VZCZCXRO8210
RR RUEHAO RUEHCD RUEHGA RUEHGD RUEHGR RUEHHA RUEHHO RUEHMC RUEHNG
RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHPE #0655/01 1061926
ZNR UUUUU ZZH
R 151926Z APR 08
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 8412
INFO RUEHWH/WHA DIPLOMATIC POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RHMFIUU/DEPT OF ENERGY 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 000655 
 
SIPDIS 
 
SIPDIS 
 
COMMERCE FOR 4331/MAC/WH/MCAMERON 
TREASURY FOR MMALLOY 
USTR FOR BHARMAN AND MCARRILLO 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EFIN USTR PE
 
SUBJECT: PERU TRADE AND INVESTMENT BRIEFS 
 
 
SUMMARY 
¶1.  This is an update on the following trade and investment news 
from Peru: 
 
-- Imports Increase 30% First Two Months of 2008 
-- Peru Reports $538 Million Trade Surplus for February 
-- 2007 Agriculture Exports Remain High 
-- Peru Investment Grade Follow On 
-- Strike, Environmental Challenges at Doe Run Peru 
-- Despite Politics, Chileans Propose More Investment in Peru 
-- Peruvians Interested in Purchasing North American Stocks 
-- Port Concessions Could Result in Significant Investment 
-- PTPA Agriculture Assistance Will Reach $1.2 Billion 
 
IMPORTS INCREASE 30% FIRST TWO MONTHS OF 2008 
¶2.  Peru's imports are up 30.2% from the same period last year, 
mostly due to strong consumer demand.  For January and February, 
capital goods were up 33.8%, consumer goods were up 42.13% and 
durable goods also showed an increase.  The number one country of 
origin is the U.S. with 18.9% of the import volume, or $264.4 
million in February alone.  Next is China with 16.4% or $214 million 
followed by Japan, Mexico, and Colombia.  The Korean car company Kia 
reported a 93% increase in imports in the first trimester due to a 
71% increase in sales. 
 
PERU REPORTS $538 MILLION TRADE SURPLUS FOR FEBRUARY 
¶3. Peru reported a February net trade surplus of $538 million as a 
result of larger than expected exports earnings due to higher prices 
and increased production, according to the Central Bank.  Exports 
grew 26.4% from the same month last year to $2.411 billion, while 
imports totaled $1.873, resulting in a 37.2% surplus.  Traditional 
exports were up 26.3% to $1.840 billion owing mostly to increased 
sales in copper (up 57.5%) and gold (up 75.4%).  Non-traditional 
exports grew 27.6% to $559 million from the same time last year 
driven primarily by agriculture, fisheries, and chemicals markets. 
 
 
2007 AGRICULTURE EXPORTS REMAIN HIGH 
¶4.  An increase in prices and high production levels led to record 
agricultural exports, totaling $2.167 billion in 2007, up 5% from 
¶2006.  Production levels were seen on average to have increased 
3.1%, with a 15% increase in sugar, and an 8% increase in asparagus. 
 The top exports in rank order were: asparagus, paprika, artichokes, 
grapes, avocado, and citrus.  Predicted climactic conditions 
indicate that 2008 exports will be even higher in production and 
will benefit from an opening of new markets in China, Singapore and 
Thailand.  Peru is the number one exporter of fresh asparagus to the 
United States and has become number one in preserved artichokes, 
recently overtaking Spain. 
 
PERU INVESTMENT GRADE FOLLOW ON 
¶5. Despite the congratulatory mood around the Fitch Investment 
recent rating of Peru as investment grade BBB minus (stable), 
observers say that markets had largely factored in the upgrade. 
Peruvian assets showed some improvement, and additional investment 
flows into Peru in terms of both FDI and portfolio inflows will now 
increase marginally.  Nevertheless, market observers say increases 
will be more substantial once an additional investment upgrade is 
received from one of the major raters, such as Moody's or Standard & 
Poor's.  Fitch made the announcement based on strong improvement in 
Peru's fiscal and external solvency ratios, which helped 
counterbalance credit weakness, as well as political and social 
risks.  Standard & Poors and Moody's rate Peru at one and two 
notches below investment grade respectively. 
 
