treat as an affirmative determination, in a 
global safeguard investigation initiated under chapter 1 of 
title II of the Trade Act of 1974 (19 U.S.C. Sec. Sec. 2251 et 
seq.), the Commission must find and report to the President 
whether imports of the article from Peru that qualify as 
originating goods under section 203(b) of the Implementation 
Act are a substantial cause of serious injury or threat 
thereof. Section 331(b) provides that, if the Commission makes 
a negative finding under section 331(a), the President may 
exclude the Peruvian articles from the global safeguard action.

                         TITLE IV--PROCUREMENT


Sec. 401. Eligible products

    This section amends section 308(4)(A) of the Trade 
Agreements Act of 1979 (19 U.S.C. Sec. 2518(4)(A)) to implement 
the government procurement provisions of the Agreement.

               TITLE V--TRADE IN TIMBER PRODUCTS OF PERU

    Annex 18.3.4 of the Agreement requires Peru to take certain 
actions to enhance its forest sector governance and promote 
legal trade in timber products. The Annex also authorizes the 
United States to take steps to ensure that timber products of 
Peru that are exported to the United States comply with 
Peruvian law governing the harvest of, and trade in, those 
products.

Sec. 501. Enforcement relating to trade in timber products of Peru

    Section 501 requires the President to establish an 
interagency committee within 90 days after the Agreement enters 
into force to oversee the implementation of Annex 18.3.4. 
Section 501 also describes requests and determinations that the 
committee may make relating to audits and verifications 
pursuant to the Annex, and it authorizes the committee to 
request verifications and take appropriate enforcement 
measures, including directing U.S. Customs and Border 
Protection to apply import measures of the type and in the 
circumstances contemplated under the Annex.
    In particular, section 501(b) authorizes the committee to 
ask the Government of Peru to conduct an audit to determine 
whether a particular producer or exporter in Peru is complying 
with Peruvian laws governing the harvest of, and trade in, 
timber products. The committee, under section 501(c), may also 
ask the Government of Peru to conduct a verification with 
respect to a particular shipment of timber products from Peru 
to determine whether the producer or exporter of the products 
complied with such laws. Section 501(c) also authorizes the 
committee to request permission from the Government of Peru for 
officials of an agency represented on the committee to 
participate in a verification visit. Pending the results of the 
verification, the committee may direct U.S. Customs and Border 
Protection to detain the shipment subject to the verification 
or, if the Government of Peru has denied a request by the 
Committee to participate in a verification visit, to deny entry 
to the shipment. After the Government of Peru provides a report 
to the committee describing the results of the verification, 
section 501(c) provides that the committee must determine 
whether action is appropriate. Such actions may include (1) 
directing U.S. Customs and Border Protection to deny entry to 
the shipment that was the subject of the verification; (2) 
directing U.S. Customs and Border Protection to deny entry to 
products of the producer or exporter subject to the 
verification that were derived from any tree species listed in 
Appendices to the Convention on International Trade in 
Endangered Species of Wild Fauna and Flora if the producer or 
exporter has knowingly provided false information to U.S. or 
Peruvian officials; or (3) any other action the committee 
considers appropriate. If the Government of Peru fails to 
provide a verification report, the committee may take such 
action with respect to the relevant exporter's timber products 
as the committee considers appropriate.
    Section 501(d) provides that neither the committee nor any 
agency represented on the committee may disclose documents or 
information received in the course of an audit under section 
501(b) or a verification under section 501(c) without the 
specific permission of the Government of Peru. Section 501(e), 
however, directs the committee to make publicly available in a 
timely manner any information on bilateral trade in timber 
products exchanged with Peru under paragraph 17 of the Annex.
    Section 501(f) addresses coordination with other laws, 
including with respect to the administration of the Endangered 
Species Act of 1973 (16 U.S.C. Sec. Sec. 1531 et seq.) and the 
Lacey Act Amendments of 1981 (16 U.S.C. Sec. Sec. 3371 et 
seq.), the authority of various administering agencies under 
any other law, and the effect on proceedings and determinations 
under any law administered by those agencies.
    Section 501(g) requires the Secretaries of Agriculture, 
Homeland Security, the Interior, and Treasury, in consultation 
with the committee, to prescribe such regulations as are 
necessary to carry out section 501. And section 501(h) requires 
the President to consult with the Senate Committee on Finance 
and the House Committee on Ways and Means, within 90 days after 
the Agreement enters into force and as appropriate thereafter, 
on the resources needed to implement the Annex.

