VZCZCXRO3753
RR RUEHAO RUEHCD RUEHGA RUEHGD RUEHGR RUEHHA RUEHHO RUEHMC RUEHNG
RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHPE #0693/01 1121757
ZNR UUUUU ZZH
R 211757Z APR 08
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 8460
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPLOMATIC POSTS
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 03 LIMA 000693 
 
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 & 
 
LIMA 00000693  002 OF 003 
 
 
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.  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 
 
LIMA 00000693  003 OF 003 
 
 
concession to develop and operate a new terminal 
at Callao. 
 
PTPA AGRICULTURE ASSISTANCE WILL REACH $1.2 
BILLION 
¶10.  The Minister of Agriclture 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