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RR RUEHAO RUEHCD RUEHGA RUEHGD RUEHGR RUEHHA RUEHHO RUEHMC RUEHMT
RUEHNG RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHPE #1183/01 1931707
ZNR UUUUU ZZH
R 111707Z JUL 08
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 8988
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RHEBAAA/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 001183 
 
SIPDIS 
 
COMMERCE FOR 4331/MAC/WH/MCAMERON 
TREASURY FOR MEWENS 
USTR FOR BHARMAN AND MCARRILLO 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EFIN EAIR USTR PE
 
SUBJECT: JUNE TRADE, INVESTMENT & AVIATION BRIEFS 
 
SUMMARY 
------- 
¶1.  This is an update on the following trade, investment and 
aviation news from Peru: 
 
Trade 
-- Peru Pursuing Trade Negotiations in Asia 
-- Trade Agreement with China Moves Forward 
-- Bilateral Trade Between Peru and India Exceeds $450 million 
-- Imports Reach Record Level in May 
-- Wal-Mart and Costco Voice Interest in Peruvian Products 
-- Exporta Facil Supports Peruvian Exports Not Only in Lima 
 
Investment 
-- Yahoo, Peru Specific Portal 
-- Alicorp Buys Argentine Business 
 
Aviation 
-- Airline Icaro de Ecuador Interested in Peru 
-- Aero Condor Fleet Shut Down 
End Summary. 
 
Peru Pursuing More Trade Negotiations in Asia 
--------------------------------------------- 
¶2.  Peru and South Korea agreed last September on preliminary themes 
in order to initiate negotiations on a trade agreement. 
Negotiations are anticipated to begin during the first trimester of 
¶2009.  Peru and Hong Kong have begun to explore the possibility of 
beginning negotiations on a free trade agreement.  Japan is now 
considering placing Peru on its list of priority countries for 
negotiating trade agreements, having rejected the possibility of a 
trade agreement with Peru last year. 
 
Trade Agreement with China Moves Forward 
---------------------------------------- 
¶3.  Peru continues to move forward on its agreement with China. 
Sources in the trade ministry say the Chinese are increasingly open 
to expanding the scope of the agreement.  The GOP has penciled in a 
possible signing at the APEC Leaders summit in November by both 
Presidents.  Chinese Trade Minister Chen Deming assured the 
Peruvians that negotiations will move forward as quickly as possible 
so both countries will soon benefit from a trade agreement. 
 
Peru-India Trade Exceeds $450 Million 
------------------------------------- 
¶4.  Bilateral trade between Peru and India already exceeds $450 
million a year, and relations between the two nations are gaining 
increasing importance, the Indian Ambassador Apuni Armes told the 
media.  "In general (trade) has quadrupled in recent years and both 
Peru and India have been pursuing similar development models," he 
stressed.  He indicated that there are many companies in India that 
have the ability and desire to establish relations with Peru, and 
Reliance Industries Limited (RIL) is one of the most interested. 
RIL is India's largest private sector enterprise. 
 
Imports Reach Record Level in May 
--------------------------------- 
¶5.  Imports increased 67.3% compared with May 2007.  This represents 
52 consecutive months of increases in imports to Peru.  Increased 
consumer demand and decreases of tariff rates by the Government of 
Peru fuel the demand for imported products.  Raw materials and 
intermediary products lead the list of most popular imports for May, 
followed by capital goods and construction materials, and then 
consumer goods.  Despite alarm bells by some economists, Peter 
Anders of the Lima Chamber of Commerce pointed out that the type of 
products being imported to Peru indicates that this is a result of 
increased investment in Peru.  Continued investment in Peru brings a 
demand for imports such as machinery, raw materials, and production 
goods.  Ultimately, he said, the result of theseimports will be 
greater production for Peru which will help the trade imbalance. 
 
Wal-Mart & Costco Interested in Peruvian Products 
--------------------------------------------- ---- 
¶6.  Wal-Mart is planning a trade visit to Peru in August to discuss 
opportunities for purchasing fish products for its supermarkets. 
Costco has met with the Peruvian Embassy in Washington to discuss 
the purchase of fruit, vegetables, coffee, cacao, and fish products 
for sale in its stores. 
 
Exporta Facil Spurs Exports Throughout Peru 
 
LIMA 00001183  002 OF 002 
 
 
------------------------------------------- 
¶7.  SUNAT (Customs Agency) announced that 90% of exports made by 
postal service occur via 'Exporta Facil.'  In particular small and 
medium size businesses are using the program to increase 
international sales.  Exports under this program which began in July 
2007 have reached US$500,000.  Exporta Facil is a government 
initiative regulated by SUNAT, Ministry of Transportation and 
Communication, Ministry of Economy and Finance, Promperu, Serpost 
and other institutions.  SUNAT noted that Exporta Facil is the 
preferred mechanism for businesses far from Lima to export their 
products.  Besides Lima, exports are being realized from Arequipa, 
La Libertad, Lambayeque, Ancash, Puno, Amazonas, Ayacucho, and other 
regions under this program. 
 
Yahoo: Peru Specific Portal 
--------------------------- 
¶8.  On June 11, Jose River Front, the VP and General Manager of 
Yahoo Hispanoamerica, officially presented its Peru version Yahoo 
portal (http://pe.yahoo.com).  The portal will provide local 
information to its users.  Internet users will be able to search the 
web through traditional methods with more relevant local information 
appearing on the main page, instant messaging, question and answer 
page, news, and tools.  Currently, Yahoo has local version portals 
in Argentina and Mexico.  Future portals in Latin America include 
Colombia, Chile, and Venezuela. 
 
Alicorp Expands, Buys Argentine Business 
---------------------------------------- 
¶9.  Alicorp (Grupo Romero - Peruvian Company), Peru's biggest wheat 
importer and processed food manufacturer and distributor, announced 
the purchase of Argentine company The Value Brand Company (TVB). 
TVB is the third most important company in Argentina for personal 
and home care products.  Alicorp purchased TVB for US$65 million. 
Sales for TVB reach approximately $100 million.  TVB exports its 
products to Peru, Bolivia, Chile, Paraguay, and Uruguay.  This 
purchase follows others made in the region by Alicorp.  Last year, 
Alicorp purchased an Ecuadorian business, Eskimo.  The General 
Manager for Alicorp acknowledged that the company is pursuing 
business in Central America as well, looking at projects in 
Honduras, El Salvador, and Guatemala. 
 
Airline Icaro de Ecuador Interested in Peru 
------------------------------------------- 
¶10.  The airline company Icaro de Ecuador has expressed interest in 
investing in Peru's domestic market.  The airline operates small 
aircraft in Ecuador.  Peruvian Trade & Tourism Minister Mercedes 
Araoz told the media that the entrance of foreign airlines into the 
domestic market is needed for improved competition and service to 
areas that are not being served by Peruvian airlines due to high 
fuel costs.  Both Aero Condor and Star Peru airlines have announced 
suspension of air service to many routes due to high fuel costs. 
 
Aero Condor Flights Shut Down 
----------------------------- 
¶11.  Recently, Aero Condor (Peruvian airline) announced that the 
company would cease operation of its 737 fleet due to high fuel 
costs.  The following day, the Ministry of Transportation and 
Communication (MTC) announced that Aero Condor had been told to 
cease operation of the fleet due to numerous incidents involving 
mechanical failures.  LAN Peru announced on the same day as the MTC 
announcement, that the airline will begin routes previously served 
by Aero Condor's 737 fleet. 
NEALON