Sec. 502. Report to Congress

    This section requires the U.S. Trade Representative, in 
consultation with other appropriate agencies, to provide 
periodic reports to the Senate Committee on Finance and the 
House Committee on Ways and Means on the steps the United 
States and Peru have taken to carry out the Annex and on 
activities related to forest sector governance carried out 
under the Environmental Cooperation Agreement that the United 
States and Peru negotiated concurrently with the United State-
Peru Trade Promotion Agreement.

                           TITLE VI--OFFSETS


Sec. 601. Customs user fees

    Section 601(a) amends section 13031(j)(3)(A) of the 
Consolidated Omnibus Budget Reconciliation Act of 1985 (19 
U.S.C. Sec. 58c(j)(3)(A)) to extend the collection of 
merchandise processing fees from October 21, 2014 to December 
13, 2014.
    Section 601(b) amends section 13031(j)(3)(B)(i) of the 
Consolidated Omnibus Budget Reconciliation Act of 1985 (19 
U.S.C. Sec. 58c(j)(3)(B)(i)) to extend the collection of 
passenger and conveyance processing fees from October 7, 2014 
to December 13, 2014.

Sec. 602. Time for payment of corporate estimated taxes

    This section amends section 401(l) of the Tax Increase 
Prevention and Reconciliation Act of 2005 (26 U.S.C. Sec. 6655 
note) to increase the portion of corporate estimated tax 
payments due in July, August, and September of 2012 for 
corporations with at least $1 billion in assets from 115 
percent to 115.75 percent of the payment otherwise due.

             F. Vote of the Committee in Reporting the Bill

    In compliance with section 133 of the Legislative 
Reorganization Act of 1946, the Committee states that on 
October 4, 2007, S. 2113 was ordered favorably reported, 
without amendment, by voice vote, a quorum being present.

                    II. BUDGETARY IMPACT OF THE BILL


S. 2113--United States-Peru Trade Promotion Agreement Implementation 
        Act

    Summary: S. 2113 would approve the free trade agreement 
between the government of the United States and the government 
of Peru that was entered into on April 12, 2006. It would 
provide for tariff reductions and other changes in law related 
to implementation of the agreement. It also would shift some 
corporate income tax payments between fiscal years.
    The Congressional Budget Office (CBO) and the Joint 
Committee on Taxation (JCT) estimate that enacting the 
legislation would reduce revenues by $20 million in 2008, 
increase revenues by $292 million over the 2008-2012 period, 
and reduce revenues by $423 million over the 2008-2017 period. 
CBO estimates that enacting S. 2113 also would increase direct 
spending by $4 million in 2008 and by $27 million over the 
2008-2012 period, and reduce direct spending by $443 million 
over the 2008-2017 period. Further, CBO estimates that 
implementing the legislation would result in new discretionary 
spending of less than $500,000 per year, assuming the 
availability of appropriated funds.
    CBO and JCT have determined that the bill contains no 
intergovernmental mandates as defined in the Unfunded Mandates 
Reform Act (UMRA). CBO has reviewed the nontax provisions of S. 
2113 and determined that the extension of customs user fees and 
the imposition of new record-keeping requirements on exporters 
of goods to Peru are private-sector mandates as defined in 
UMRA. We estimate that the aggregate costs of those mandates 
would greatly exceed the annual threshold established in UMRA 
for private sector mandates ($131 million in 2007, adjusted 
annually for inflation) in fiscal year 2015. JCT has determined 
that the tax provision of the bill (section 602) contains no 
private-sector mandate as defined in UMRA.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of the legislation over the 2008-2017 period 
is shown in the following table. The cost of this legislation 
falls within budget function 750 (administration of justice).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           By fiscal year, in millions of dollars--
                                    --------------------------------------------------------------------------------------------------------------------
                                      2008    2009    2010    2011    2012      2013      2014       2015     2016    2017      2008-2012     2008-2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   CHANGES IN REVENUES

Free Trade Agreement...............     -20     -35     -37     -39     -41        -44       -47        -50     -53     -56            -173         -423
Payment of Corporate Estimated Tax.       0       0       0       0     465       -465         0          0       0       0             465            0
Total Changes in Revenues..........     -20     -35     -37     -39     424       -509       -47        -50     -53     -56             292         -423
                                                               CHANGES IN DIRECT SPENDING

Customs User Fees:
    Estimated Budget Authority.....       4       5       6       6       6          7         7       -484       0       0              27         -443
    Estimated Outlays..............       4       5       6       6       6          7         7       -484       0       0              27        -443
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office and Joint Committee on Taxation.

