Peru President Alan García looking to speed up tariff reduction process and establish free trade deal with Brazil

Peru President Alan García set the pace last week to accelerate an existing tariff reduction process with Brazil and facilitate the establishment of a two-nation free trade area.

“I propose a reinforced bilateral agreement on services, investment and financing that will reduce the set commercial tariff reduction period, allowing us to take a great leap, here and now, toward the future,” García said Thursday during his inaugural speech at the Sao Paolo-based ExpoPerú, or Forum on Investment, Trade, Tourism and Culture.

This new type of integration, García said, implies deepening our commercial agreements, a greater economic and political cooperation, an investment in democracy and liberty as well as an alliance that will project us toward the Pacific and Asia.

He recalled that Peru and Brazil already have a trade agreement that contemplates a 15-year period for tariff exemption, but that his administration hopes to speed up the process and reach that goal within a 10-year span.

“I believe that the best way to respond to the North American crisis, to the European recession,” said Garcia, who wants to include services, financing and investment is the trade deal, “is by strengthening via integration but without limiting ourselves to old models.”

“Brazil is part of Mercosur… and Peru is part of the Andean Community of Nations,” García added, “but between us a new type of relation is blosomming and it differs from the frameworks set up 50 years ago. This is the message of a new kind of integration, the twenty-first century’s integration.”

ExpoPerú, as a sign of this new cooperation, García argued, has been more than successful.

Five Brazilian companies have already expressed their desire to establish subsidiaries to exploit Peru’s precious “blue gold,” he said in comments to Radio Nacional, promising more than $1.5 billion in investment.

In Peru, water is a dire issue. The country’s glaciers, which feed hydroelectric plants and provide drinking water to Lima, the world’s second largest desert city after Cairo, Egypt, are in the process of accelerated meltdown due to global warming. Peru has historically suffered from its lack of a national water management plan, and in recent years, it has been at the core of social unrest among farmers in competition with the mining and metallurgic industries. Pollution from those sectors, as well as the massive use of agrochemicals, are another cause for concern.

And, according to Eduardo Ballón, an analyst for Peru’s Center for the Study and Promotion of Development, or Desco, Brazil isn’t interested in a free trade agreement with Peru, “all it has in Peru are important geopolitical interests.”

“Brazil isn’t interested by a FTA with Peru; that’s why President García has proposed moving along as quickly as possible with services, which, obviously, are going to be given to us by them,” he added. “Peru isn’t prepared to sell Brazil what it needs. But, the Peruvian government and some business sectors are interested in Brazilian investment… but what will Peru gain from all of this? In the short-term, very little or nothing at all, and in the medium-term, protection from a big brother different from the United States.”

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