Beef, sheep meat, sugar, dairy, rice, grain and wine are among the industries that stand to benefit from a new trade deal between Australia and Peru.
Yesterday, the Minister for Trade, Tourism and Investment, The Hon Steve Ciobo, announced the launch of the comprehensive Free Trade Agreement (FTA) following negotiations with Peru’s Minister for Foreign Trade and Tourism, Eduardo Ferreyros.
During the past 10 years Peru has been one of the world’s fastest growing economies, the fastest growing economy in Latin America, and the world, with the same gross domestic product as Vietnam (about $150 billion) and the same consumer base as Malaysia (30 million).
Many of Australia’s exports to Peru are blocked by high tariffs that this FTA will seek to eliminate. Australian dairy and sugar exports currently attract tariffs of up to 29 per cent, beef exports face tariffs of up to 17 per cent, and sheep meat, wheat, rice and wine also face tariff barriers. The United States, the European Union and Canada all have FTAs that give them preferential access to Peru. The Peru-Australia Free Trade Agreement (PAFTA) will help Australian farmers compete and break into this growing market.
The National Farmers’ Federation (NFF) has welcomed the Government’s announcement that talks are underway between the two countries to develop a FTA.
NFF President Fiona Simson said all steps to provide Australian farmers’ preferential access to global markets were positive.
“We congratulate Trade Minister Steve Ciobo and the Government for their continued focus on liberalised trade. As an export-dependent industry, Australian agriculture’s growth depends on continually improving market access for our products.”
An FTA with Peru is a stepping stone to a larger trade deal with the Pacific Alliance which includes Mexico, Peru and Chile and a way to retain some of the benefits negotiated through the Trans Pacific Partnership (TPP) process.
“Without such a deal, Australia, won’t be able to compete for Peruvian market share.
Yesterday’s announcement comes after remaining TPP countries met in Hanoi on the weekend to agree on a plan and a timeline to rescue the watershed agreement.
“We congratulate Minister Steve Ciobo for his dogged efforts in keeping the TPP, and the benefits it offers Australian farmers, alive.”
Ms Simson said a TPP without the US as a party was beneficial for Australia.
“Under a ‘TPP minus 1 agreement’ Australia will maintain preferential access into the US market by virtue of our existing bilateral FTA. We would also maintain preferential access for red meat into Japan, which the US would not get until it either joins the TPP or negotiates a bilateral agreement with Japan.
“The big challenge will be making sure countries such as Malaysia and Vietnam have an incentive to stay in the tent, as it was the carrot of the US market that brought them in,” Ms Simson said.
The first round of negotiations will be held in Lima in July. The NFF will be making a submission to the Office of Trade Negotiations.