US FTA Brings Few Benefits to Peru

17 August 2010

Pedro Francke

Since coming into force on 1 February 2009, the Free Trade Agreement (FTA) signed between the US and Peru appears to have brought few benefits to the Andean nation, according a column by Pedro Francke, an economist at Lima's La Católica University, for Peruvian newspaper La Primera.

According to the economist, exports of textiles to the US fell by 28% in 2009, whilst in the same year exports by China, Bangladesh and India practically saw no change and they do not have FTAs with the US.

The overall trade balance appears to have favoured the US. Whilst Peruvian exports to the US haven’t seen much benefit since the FTA came into force (these grew by just 10% in 2008 and fell by 27% in 2009), it seems that the country imports more from its North American partner (these were up 50% in 2008, but fell by 20% in 2009).

Another key point centres on the failure to create jobs since the FTA came into force. Peru's former trade and tourism minister, Alfredo Ferrero, had said that the trade agreement would lead to the creation of some 900,000 new jobs.

The FTA with the US was supposed to improve environmental conditions in Peru, however since the implementation of the agreement the Peruvian government has seen indigenous protests as it attempted to bring in legislative changes that would give greater access by foreign investors to forestry, mining and other natural resource concessions, including huge areas of Peru’s Amazon region

Despite all these apparent problems, Peru’s Exporters’ Association (Adex) maintains that the international financial crisis has prevented Peru from reaping the benefits of this trade agreement and therefore the country will have to patiently await its northern partner’s economic recovery.

 

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