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United States Requests Consultations Regarding Peru's Environmental Obligations Under Bilateral Trade Agreement

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On January 4, 2019, the United States requested consultations with Peru with respect to its forest governance obligations under the 2007 United States – Peru Trade Promotion Agreement (PTPA). The PTPA has an environmental chapter with robust terms that were included largely at the insistence of members of Congress, reflecting concerns that a free trade agreement with Peru could increase the country's export of illegally logged wood to the United States. The request for consultations focused on Peru's decision to relocate its Agency for the Supervision of Forest Resources and Wildlife (OSINFOR) to within Peru's Ministry of Environment—a change that, in the view of the United States, “appears to conflict” with a PTPA obligation that “‘OSINFOR shall be an independent and separate agency.’”

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1 Office of the U.S. Trade Rep. Press Release, USTR Requests First-Ever Environment Consultations Under the U.S.-Peru Trade Promotion Agreement (PTPA) (Jan. 4, 2019), at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/january/ustr-requests-first-ever [https://perma.cc/EKJ9-Y5WJ] [hereinafter Environment Consultations Request].

2 M. Angeles Villarreal, Cong. Research Serv., RL34108, U.S.-Peru Economic Relations and the U.S.-Peru Trade Promotion Agreement 17 (2007).

3 Environment Consultations Request, supra note 1 (quoting from the PTPA).

4 Id. In terms of process, the PTPA was negotiated pursuant to the Bipartisan Trade Promotion Authority Act of 2002, 116 Stat. 933, which ensured that it would receive an up-or-down vote from Congress once it and its implementing legislation were submitted for approval. See Villarreal, supra note 2, at 1–2.

5 Office of the U.S. Trade Representative, Bipartisan Agreement on Trade Policy (May 2007), available at https://ustr.gov/sites/default/files/uploads/factsheets/2007/asset_upload_file127_11319.pdf [hereinafter May 10 Agreement]; see also H. Rep. 110-421 (Nov. 5, 2007) (describing the “historic” May 10 Agreement).

6 May 10 Agreement, supra note 5, at 2–3.

7 Id. at 3. For a broader discussion of the ways in which trade agreements incorporate regulatory requirements, see generally Mertenskotter, Paul & Stewart, Richard B., Remote Control: Treaty Requirements for Regulatory Procedures, 104 Cornell L. Rev. 165 (2018). See also id. at 216–18 (discussing the PTPA's environmental provisions).

8 Villarreal, supra note 2, at 2; United States-Peru Trade Promotion Agreement Implementation Act, Pub. L. No. 110-138, 121 Stat. 1455 (2007).

9 Office of the U.S. Trade Rep., Peru Trade Promotion Agreement, at https://ustr.gov/trade-agreements/free-trade-agreements/peru-tpa [https://perma.cc/D2HC-6WJC] [hereinafter USTR Overview of PTPA].

10 Trade Promotion Agreement, Peru-U.S., Arts. 18.2, 18.3, Annex 18.2 [hereinafter PTPA], available at https://ustr.gov/trade-agreements/free-trade-agreements/peru-tpa/final-text. Both the United States and Peru are parties to CITES. List of Contracting Parties, Convention on International Trade in Endangered Species of Wild Fauna and Flora, at https://cites.org/eng/disc/parties/chronolo.php.

11 PTPA, supra note 10, at Annex 18.3.4.

12 Id. at Annex 18.3.4, §§ 6–7, 13(a).

13 Convention on International Trade in Endangered Species of Wild Fauna and Flora, Art. II, Mar. 3, 1973, 27 UST 1087, 993 UNTS 243.

14 Id. Arts. III, § 2; IV, § 2; V, § 2.

15 Id. Arts. III, § 2(b); IV, § 2(b); V, § 2(a).

16 Pervaze A. Sheikh, Cong. Research Serv., RL 33932, Illegal Logging Background and Issues 8 (2008).

17 USTR Overview of PTPA, supra note 9.

18 Office of the U.S. Trade Rep. Press Release, Statement by Ambassador Ron Kirk on the Annex on Forest Sector Governance of the United States-Peru Trade Promotion Agreement (PTPA) (July 30, 2010), at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2010/july/statement-ambassador-ron-kirk-annex-forest-sector-gov [https://perma.cc/6JCE-7QSC] [hereinafter Ron Kirk on the Forest Annex].

