Free Trade Between Peru and the U.S.: Does it Come at a Price?

By Camila Güiza-Chavez


[dropcap]O[/dropcap]n a balmy spring day in 2006, within the pristine walls of the White House, two men in starched suits sat down together at a table. Between them was a thick stack of papers. Besides a few minutes of forced chatter, the men didn’t delay much in getting to the real objective of their meeting: to sign a document that would secure free trade between their two countries, the U.S. and Peru. With barely repressed eagerness they withdrew their fountain pens and wrote their signatures smoothly across the page. In doing so they solidified the deal, secured huge amounts of money for both their countries, and wrote the fate of millions of people. A few glossy smiles and a firm handshake later, then-presidents George W. Bush and Alejandro Toledo went their separate ways, satisfied and hopeful for the future.

Three years later, dozens of people lay dead on the floor of the Amazon rainforest. It was June 5th, 2009, and for the past 10 days, over 2000 people of the Awajún and Wampi tribes had been occupying a highway known as the “Devil’s Curve” that connects the jungle to the northern coast of Peru. In response, police mobilized into the region, sparking a standoff with indigenous protesters. According to witness testimonies, tear gas and machine gun fire rained down from helicopters overhead, while police on the ground shot AKM rifles into the crowd. 33 people were killed, on both sides, and many more were wounded–the exact number is unclear, but estimates reach into the hundreds.

Why did they die? The answer depends on who you ask, but every version of the story points to one thing: the Peruvian Trade Promotion Agreement (PTPA), signed by Bush and Toledo on that spring day in 2006. Essentially, the PTPA eliminated trade barriers between the U.S. and Peru. Trade skyrocketed as a result, going from $9.1 billion in 2009 to $18.2 billion in 2013. By that point, the U.S. had become Peru’s largest trading partner worldwide.

For those of us in the U.S., this may not seem like a big deal. After all, let’s face it: the biggest change in our day-to-day lives is probably an increase of Peruvian products in our grocery stores (quinoa, anyone?).

In Peru, however, it’s a different story. The country erupted in protest the day the Peruvian Congress approved the PTPA in a 79 to 14 vote (June 28, 2006). Who would sit on the negotiating committee, how they would be chosen, what would be the provisions of the agreement–all these were heavy points of contention. Flames of dissent tore across college campuses, as students expressed outrage that Peru was selling out to an “imperial” country like the United States. Farmers in eight different agricultural regions went on strike. The unrest peaked on that fateful day in the Amazon–a day that would go down in Peruvian history as “El Baguazo.”

Why did a trade agreement, which probably received about 5 seconds of mainstream media coverage in the U.S. when it was signed, spark such an intense response and lead to fatal consequences?

According to Percy Alberto Bobadilla, professor of social sciences at the Pontifical Catholic University of Lima, it all boils down to miscommunication–if the government had explained the PTPA to the indigenous community, they wouldn’t have felt the need to protest. Bobadilla, like much of the urban middle class of Peru, favors the agreement. He believes it paved the way for Peruvian producers to “equitably enter into the international market,” and that the “top notch” team that negotiated the terms of the PTPA acted with the best interests of the people in mind. “Today,” he says, “no one is against the PTPA.”

Indigenous rights advocates across the country, however, will tell you differently. “The free trade agreement is a threat to the indigenous community,” argues Klaus Quicque Bolívar, president of FENAMAD (Federation of Madre de Dios River Natives and Affluents). A thousand miles away from Bobadilla’s office and the bustling streets of Lima, FENAMAD is located in a small town by the Amazon’s Madre de Dios River. The organization works to protect the rights of the thousands of native people who inhabit the region.

As Bolívar points out, what makes the PTPA such a threat is that there is no law that gives indigenous people the right to their own homeland or its resources. “What happens if oil is found in indigenous territory?” he asks, knowing the answer. With government approval, businesses are allowed to tap into whatever natural resource they are after (usually oil, wood, or mineral stores), even if they’re in a place that native people call home. This has always been the case, but free trade agreements exacerbate the issue.

“The PTPA makes the whole nation open its eyes and ears and ask, ‘where do I have space to exploit?’” says Bolívar. According to a letter issued in 2010 to the Obama administration by interest groups including Amazon Watch and the Washington Office on Latin America, “Amazonian land under concession to U.S. and other oil, gas and mining companies” rose “from around 10% before trade negotiations started in 2003, to an estimated 70% in 2010.”

But it’s not just about land rights and environmental concerns–it’s also about voice. According to activist Iris Olivera, even though “many [of the provisions in the agreement] directly impacted the indigenous community, they were not consulted with before the agreement was signed.” Olivera works for a Lima-based nonprofit called Law, Environment, and Natural Resources. As she and the other women who run the NGO will tell you, Peru’s large indigenous community (which makes up 45% of the population) is as vibrant as it is disenfranchised. Just like most native peoples around the world, native Peruvians are underrepresented (at best) in government. So when it came time to negotiate the PTPA with the U.S., it was passed with little to none of their input.

After some pressure from U.S. Congress members, the PTPA was reformed to include the creation of a Ministry of the Environment. However, rural indigenous communities have reason to be skeptical of politicians’ promises, as they have traditionally been the last ones to be accounted for. A 2015 report by the International Fund for Agricultural Development reveals that while Peru has successfully reduced the number of people living below the poverty line (from 59% of the population to 24%) since 2000, reduction has been uneven geographically. According to the report, “in the rural areas of the highlands and the rainforest areas, poverty still affects about 53 and 43 percent of the population respectively, and particularly indigenous communities.”

Peru’s government is in some ways taking steps to address this issue. Sierra Exportadora, an agency created in 2006 by the Department of Agriculture, attempts to translate the language of the global market and the PTPA to the language of farmers, providing technology to help them compete on a global scale.
However, for indigenous people in the Amazon, the problem with the PTPA isn’t just that they don’t have easy access to the market–the agreement’s whole premise is an attack on their way of life. “Each region of Peru has its own realities,” says Bolívar, explaining why the answer isn’t simply to replicate Sierra Exportadora’s activities in the Amazon. “For us, ‘developing’ doesn’t mean destroying forests.”

Peru is facing the same question all industrialized countries have faced: how to rise up economically while elevating all sectors of the population. If history has taught us anything, it’s that those who get left behind are always those who were poorest in the first place. In the U.S. and in too many countries around the world, indigenous populations have been left with only two options: abandon their traditional way of life and align themselves with the government’s capitalistic worldview (i.e. collaborate with businesses who come to extract their land’s resources, or start extracting those resources themselves and selling them on the international market), or get left behind economically and become politically invisible.

Since signing the PTPA, Peru has entered into almost a dozen similar agreements with governments around the world, including those of China, Japan, and the European Union. With the recent election of Peru’s new president, Pedro Pablo Kuczynski, it remains to be seen how the country will be steered. While it’s in the process of carving its place on the global economic stage, can Peru learn from the mistakes of other countries and stop wealth gaps from widening along all-too predictable lines?


Camila Güiza-Chavez is a sophomore in Ezra Stiles College and an Ethnicity, Race, and Migration major. Contact her at