Peru-Australia Trade Agreement “Most Ambitious So Far”

After completing negotiations three months ago, Peru and Australia signed a free trade agreement this week, “the most ambitious bilateral agreement signed so far by Peru,” according to Trade and Tourism minister Enrique Ferreyros.

The Peru-Australia Trade Agreement, PAFTA, “will bring us even closer to one of the most important markets in the Asia-Pacific region, whose inhabitants have a high purchasing power. I’m sure the deal will provide great opportunities for our goods and services exporters,” Ferreyros said.

The agreement was signed in Canberra by Ferreyros and Steven Ciobo, Australia’s minister of Trade, Investment and Tourism. It covers a wide range of trade, services and investment development opportunities, including the recognition of Australian university degrees in Peru, reduction of red tape, and the elimination of import tariffs on 95 percent of Peru’s export products.

Agroexporters trust they will be able to double agricultural exports to Australia by 2021, from the current fledgling total of $50 million per year (namely coffee, cacao, and some fresh produce). The benefits will also come from Australia, with agricultural technology that includes the use of satellite, georeferencing and drones to improve farm production.

Total exports to Australia in 2017 were $185 mn, of which 60 percent was in minerals such as copper, zinc and lead.  Currently, exports to Australia are equivalent to 0.4 percent of Peru’s trade revenue.

For Peru, the benefits of PAFTA will be seen in the long term if Peruvian businesses and industries fully use this opportunity.

According to Rafael Zacnich, chief economist at the private foreign trade association, Comex Peru, “Taking advantage of these opportunities is what will determine the real impact.”

For Australia, the comprehensive agreement supports its goal of increasing its gains from the Trans-Pacific Partnership (TPP), and provides a gateway to Latin America.  Specific benefits include the elimination of tariffs on beef within five years, and immediate duty-free access for  Australian wine, sheep meat, most horticulture products (including almonds), kangaroo meat and wheat; and also for pharmaceuticals, medical devices, paper and paperboard.

According to Australia’s Department of Foreign Affairs and Trade, PAFTA will allow more sugar market access for Australian sugar farmers than what Peru has provided to any sugar exporting country in the past twenty years. It also offers the best services commitments that Peru has offered any other country, which will create new opportunities for Australian mining service providers.

During his visit to Australia this past week, Ferreyros also inaugurated Peru’s new trade office, OCEX Sydney, directed by commercial councilor Mario Vargas.   Trade and Tourism has 35 commercial offices abroad.