News and Analysis • Volume 12 • Number 20 • 4th June 2008
Peru Signs Free Trade Agreements with Singapore and Canada
Peru, one of the world’s fastest-growing economies, has signed free trade agreements with Canada and Singapore, in a move expected to bring the South American country, which chiefly exports metal and specialty agricultural products, cheaper prices for manufactured goods such as cars and electronics.
Trade officials from Peru and Singapore signed a bilateral deal in Lima on 29 May, making official a text that took three years to negotiate.
Issues such as trade in goods, rules of origin, competition policy and dispute settlement are a few of the topics covered in what the government of Singapore has described as a “broad-based and comprehensive agreement.” Immediately upon entry into force, over 87 percent of Singapore’s exports to Peru will benefit from duty-free treatment, with the remaining tariffs to be phased out over a 10-year period. All Peruvian exports will be given instant tariff-free status to Singapore.
Trade between the two countries totaled US$37.2 million in 2007. Trade officials hope that the pact will broaden Peru’s trade reach in Southeast Asia, an area that is an increasingly significant consumer of natural resources.
On the same day that the Singapore deal was signed, Peru inked a separate bilateral pact with Canada. Upon implementation of the Canadian deal, Peru will abolish tariffs on 95 percent of Canadian exports; the remainder will be eliminated over the following five to ten years. Products such as wheat, barley, lentils and a variety of paper products are among those earmarked for immediate duty-free access. For its part, Canada will immediately remove 97 percent of its tariffs on Peruvian imports, with the rest phased out over a three- or seven-year period. However, exceptions to tariff reductions are provided to over-quota tariffs on dairy, poultry, eggs and refined sugar.
Canada, Peru’s second-largest foreign investor after Spain, has a large interest in the country’s mining industry. Peru views Canada as an important market for gold, metals, textiles, as well as cheaper cereals at a time of rising food prices. Two-way commerce between the countries totaled US$2.45 billion last year.
Peruvian President Alan Garcia has set an aggressive agenda for free trade after reaching a landmark deal with the US last year. The Garcia administration is also interested in similar agreements with China and the EU. However, Peru’s unilateral pursuit of its own trade agreements has reportedly irritated some of its partners in the Andean Community regional trade group, made up of Colombia, Ecuador, Bolivia and Peru.
ICTSD Reporting; “Singapore, Peru sign free trade agreement,” XINHUA, 30 May 2008; “Canada signs free trade deal with Peru,” ASSOCIATED PRESS, 30 May, 2008; “Singapore and Peru sign free trade agreement,” XINHUA; “Canada Signs Free Trade, Labour Cooperation and Environment Cooperation Agreements with Peru,” News Release, 29 May, 2008; “Peru, Singapore and Canada set to sign free trade agreement,” MERCOPRESS, 27 May, 2008.