The United States and Peru have signed a free trade agreement after 18 months of negotiations.

The comprehensive trade agreement will eliminate tariffs and other barriers to goods and services and expand trade between the United States and Peru. For Peru's apparel industry, the pact will provide duty free and quota free access to the US for products that use US or Peruvian-made textiles.

Announcing the conclusion to the free-trade negotiations, US Trade Representative Rob Portman said: "An agreement with Peru is a key building block in our strategy to advance free trade within our hemisphere.

"In addition to eliminating tariffs, Peru will remove barriers to trade in services, provide a secure, predictable legal framework for US investors operating in Peru, provide for effective enforcement of labour and environmental laws, protect intellectual property, and provide an effective system to settle disputes.

"Also, since many products from Peru already enter the US market duty-free under the Andean Trade Preference Act (ATPA) - this free trade agreement with Peru will level the playing field and make duty-free treatment a two-way street."

US talks with Colombia and Ecuador will resume early next year in an effort to broaden the trade agreement into a wider Andean pact.

The US initiated free trade agreement negotiations with three Andean nations - Peru, Colombia, and Ecuador - in May 2004. Bolivia has participated as an observer and could become part of the agreement at a later stage.