19 See Finer, Matt, Jenkins, Clinton N., Blue Sky, Melissa A. & Pine, Justin, Logging Concessions Enable Illegal Logging Crisis in Peruvian Amazon, 4 Sci. Rep. 1, 2 (2014) (noting that “[i]n 2008, OSINFOR did gain greater independence when it was placed within the Presidency of the Council of Ministers”); see also Julia M. Urrunaga, Andrea Johnson, Inés Dhaynee Orbegozo & Fiona Mulligan, The Laundering Machine: How Fraud and Corruption in Peru's Concession System Are Destroying the Future of Its Forests, Envtl. Investigation Agency 21 (2012) (noting that OSINFOR was previously “financed by revenues from timber harvesting, a structure that created perverse incentives and institutional pressures for an entity charged with monitoring logging activities”).

20 PTPA, supra note 10, at Annex 18.3.4, § 3(h)(iii).

21 E.g., Ron Kirk on the Forest Annex, supra note 18.

22 Letter from Michael B.G. Froman, U.S. Trade Rep., to Magali Silva Velarde-Alvarez, Minister of Trade and Tourism, Republic of Peru (Feb. 26, 2016), available at https://ustr.gov/sites/default/files/Request-Letter-to-Peru-02262016.pdf [https://perma.cc/9YMC-2U9E].

23 Office of the U.S. Trade Rep. Press Release, U.S. Timber Committee Reacts to Peru's Timber Verification (Aug. 17, 2016), at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2016/august/us-timber-committee-reacts-peru-timber-verification [https://perma.cc/HBA4-NMDL].

24 Interagency Comm. on Trade in Timber Products from Peru Press Release, Statement Regarding July 2016 Timber Verification Report from Peru, at 3 (Aug. 17, 2016), available at https://ustr.gov/sites/default/files/Timber-Committee-Report-8172016.pdf [https://perma.cc/SQW2-K5P5].

25 Frank Bajak, AP Investigation Shows Peru Backsliding on Illegal Logging, Assoc. Press (Apr. 19, 2017), at https://apnews.com/8f4d73bdc605446c9c64bc2aedf7aa31.

26 Office of the U.S. Trade Rep. Press Release, USTR Announces Unprecedented Action to Block Illegal Timber Imports from Peru (Oct. 19, 2017), at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/october/ustr-announces-unprecedented-action [https://perma.cc/U3Z6-UQPX]. The United States has blocked timber shipments from Oroza “for three years or until the [Interagency Committee on Trade in Timber Products from Peru] determines that Oroza has complied with all applicable laws, regulations, and other measures of Peru governing the harvest of and trade in timber products, whichever is shorter.” Id.

27 Environment Consultations Request, supra note 1.

28 Id.

29 PTPA, supra note 10, at Annex 18.3.4, § 3(h)(iii); see also Environment Consultations Request, supra note 1 (citing this provision).

30 Environment Consultations Request, supra note 1; see also Letter from House Comm. on Ways and Means to Robert Lighthizer, U.S. Trade Rep. (Dec. 19, 2018), available at https://democrats-waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/12.19.18%20USTR%20Peru%20letter.pdf [https://perma.cc/V4KF-Q7MG] (objecting to Peru's decision to move OSINFOR into another government ministry and describing the decision as “a flagrant attack on the heart of the Forest[] Annex that cannot go unchallenged”).

31 Lucien O. Chauvin, Forestry Agency to Maintain Independence, Peru Tells U.S., Bloomberg Law (Jan. 7, 2019), at https://www.bloomberglaw.com/document/X7L0SB0G000000?bna_news_filter=international-trade&jcsearch=BNA%25200000016829c9d327a7fcfdfd8ab10000#jcite.

32 PTPA, supra note 10, Art. 18.12(1).

33 Id. Art. 18.12(2).

34 Id. Art. 18.12(3).

35 Id. Art. 18.12(4) n.8; see also id. Art. 18.6.

36 Id. Art. 18.12(4).

37 Id. Art. 18.12(6)–(7).

38 Id. Art. 21.4(6).

39 For discussion of this agreement and the process it will undergo in pursuit of congressional approval, see Jean Galbraith, Contemporary Practice of the United States, 113 AJIL 131, 150 (2019).

40 Glenn Thrush & Alan Rappeport, U.S. Accuses Peru of Violating Agreement to Protect Rain Forest, N.Y. Times (Jan. 4, 2019), at https://www.nytimes.com/2019/01/04/us/politics/peru-rain-forest-protection-violations-trump-administration.html.

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