Basis of estimate

            Revenues
    Under the United States-Peru agreement, tariffs on U.S. 
imports from Peru would be phased out over time. The tariffs 
would be phased out for individual products at varying rates 
according to one of several different timetables ranging from 
immediate elimination on the date the agreement enters into 
force to gradual elimination over 10 years.
    According to the U.S. International Trade Commission, the 
United States collected about $5 million in customs duties in 
2006 on $6 billion of imports from Peru. However, since 1991, 
imports to the United States from Peru have been subject to 
reduced tariff rates in accordance with the Andean Trade 
Preference Act (ATPA), which was expanded in legislation 
enacted in 2002, and is currently scheduled to expire on 
February 29, 2008. The ATPA overlaps to a large extent with the 
free trade agreement that would be implemented by this bill. As 
a result, enacting the bill would effectively extend the ATPA 
for Peru after February 29, 2008, while also lowering tariff 
rates not covered by the ATPA. Based on expected imports from 
Peru, CBO estimates that implementing the tariff schedule 
outlined in the U.S.-Peru agreement would reduce revenues by 
$20 million in 2008, by $173 million over the 2008-2012 period, 
and by $423 million over the 2008-2017 period, net of income 
and payroll tax offsets.
    This estimate includes the effects of increased imports 
from Peru that would result from the reduced prices of imported 
products in the United States, reflecting the lower tariff 
rates. It is likely that some of the increase in U.S. imports 
from Peru would displace imports from other countries. In the 
absence of specific data on the extent of this substitution 
effect, CBO assumes that an amount equal to one-half of the 
increase in U.S. imports from Peru would displace imports from 
other countries.
    S. 2113 would also shift payments of corporate estimated 
taxes between 2012 and 2013. For corporations with at least $1 
billion in assets, the bill would increase the portion of 
corporate estimated payments due from July through September of 
2012. JCT estimates that this change would increase revenues by 
$465 billion in 2012 and decrease revenues by $465 billion in 
2013.
            Direct Spending
    Under current law, customs user fees will expire either 
after October 7, 2014 (for COBRA fees) or after October 21, 
2014 (for merchandise processing fees). Such fees are recorded 
in the budget as offsetting receipts (a credit against direct 
spending). S. 2113 would extend both COBRA fees and merchandise 
processing fees through December 13, 2014. CBO estimates that 
this provision would increase offsetting receipts by $485 
million in fiscal year 2015.
    In addition, the bill would exempt certain goods imported 
from Peru from merchandise processing fees. Based on the value 
of goods imported from Peru in 2007, CBO estimates that 
implementing this provision would reduce fee collections by 
about $4 million in fiscal year 2008 and by about $42 million 
over the 2008-2015 period. There would be no effects after 
December 13, 2014, because fees expire after that date.
            Spending subject to appropriation
    Title I of the bill would authorize the appropriation of 
necessary funds for the Department of Commerce to pay the 
United States' share of the costs of the dispute settlement 
procedures established by the agreement. Based on information 
from the agency, CBO estimates that implementing this provision 
would cost less than $500,000 per year, subject to the 
availability of appropriated funds.
    Title III would authorize the International Trade 
Commission (ITC) to conduct investigations, if petitioned, into 
whether Peruvian imports might threaten or cause serious injury 
to domestic competitors. The ITC would report to the President 
on its findings and determinations, and if necessary, recommend 
the appropriate amount of import relief. Based on information 
from the agency, CBO estimates that implementing these 
provisions would cost less than $500,000 per year, subject to 
the availability of appropriated funds.
    Title V would require the United States Trade 
Representative to prepare a report for Congress regarding 
activities carried out to promote legal trade in timber 
products as stipulated in the agreement. CBO estimates that 
complying with this reporting requirement also would cost less 
than $500,000 per year.
    Estimated impact on state, local, and tribal governments: 
CBO and JCT have determined that the provisions of S. 2113 
contain no intergovernmental mandates as defined in UMRA.
    Estimated impact on the private sector: CBO has determined 
that the non-tax provisions of S. 2113 would impose private-
sector mandates, as defined in UMRA, by extending the customs 
user fees and by enforcing new record-keeping requirements on 
exporters of goods to Peru. The aggregate costs of those 
mandates would greatly exceed the annual threshold established 
in UMRA for private-sector mandates ($131 million in 2007, 
adjusted annually for inflation) in 2015. JCT has determined 
that the tax provision of the bill (section 602) contains no 
private-sector mandate as defined in UMRA.
            Customs user fees
    The bill would extend through December 13, 2014, the 
customs user fees that are scheduled to expire on October 7, 
2014 or October 21, 2014. These fees are used to fund the 
processing costs of the U.S. Customs Service. CBO estimates 
that the aggregate cost to the private sector to comply with 
this mandate would be about $485 million in fiscal year 2015.
            Record-keeping requirement
    The bill also would require any person exporting goods to 
Peru who is required to complete a certificate of origin to 
keep all documents that relate to the origin of goods being 
certified for at least five years after the date of 
certification. CBO estimates that the cost of that record-
keeping requirement would be minimal.
    Estimate prepared by: Federal revenues: Andrew Langan, 
Zachary Epstein; Direct spending: Mark Grabowicz; Spending 
subject to appropriation: Susan Willie, Sunita D'Monte; Impact 
on state, local, and tribal governments: Neil Hood; Impact on 
the private sector: Jacob Kuipers.
    Estimate approved by: G. Thomas Woodward, Assistant 
Director for Tax Analysis; Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

