US Senate passes Peru trade pact

The pact will eliminate duties on most US products and gradually phase out all tariffs, and require Peru to open it services market.

US President George W Bush said both countries would benefit from the deal, which was also hailed by Peruvian President Alan Garcia.

The two-way trade between the US and Peru is worth about $9bn a year.

It is the first trade agreement that President Bush has managed to get through Congress since the Democrats took control in January.

Trade deals with Colombia, Panama and South Korea are awaiting approval.

'Level field'

The free-trade pact, which was passed in a 77-18 vote, will require Peru and the US to enforce core international labour standards, such as the right to bargain collectively and to strike.

Environmental provisions will also require the US and Peru to enforce their domestic environmental laws and to honour international environmental obligations.

Who will benefit from deal?

President Garcia welcomed the Senate's vote, saying it was "good news for the increase of jobs and wages that should boost foreign investment in the country".

Mr Bush said after the vote that he looked forward to signing the bill that would "level the playing field for American exporters and investors" and signal "our firm support for those who share our values of freedom and democracy".

Earlier, Mr Bush had said free-trade deals were the best way of countering the influence of Venezuelan President Hugo Chavez in South America.

The American Farm Bureau Federation estimates the pact will boost US farm exports to Peru by more than $700m a year once it is fully implemented.

However, international aid organisation Oxfam said the agreement would expose Peru's small farmers to "massive dumping" of subsidised US farm goods.