PERU-US FTA

Environmental Issues Factsheet*  BACKGROUND

•   Peru is one of the most biologically and geographically diverse countries in the world. It ranks 11th worldwide in terms of the number of plant and animal species within its territory.1

•   Cognizant of this rich heritage, Peru has taken a number of actions to protect is biodiversity including the establishment of a series of national parks, reserves, and protected areas. These protected areas cover 32% of Peru’s territory (see Figure 1). By comparison, the U.S. has set aside 26% of its territory for protection.2

•   Peru is a signatory to a number of

international conventions such as the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), the Montreal Protocol (ozone), and the Rio Declaration on Environment and Development which are intended to protect its environment and biodiversity.

•   The United States-Peru Trade Promotion

Agreement (FTA) which was adopted by the U.S. Congress in December of 2007 and entered into force on February 1, 2009, includes specific and enforceable environmental provisions.

Figure  1:    Protected  Natural  Areas  in  Peru    

*Prepared by the Embassy of Peru and DTB Associates, LLP - www.dtbassociates.com

                                                                                                                         1  Source:  World  Conservation  Monitoring  Centre  of  the  United  Nations  Environment  Program  (UNEP-­‐WCMC),  2004.  Species  Data  (unpublished,  September  2004).  2  ProtectedPlanet.net,  the  online  interface  for  the  World  Conservation  Monitoring  Centre  of  the  United  Nations  Environment  Program  (UNEP-­‐WCMC).  Data  as  of  2014.  See:  http://www.protectedplanet.net/country/PE/compare/US    

 

 

•   Chapter 21 of the FTA, for example, states that labor and environmental commitments are subject to the same dispute resolution and compliance mechanisms, as trade and investment commitments.

•   The FTA also contains an Annex on Forest Sector Governance. Paragraph 6(a) of the Annex stipulates that periodic audits shall be conducted in Peru to verify that timber products exported by Peru to the U.S. comply with all applicable laws.3

•   Overall exports of timber products from Peru to the U.S. have dropped since the adoption of the FTA (see Figure 2) with the U.S. sourcing approximately 0.16% of its imports from Peru (see Figure 3).

Exports  of  Timber  Products  from  Peru  to  the  United  States  (2002-­‐2011)  (US$  million)  

 Figure  2  

 Source:  Ministry  of  Trade  and  Tourism  of  Peru  (MINCETUR)  

           

                                                                                                                         3  “Audits  of  Producers  and  Exporters  -­‐  6.  (a)  Peru  shall  conduct  periodic  audits  [Such  audits  shall  be  conducted  at  least  every  five  years  and  may  be  conducted  by  a  mutually  agreed  third  party]  of  producers  and  exporters   in   its  territory  of  timber  products  exported  to  the  United  States,  and  verify  that  exports  of  those  products  to  the  United  States  comply  with  all  applicable  laws,  regulations,  and  other  measures  of  Peru  governing  the  harvest  of,  and  trade  in,  timber  products  including,  in  the  case  of  tree  species  listed  in  CITES  Appendix  II,  relevant  chain  of  custody  requirements.”  (Chapter  18.  Environment,  Annex  18.3.4  Annex  on  Forest  Sector  Governance  -­‐  Verification  and  Enforcement  Measures)  

61

49.453.1

57

71.8

55.1

37.2

19.9 21.5 22.6

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

 

 

 Imports  of  Timber  Products  by  the  United  States  (2011)  

 

 Figure  3  

 Source:  United  States  International  Trade  Commission  

RECENT ISSUES

•   U.S. environmental groups have complained that Peru has “rolled back” its environmental laws in violation of the FTA to promote trade and investment. From Peru’s perspective, reforms contained in the July 2014 law, which are the subject of these complaints, were designed to create a predictable legal framework and streamline investment procedures, as well as formalize business activities and discourage illicit trafficking. The Ministry of Environment retains its authority to establish “reserve zones” and set quality standards, while improving consultations and input from other stakeholders.

•   More recently, members of the U.S. Congress are demanding that the US Trade Representative (USTR) request an audit report on Peru’s compliance with applicable laws and are seeking enforcement of Paragraph 6(a) of the US-Peru FTA Annex on Forest Sector Governance.

•   Their request rests on a June 4th 2015 briefing paper by the Environmental Investigation

Agency (EIA) that concluded that “failure to enforce these obligations undermines the effectiveness of these measures.” Allegations have also been made that “illegal logging, destruction of rain forests, and export of endangered tree species remains rampant in Peru.” The EIA review further alleged that “at least one-third of trade in CITES4 species, cedar and mahogany, have continued to be laundered since the trade agreement came into force.”

                                                                                                                         4  Convention  on  Trade  in  Endangered  Species  of  Flora  and  Fauna  (CITES)    

Peru  0.16%

Canada52%

China19%

Brazil10%

Chile4%

Indonesia2%

Others13%

 

 

ACTIONS TAKEN Peru is fully committed to the full implementation and enforcement of the environmental provisions of its bilateral FTA with the United States. Concerning the Forest Sector Annex, the following actions have been taken:

•   On June 9th 2015, the Peruvian ministers of Trade, Magali Silva, and Environment, Manuel

Pulgar Vidal, and the US ambassador to Peru, Brian A. Nichols, signed an agreement for the implementation of a Secretariat to respond to submissions on environmental enforcement matters under the FTA (see photo below).