          III. REGULATORY IMPACT OF THE BILL AND OTHER MATTERS

    Pursuant to the requirements of paragraph 11(b) of Rule 
XXVI of the Standing Rules of the Senate, the Committee states 
that the bill will not significantly regulate any individuals 
or businesses, will not affect the personal privacy of 
individuals, and will result in no significant additional 
paperwork.
    The following information is provided in accordance with 
section 423 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
(Pub. L. No. 104-04). The Committee has reviewed the provisions 
of S. 2113 as approved by the Committee on October 4, 2007. In 
accordance with the requirements of Pub. L. No. 104-04, the 
Committee has determined that the bill contains no 
intergovernmental mandates, as defined in the UMRA, and will 
not affect the budgets of State, local, or tribal governments. 
The Committee has determined that the bill does impose private-
sector mandates, as defined in the UMRA, by extending customs 
user fees and by imposing new record-keeping requirements on 
exporters of goods to Peru. The aggregate costs of those 
mandates will exceed the annual threshold established in UMRA 
for private-sector mandates ($131 million in 2007, adjusted 
annually for inflation) in fiscal year 2015. Although the 
aggregate cost to the private sector of the record-keeping 
requirements will be minimal, the aggregate cost of the 
extension of customs fees will amount to approximately $485 
million in fiscal year 2015.

