Peru Election 2006

Maxwell A. Cameron
February 22, 2006
In a meeting with the foreign press, Javier Diez Canseco, candidate of the Socialist Party, outlined his initiative to submit the recently negotiated Free Trade Agreement between Peru and the United States to a referendum. Diez Canseco is working with a network of civil society organizations, unions, and parliamentary leaders to prevent the FTA from being approved in the current legislature, which will reopen in March.

The opposition to the FTA has collected more than the necessary number of signatures to call a referendum, and have submitted these signatures to the National Organization of Electoral Processes (ONPE) which, once it approves the signatures, must pass them to the National Election Board (JNE) which forwards the request, along with a bill calling for a referendum, to the Congress. The Congress will then study the law—it is not yet clear which commission or commissions will be involved—and there must be, according to the regulations governing referendum initiatives, a public debate in a plenary session of Congress. The proposal cannot be archived by a commission. In addition, Diez Canseco and Michel Martínez will propose separate legislation in favor of a referendum. Yet another legislative bill that is being proposed that would establish the mechanisms by which trade and other deals are negotiated.
Concerning the substance of the negotiations, Diez Canseco argued that the agreement treats two unequal countries as if they were equal partners. In addition, the FTA is merely an “agreement” in the US, where as it is a “treaty” in Peru. It would have the same force as treaties signed by Peru after conflicts with Chile and Ecuador, for example. Moreover, the FTA implies a change in Peru’s constitution in that it alters the role of the state. As a result, Peru would not have been able to pass the law on royalties that is currently in effect had a FTA been in place. Similarly, once the FTA enters into force it will be difficult to adopt laws protecting the environment or taxing windfall gains. The latter measure, according to Diez Canseco, could generate as much as $450 million dollars in revenue from petroleum earnings alone.
According to Diez Canseco, the FTA affects Peru’s constitution because it locks-in the existing model of development and impedes changes. Toledo is made a life-time president, Diez Canseco joked, and he added that Peru could save money by canceling the elections and spending the money on improving competitiveness since once the FTA is adopted it will be impossible to alter the economic model. More seriously, he argued that the agreement can be challenged on constitutional grounds. For one thing, the agreement does not eliminate disloyal competition. For another, it creates a system of arbitral panels over and above the judiciary. Confronted with the argument that the FTA does allow countries to prohibit anti-competitive pricing using countervailing duties against dumping, Diez Canseco fell back on the argument that the panel system supercedes the national judiciary.
The adoption of the agreement will also put Peru in a more difficult position internationally, since it will mark the minimum level of liberalization that will be required in all subsequent negotiations. It also places Peru out of step with other Andean countries, and makes questionable Peru’s participation in the Andean Parliament. He criticized the government for not linking the FTA to the war on drugs and extracting concession from the US. Peru, a poor country, must face the war on drugs alone.
The election in Costa Rica could be an important precedent for the rejection of a FTA by a Latin American country. It is not yet clear who has won (the recount should be finished tomorrow), but should the election be won by Ottón Solís of the Citizen’s Action Party, this could have an impact on the discussion of the FTA in Peru because Solís has promised to renegotiate the CAFTA.
Diez Canseco lamented the lack of an electoral debate on this issue in Peru, which he attributed to the superficiality and hypocrisy of some of the candidates. He reserved especially scathing words for candidates who have said that they cannot comment on the FTA because they have not read it but if any national interests are affected negatively, the agreement will have to be modified. Diez Canseco noted that, in general terms, the content of the FTA has been known for some time and now that the deal is negotiated and published it is closed to modifications.
The major parties of the opposition—the American Popular Revolutionary Alliance, or APRA, and National Unity, UN—want to freeze the debate and prevent the FTA from becoming an election issue. They would like to not have to debate the FTA until after April 9. Pedro Francke, economist at the Catholic University, noted that the US has until April 6 to submit the legislation to the US Congress, and wishes to vote on the bill before June when members of congress begin to gear up for midterm congressional elections in the fall.
His assessment of the correlation of forces within the congress was that UN will favor the FTA; APRA has said this congress should not approve it, so may abstain; the AP has been wishy-washy, so nobody knows how they will vote (but there are probably at least a couple of “no” votes among them); there are about 5 “no” votes among the independents; one or two “or maybe more” members of the ruling party, Perú Posible, will vote “no”; and the members of the Alliance for Progress of Natale Amprimo, will vote in favor. On balance, the vote will be close. As a result, a strong debate will focus on voting procedures, and a key issue to watch is what commissions will review the FTA.
Diez Canseco outlined three arenas of opposition to the FTA: the congress, the streets, and the courts. An example of opposition in the streets is work stoppages in Cuzco in opposition against the FTA. The strategy of legal opposition will be to insist that the FTA alters Peru’s constitution and therefore requires an extraordinary majority (80 rather than 60 votes out of 120) to pass. A team of legal experts is preparing a case to be made before the Constitutional Tribunal.