(WTD, 10/18/05). The United States needs to abandon its "extreme" positions on sensitive issues in order to complete negotiations on a free trade agreement with the Andean countries of Colombia, Ecuador and Peru by the end of next month, a Peruvian trade official said yesterday

Negotiators from the three countries * and Bolivia, which is participating as an observer * are in Washington this week for the 13th round of negotiations on a US-Andean FTA. The countries hope to complete the pact next month, according to Carlos Alzamora, senior Peruvian advisor for the FTA negotiations. The goal is to have the basic outline of an agreement ready when President Bush meets his Andean counterparts at the Summit of the Americas meeting November 4 in Argentina.

A final push from the leaders should pave the way for resolving the final * and most politically sensitive * issues of agriculture and intellectual property rights.

On agriculture, Peru's Alzamora said his government is concerned that subsidized US farm exports will displace small farmers. These farmers will need not just transitional periods before tariffs are eliminated in sensitive products but also compensation and assistance. The most sensitive farm products for Peru are rice, corn, dairy and chicken hindquarters.

Sugar * one of the most controversial items in the narrowly approved US-Central America free trade agreement * is not an issue for Peru, but it is a key commodity for Colombia (WTD, 10/18/05). The United States has been negotiating bilaterally with each of the three Andean countries on agricultural market access.

There also is concern that US insistence on data privacy protection for pharmaceutical manufacturers could impede Peru's ability to protect public health. Peruvian Ambassador Eduardo Ferrero said the data exclusivity issue is a key sticking point in the IPR talks, along with second-use patents and Andean insistence on recognition of biodiversity and traditional knowledge of indigenous peoples.

Despite the tough issues still outstanding, the two Peruvian officials expressed optimism about meeting the informal November deadline for completing the negotiations.

They spoke at a program yesterday sponsored by the George Washington University Center for Latin American Issues.

Mr. Ferrero noted that eight chapters have been closed * customs administration, technical barriers to trade, financial services, competition policy, safeguards, capacity building, electronic commerce and legal issues. Another seven are very close to completion. In the area of market access for industrial products, Mr. Ferrero said 80 percent of products will be duty-free immediately upon implementation of the FTA. The remaining 20 percent will fall into two phase-out baskets of five and 10 years.

Completing the agreement in November is seen as critical to Congressional approval * and the three Andean legislatures * by next summer, before US Presidential Trade Promotion Authority expires. The countries also want to make sure the agreement does not become caught up in the politics of next year's election cycles in Peru, Colombia and the United States. The FTA needs to be in place before the Andean trade preferences program expires at the end of next year. 

Mr. Ferrero said the Andean countries have been warned by the White House that Congressional support for unilateral trade preferences programs is waning and that the Andean trade preferences program may not be renewed. He expressed concern that without the FTA, the Andean countries will begin to see an exodus of foreign investment and business by the middle of next year in anticipation of the demise of the ATPA.