Peru to Double Down on Free Trade to Offset Copper Swings

(Bloomberg) --

Peru’s free trade agreements with the world’s biggest economies have cushioned the impact of slower global growth and the Andean nation is seeking more deals to reduce the dependency on copper, a top government official said.

While a slide in copper prices has dragged down Peru’s exports this year, shipments of agricultural and factory goods are still rising, said Trade Minister Edgar Vasquez. That’s partly thanks to its 19 free trade accords with countries including the U.S., Japan and the European Union.

“We are still seeing growth in -added exports and while it could be higher, given the international context of deceleration it’s still positive,” Vasquez said by phone from New York. “If we didn’t have those agreements, Peru would be paying tariffs to enter markets and in a context of global deceleration, we would be even more affected.”

Peru’s copper exports fell 12% to $7.8 billion in the first seven months of this year compared with the same period of 2018, as the U.S.-China trade war hurt demand, according to the central bank. Peru is the world’s second biggest copper producer. At the same time, non-commodity exports rose 2.9%, led by growth in avocados, grapes, fish and textiles.

Read more: Peru Has Slowest Growth Since 2009 as Pessimism Spreads

Peru is one of 11 countries including Canada and Asian-Pacific nations that signed a trade pact known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership that entered into force at the end of last year. The minister said Peru aims to ratify the agreement by December and added that the country is negotiating a free-trade agreement with India.

Peru exported $13 billion of non-commodity items last year and aims to boost sales to $18 billion by 2021, Vasquez said. Improvements to infrastructure under the government’s six-year investment program should push exports above $20 billion by 2025 as lower logistical costs make producers more competitive, he said.

Read more: Peru Bank Seeks Slice of $30 Billion Infrastructure Program

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