Peru and Chinese president conclude free trade talks

Peru President Alan García and his Chinese counterpart, Hu Jintao, wrapped talks Wednesday to seal a free trade pact ahead of the Asia-Pacific Economic Cooperation summit this weekend.

“Today, in the presence of President Hu Jintao, we can announce the happy conclusion of negotiations for the free trade agreement with China,” García told reporters following the meeting. 

Jintao said the deal, which could be signed as early as next March, holds wider significance than the interests of the two nations forging the treaty.

“A greater development of Chinese-Peruvian relations is not only in the fundamental interest of the two countries and their peoples, but will also favor southern hemispheric relations and contribute to peace, stability and world development,” he said.

Amid concern that a Peru-China free trade deal could negatively affect Peru’s textile manufacturers, Commerce Minister Mercedes Aráoz denied Tuesday that local textile manufacturers — mainly located in Gamarra, one of the largest production and commercial areas in Peru — would be affected by the signing of a Peru-China trade pact, adding that the goal of this agreement is to generate more employment.

The trade deal is well balanced and sets guidelines for the protection of Peruvian textiles and footwear industries, said Aráoz. “It maintains the current levels of protection, with the highest tariff rate at 17 percent, added to a series of regulations that permit mechanisms such as customs protection and trade defense.”

Hu, who attended the G20 crisis talks in Washington on Saturday and stopped over in Costa Rica to thank President Oscar Arias Sánchez for cutting diplomatic ties with Taiwan, departed from Cuba on Wednesday morning to land in Peru’s capital, Lima, a few hours later.

Hu will take part in a two-day official visit before his participation in the APEC Leaders’ Summit scheduled for Nov. 22-23. He is accompanied by 600 people, including 12 of his top-ranking ministers and hundreds of business leaders.

Hu, who is the first Chinese president to set foot on Peruvian soil, met privately Wednesday afternoon with García, and was met with high military honors.

After ticking off a free trade deal with Chile in 2006, the Peru-China trade pact would be China’s second in Latin America, as the rising giant seeks to expand markets for its manufactured goods and sources of raw material to fuel its astounding growth.

China only has about 10 percent of arable land, its ocean is overexploited and it needs a lot of food, said Eduardo McBride, President of the Peruvian-Chinese Chamber of Commerce.

China needs what Peru has to offer, McBride added, and the Peruvian grape — whose exports shot up from zero to $9 million in the past two years — is a perfect example.

Singapore is the Andean country’s key destination in Southeast Asia for manufactured exports to the region. In 2006, total bilateral trade increased 55% from 2005 to total $45.2 million.

But, according to daily El Correo, the trade deal is to boost trade between Peru and China, likely making China the Andean country’s number one trade partner by 2009.

Travelling with Hu is Alibaba Group Chairman Jack Ma, a successful Asian entrepreneur dubbed “China’s internet godfather.”

Ma first started building websites for Chinese companies with the help of friends in the US. He founded Alibaba.com in 1999, a China-based business to business marketplace site which serves 12 million members from 200 countries.

Ma is scheduled to visit Lima’s renowned Gamarra garment district – where more cash transactions occur than anywhere else in Peru – to explain the benefits of the Peru-China trade deal and explain how the Andean country’s “Easy Export” program could help small and medium-sized businesses increase their exports.

“Commerce between China and Peru is very important and also strategic,” said Ma. “China has a huge market and China needs to develop more relations with South America, and especially with Peru.”

In China, and in many other Asian countries, added Ma, small and medium-sized business have integrated the globalized world with the help of technology. Peru could do the same.

Many Peruvians have Chinese ancestry, he said, “and in these modern times, we have to strengthen our relations.”

Trade talks between Peru and China were first launched in September 2007 when García and Hu met in Sydney on the sidelines of the 15th APEC Leaders’ Meeting. China-Peru ties have entered a new stage of development since the two countries established a comprehensive partnership of cooperation in 2005, as exchanges and cooperation in the areas of culture, education, science and technology, justice and tourism have become more frequent.

On the Taiwan issue, Garcia has always firmly adhered to the one-China policy.

Months prior, in March 2007, Li Changchun, member of the Standing Committee of the Political Bureau of the Central Committee of the Communist Party of China, visited Peru. During his visit, together with President García, Li co-announced to launch the China-Peru FTA Joint Feasibility Study in 2007.

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