| Čoahkkáigeassu: | Peru and the United States signed a Free-Trade Agreement (FTA) in December 2005. While most economic analyses indicate overall benefits for Peru, there are concerns of potential adverse consequences particularly on vulnerable population groups. In the medium- to long-term it is expected that growth brought about by trade liberalisation will increase wages and provide households with higher incomes, which may be used to improve child welfare. In the short-term, however, some Peruvian households, especially those in rural areas, are more likely to suffer negative effects under the FTA. Children from poor families are amongst those who will be most affected, and it is thus vital to identify appropriate mechanisms to support them. Young Lives research in Peru shows that the impact of the Peru/US FTA on different segments of the Peruvian population is likely to be mixed. Impacts on children, particularly from poor families, include a reduction in the quality of their education, increased child labour, and indirect impacts on welfare due to increased women’s employment. In this paper, the authors review these impacts on child well-being in Peru and consider the challenges for policy-makers in addressing the working and living conditions of poor Peruvians in light of the FTA. Their findings highlight the need for favourable policies in four areas: the gradual phased implementation of the FTA; ensuring adequate and sustainable funding for basic social services; compensating for FTA-induced short-term losses faced by children living in agricultural households; and child-focused social protection policies.
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