With the enactment of the United States-Peru Trade Promotion Agreement (“TPA” or the “Agreement”), Peru becomes the second South American state (after Chile) to enter into a bilateral free trade agreement with the United States. The Agreement had been signed on April 12, 2006, and entered into force on February 1, 2009. The enactment of the Agreement was facilitated by an executive order signed by former President George W. Bush on January 16, 2009—only four days before leaving office—following Peru’s compliance with the labor, environmental and intellectual property stipulations imposed by the United States in the Bipartisan Trade Agreement (“BTA”) dated May 10, 2007. Peru in turn passed a Supreme Decree on February 1, enacting the US-Peru TPA as of that date.
The Agreement eliminates tariffs and other barriers to trade. Chapter 10 of the Agreement contains the following guarantees for investors: national treatment, most favored nation treatment, fair and equitable treatment, full protection and security, protection against unlawful direct or indirect expropriation and free transfer of funds.
The US-Peru TPA further establishes dispute settlement procedures for investment disputes. Specifically, the Agreement provides for arbitration pursuant to the 1965 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (the ”ICSID Convention”) or the Arbitration Rules of the United Nations Commission on International Trade Law (“UNCITRAL”), as well as in accordance with any other rules or arbitral institutions agreed to by the parties.