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Agriculture Exports on the Rise in Peru as Free Trade Promoted

Peru has been very busy looking for cooperation in the realm of international commerce. In his remaining months as president, President García is intent on leaving lasting footprints, especially a legacy of free trade. At present, Peru has signed bilateral free-trade agreements (FTAs) with the United States, China, Canada and Singapore.  It plans on signing agreements with Japan, the European Union and the European Free Trade Association (EFTA).

While the pact with EFTA is expected to come into force in July, trade with Switzerland will begin this month. Switzerland’s main commodity interest appears to be gold, as Peru's mineral exports to Switzerland amount to about 3.8 billion dollars, while the export value of non-traditional products totals seven million dollars. Other notables in the Peru-EFTA agreement include industrial and processed goods, fish, intellectual property rights, government procurement, competition and investment.

Peru and South Korea are expected to sign an FTA on March 21. Such an agreement is expected to boost bilateral commerce by $7 billion by 2016 and would benefit Peru’s agriculture, mining, coffee and fishing sectors. There is also news that Peru is seeking deeper trade integration with Panama, Chile and Colombia to cooperate with respect to goods and services, trade facilitation and microenterprises. Peru is even undergoing talks with Arab nations.

Bloomberg reports that Mexico’s government is close to reaching a free-trade agreement with Peru.  Mexican Economy Minister Bruno Ferrari said that Mexico currently exports $974 million annually to Peru, which represents 0.3 percent of Mexican exports and 3.4 percent of Peru’s imports—but Mexican exports to Peru would increase to $2.7 billion under an FTA.

Peru’s large agricultural sector is expected to make gains from these agreements; it is already slated to reach $4 billion in shipments this year.  Agro-exports have grown by 20 percent in the first two months of 2011 versus the same in 2010. Last year’s total agriculture export figure of $3.2 billion represented a growth of 31 percent over 2009.  According to Peru’s development director Luis Torres, demand has increased for Peruvian products in three principal markets: Brazil, China, and the United States. New customs regulations and improvements to the two roads that connect the countries through the Amazon have helped increase trade between Peru and Brazil. France is also a notable partner in agricultural exports, with exports expected to rise by 20 percent this year.

So why are we seeing so much movement recently in the realm of international trade?  It is no coincidence that such rapid movement comes months before April’s election. García could see his free-trade agenda threatened depending on who succeeds him.  Although anti-free trader Ollanta Humala is in fourth place, his numbers have been rising from 10 percent to 13 percent and he unexpectedly won in the first round of votes in 2006. García has made it clear that he hopes that any incoming administration follow in his footsteps of neoliberalism and is taking steps to ensure that such policies prevail once he exits office by negotiating these agreements in advance. Only in April will we be able to see if his free-trade policies endure.

Any opinions expressed in this piece do not necessarily reflect those of Americas Quarterly or its publishers.
Tags: Peru, Free Trade

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