Post by unlawflcombatnt on Nov 7, 2007 23:42:18 GMT -6
The Peru Free Trade Agreement is nearing a vote in Congress. There are some points worth mentioning.
*Peruvian Labor leaders have urged the U.S. Congress to reject the agreement.
*Peruvian Labor leaders stressed that if it was passed, at least remove the requirement that Peru privatize its Social Security.
*Peru is NOT required to remove its 19% Value-Added-Tax (VAT) This was discussed at some length by the bill's opponents, including Republican Duncan Hunter of California. Peru adds a VAT on goods it produces and sells in Peru. But when it exports those same goods to the United States, the VAT is removed. This functions as a 19% subsidy on Peruvian exports to the United States.
But that's only half of it. When American goods are imported by Peru, they have this 19% added to their price. In effect, there is a 19% export subsidy on Peruvian exports, and a 19% import duty/tariff on imports. This VAT policy will remain in place even after the Peruvian FTA is implemented.
*Enforcement of labor regulations is exclusively at the discretion of President Bush. They are not binding or mandatory.
*Nothing has been done to eliminate or restrict Peru from being a tax haven for Corporate America.
The usual pro-Globalist lies and propaganda were spewed by members of both parties in support of the bill. "Opening up markets" and "knocking down barriers" to U.S. exports was the major lie regurgitated. However, the facts largely refute the pro-Globalist arguments. The potential Peruvian consumer market for American goods is almost non-existent. To demonstrate just how minuscule their market is, some basic facts and calculations are noteworthy. The basic information below is from the CIA's country site.
www.cia.gov/library/publications/the-world-factbook/geos/pe.html
PERU:
Population:
28,674,757 (July 2007 est.)
GDP (official exchange rate):
$77.14 billion (2006 est.)
Per Cap Income (Total Population)
$2,690/year.
Household income or consumption by % share:
lowest. 10%: 0.8%
highest 10%: 37.2% (2000)
If the highest 10% earn 37.2% of GDP/Income, then the lower 90% earn only 62.8% of GDP/Income.
(100% - 37.2% = 62.8%)
Thus, the per capita income of the lower 90% would be much lower than $2,690/year.
Calculating per capita income for the lower 90%:
28,674,757 people X 90% = 25,807,281 people
Thus, 25,807,281 people have 62.8% of GDP
62.8% (0.628) X $77.14 billion = $48.4 billion
Thus, 25,807,281 people (the lower 90%) have $48.4 billion of the GDP
$48.4 billion divided by 25,807,281 people = $1,877
Per Capita GDP (lower 90% of Population)
$1,877/year.
(In contrast, per capita US GDP is :$43,800)
However, even this per capita number is still higher than Personal Income.
Peru devotes 19% of GDP to Gross Private Investment. Thus at most, Peruvians have only 81% of their GDP remaining for purchasing goods (Even this amount is an overstatement, as Government expenditures have not been subtracted.)
81% of the lower 90%'s Per Capita Income would be only $1,520/year.
(Compared to US. per capita Personal Income of $39,000/year)
54% of Peru's population is below the poverty line.
Adding this all together, Peru has little potential as a market for U.S. goods. How much American production can a $1,520/year income buy? How much can they purchase when 54% are below the poverty line?
On the other hand, how much can Corporate America save in labor costs by replacing American workers with Peruvian workers? How much will Corporate America have to pay Peruvian workers, when 90% of the population has a per capita income of $1,520/year? How much labor cost can be saved by replacing workers from a country with $39,000/year income with those with a $1,520/year income?
A lot. In fact, Peru has tremendous potential as a cheap labor source for Corporate America, allowing them to replace higher-cost American labor with impoverished cheap labor from Peru. Peru has a population of 28.6 million--25.807 million with an average per capita income of only $1,520/year, and 54% of whom are below the poverty line. Peru's real potential is as a source of cheap labor--putting still more Americans out of work, and driving down wages of Americans still employed.
The Peru Free Trade Agreement is just another sellout of America and American workers. As with ALL such agreements, it increases Corporate profits by reducing labor costs--replacing higher-paid American workers with lower-paid Peruvian workers.
