Australia, Peru Kick Off FTA Talks

1 June 2017

Australian and Peruvian trade officials announced last week the start of formal talks towards reaching a free trade agreement (FTA), with the first negotiating round scheduled for July.

The news was announced by Australia Trade Minister Steven Ciobo and Peruvian Trade Minister Eduardo Ferreyros on 24 May, with the two high-level officials noting that the possibility of an FTA has been under discussion since last year’s Asia-Pacific Economic Cooperation (APEC) leaders’ meeting in Lima, Peru. (See Bridges Weekly, 24 November 2016)

Speaking to reporters in Canberra last Thursday, Ciobo and Ferreyros both cited services and investment as key areas for a “comprehensive” future trade deal. In the area of services, Ciobo indicated that improved market access would be one of Canberra’s objectives going forward, naming sectors including finances, mining, and tourism, among others.

He also flagged Peru’s strong economic growth prospects, as well as its role in the Latin American region, as other valuable gains for Australia.

“We see real growth potential in Latin America and being able to build on the Chile free trade agreement with this – a comprehensive, ambitious free trade agreement with Peru – will provide another opportunity for Australian businesses to engage,” he told reporters, noting also that the Andean nation has trade deals with large economic powers such as the US, Canada, and the European Union.

Peru is also a member of the Pacific Alliance, a regional grouping that also includes Chile, Colombia, and Mexico, which is increasingly looking to develop deeper trade ties with other countries and blocs.

Over the past year, officials from that group have held meetings on those subjects with several counterparts in the Asia-Pacific, along with officials from the European Union and South American customs bloc Mercosur. (See Bridges Weekly, 9 February 2017, 16 March 2017, and 13 April 2017)

According to Australia’s Department of Foreign Affairs and Trade (DFAT), the Oceanic nation is also interested in seeing the future trade deal with Peru – known otherwise as the PAFTA – include provisions on digital trade and competition policy, though it does not go into further specifics on those subjects.

Market access in goods was also raised as an area of interest for the two sides, as were measures related to food safety and plant and animal health.

“This trade deal will allow preferential access for Peruvian products to a market with strong buying capacity. Similarly, it will help make sanitary and phytosanitary trade requirements more transparent and efficient,” said Ferreyros in a statement released by his office.

While the officials did not commit to any set date for concluding the trade talks, both suggested that this could occur by December.

According to DFAT statistics, bilateral goods and services trade hit A$504 million (US$375 million) in 2015-2016 – which the agency noted was a one-fifth boost from just one year before.

TPP timing

Australia and Peru are already members of APEC, the 21-country regional coalition. The two economies are also signatories to the Trans-Pacific Partnership (TPP), a comprehensive trade deal that was negotiated over several years and signed in early 2016. (See Bridges Weekly, 11 February 2016)

In a factsheet describing the planned Peru deal, Australia’s DFAT flagged the uncertainty over TPP’s future as one of the drivers behind the two countries’ push for an FTA.

The United States, one of the TPP’s original signatories, withdrew earlier this year, with the remaining 11 countries now looking at how and whether they can move forward with the trade agreement. (See Bridges Weekly, 11 February 2016)

“With the TPP currently unable to enter into force in its current form, Australia’s trade relationship with Peru, Australia’s trade relationship with Peru remains governed by Peru’s obligations under the World Trade Organization (WTO) Agreement,” according to the agency factsheet, which noted that the South American nation does have improved terms of trade with other countries under different trade pacts.

Officials from both sides also say that having spent years working together to reach a final TPP, their countries are now well familiar with each other – both in terms of economic priorities and negotiating approach.

Regarding the TPP itself, on Australia’s side trade officials have backed moving ahead with a “TPP-11” deal, though Canberra has not yet ratified the accord domestically. In Peru, the deal is also pending ratification in its own national legislature.

“We are having conversations at a ministerial level on how to work to make this agreement enter into force. Every country has their own procedures, in Peru we have a domestic procedure that we have to go through Congress,” Ferreyros told reporters.

TPP trade ministers recently agreed to come up with possible options for consideration in time for the APEC leaders’ meeting in November. A meeting among TPP officials is planned for Japan next month, according to the Kyodo news agency, in a bid to move those efforts along. (See Bridges Weekly, 24 May 2017)

ICTSD reporting; “TPP chief negotiators to meet in Japan in mid-July,” KYODO NEWS, 30 May 2017.

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