Peru and Australia trade talks underway

Peru and Australia trade talks underway

Farm Online News

A Free Trade Agreement with Peru could carry potential growth opportunities for Australian farm exports through new tariff cuts.


PERU is the next nation in the Coalition government’s sights to strike a Free Trade Agreement with, carrying potential growth opportunities for Australian farm exports through new tariff cuts.

Trade Minister Steve Ciobo is set to launch negotiations tomorrow on an FTA with Peru, following up on last week’s announcement that similar talks had been kick-started to secure a trade deal with Hong Kong.

Mr Ciobo’s launch of talks for the Peru-Australia FTA (PAFTA) - alongside the country’s Trade Minister Eduardo Ferreyros - also arrive after he recently thrust the Trans Pacific Partnership (TPP) back into the spotlight.

The TPP was declared “dead” by the federal opposition after US President Donald Trump signed his country’s withdrawal, in one of his first acts after coming to office at the start of this year.

But Mr Ciobo met with trade ministers from the 10 other TPP countries at the APEC forum in Vietnam at the weekend to discuss the deal’s future, which was described by the National Farmers’ Federation as still being a transformational opportunity for Australian agriculture, despite the US withdrawal.

Following the 2013 federal election, former Trade Minister Andrew Robb also signed new FTA’s with China, Korea and Japan which cut long-standing tariff barriers on major farm exports like beef and dairy, which provided Australia with a competitive advantage over large agricultural exporting countries like the US.

Peru has a population of 31 million and is one of the fastest growing economies in Latin America.

It presents a growing opportunity for Australian exporters that face a competitive disadvantage in the market due to imports from the US, EU and Canada that have duty free access via existing FTAs.

Many of Australia’s agricultural exports to Peru face high tariffs like; beef (up to 17 per cent) and dairy and sugar (up to 29pc), while sheep meat, wheat, rice and wine also face tariff barriers.

But the per capita beef consumption in Peru is estimated to rise from 7 kilograms in 2014 to 20 kilograms in 2020, as the country grows.

Mr Ciobo said Australians traditionally looked north to Asia when expanding offshore, “but there are also massive opportunities to our east in Latin America”.

“Peru presents a growing opportunity for Australian exporters that this FTA will help unlock,” he said.

“Australia’s agricultural exporting strengths of beef, sheep meat, horticulture, wheat, barley, rice, canola, sugar and wine are effectively shut out of the Peruvian market because of tariff barriers.

“A high quality FTA with Peru will help Australian farmers compete and break into this market.”

Mr Ciobo said there were good growth prospects in Peru for Australian agricultural exports and a major Peruvian supermarket chain had already expressed interest in importing Australian beef.

Peru Trade Minister Eduardo Ferreyros in Canberra today.

Peru Trade Minister Eduardo Ferreyros in Canberra today.

But he said without an FTA, Australian exporters would be “uncompetitive” and unable to take up the opportunities.

Peru is a member of the Pacific Alliance trading bloc and a new FTA could be used as a stepping-stone to an Australia-Pacific Alliance FTA including Mexico, Chile and Colombia, he said.

“An agreement with Peru could be negotiated quickly, based on our shared history of negotiating the TPP,” he said.

“The Turnbull government is pursuing an ambitious trade agenda and more agreements to open new markets for Aussie exporters.”

In 2015-16, Australia’s total two-way trade in goods and services with Peru was worth $504m - up 19.4pc from the previous year.

The number of Australian companies operating in Peru has grown from 10 in 2003 to currently more than 90.

WA rural Liberal MP Nola Marino welcomed the starting of trade talks on a deal with Hong Kong last week, with potential benefits for agricultural exports.

Total two-way trade in goods and services between the two countries last year was worth $15.3 billion.

Currently annual agricultural exports from Australia to Hong Kong are worth $1.2 billion, covering a wide range of goods like beef, lamb, pork and poultry.

In 2015, Australian chilled and frozen beef exports to Hong Kong were valued at $81.3 million and lamb $14.3 million.

In 2016, Australia was the number one supplier to Hong Kong for cheese and yoghurt and number two for stone fruits like apricots, cherries, peaches and plums and almonds.

Mr Ciobo said Australia had a “terrific opportunity” to boost the export of services like those in the finance sector, when trading with a services-focussed economy like Hong Kong.

He said Australia, Canada, NZ and other countries had been holding “really fruitful” discussions about capturing gains contained within the TPP, after the US withdrawal.

“I don't know ultimately what's going to happen but what I am going to do is make sure we put in a concerted effort to try to get TPP over the line as a TPP11 if need be,” he said.

“We're going to keep having these conversations looking at whether or not we can put in place a TPP11 - maybe not by the end of the year but certainly in the first half of next year.

“But there's a lot of process that we've got to work through and of course with the US withdrawing, it's changed the metric for countries.

“I understand that countries will need to recalibrate their metrics around the TPP and that's just a process that's going to get worked through and it just takes a little bit of time.”


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