             IV. ADDITIONAL VIEWS OF SENATOR ORRIN G. HATCH

    The changes in the Peruvian Agreement to the intellectual 
property rights (IPR) and labor chapters will become more 
relevant when we as a nation begin to negotiate future free 
trade agreements with deserving nations.
    The labor chapter of U.S.-Peru Free Trade Agreement could 
put U.S. Federal and State labor laws at significant risk. 
Several provisions of the labor chapter of the US-Peru trade 
agreement create an unacceptable risk that the United States 
will be required to change important provisions of U.S. Federal 
and state labor law or be subject to trade sanctions. Given 
that the purpose of the May 10th agreement was to ensure that 
Peru adopted strong labor provisions, not the United States, 
Congress' implementation of this agreement should provide an 
explicit safe harbor for US labor law.
    The Peru FTA Requirement to Adopt ``Fundamental Labor 
Rights'' Puts Right-to-Work, Freedom of Association and other 
Major US Labor Provisions at Significant Risk. Article 17.2 of 
the Peru FTA requires both Peru and the United States to 
``adopt and maintain in its statutes and regulations, and 
practices there under, the following rights as stated in the 
International Labor Organization ILO Declaration on Fundamental 
Principles and Rights at Work and its Follow-up (1998) (ILO 
Declaration) where it affects trade between the countries. 
These rights are freedom of association, recognition of 
collective bargaining, elimination of forced/ compulsory labor, 
effective abolition of child labor, prohibition of worst forms 
of child labor, and elimination of employment discrimination.
    The Peru FTA does not provide any definition of these 
fundamental rights, leaving the interpretation of what 
constitutes ``freedom of association'' or ``collective 
bargaining'' to a dispute settlement panel appointed by the US 
and Peruvian governments.
    Given the agreement's reference to the ILO Declaration, it 
is widely expected that such a dispute settlement panel would 
in fact look at and rely at least partially on the standards of 
the relevant ILO core conventions associated with these rights, 
much as the ILO does each year in its follow-up reports 
required by the ILO Declaration. The recent push by House 
Democrats to have Peru enact very detailed changes to its 
treatment of contract laborers as part of its implementation of 
the agreement--an issue not specifically addressed in the Peru 
FTA--confirms the wide range of issues subject to this chapter.
    The United States, which has only ratified two of the eight 
ILO core conventions, faces substantial risk that a panel will 
find that US labor law violates the Peru FTA, requiring the US 
to change its law or face trade sanctions. Key US laws subject 
to that risk include:
           State right-to-work rules, which standard 
        labor market analysis and several other countries (such 
        as Canada) find imposes an improper restraint on the 
        ability of workers to bargain collectively or to strike 
        (as non-union workers have the authority to vote on 
        whether to strike);
           U.S. prohibitions on the admission to unions 
        of persons connected with the Communist Party or the 
        Klu Klux Klan given that ILO standards require the 
        admission of all applicants;
           U.S. prohibitions in the National Labor 
        Relations Act (NLRA) on the inclusion of supervisors in 
        union, which is required by ILO conventions;
           Exclusive bargaining rights provided under 
        the NLRA, which are in conflict with ILO standards 
        requiring minority unions be allowed to function;
           Various federal and state laws that place 
        reasonable and balanced limits on the right to strike, 
        which are in conflict with the ILO conventions' 
        prohibition on virtually all restrictions on the right 
        to strike;
           U.S. laws permitting the permanent 
        replacement of striking workers, which the ILO has 
        indicated may pose a risk to the effective enforcement 
        of the right of collective bargaining when it occurs on 
        an extensive basis;
           Fair Labor Standards Act minimum age of 14 
        and state laws where there are no minimum ages for 
        children working in agriculture contravenes the ILO 
        Minimum Age convention; and
           Lack of equal remuneration or comparable 
        worth rules.
    It is very unfortunate that the Peru FTA is likely to 
require state labor law changes as well. By requiring the 
adoption of these rights at the federal level, the Peru FTA in 
combination with the US Constitution's Supremacy Clause (Art. 
VI, section 2) is also expected to require any changes made at 
the federal level to preempt conflicting state law. As a 
result, state right-to-work rules or lower minimum age 
standards would face significant risk of being overturned by 
dispute settlement panels.
    The Peru FTA requires parties to promote migrant worker 
rights. Annex 17.6 requires the United States and Peru to 
engage in a wide range of capacity building work. While much of 
it could be useful, its obligation to promote migrant rights, 
without regard to the legal status of a migrant, creates a 
troubling requirement that the United States would be promoting 
rights for illegal immigrants at odds with Congress' direction.
    For years, I have been a steadfast supporter of fair 
intellectual property laws that are appropriately enforced. The 
Constitution itself provides for the creation of intellectual 
property and it has been the process used by brilliant U.S. 
innovators to develop, market, and sale groundbreaking new 
products for years. In the sea of red trade deficits we have 
faced for so many years now, IP and the innovative U.S. 
products that use its protection have been one of the few areas 
where the U.S. has a trade surplus.
    Traditionally, trade agreements have strengthened American 
innovation abroad. However, with the newly renegotiated text 
found within the U.S.-Peru FTA's IPR chapter we see that we 
have walked back from the rigorous IPR protections found in 
previous agreements in favor of weakened provisions. These 
changes mainly affect one of America's most productive 
industries, that of pharmaceuticals.
    The U.S. Peru FTA weakens IP protection in three ways:
    First, the agreement does away with patent linkage. Linkage 
requires a country, before it approves a generic medicine for 
sale, to ensure that the brand-name medicine is no longer under 
patent. Without linkage, governments can help facilitate patent 
infringement. Linkage doesn't hinder access to medicines and 
it's not about compulsory licensing. It's about protection of 
basic patent rights. The proposed changes replace this simple 
enforcement procedure with a complex one. I don't see what that 
accomplishes.
    Second, the changes shorten the period of data exclusivity 
for innovative medicines, authorizing a shorter period than we 
require here in the United States. This change is not only 
unfair to U.S. innovators but devalues the incentive for 
launching new drugs in developing countries. Here's why. In 
developing countries, it is often difficult to enforce patent 
rights. But data protection is effective and relatively easy to 
administer. It often provides the only real protection 
biopharmaceutical companies have when they invest significant 
resources to launch new products. You take away the protection 
and you take away the incentive to launch. It's hard enough to 
get companies to launch medicines quickly in these countries 
because the markets are so small. If you shrink data 
protection, you effectively shrink the market even further.
    Finally, the new template no longer requires countries to 
add time to patent terms for pharmaceuticals to make up for 
undue delays in marketing approval or patent grant. We require 
patent restoration here in the United States, so why not 
abroad? Because, critics argue, patent terms are long enough as 
they are. But without patent term restoration, we actually go 
the other direction. Without patent term restoration, the 
effective patent term could actually shrink significantly.
    From what I understand, the Democrats insisted on the 
changes to the IPR Chapter in order to grant greater access to 
medicines for developing nations. What is ironic to me is that 
these changes will do just the opposite.
    All of these changes were ostensibly part of an effort to 
promote access to medicines to poor people. A noble goal. But 
what's so absurd about this is that the changes may actually 
have the opposite effect, and harm U.S. competitiveness in the 
process.
    Why would we backtrack on IPR? Some may say that we are 
rich enough so that we can afford to give away the fruits of 
our ingenuity. But that's like saying we are rich enough to 
voluntarily close down our factories so that our competitors 
can have a chance. We don't have that luxury.
    Some say backtracking on IPR is necessary to help the poor 
and sick. That, too, is wrong. IPR is all about incentives. If 
you protect IPR, then people will have a stronger incentive to 
develop new and innovative products and bring them to market 
faster. If you don't protect IPR, then those incentives are 
greatly diminished. Here is what we might expect with weak IPR 
protection:
    There would be less incentive to launch products early in 
developing countries. Innovative companies would have less 
reason to show up when their technology could immediately be 
copied and sold by others who made no contribution to the R&D.
    If there were fewer brand-name launches, there would be 
fewer generics. As brand-name medicines go off patent, generic 
medicine companies can rely on the safety approvals and market 
secured by the research-based companies, making more generics 
available to more people. Without the brand name company 
securing the safety approvals and creating the market, fewer 
generics can enter the marketplace, and fewer people will get 
the medicines they need.
    As a result, the poor would not have access the newest and 
most effective medicines. It is easy and convenient to use IPR 
as a scapegoat for poor health care systems. The reality is 
that access to medicines is helped, not hindered, by strong IPR 
protections. Problems in access to medicines are most often due 
to other factors, such as poor infrastructure, taxes, tariffs, 
an ineffective health care system, and different government 
funding priorities. By pointing at IPR, we divert attention 
from these much more critical problems.
    In sum, the changes we have foisted upon Peru are harmful 
not only to U.S. interests, but also to the very interests they 
purport to serve.
    I applaud the USTR and her staff on their hard work in 
negotiating this agreement, especially in the area of 
Intellectual Property Rights however, I know there are several 
Senators in this body who represent states that contain 
numerous innovative companies that benefit from strong 
intellectual property laws and enforcement. While the overall 
agreement strengthens American IPR--it does so in a way that is 
not as vigorous as agreements in the past.
    Millions of jobs across the Country depend on these laws.
    I know first hand that many countries around the world 
would like nothing more than to see the U.S. intellectual 
property laws and enforcement diminished. Why? Because they 
want to exploit us.
    They want to be able to steal our inventions.
    They want to be able to rip-off our best and brightest 
ideas. They want our taxpayers to fund billions of dollars of 
extremely important research and then take it from us for free.
    The American people should know that there are significant 
problems with the Peruvian Agreement and that Congress has 
passed an agreement which should provide neither a template, 
nor a model, for future trade agreements.

