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DE RUEHPE #0150/01 0281950
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FM AMEMBASSY LIMA
TO RUEHSG/AMEMBASSY SANTIAGO 1699
RUEHME/AMEMBASSY MEXICO 3604
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RUEHKO/AMEMBASSY TOKYO 2649
RUEHGP/AMEMBASSY SINGAPORE 0206
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RUEHBJ/AMEMBASSY BEIJING 0408
RUEHC/SECSTATE WASHDC 7745
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/DEPT OF INTERIOR WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 02 LIMA 000150 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
COMMERCE FOR 4331/MAC/WH/MCAMERON 
TREASURY FOR MMALLOY 
USTR FOR BHARMAN AND MCARRILLO 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EFIN USTR CA CH CI EU PE
 
SUBJECT: PERU SIGNS FTA WITH CANADA AND MOVES FORWARD ON OTHER FREE 
TRADE AGREEMENTS 
 
 
SUMMARY 
------- 
¶1. (SBU) With the U.S.- Peru Free Trade Agreement, approved by the 
U.S. Congress last month, in its implementation phase,  the 
Government of Peru (GOP) has closed its agreement with Canada, and 
is actively negotiating a tariff-only deal with China.  The GOP is 
also looking to conclude agreements with Singapore and Mexico.  On 
one front the GOP appears to be gaining momentum on concluding free 
trade agreements with numerous partner countries; however, the 
picture is not as rosy with regard to negotiations with the European 
Union, where the GOP has questioned whether it should continue to 
negotiate alongside Bolivia and Ecuador, or instead seek a bilateral 
agreement.  While Peru and Chile signed a trade agreement in 1998 
(updated in 2006), the Chilean government announced last week that 
it would wait to submit the agreement to its senate.  Peruvian 
observers say that the delay is politically motivated and related to 
Chile's pique over the maritime border dispute. 
END SUMMARY. 
 
 
CANADA - SIGNED AND PREPARED FOR IMPLEMENTATION 
--------------------------------------------- -- 
¶2. (SBU) This weekend in Davos, Switzerland, on the margins of the 
World Economic Summit, Peru and Canada signed their free trade 
agreement. The negotiation process started July 16, 2007, with the 
fourth and last negotiation round held in November.  Peru plans for 
the implementation stage to correspond with that of the U.S.-Peru 
Trade Promotion Agreement so both agreements may enter into force 
simultaneously. 
 
¶3. (U) The Canadian-Peru trade agreement is very similar to the 
U.S.-PTPA.  Unlike Canada's agreement with Chile, the Peru agreement 
includes provisions on intellectual property rights.  The agreement 
also addresses biodiversity issues in the environment chapter, 
protection for consumers and safety of electronic commerce, and 
strong measures for sanitary and phytosanitary protections. Canadian 
government sources say the agreement would Qer into force when the 
U.S. agreement enters into force. 
 
CHINA - AGREEMENT AS APEC DELIVERABLE 
------------------------------------- 
¶4. (U) Negotiations on a limited tariff agreement with China 
advanced this week with the first round of talks being held in Lima. 
 The next round will be held in Beijing on March 3, 2008.  The GOP 
hopes to conclude four or five negotiation rounds prior to November 
with plans for the agreement to be signed at the Lima APEC Leaders 
Summit. China is Peru's second largest commercial partner.  Peruvian 
exports to China also grew thirty percent from 2006 to 2007. 
 
¶5. (SBU) Unlike the PTPA, the Peru-China trade agreement, is largely 
a tariff-only agreement, establishing a list of products which will 
be excluded from the agreement, such as some textiles and shoes. 
The agreement will include safeguards to protect the Peruvian market 
from a massive influx of imports.  Peru's minister of Foreign Trade 
and Tourism, Mercedes Aroz sees China's principal interest in 
Peruvian minerals and fishmeal products, with a growing interest in 
Peru's agricultural exports.  Peru continues to be interested in 
Chinese electronic goods and equipment. 
 
¶6. (SBU) The Association of Peruvian Exporters (ADEX) provided the 
Embassy with a summary and critique of the first round of 
negotiations held from January 20-23 in Lima.  The themes covered 
during the first negotiations included market access, rules of 
origin, commercial technical obstacles, dispute settlement, customs 
processes, commercial defenses, sanitary and phytosanitary measures, 
services, investment, and intellectual property rights.  On each 
topic, Peru and China submitted their proposals with plans for 
further evaluation at the next round of talks.  On commercial 
technical obstacles, an agreement was made to create an 
English-language website which will provide a central location for 
 
LIMA 00000150  002 OF 002 
 
 
information on regulations and evaluation criteria.  On dispute 
settlement, China proposed that all chapters in the agreement be 
covered.  Initially, China did not agree to include a chapter on 
customs procedures in the agreement, but are now discussing 
convening a special committee to address the issue.  On sanitary and 
phytosanitary measures, China is in agreement with the proposal 
offered by Peru. 
 
PERU AND THE EU - WITH THE ANDEANS OR ALONE? 
-------------------------------------------- 
¶7.  (SBU) While the Andean Community (CAN) finally reached a modus 
vivendi with the EU late last year by agreeing to negotiate an 
association agreement on two tracks, President Garcia questioned 
again whether Peru would be better off negotiating a trade deal 
bilaterally with the EU.  Under the two-track system, Colombia and 
Peru would advance quickly, while Ecuador and Bolivia would move at 
their own pace.  During Garcia's January 14-15 trip to Spain, he 
told a Spanish business audience that Peru and Colombia should not 
be punished because they are more committed to free trade than their 
neighbors Bolivia and Ecuador.  Foreign Trade Minister Araoz 
suggested the President was expressing the government's frustration 
with these neighbors, but said the government was still committed to 
the Andean Community for now. 
 
CHILEANS POSTPONE FTA VOTE IN PIQUE 
----------------------------------- 
¶8.  (SBU) In an event unrelated to trade policy, the Chilean 
government announced yesterday that it would no longer submit the 
Chile-Peru FTA to a vote in the Chilean Senate on a special approval 
(fast-track equivalent) procedure during the Congressional recess. 
Instead, the bill would be submitted when the Congress returns in 
March.  Chilean Embassy contacts told us the reasons for this move 
were largely technical, but Peruvian observers speculate it was 
intended as a political gesture to indicate Chile's displeasure at 
Peru's having initiated a legal process at the International Court 
of Justice in The Hague to resolve the bilateral maritime border 
dispute.  (SEPTEL TO FOLLOW). 
 
CONCLUSION 
---------- 
¶9. (SBU) The Government of Peru sees free trade agreements as a 
means for sustained economic growth and reduction of poverty.  In 
addition to concluding negotiations with Canada, Singapore, and 
Mexico, and beginning negotiations with China and South Korea, Peru 
has approached Japan to explore opportunities for a trade agreement. 
 Trade agreements are just part of that outreach effort. Hosting 
APEC will also provide Peru with worldwide visibility, as will the 
May 2008 European-Union - Latin America and Caribbean (EU - LAC) 
Summit.  Both trade agreements and summits in 2008 will enable Peru 
to position itself to become an active partner in worldwide economic 
relationships in the years to come. 
NEALON