The United States and Peru signed the U.S.-Peru Free Trade Agreement (FTA) in February 2009. The agreement has boosted economic growth, increased trade, and created jobs in both countries. The agreement allows duty-free access to goods and services exported to the United States from Peru and vice versa, creating a level playing field for businesses in both countries. One of the key features of the agreement is the “Preference Criterion,” which outlines the rules of origin for goods to qualify for duty-free access.
Under the U.S.-Peru FTA, the Preference Criterion is an essential tool for determining whether goods qualify for duty-free treatment under the agreement. The criterion specifies that goods must meet specific requirements to qualify for preferential treatment. The primary requirement is that goods must be produced entirely in Peru or the United States. If the goods contain any foreign materials or components, they must undergo a substantial transformation in either country to qualify for duty-free access.
The Preference Criterion also establishes two main methods for determining whether a good has undergone substantial transformation. The first method is based on the change in tariff classification of the good. This method requires that the good changes its tariff classification based on a specific set of criteria. The second method is based on the value-added of the good. This method requires that the good`s value increase by a specific percentage in either Peru or the United States.
The application of Preference Criteria is essential to ensure that goods qualify for duty-free access under the U.S.-Peru FTA. It helps to prevent goods from being produced in other countries and then exported to Peru or the United States, where they are assembled or packaged to qualify for duty-free access. By establishing clear rules of origin, the criterion ensures that trade is fair and equitable for both countries.
In conclusion, the U.S.-Peru FTA is a vital tool for boosting economic growth and increasing trade between the two countries. The Preference Criterion is a critical component of the agreement, outlining the rules of origin for goods to qualify for duty-free access. By ensuring that goods are produced entirely in Peru or the United States or have undergone substantial transformation, the criterion promotes fair trade and economic development in both countries. As a professional, it is essential to highlight the importance of the Preference Criterion in any discussion of the U.S.-Peru FTA.