Canada to Discuss Free Trade With Peru

from The Embassy

Peru and Canada could start discussions for a bilateral free trade agreement as early as February, according to Peruvian Agriculture Minister Juan Jose Salazar.

During a visit to Ottawa last weekend, Mr. Salazar said the talks would begin when Canadian Prime Minister Stephen Harper considers the time opportune, stressing that Peru has great expectations in achieving such an agreement, having done initial evaluations into the benefits of such a deal.

Mr. Salazar is the highest-ranking official from Peru to come on a working visit to Canada since former president Alberto Fujimori in 1998.

Mr. Salazar told Embassy his visit was first and foremost a political gesture. Peru wants to be closer to Canada, both politically and economically. He expressed his government's awareness of the Canadian market's significance for Peruvian exports, the potential benefits of a bilateral free trade agreement, and how co-operation in critical areas can be consolidated and improved.

In Quebec, the first stop of his visit, Mr. Salazar signed an agreement with an agricultural financing institution, which will allow Peru to receive assistance in areas such as geodesy, cadastre, land property rights and insurance. The goal is to select a pilot region in Peru in the next 60 days and within a year implement programs similar to existing ones in Quebec. The overall goal of this and other initiatives is to propel transition in agriculture, from subsistence models to achieving export competitiveness in a free trade context.

Canadian investments in Peru are very significant, estimated to be around $5 billion, particularly in the mining sector, with a bilateral investments protection agreement already in place. After the uncertainties surrounding Peru's last presidential election, with the second ballot contested by radical candidate Ollanta Humala and former president Alan Garcia, the victory of the latter–albeit a relief–still left the lingering doubts of his commitment to pursuing his predecessor Alejandro Toledo's macroeconomic policies. One of Mr. Garcia's first official visits as president was to the Canadian Embassy in Lima, where he reassured diplomats about the respect for the rule of law and legal certainties for Canadian businesses.

Currently, more than 80 Canadian companies are carrying out mining exploration operations in Peru. Mr. Salazar pointed out it is state policy to secure those investments, adding that although in the past some Canadian extractive industries had contravened laws and have had a poor track record in pollution, things have changed dramatically over the last decade. He has personally been involved in rigorous evaluations and is very pleased with the results. Today, the local communities are the first defenders of the mining activities as they have found great social support through the companies' corporate social responsibility initiatives and their activities are compatible with best environmental practices and agriculture, said Mr. Salazar.

Peru has reached a free trade deal with the United States, though it has yet to be ratified by the American Congress. Mr. Salazar said Peru has complied with all the agreements, but now some Democrats in Congress are expressing concerns over labour and environmental issues, "complicating the scene." Mr. Salazar said at home, the issue was initially politicized, but now there is widespread support. He concurred that free trade poses a challenge for traditional agriculture, and explained how the Peruvian government is committed to policies that would ameliorate the transitional difficulties faced by some sectors and sensitive crops in the initial period.

In terms of regional relations, free trade initiatives are a divisive factor. Within the Community of Andean Nations (CAN), Colombia and Peru are pursuing them, whilst Bolivia and now Ecuador are intent in their opposition. Venezuela had left the CAN over the issue. And yet, Mr. Salazar expressed his optimism on reaching consensus within CAN, based on the fact that the European Union would only negotiate bloc to bloc. Nonetheless, he was quick to add that others–Chile–had negotiated bilaterally and "[Peru] cannot wait forever. We have a commitment to the poor, and millions of poor people are in rural areas."

Chile leads the region in free trade agreements with the rest of the world. Mr. Salazar noted how his country and Chile could potentially work together to increase access to Asian markets with complementary exports.

As in any discussion with South American leaders, the current political climate made its way into the conversation. Mr. Salazar conveyed his take on events, saying solutions to poverty reduction won't happen with exclusionary policies, and while each country's identity has to be preserved, the region has to overcome policies that are proven to lead to dictatorial regimes and that do not create the conditions for development that the vast majority hopes for.

Regarding Peru's domestic politics, many international observers have expressed concerns over the proposed reinstatement of the capital punishment in the country. Mr. Salazar explained the proposal came out of cabinet and is currently before Congress, and made it clear he does not consider it a solution to crime or violence. When confronted with the negative reactions in Europe–and possibly in Canada–he expressed his hope this would not hinder co-operation and that his country should be judged by its firm commitments to openness and the rule of law. The message is: Let's talk free trade.

Vladimir Torres is an Ottawa-based Latin American affairs analyst.

editor@embassymag.ca