                                   Orrin G. Hatch.

        V. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

SECTION 13031 OF THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 
                                  1985


SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES.

  (a) * * *
  (b) Limitations on Fees.--(1) * * *

           *       *       *       *       *       *       *

  (18) No fee may be charged under subsection (a) (9) or (10) 
with respect to goods that qualify as originating goods under 
section 203 of the United States-Peru Trade Promotion Agreement 
Implementation Act. Any service for which an exemption from 
such fee is provided by reason of this paragraph may not be 
funded with money contained in the Customs User Fee Account.

           *       *       *       *       *       *       *

  (j) Effective Dates.--(1) * * *

           *       *       *       *       *       *       *

  (3)(A) Fees may not be charged under paragraphs (9) and (10) 
of subsection (a) after [October 21, 2014] December 13, 2014.
  (B)(i) Subject to clause (ii), Fees may not be charged under 
paragraphs (1) through (8) of subsection (a) after [October 7, 
2014] December 13, 2014.

           *       *       *       *       *       *       *

                              ----------                              


TARIFF ACT OF 1930

           *       *       *       *       *       *       *


SEC. 508. RECORDKEEPING.

  (a) * * *

           *       *       *       *       *       *       *

  (h) Certifications of Origin for Goods Exported Under the 
United States-Peru Trade Promotion Agreement.--
          (1) Definitions.--In this subsection:
                  (A) Records and supporting documents.--The 
                term ``records and supporting documents'' 
                means, with respect to an exported good under 
                paragraph (2), records and documents related to 
                the origin of the good, including--
                          (i) the purchase, cost, and value of, 
                        and payment for, the good;
                          (ii) the purchase, cost, and value 
                        of, and payment for, all materials, 
                        including indirect materials, used in 
                        the production of the good; and
                          (iii) the production of the good in 
                        the form in which it was exported.
                  (B) PTPA certification of origin.--The term 
                ``PTPA certification of origin'' means the 
                certification established under article 4.15 of 
                the United States-Peru Trade Promotion 
                Agreement that a good qualifies as an 
                originating good under such Agreement.
          (2) Exports to peru.--Any person who completes and 
        issues a PTPA certification of origin for a good 
        exported from the United States shall make, keep, and, 
        pursuant to rules and regulations promulgated by the 
        Secretary of the Treasury, render for examination and 
        inspection all records and supporting documents related 
        to the origin of the good (including the certification 
        or copies thereof).
          (3) Retention period.--The person who issues a PTPA 
        certification of origin shall keep the records and 
        supporting documents relating to that certification of 
        origin for a period of at least 5 years after the date 
        on which the certification is issued.
  [(h)] (i) Penalties.--Any person who fails to retain records 
and supporting documents required by subsection [(f) or (g)] 
(f), (g), or (h) or the regulations issued to implement [either 
such subsection] any such subsection shall be liable for the 
greater of--
          (1) * * *

           *       *       *       *       *       *       *


SEC. 514. PROTEST AGAINST DECISIONS OF THE CUSTOMS SERVICE.

