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### Viewing cable 08LIMA150, PERU SIGNS FTA WITH CANADA AND MOVES FORWARD ON OTHER FREE

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08LIMA150 | 2008-01-28 19:07 | 2011-04-28 00:12 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Lima

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    VZCZCXRO3212
    RR RUEHAO RUEHCD RUEHGA RUEHGD RUEHGR RUEHHA RUEHHO RUEHMC RUEHNG
    RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
    DE RUEHPE #0150/01 0281950
    ZNR UUUUU ZZH
    R 281950Z JAN 08
    FM AMEMBASSY LIMA
    TO RUEHSG/AMEMBASSY SANTIAGO 1699
    RUEHME/AMEMBASSY MEXICO 3604
    RUEHUL/AMEMBASSY SEOUL 0557
    RUEHKO/AMEMBASSY TOKYO 2649
    RUEHGP/AMEMBASSY SINGAPORE 0206
    RUEHOT/AMEMBASSY OTTAWA 3135
    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

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    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

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