ANDEAN TRADE DEAL SEEN KEY FOR U.S. WAR ON DRUGS

LIMA, Peru - The United States could flop in its fight to curb the drugs
trade and the threat of terror if it does not soon open its market to
select goods from the Andean region, which churns out almost all of the
world's cocaine, Peru's top trade negotiator said on Wednesday.

"The biggest risk isn't that (Peru's) economy won't take off, but that drug
trafficking and terrorism -- issues that the United States cares about --
get worse," Alfredo Ferrero, deputy minister for integration and
international trade negotiations, told Reuters.

In an historic visit last weekend to Lima, President Bush urged lawmakers
to act swiftly to renew the Andean Trade Preferences Act (ATPA), a 1991
trade deal which eliminated U.S. import tariffs for certain goods from top
cocaine producers Colombia, Peru, Bolivia, and Ecuador.

Peru and its Andean peers have lobbied Washington to help fight poverty by
not only renewing the deal, which expired in December, but by giving
duty-free breaks to other goods like garments.

Lima had fought hard to get the deal sealed before Bush's visit, the first
by a sitting U.S. president to Peru, but the pact is bogged down in the
Senate in a larger trade package. It has also sparked concerns from some
U.S. textile makers.

But Ferrero insisted that U.S. inaction on the deal -- which he says is
"life or death" for Peru -- could make it even harder for poor nations to
make progress in the uphill battle to quash the lucrative drugs trade.

"The motivation behind ATPA is simple: the Andean region produces 100
percent of the world's cocaine," Ferrero said. Colombia leads world
production of coca leaf, used to make cocaine, followed by Peru and
Bolivia. The United States is the world's biggest drug consumer.

Fertile Ground For Terror

Ferrero also warned that the deal was key in braking leftist "terror"
groups that feed off drug-running, like Shining Path, which some experts
say is still a threat for Peru, or the Revolutionary Armed Forces of
Colombia (FARC).

Washington has already sunk more than $1 billion into curbing the drugs
trade in Colombia and is now asking Congress to allow that aid to be used
against the FARC.

"ATPA is a matter of national security for the United States," Ferrero
said. "Wherever there is poverty and inequality, there will be fertile
ground for terrorism."

Some 3,500 people die each year in Colombia's 38-year-old war between the
state, leftist rebels, and far-right paramilitary outlaws. "It isn't a
problem just for Peru ... Do we really want other situations like
Colombia's across South America?" Ferrero said.

Memories of the bloody insurgency war that killed 30,000 Peruvians in the
1980s and 1990s were dredged up last week when a bomb near the U.S. embassy
killed nine people. The government says it is following leads on the
unclaimed attack, but some experts have pointed to Shining Path or the FARC.

ATPA is seen as do-or-die for Peru's textile industry, which has stumbled
amid fierce competition and a three-year economic slump. Officials say that
if U.S. lawmakers agree to eliminate a current 21-percent apparel duty, the
industry could double the $700 million it exports annually in two to three
years. Some 80 percent of those exports go to the United States.

Prime Minister Roberto Danino said this week ATPA could create 300,000 new
jobs in this work-starved nation where unemployment and underemployment
together top 50 percent.

Ferrero said it would be "tragic" if U.S. lawmakers voted down the deal,
adding that action was needed soon: "We're reaching the end of our rope."