  (a) * * *

           *       *       *       *       *       *       *

  (i) Denial of Preferential Tariff Treatment Under the United 
States-Peru Trade Promotion Agreement.--If U.S. Customs and 
Border Protection or U.S. Immigration and Customs Enforcement 
of the Department of Homeland Security finds indications of a 
pattern of conduct by an importer, exporter, or producer of 
false or unsupported representations that goods qualify under 
the rules of origin provided for in section 203 of the United 
States-Peru Trade Promotion Agreement Implementation Act, U.S. 
Customs and Border Protection, in accordance with regulations 
issued by the Secretary of the Treasury, may suspend 
preferential tariff treatment under the United States-Peru 
Trade Promotion Agreement to entries of identical goods covered 
by subsequent representations by that importer, exporter, or 
producer until U.S. Customs and Border Protection determines 
that representations of that person are in conformity with such 
section 203.

           *       *       *       *       *       *       *


SEC. 520. REFUNDS AND ERRORS.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Goods Qualifying Under Free Trade Agreement Rules of 
Origin.--Notwithstanding the fact that a valid protest was not 
filed, the Customs Service may, in accordance with regulations 
prescribed by the Secretary, reliquidate an entry to refund any 
excess duties (including any merchandise processing fees) paid 
on a good qualifying under the rules of origin set out in 
section 202 of the North American Free Trade Agreement 
Implementation Act, section 202 of the United States-Chile Free 
Trade Agreement Implementation Act, section 203 of the 
Dominican Republic-Central America-United States Free Trade 
Agreement Implementation Act, [or] section 202 of the United 
States-Oman Free Trade Agreement Implementation Act [for 
which], or section 203 of the United States-Peru Trade 
Promotion Agreement Implementation Act for which no claim for 
preferential tariff treatment was made at the time of 
importation if the importer, within 1 year after the date of 
importation, files, in accordance with those regulations, a 
claim that includes--
          (1) * * *

           *       *       *       *       *       *       *


SEC. 592. PENALTIES FOR FRAUD, GROSS NEGLIGENCE, AND NEGLIGENCE.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Maximum Penalties.--
          (1) * * *

           *       *       *       *       *       *       *

          (10) Prior disclosure regarding claims under the 
        united states-peru trade promotion agreement.--An 
        importer shall not be subject to penalties under 
        subsection (a) for making an incorrect claim that a 
        good qualifies as an originating good under section 203 
        of the United States-Peru Trade Promotion Agreement 
        Implementation Act if the importer, in accordance with 
        regulations issued by the Secretary of the Treasury, 
        promptly and voluntarily makes a corrected declaration 
        and pays any duties owing with respect to that good.
          [(10)] (11) Seizure.--If the Secretary has reasonable 
        cause to believe that a person has violated the 
        provisions of subsection (a) and that such person is 
        insolvent or beyond the jurisdiction of the United 
        States or that seizure is otherwise essential to 
        protect the revenue of the United States or to prevent 
        the introduction of prohibited or restricted 
        merchandise into the customs territory of the United 
        States, then such merchandise may be seized and, upon 
        assessment of a monetary penalty, forfeited unless the 
        monetary penalty is paid within the time specified by 
        law. Within a reasonable time after any such seizure is 
        made, the Secretary shall issue to the person concerned 
        a written statement containing the reasons for the 
        seizure. After seizure of merchandise under this 
        subsection, the Secretary may, in the case of 
        restricted merchandise, and shall, in the case of any 
        other merchandise (other than prohibited merchandise), 
        return such merchandise upon the deposit of security 
        not to exceed the maximum monetary penalty which may be 
        assessed under subsection (c).

