The US and Peru had signed a trade promotion agreement in 2009. It covers the garment, textile and agricultural export sectors. But Peru failed to enforce basic garment sector labor laws under the terms of free trade pact. The export law exempts employers from key parts of the general labor code by allowing them to hire virtually their entire workforce for an unlimited duration on a series of renewable, temporary contracts, some as short as 15 days.

Moreover, garment and textile employers have taken advantage of the law by systematically declining to renew the contracts of thousands of workers who joined unions in an effort to improve wages and working conditions. Major Peruvian companies in export sectors violate Peruvian labor laws with impunity, dismissing workers for union activity, employing workers on fraudulent contracts, and failing to pay legally mandated bonuses.

Even in cases where labor inspectors have found violations, fines are too low to deter employer misconduct and often go unpaid. A number of US and Peruvian human rights and union groups have filed a complaint with the US Department of Labor. These allege failure to adhere to labor provisions in the US-Peru trade promotion agreement. Peru happens to be a partner country involved in the 12-nation TPP negotiations.