On February 1, 2009, the U.S. Peru Trade Promotion Agreement (commonly referred to as the U.S.-Peru Free Trade Agreement, or FTA) entered into force. The agreement enhances the overall commercial and investment climate by, inter alia, eliminating tariffs on many goods, accelerating the customs clearance process for U.S. imports, and strengthening the protection on intellectual property rights.
The FTA builds upon the provisions of the previously existing Andean Trade Preferences and Drug Eradication Act (1991), which has allowed Peruvian firms to export most goods to the United States duty-free. The FTA will afford similar treatment to a majority of U.S. goods entering Peru, making 80% of U.S. consumer and industrial products eligible for duty-free access into Peru immediately upon entry into force; with the remaining tariffs phased-out over ten years. More than two-thirds of current U.S. farm exports to Peru will also become duty free immediately. Despite these changes, the 18% VAT rate still applies to almost all commercial transactions. The FTA is also the first U.S. trade agreement in force that reflects the enhanced labor and environmental standards set out in the May 2007 agreement between the two governments.