           *       *       *       *       *       *       *

  (i) False Certifications of Origin Under the United States-
Peru Trade Promotion Agreement.--
          (1) In general.--Subject to paragraph (2), it is 
        unlawful for any person to certify falsely, by fraud, 
        gross negligence, or negligence, in a PTPA 
        certification of origin (as defined in section 
        508(h)(1)(B) of this Act) that a good exported from the 
        United States qualifies as an originating good under 
        the rules of origin provided for in section 203 of the 
        United States-Peru Trade Promotion Agreement 
        Implementation Act. The procedures and penalties of 
        this section that apply to a violation of subsection 
        (a) also apply to a violation of this subsection.
          (2) Prompt and voluntary disclosure of incorrect 
        information.--No penalty shall be imposed under this 
        subsection if, promptly after an exporter or producer 
        that issued a PTPA certification of origin has reason 
        to believe that such certification contains or is based 
        on incorrect information, the exporter or producer 
        voluntarily provides written notice of such incorrect 
        information to every person to whom the certification 
        was issued.
          (3) Exception.--A person shall not be considered to 
        have violated paragraph (1) if--
                  (A) the information was correct at the time 
                it was provided in a PTPA certification of 
                origin but was later rendered incorrect due to 
                a change in circumstances; and
                  (B) the person promptly and voluntarily 
                provides written notice of the change in 
                circumstances to all persons to whom the person 
                provided the certification.

           *       *       *       *       *       *       *

                              ----------                              


                  SECTION 202 OF THE TRADE ACT OF 1974

SEC. 202. INVESTIGATIONS, DETERMINATIONS, AND RECOMMENDATIONS BY 
                    COMMISSION.

  (a) Petitions and Adjustment Plans.--
          (1) * * *

           *       *       *       *       *       *       *

          (8) The procedures concerning the release of 
        confidential business information set forth in section 
        332(g) of the Tariff Act of 1930 shall apply with 
        respect to information received by the Commission in 
        the course of investigations conducted under this 
        chapter, part 1 of title III of the North American Free 
        Trade Agreement Implementation Act, title II of the 
        United States-Jordan Free Trade Area Implementation 
        Act, title III of the United States-Chile Free Trade 
        Agreement Implementation Act, title III of the United 
        States-Singapore Free Trade Agreement Implementation 
        Act, title III of the United States-Australia Free 
        Trade Agreement Implementation Act, title III of the 
        United States-Morocco Free Trade Agreement 
        Implementation Act, title III of the Dominican 
        Republic-Central America-United States Free Trade 
        Agreement Implementation Act, title III of the United 
        States-Bahrain Free Trade Agreement Implementation Act, 
        [and] title III of the United States-Oman Free Trade 
        Agreement Implementation Act, and title III of the 
        United States-Peru Trade Promotion Agreement 
        Implementation Act. The Commission may request that 
        parties providing confidential business information 
        furnish nonconfidential summaries thereof or, if such 
        parties indicate that the information in the submission 
        cannot be summarized, the reasons why a summary cannot 
        be provided. If the Commission finds that a request for 
        confidentiality is not warranted and if the party 
        concerned is either unwilling to make the information 
        public or to authorize its disclosure in generalized or 
        summarized form, the Commission may disregard the 
        submission.

           *       *       *       *       *       *       *

                              ----------                              


            SECTION 308 OF THE TRADE AGREEMENTS ACT OF 1979

SEC. 308. DEFINITIONS.

  As used in this title--
          (1) * * *

           *       *       *       *       *       *       *

          (4) Eligible products.--
                  (A) In general.--The term ``eligible 
                product'' means, with respect to any foreign 
                country or instrumentality that is--
                          (i) * * *

           *       *       *       *       *       *       *

                          (v) a party to a free trade agreement 
                        that entered into force with respect to 
                        the United States after December 31, 
                        2005, and before July 2, 2006, a 
                        product or service of that country or 
                        instrumentality which is covered under 
                        the free trade agreement for 
                        procurement by the United States; [or]
                          (vi) a party to the United States-
                        Oman Free Trade Agreement, a product or 
                        service of that country or 
                        instrumentality which is covered under 
                        that Agreement for procurement by the 
                        United States[.]; or
                          (vii) a party to the United States-
                        Peru Trade Promotion Agreement, a 
                        product or service of that country or 
                        instrumentality which is covered under 
                        that agreement for procurement by the 
                        United States.

           *       *       *       *       *       *       *

                              ----------                              


 SECTION 401 OF THE TAX INCREASE PREVENTION AND RECONCILIATION ACT OF 
                                  2005

SEC. 401. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.

  Notwithstanding section 6655 of the Internal Revenue Code of 
1986--
          (1) in the case of a corporation with assets of not 
        less than $1,000,000,000 (determined as of the end of 
        the preceding taxable year)--
                  (A) * * *
                  (B) the amount of any required installment of 
                corporate estimated tax which is otherwise due 
                in July, August, or September of 2012 shall be 
                115 percent 115.75 percent of such amount,

           *       *       *       *       *       *       *


                                  
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