STRIKE, ENVIRONMENTAL CHALLENGES AT DOE RUN PERU 
¶6.  The U.S.-owned Doe Run metallurgical plant in La Oroya is 
operating at partial strength due to a week-long strike by most of 
its 1,720 workers, who are demanding shorter hours and more pay. 
Unrelated, the Peruvian subsidiary also recently lost its 
environmental certification from German-based company TUV Rheinland. 
 The Peruvian government recently gave Doe Run until next year to 
complete an emergency clean-up plan to alleviate toxic emissions 
near the smelter. The company was recently sued in U.S. federal 
courts for the lead poisoning of 150 Peruvian children living near 
the plant. 
 
DESPITE POLITICS, CHILEANS PROPOSE MORE INVESTMENT IN PERU 
¶7.  Despite the current bilateral dispute over maritime borders, 
Chilean investors remain very interested in investing more in Peru. 
 
LIMA 00000655  002 OF 002 
 
 
The president of the Chilean Bank and Financial Investment 
Association stated Chilean investors are putting pressure on their 
Congress to widen its commercial agreement with Peru and approve an 
FTA immediately in order to invest significantly more.  Peru is the 
third largest recipient of Chilean investment in the world, a total 
of $5.575 billion from 1990-2007, currently providing for over 
40,000 Peruvian jobs.  Chilean investors currently dominate the 
retail sector. This time Chilean investors are reportedly looking 
seriously at the energy sector. 
 
PERUVIANS INTERESTED IN BUYING NORTH AMERICAN STOCKS 
¶8.  The president of the Central Stock Registry predicted that 
Peruvian purchases of U.S. and Canadian stocks will increase $122.8 
million in the first quarter of 2008 (up 147% from the same time 
last year), 95% in stocks and 5% in bonds.  He reported that sales 
of Peruvian stock to foreign investors this first quarter totaled 
$196.8 million (up 29%), 86% in stocks and 14% in bonds.  Most of 
the stocks purchased in both directions were in the mining, 
telecommunications, hydrocarbon, and banking and financial sectors. 
 
 
PORT CONCESSIONS COULD RESULT IN SIGNIFICANT INVESTMENT 
¶9.  Peru's port concessions could result in $411 million of 
investment in Peru's seven ports.  The ports include Paita, 
Salaverry, Chimbote, Ilo, San Martin, Iquitos, Pucallpa, and 
Yurimaguas.  Peru's Investment Promotion Agency (ProInversion) 
stated that it will use the APEC and EU summits to attract investors 
from countries such as Singapore who has already expressed interest. 
 David Lemor, the Director of Peru's Investment Promotion Agency 
(ProInversion), voiced concern that the Peruvian Congress will 
weaken potential port concessions with legislation to replace 
national with regional port authorities and other changes to the 
National Port System Law.  On April 9th, the ports were shut down 
for two hours due to striking workers supporting the legislation. 
Peru's main port of Callao, outside Lima, remains troubled by 
inefficiencies. In June 2006, Dubai Ports World (DPW) acquired a 
30-year concession to develop and operate a new terminal at Callao. 
 
PTPA AGRICULTURE ASSISTANCE WILL REACH $1.2 BILLION 
¶10.  The Minister of Agriculture announced $1.2 billion investment 
over the next five years into two programs designed to assist with 
U.S.-Peru Trade Promotion Agreement (PTPA) implementation.  The 
competitiveness enhancement plan ($700 million) will aim to create 
economies of scale by the formation of associations with direct 
support for innovation, technology, and agricultural reconstruction. 
 The agro-rural program ($500 million) will work to modernize the 
poorest agricultural sectors, centralizing the administration of 
rural development activities and projects creating a single office 
for all related services.  It will have an emphasis on 
public-private partnerships with a focus on regional economic 
development.  There will be further details in the near future. 
MCKINLEY