¡Hola Peru! Trade negotiations kick off in Lima

Todd Dias   Sophia Vincent   By Todd Dias, Australian services trade negotiator for PAFTA; and Sophia Vincent, Australian goods trade negotiator for PAFTA

Peru – home of the ancient Inca civilisation, attractions like Machu Picchu and, we hope, Australia’s newest trade agreement.

Peru might not be top of mind for most Australians, but even before we arrived it was clear that ties between our two countries are strong.  It seemed that half the passengers on our first flight (from Australia to Santiago) joined us on the connecting flight to Lima.  They were a mix of Peruvian students returning from studying in Australia (there are over 1,600 of them in Australia) and Australian tourists excited about starting their Latin American holiday (Peru is the number one destination in South America for Australians).

We were equally excited about starting our trade negotiations with the Peruvian Government.  Many of us had already forged close working relationships with our Peruvian counterparts in other places like the Trans-Pacific Partnership negotiations, the Asia Pacific Economic Cooperation (APEC) and the World Trade Organization.

Peruvians are a pleasure to work with.  They, like us, believe in the benefits of liberalising international trade and investment.  Their government began opening their economy in the 1990s (not too long after Australia did the same).

Discussions continue outside the negotiating room.

It is the opportunities from Peru’s economic growth that we are trying to tap into with the Peru-Australia Free Trade Agreement (FTA).  We want to improve Australia’s competitive position in the Peruvian market. We want to create a higher level of legal certainty for Australians trading with and investing in Peru. And we hope the Peru-Australia FTA will have a head-turning effect to encourage even closer ties between us.  All of that builds business links, and that means increased investment and employment.

So what are trade negotiations like? Well, let’s be honest, they can be slow going at times.  We discuss every word of the text (and there’s a lot of text!) because we want to be sure that we get the best deal possible for both sides.  With the Peru-Australia FTA, we are lucky because we have a shared negotiating history with the TPP, and a prior understanding of each other’s interests, which means we can move along quite smoothly.

Ready to kick off negotiations.

The term “free trade” can sometimes be read as meaning that governments are throwing off all the shackles of regulation and opening up the market without restraint. That causes understandable concern from some in the community. But, despite the agreement’s name, we aren’t negotiating to give up our sovereignty – when all is said and done in an FTA, Australian laws and standards remain in place, and we retain our right to regulate international trade and investment.

In Lima, we spent a lot of time agreeing to areas that both sides wanted to exclude from parts of the agreement.  Social services are a great example – anyone who has found the time to read the TPP will know that Australia and Peru both excluded sectors like public health and education from the services and investment obligations.

Naturally, however, the negotiations aren’t just about seeking exclusions. We also discuss ways to make doing business easier for our respective firms. This is particularly the case in areas like mining and related services, education, pharmaceuticals, telecommunications, financial services and agriculture, where Australian business has told us it is keen to build its presence in Peru.

We also are committed to carving out a competitive edge in Peru for Australian exports. Many agricultural products have difficulty accessing the Peruvian market at the moment because of high tariffs. Peru is one of the fastest growing economies in Latin America, with a remarkable average growth of 5.9 per cent over the last ten years, and huge demand for many goods that are key export strengths of Australia. We are working to eliminate tariffs levied on Australia’s exports and establish mechanisms to discuss and resolve non-tariff barriers as they arise.

A key part of our job as negotiators is to raise any interests that Australian stakeholders raise with us with our Peruvian counterparts. We are doing this already, but we are also keen to hear more – so if you do have any interests, questions or concerns, feel free to let us know – it’s as simple as sending an email to pafta@dfat.gov.au. But you might want to get in quick, as the first round of negotiations showed that we are on track to conclude a deal pretty rapidly.

High level of interest from the Peruvian delegation…and a great view to distract us!

After three days locked in negotiations in an old airport control tower (which these days houses Peru’s Ministry of Foreign Trade and Tourism), what do we have to show? We have already agreed to a significant amount of the treaty text, and will keep working by phone and email over coming weeks to finalise as many of the minor outstanding issues as possible.

We don’t get much down time on these trips, but even so, the vibrancy of Lima is undeniable. It is clearly a city on the rise in a country with a bright economic future. We want Australians to be part of that future – with a high-quality FTA paving the way.

Find out more about the Peru-Australia Free Trade Agreement.

Downtown San Isidro, Lima.
Peru’s Ministry of International Trade and Tourism – MINCETUR.

2 thoughts on “¡Hola Peru! Trade negotiations kick off in Lima

  1. Elisabeth Perrin

    Dear Todd,
    Thank you for your post. I am very excited by the PAFTA negotiations to enhance relations between Australia and Peru. I went to Lima, San Juan de Lurigancho, Cusco and Machu Picchu in January this year, and must say I’m quite impressed by Peru’s potentials (despite many challenges). What are the top trade areas where PAFTA will be beneficial to Australia’s businesses (and the Australian society and Peru vice versa)?
    With best wishes,

    1. Dear Elisabeth

      Thank you for your message and great to hear you, like us, were impressed with Peru’s potential on your recent trip. We have more information about PAFTA on our website (www.dfat.gov.au/pafta), but in a nutshell the agreement will cover trade in goods, services, investment, intellectual property, environment and labour standards, government procurement, electronic commerce and a range of other areas. Our intent is to make it easier to trade between our countries and to encourage greater two-way investment. There will be opportunities for Australian producers to export more agricultural products, mining equipment and medical devices, among others. We also want to make it easier for Peruvians to benefit from a high-quality Australian education (either here or in Peru) and for our highly skilled professionals, such as architects, to provide services in Peru. The Peruvian Government has identified textiles and horticulture as its main areas of interest.

      The final deal will determine the extent of the benefits, but we are confident PAFTA will help businesses and consumers on both sides of the Pacific. We want to promote genuine win-win partnerships, not create an agreement that will make basic services more expensive or give companies unfettered rights to challenge legitimate public policies. This is all part of our ongoing efforts to grow business and people-to-people links with Latin America and we hope these efforts will eventually lead to one of our airlines starting direct flights from Australia to Lima, making your next trip to Peru a little less time consuming!

      Best wishes – Todd Dias

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