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Peru to Ask U.S. Congress to Extend Trade Preference

By Alex Emery, Bloomberg, November 27, 2006

Nov. 27 (Bloomberg) -- Peruvian officials plan to lobby the U.S. Congress to extend U.S.-Andean preferential tariffs after giving up on winning approval for a free trade agreement before April.

An eight-minister delegation will travel to Washington next week to urge Democratic lawmakers, who took control of Congress in Nov. 7 elections, to extend for a year preferential tariffs due to expire next month, Peru's Trade Minister Mercedes Araoz said. Meanwhile, Peru is focusing on trade accords with Canada and Pacific Rim nations such as China, Araoz said.

Peruvian officials will stress to Democrats skeptical of free-trade agreements how President Alan Garcia supports efforts by the U.S. to stem the region's drug trade, Araoz said. They will also argue Peru is a counterweight to Venezuelan President Hugo Chavez, who has sought to fan anti-U.S. sentiment and economic nationalism in South America, he said.

``This anti-globalization movement is going against history,'' Araoz told foreign correspondents today in Lima. ``President Garcia backs the free-trade agreement for the Americas. We shouldn't be held hostage to the debate between Republicans and Democrats.''

Garcia remains one of the few pro-U.S. leaders in the region as former Ecuadorian Finance Minister Rafael Correa, an ally of Chavez who advocates possibly defaulting on the nation's debt, collected 67 percent of the vote with 52 percent of the ballots counted from yesterday's election. Chavez allies Evo Morales of Bolivia and Daniel Ortega of Nicaragua won elections over the past 12 months.

`Southeast Asia Strategy'

``With so few days left before Congress adjourns, even the preferential tariffs are going to be difficult to get,'' David Lewis, an analyst at Washington-based trade consultant firm Manchester Trade Ltd. ``There are more pressing issues, and a lot of people who came in are not free-trade backers.''

Araoz said her contacts in the U.S. have told her not to expect Congress to even take up the Peru free trade agreement before April.

Peru and Canada are scheduled to start trade talks in mid- December, while Peru has proposed similar agreements with China, Japan, South Korea, Australia and New Zealand, Araoz said. Peru has signed accords with Chile and Thailand this year and is currently negotiating with Singapore and Mexico.

``There's a strong focus on our Southeast Asia strategy,'' Araoz said.

Peru's currency was little changed at 3.2260 to the U.S. dollar after the central bank bought $10 million on the exchange market Nov. 24. The sol has gained 5.8 percent so far this year.

The yield on Peru's benchmark 9 7/8 bond due 2015 rose 7 basis points, or 0.07 percentage point, to 5.967. The bond's price, which moves inversely to its yield, fell 0.5 cent to 125, a five-week low.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net