*Peruvian Labor leaders have urged the U.S. Congress to reject the agreement.
*Peruvian Labor leaders stressed that if it was passed, at least remove the requirement that Peru privatize its Social Security.
*Peru is NOT required to remove its 19% Value-Added-Tax (VAT) This was discussed at some length by the bill's opponents, including Republican Duncan Hunter of California. Peru adds a VAT on goods it produces and sells in Peru. But when it exports those same goods to the United States, the VAT is removed. This functions as a 19% subsidy on Peruvian exports to the United States.
But that's only half of it. When American goods are imported by Peru, they have this 19% added to their price. In effect, there is a 19% export subsidy on Peruvian exports, and a 19% import duty/tariff on imports. This VAT policy will remain in place even after the Peruvian FTA is implemented.
*Enforcement of labor regulations is exclusively at the discretion of President Bush. They are not binding or mandatory.
*Nothing has been done to eliminate or restrict Peru from being a tax haven for Corporate America.
The usual pro-Globalist lies and propaganda were spewed by members of both parties in support of the bill. "Opening up markets" and "knocking down barriers" to U.S. exports was the major lie regurgitated. However, the facts largely refute the pro-Globalist arguments. The potential Peruvian consumer market for American goods is almost non-existent. To demonstrate just how minuscule their market is, some basic facts and calculations are noteworthy. The basic information below is from the CIA's country site.
www.cia.gov/library/publications/the-world-factbook/geos/pe.html
PERU:
Population:
28,674,757 (July 2007 est.)
GDP (official exchange rate):
$77.14 billion (2006 est.)
Per Cap Income (Total Population)
$2,690/year.
Household income or consumption by % share:
lowest. 10%: 0.8%
highest 10%: 37.2% (2000)
If the highest 10% earn 37.2% of GDP/Income, then the lower 90% earn only 62.8% of GDP/Income.
(100% - 37.2% = 62.8%)
Thus, the per capita income of the lower 90% would be much lower than $2,690/year.
Calculating per capita income for the lower 90%:
28,674,757 people X 90% = 25,807,281 people
Thus, 25,807,281 people have 62.8% of GDP
62.8% (0.628) X $77.14 billion = $48.4 billion
Thus, 25,807,281 people (the lower 90%) have $48.4 billion of the GDP
$48.4 billion divided by 25,807,281 people = $1,877
Per Capita GDP (lower 90% of Population)
$1,877/year.
(In contrast, per capita US GDP is :$43,800)
However, even this per capita number is still higher than Personal Income.
Peru devotes 19% of GDP to Gross Private Investment. Thus at most, Peruvians have only 81% of their GDP remaining for purchasing goods (Even this amount is an overstatement, as Government expenditures have not been subtracted.)
81% of the lower 90%'s Per Capita Income would be only $1,520/year.
(Compared to US. per capita Personal Income of $39,000/year)
54% of Peru's population is below the poverty line.
Adding this all together, Peru has little potential as a market for U.S. goods. How much American production can a $1,520/year income buy? How much can they purchase when 54% are below the poverty line?
On the other hand, how much can Corporate America save in labor costs by replacing American workers with Peruvian workers? How much will Corporate America have to pay Peruvian workers, when 90% of the population has a per capita income of $1,520/year? How much labor cost can be saved by replacing workers from a country with $39,000/year income with those with a $1,520/year income?
A lot. In fact, Peru has tremendous potential as a cheap labor source for Corporate America, allowing them to replace higher-cost American labor with impoverished cheap labor from Peru. Peru has a population of 28.6 million--25.807 million with an average per capita income of only $1,520/year, and 54% of whom are below the poverty line. Peru's real potential is as a source of cheap labor--putting still more Americans out of work, and driving down wages of Americans still employed.
The Peru Free Trade Agreement is just another sellout of America and American workers. As with ALL such agreements, it increases Corporate profits by reducing labor costs--replacing higher-paid American workers with lower-paid Peruvian workers.