Page last updated at 04:02 GMT, Saturday, 17 January 2009

Bush signs Peru free trade pact

A sunset over the Amazon jungle, Peru
Critics say Peru's leaders are opening up the rain forest to biofuel crops

US President George W Bush has signed off a free-trade pact with Peru despite strong opposition from ecologists and labour-rights activists.

Four days before handing over to Barack Obama, he signed a proclamation enacting the pact on 1 February.

The pact was concluded nearly three years ago but concerns over Peru's environmental policies had held up its approval in the US.

The Peruvian government is accused of putting the Amazon rain forest at risk.

Peru is the 14th country to have signed a free-trade pact with the US since Mr Bush took office eight years ago.

Relief in Lima

Earlier this week, Democrats in the US Congress and development organisations said Peru had still not fulfilled key obligations to improve its labour rights and environmental standards and urged Mr Bush not to sign the deal.

Seventy per cent of the Amazon runs the risk of deforestation
Roger Najar
head of the indigenous caucus in Peru's Congress

In Peru, opposition lawmakers point to a newly amended forestry law backed by Mr Garcia, which allows large swaths of rain forest to be converted into biofuel projects if they are deemed "a matter of national interest".

"The new law means 70% of the Amazon runs the risk of deforestation," Roger Najar, head of the indigenous caucus in Peru's Congress, told the Associated Press news agency.

Perus' Environment Minister, Antonio Brack, said Mr Najar was misinterpreting the new law.

The Peruvian government will be relieved that Mr Bush has signed off the pact, the BBC's Dan Collyns reports from Lima.

It was worried that if the pact had been left to a new US administration focused on fighting a recession and saving jobs at home, it could have been delayed for another six months.

For Peru, the deal will expand the duty-free access it has had to the US market since the early 1990s.

In return, it will eliminate duties on more than three-quarters of US industrial and consumer products, and more than two-thirds of its agricultural exports.

Peruvian farmers have protested that the deal will flood the domestic market with subsidised US imports, undercutting home-grown agricultural produce.

There is also concern that with Peru opening its markets to US companies, poor Peruvians will be unable to afford expensive imports such as medicine.

Meanwhile Peru is hedging its bets as it sees the US, its leading trading partner, facing a financial crisis, our correspondent says.

With several other bilateral deals under its belt, it is pinning its hopes on the Asian market and expects to close trade pacts with China, South Korea and Japan this year.

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