US embassy cable - 05LIMA4278

UNCLAS SECTION 01 OF 02 LIMA 004278 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR WHA/AND, EB/TPP/ABT - E HEARTNEY 
COMMERCE FOR ITA/OTEXA/N. FREEMAN 
USTR FOR B. HARMAN, T. SMITH, A. HEYLIGER 
 
E.O. 12958: N/A 
TAGS: KTEX, ETRD, ECON, EINV, PE 
SUBJECT: GOP JUSTIFIES USED CLOTHING LAW 
 
REF: A) STATE 176750  B) LIMA 2523 
 
1.  (SBU) Summary.  In a meeting on September 27 with the 
DCM, Vice Minister of Industry Antonio Castillo cited three 
arguments to justify Peru's ban on the imports of used 
clothing imports, Law 28514.  First, the Basel Convention on 
the Control of Transboundary Movements of Hazardous Wastes, 
to which Peru is a signatory, specifically lists textile 
residues and used clothes as textile wastes, which are 
covered under the Convention.  Second, the GOP argues that 
the law only extends the ban on used clothing that dates 
back to 1996.  Third, Castillo highlighted that the law 
protects the domestic textile and apparel industry and jobs. 
The GOP published its implementing procedures for Law 28514 
on September 27; the Ministry of Trade should notify the WTO 
shortly of the new law.  End Summary. 
 
Previous Law Extended 
--------------------- 
 
2.  (SBU) During a meeting with Vice Minister of Industry 
Antonio Castillo and his advisor Carlos Ferraro on September 
27, the DCM delivered reftel A demarche regarding Peru's 
used clothing ban.  Ferraro noted that Law 28514 "Law that 
Prohibits the Importation of Used Clothing and Shoes," 
promulgated in May 2005, was an extension of a previous 
Peruvian law that banned imports of used textile and apparel 
products.  Ferraro highlighted that the Peruvian Government 
had just published the official implementing regulations on 
September 27.  (Note:  we will send copies to State, 
Commerce and USTR via email.  End Note.) 
 
3.  (SBU) When asked about the rationale behind the law, 
Vice Minister Castillo responded that Peru is a small 
economy where many people depend on the textile industry for 
jobs.  The GOP banned used clothing imports, not for health 
reasons, but to protect the local textile and apparel 
industry, which cannot compete with cheaper imported used 
clothes.  Castillo noted that the GOP has banned imports of 
used clothing since 1996, as justified under the Basel 
Convention on the control of Transboundary Movements of 
Hazardous Wastes.  Peru became a signatory of the Basel 
Convention in 1994. 
 
4.  (U) While the Basel Convention primarily deals with the 
movement of hazardous wastes and chemicals, the agreement 
specifically lists used textiles as a potentially hazardous 
good in several places, including in the Protocol, Section 
B3.3.12 Textile Residuals and Used Clothing and Annex IX 
List B3030 Textile Wastes.  The Convention also discusses 
the second use of products and enables countries to 
determine whether certain products, including textiles and 
apparel, can be reused under local law. 
 
Exceptions for Donations 
------------------------ 
 
5.  (U) Law 28514 provides an exception for donations of 
used clothing.  When asked about this exception, Ferraro 
noted that charitable donations benefit those Peruvians in 
need; the GOP could not justify banning donations of used 
clothing.  Ferraro informed us that any NGOs that want to 
donate used clothing to Peru must submit a written request 
justifying the donation to the Peruvian Agency for 
International Cooperation (APCI), which overseas NGO 
activity.  According to the recently published implementing 
regulations, APCI will review the applications, determine 
whether to accept clothing donations, and work with the NGO 
to ensure that the donations are not being sold illicitly 
upon entrance into Peru. 
 
WTO Notification 
---------------- 
 
6.  (SBU) Ferraro explained that the Ministry of Trade and 
Tourism (Mincetur) has the responsibility to notify the WTO 
of new laws that affect trade.  He mentioned that because 
the GOP just published the implementing procedures for the 
used clothing law, Mincetur should notify the WTO shortly. 
Additionally, he reiterated that the law is not a new law, 
but rather an extension of a previous law.  Therefore, the 
WTO already had some notification of the law. 
 
No U.S. Industry Sales 
---------------------- 
 
7.  (SBU) When we mentioned that U.S. industry is currently 
losing sales as a result of the ban, Vice Minister Castillo 
questioned how that was possible.  According to Castillo, no 
U.S. industry has sold used clothing in Peru legally since 
the used clothing ban was implemented in 1996.  We explained 
that U.S. industry would like to sell used clothing in Peru 
to targeted markets, as domestically produced clothing is 
more expensive and Peruvians with low purchasing power 
cannot afford it.  Ferraro explained that Peru produces 
various qualities of clothing that is sold on the local 
market to everyday Peruvians.  Used clothing imports would 
directly compete with these local producers.  Additionally, 
Ferraro highlighted that used clothing that enters Peru as 
illegal contraband from Chile hurts domestic producers in 
the southern part of Peru. 
 
Comment 
------- 
 
8.  (SBU)  The GOP feels very strongly that its ban on used 
clothing imports does not violate international trade norms 
and is justified under the Basel Convention.  Vice Minister 
Castillo reassured us that the GOP remains committed to free 
market principals and trade liberalization.  He seemed 
perplexed, however, why the extension of a used clothing 
ban, which has existed for almost 10 years, would send a 
negative message about Peru's commitment to free trade. 
 
STRUBLE