The top U.S. trade official on Friday took a first step toward potential sanctions on Peru for allegedly violating environmental protections aimed at combating illegal logging, a case that could have ramifications for the new North America free-trade deal.
U.S. Trade Representative Robert Lighthizer said the Trump administration has requested consultations over the Peruvian government over its decision to make an agency monitoring the notoriously corrupt logging industry part of the Environment Ministry. The agency is required to be independent under the U.S.-Peru trade pact.
"I urge Peru to abide by its obligations," Lighthizer said.
Peru had no immediate response, but its Ministry of Foreign Trade and Tourism said Thursday that the forest auditor's office remains independent despite the change.
The case is being closely watched in Washington, where lawmakers are assessing the Trump administration's response as a sign of how closely it might enforce protections in the revamped North America trade accord for the U.S., Canada and Mexico. The U.S. has never before taken punitive measures against an international trade partner accused of violating environmental protections in a free trade deal.
"Finally, a tree falls in the woods and someone hears it," said Rep. Lloyd Doggett, a Democrat from Texas who for years has pushed for greater enforcement.
Illegal logging has long been an issue in Peru, where the World Bank estimates 80 percent of timber exports are illegal. Companies are required to obtain permits showing the wood comes from approved harvesting areas, but prosecutors say that for years regional forestry officials have signed off on paperwork falsely stating the origin of timber.
The 2006 U.S.-Peru free trade pact included what was considered a groundbreaking environmental agreement in which Peru agreed to allow the Agency for the Supervision of Forest Resources to operate as a separate independent agency. The U.S. has spent more than $90 million in forest-protection aid and other assistance to Peru.
An April 2017 investigation by the AP found Peru's government has repeatedly undermined Washington's efforts to get it to clean up its corrupt timber trade and is failing to meet the environmental requirements established in the accord.