•   The Secretariat will be housed at the Department of Sustainable Development of the General Secretariat of the Organization of American States (OAS) headquarters in Washington, DC. It will function independently under the supervision of the Environmental Affairs Council established under the FTA.

•   Peru has also designed a National Anticorruption Plan for the Forestry and Wild Fauna sector approved in 2011 by executive decree (D.S. N° 009-2011-AG) which is currently under implementation.

•   Peru adopted Law N° 29263 which modifies a number of articles of its Penal Code and of its General Environmental Law in order to increase penalties for environmental violations (including offences pertaining to forestry and wild fauna resources).

•   By executive decree D.S. 019-2010-AG of 2010 Peru has specified the actions and strengthened the mechanisms for coordination on flora and fauna species between its CITES Administrative Authority and its CITES Scientific Authority, in order to determine and implement the appropriate limits for exports of mahogany listed in Appendix II of the CITES Convention.

•   In this way an orderly and institutionalized process has been established for CITES species which includes:

o   The CITES administrative authority in Peru is the “National Forestry and Wild Fauna Service – SERFOR”, which verifies the annual operative plans (POA) of forestry concessions that involve mahogany, before these are approved, in order to include them in the national export limit (quota) for the mentioned specie.

 

 

o   The specific CITES scientific authority in Peru is the “Ministry of the Environment – MINAM”. It has to issue a Report that this Extraction is Non-Detrimental, which guarantees the sustainable use of mahogany.

o   Only with this Report can the CITES administrative authority, SERFOR, establish the appropriate national export limit, adhering to what is established under the CITES Convention (see Figure 4).

o   Furthermore, a separate and autonomous auditing body, the “Supervisory Agency

of Forestry and Wild Fauna Resources – OSINFOR” supervises 100% of the licenses granted for forestry concessions to participate in the export quota for the CITES covered mahogany specie.

 Quantity  of  CITES  permits  issued  to  Cedar  and  Mahogany  

2008-­‐2011    

 Figure  4  

 Source:  Ministry  of  Agriculture  of  Peru  (MINAG)  

•   Regarding OSINFOR, the auditing body, the EIA briefing paper itself explicitly recognizes

that “Peru has established a legitimately independent agency that not only effectively monitors and attempts to sanction illegal logging but is making its information public for companies, government officials and communities to access.”

•   In addition, it must be noted that the volumes of actual Peruvian mahogany exports are less than the volumes authorized by SERFOR for mahogany exports under the national quota. Overall, exports of mahogany, cedar, and other timber products have dropped considerably since the implementation of the FTA (see Figures 5 and 6).

 

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Cedar

Mahogany

 

 

Exports  of  Mahogany  (Swietenia  macrophylla)    Volume  and  FOB  Value  

 

   

Figure  5  Source:  MINAG      

Exports  of  Cedar  (Cedrela  odorata)    Volume  and  FOB  Value  

   

   

Figure  6  Source:  MINAG  

•   In conclusion, the following enhancements to Peru’s forestry monitoring mechanisms must

be highlighted:

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60,0002000

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Volume  (m3)

FOB  US$  (thousand)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Volume  (m3) 51,260 32,840 52,130 42,400 30,780 23,580 22,560 3,951 3,057 2,577 837.1 157.5FOB  US$  (thousand) 46,760 32,300 55,190 46,850 39,460 35,470 37,450 5,020 5,260 4,744 1,383 245

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Volume  (m3)

FOB  US$  (thousand)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Volume  (m3) 5,550.1 2,988.8 8,760.9 11,588.0 29,390.0 29,163.0 44,117.0 54,151.0 11,858.4 6,497.4 4,405.1 1,303.3FOB  US$  (thousand) 3,539 1,847 5,638 6,865 19,339 18,825 37,507 50,718 12,000 6,599 521.03 913.77

 

 

o   Development of Peru’s National Forestry and Wildlife Information System (SNIFF), an electronic system to verify and track the legal origin and proper chain of custody of timber harvested from Peru’s forests, from stump to port;

o   Development of an app in SERFOR’s web page where information regarding the export permits granted for CITES timber species is available in detail: http://cites.serfor.gob.pe/

o   Advances in the development of a National Forestry and Wild Fauna Inventory,

which includes CITES species.

o   Surveys that have been conducted on the number of trees for mahogany species (Swietenia macrophylla) as well as cedar species (Cedrela odorata).

CONCLUDING REMARKS

•   Peru is fully committed to upholding its environmental commitments under the Peru-U.S FTA, as well as under the relevant international agreements to which it is party.

•   Peru’s environmental commitments stem not only from such agreements but from the

priority that the Peruvian Government itself attributes to the protection of its environment and of its rich biodiversity, an issue which it continues to promote in new agreements including the Trans Pacific Partnership (TPP).

•   More specifically, proof of the success of joint U.S.-Peruvian efforts to protect forest

resources, is that exports of mahogany and cedar have dropped considerably since the negotiation and implementation of the FTA.