United States-Peru Trade Promotion Agreement Implementation Act
Press Release
UNITED STATES-PERU TRADE PROMOTION AGREEMENT IMPLEMENTATION ACT -- (House of Representatives - November 07, 2007)
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Mr. HUNTER. I want to thank my great colleague for yielding to me. And let me just say, Mr. Speaker, that I am unalterably against this deal because I think it doesn't fix the basic defect that we have seen in every trade deal that we have made in recent years. That defect is, as most of my colleagues know and understand, that the competitors to American businesses get their value-added taxes rebated to them by their home governments and they in turn charge us what effectively is a tariff in the same amount as that value-added tax when our products go to their country, and we didn't change this in this Peru Free Trade Agreement. It's not really free trade, it's only free coming in one direction, and that's our direction.
Let me explain that very simply. If this podium costs $100 and it is made in Peru and it is going to be shipped to the United States, their value-added tax is 19 percent. That means that as they build this podium in Peru, as they add wood and metal and labor, they pay their government 19 percent value-added tax. That is how they pay their tax burden. We have a direct tax burden known as an income tax and a corporate tax.
When they take this particular podium down to the docks to be shipped to the United States, the Government of Peru will give them their money back. They will rebate their taxes to them. Effectively that company will be working tax-free.
Now, if you made the other podium in the United States and we shipped it to them under this deal, when that podium gets to Peru to be sold on their showroom floors, the American manufacturer will face a 19 percent fee or tariff. So the Government of Peru under this deal will be allowed to subsidize their guys to the tune of 19 percent and penalize our guys to the tune of 19 percent.
Let me just say this is an unfair deal. This is the reason why America has massive trade deficits even to countries that have higher labor rates than the United States. Until we fix that basic defect, all these trade deals are bad deals and they accrue to the detriment of the American worker and the American businessman.
Vote ``no'' on this. And I regret I will not be here tomorrow. I have to be away from the floor. I wish the vote could have been held tonight. This is a bad deal.
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