Peru-China FTA to induce 10,000+ Peruvian companies to pursue exports to China

Peru and China’s bilateral Free Trade Agreement became effective March 1st.   According to officials at Peru’s Foreign Trade and Tourism Ministry (Mincetur) the agreement could potentially prompt some 10,000+ companies to begin exporting to China.  Read more about it in this article from Andina

All in all, the official message expressed by major media is that trade with China = good. I personally this doubt this is the full story. I’m pretty sure a great many Peruvian industries are not so happy they will be competing with “made in China.”

For example, I’m sure the companies which make all the cloths sold at Lima’s Gamarra Market are shaking in their boots right about now.

On the other side, as Michael Reid explains in his book, The Forgotten Continent: The Battle for Latin America’s Soul, the rise of China and other countries which offer Latin America countries alternative markets for their exports has empowered Latin America with far more freedom to develop on their own terms than every before in history.  With new markets, Latin America is no longer as heavily dependent on the United States, and China is at the center of this shift.

There’s always two sides to the story and I’m barley scratching the surface here.  I’m sure readers from Peru to China have many other reasons to argue both sides of the equation.

China-ASEAN FTA – CCTV

China-ASEAN Free Trade Agreement came into effect at the start of the new year.  CCTV9 reports:

China-Peru FTA goes into force this February

China’s second FTA with a Latin American nation will become active this February 2010. A mile stone for both country’s, the agreement seeks to boost bilateral trade to new levels.

Here are the basic facts and forecasts, provided via this article from Nasdaq.com. For the record, author Sophie Kevany, is a superb journalist who is actually based in Peru. This article does not do justice to her credo of true investigative journalism I have read in the past, but no less is always a good source for all that is Peruvian finance.

Check out her other articles on the WSJ, Decanter (yes she even writes about Peruvian wines and spirits), and well, just google her name and you’ll be greeted with a swarm of informative pieces about Peru and the greater South American region.

LIMA -(Dow Jones)- Peru’s free trade agreement with China is set to come into force early February, and it is expected to boost total trade values to an estimated $8 billion in its first year.

The treaty was ratified earlier this month by a supreme government decree, meaning Peru’s congress will not vote on it, state newspaper El Peruano said Wednesday.

The treaty excludes so called “sensitive products” such as textiles, shoes and clothing, Peru’s Vice Minister for Trade and Tourism, Eduardo Ferreyros, told El Peruano.

Trade between the two countries is expected to total about $5.5 billion in 2009. Of that, exports to China from Peru are expected to reach $3 billion, Ferreyros told state news agency Andina, while imports from China should total about $2.5 billion.

-By Sophie Kevany, Dow Jones Newswires; 51-198-903-8043; sophie.kevany@ dowjones.com

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Singapore-Latin Trade: Singapore and Panama in focus

Attention! / ¡Atención! / ???

Merlion - Singapore

For those of you out there who pay the whoppin’ $399 a year for a subscription to the Latin Business Chronicle, you can feast your eyes on some juicy reporting about Singapore’s growing trade with Latin America, particularly with Panama.

Here’s a brief synopsis from CSA of what was available for free from the Latin Business Chronicle:

Singapore’s trade with  Panama is a $6.6 billion usd, more than double Singapore’s entire trade with its second largest trading partner in Latin America, Brazil.

Considering that Singapore has signed Free Trade Agreements with the South American countries of Peru and Chile which have yet to help increase total exchange to a level even comparable with Panama’s.  It is clear to CSA, Singapore has found a healthy partner in Panama and it plans to nourish the relationship.

Panama is country of similar size (population wise), like Singapore it is strategically positioned in the middle a important global trade network, and it is increasingly open to economic cooperation with Asia.

Long term, CSA believes that Singapore is playing it smart in Latin America.  It is positioning itself to not only benefit directly from trade, but also from the growth of trade between other Asian and Latin American countries.

In other words, once Singapore has established a base of operations in Panama, it will probably expand into the business of providing services for other countries and companies within the Asia – Latin America trade network.

Below are a few excerpts from the Latin Business Chronicle article you can access directly via this link.

Soon, Singapore will also be known locally for its port services. PSA International, the world’s second-largest container terminal operator, will be competing with Hong Kong-based Hutchison Whampoa, the world’s largest operator for container traffic that goes through Panama.

PSA is building a terminal at the Pacific entrance of the Panama Canal, right across from the Port of Balboa, which is operated by Hutchison unit Panama Ports Company. It expects to open the terminal, located at what once was a US Naval station, next year.

The current and future business generated by ST Aerospace and PSA is helping cement Panama as Singapore’s top trading partner in Latin America. Singapore’s trade with Panama is twice as large as its second-largest trade partner in Latin America, Brazil.

Last year, Singapore’s total trade with Panama grew by 59.6 percent to 9.2 billion Singapore dollars (US$6.6 billion), according to a Latin Business Chronicle analysis of IE Singapore data. While Singapore exports still dominate the …

Former President of Peru, Alejandro Toledo criticizes FTA with China

AgenciaPeru.tv — Spanish news bite of former President Alejandro Toledo of Peru.

Toledo comments on Peru’s FTA with China

Former President Alejandro Toledo criticized the free trade agreement that Peru and China signed in April this year. Toledo was at the Club de la Banca in San Isidro, Lima this afternoon after talks with a group of businessmen on the financial crisis and opportunities for Peruvians.

Remember, Toledo was instrumental in rebuilding Peru’s market economy and in promoting the signing of the Free Trade Agreement between the United States and Peru. It is curious as to why a man who was once labeled a lap dog of US policy in promoting free trade and free market economics is now expressing concern about Peru’s FTA with China.

If you can understand Spanish I suggest watching this short video to get his full commentary. If not, the general gist of his message is that Peru simply needs to be careful and help empower Peru’s micro-enterprises with the skills necessary to compete Chinese labor and cheap manufacturing.

Second, in the midst of this crisis, Peru can not forget the pains and ills of the everyday Peruvian on the street. Although the agreement with China is something which can potentially bring long term investment and growth in trade, it is important to not forget about the Peruvians which will be affected (economically) by the growth in exchange with China.