The US Senate has passed the US/Peru Trade Promotion Agreement (TPA) by overwhelming majority, clearing the way for the final legislation to be signed and implemented by President Bush.

The trade pact, which was passed by a vote of 77 to 18, was previously negotiated by the Bush Administration and approved by the US House of Representatives in November. 

It will eliminate duties on some 80% of US industrial exports, allowing US yarn and fabric makers to export their goods (under 'favourable' rule-of-origin rules) to Peruvian manufacturers who will then be able to sell apparel duty free to the US.

However, the American Apparel & Footwear Association (AAFA) points out that unless the legislation is implemented quickly, trade benefits are likely to be interrupted.

This is because the current Andean Trade Preference Act (ATPA) legislation expires on 29 February 2008 and, as it stands, there will be a gap before the new US/ Peru TPA comes into effect.
The APTA is a key trade initiative that allows Peru and other Andean nations duty-free access to the US market when US cotton, yarn and fabric inputs are used in the final product. 

Representatives from the entire US textile and apparel supply chain - from cotton to consumer - are currently calling for an immediate renewal of the Andean Trade Preference Act. 
"There will be a rude shock on 1 March 2008 if trade benefits are interrupted because Congress failed to pass an Andean renewal to bridge this gap," said AAFA president and CEO, Kevin Burke.

"We ultimately need permanent, comprehensive free trade agreements with countries in the region, like Peru, Panama and Colombia, to avoid this uncertainty." 
The US is also negotiating FTA deals with Colombia, Panama and South Korea, but these pacts are unlikely to be agreed this year.