Peru-Thailand FTA on course

The Nation | Bangkok | 20 August 2004

INTERVIEW: Peru FTA on course

Peru’s Vice Minister of Foreign Trade Pablo de la Flor was in Bangkok earlier this week for the third round of free-trade agreement talks between Thailand and Peru. De la Flor said he was convinced the two countries would be able to conclude the deal before the scheduled visit of Prime Minister Thaksin Shinawatra to Peru in November.

The Peruvian trade negotiator also said that Peru is actively seeking out bilateral FTAs. The Latin American country is currently negotiating an FTA with the US that it hopes to conclude by February. It has also launched preliminary talks to enter into a similar agreement with the European Union.

De la Flor said the deal with Thailand, if agreed, would be the first signed with an Asian country and as such would set the mould for Peru to strike future deals in the region.

The following excerpt is taken from an interview with reporter Jeerawat Na Thalang.

How many people have you met during this trip to Thailand?

I can’t remember, but I am very happy with the outcome of the meetings. It’s another step in the long journey toward making a free-trade agreement with Thailand. We are very satisfied and very happy.

We made significant progress on the key issues of the agreement. What is more important is that we have the framework that will enable us to continue working for the fourth round and the fifth meeting in November of this year.

Will it be possible to conclude the FTA before Prime Minister Thaksin visits Peru in November?

We are convinced that we will finish before the prime minister’s visit.

What will be the terms of the FTA?

The FTA is very broad and comprehensive. It not only includes trade and goods but also services. It touches on a number of related matters such as sanitary and phyto-sanitary [plant hygiene] regulations, commerce and investment. We also look at ways of safeguarding cooperation, and customising procedures.

Are the FTA negotiations with the US proving more difficult than the Thai FTA?

Absolutely. It is more difficult because it’s much larger, more comprehensive and involves deeper commitment.

For example, we are not negotiating with Thailand on IPR [intellectual property rights]. But the US asked us to adopt commitments that go beyond what have been agreed in the context of the World Trade Organisation (WTO). So it adds some difficulties to the negotiations. There are also issues linked to dispute settlements between states and companies.

Indeed, the negotiations with the US are hard due to the nature of the issues at stake and the depth of the commitment and the difficulties that are inherent in that, although [both agreements] matter simultaneously. But the agreement with Thailand does not include IPR and government procurement.

Since Peru has been quite active in pursuing FTAs, is there any public sentiment against these moves in Peru?

Interestingly enough, there is a very favourable atmosphere toward - and perception of - FTAs. The public likes FTA negotiations because they are fully aware that the only way out of poverty is to actively engage in the world economy, particularly with the large trading partners like the US.

They are also very enthusiastic about the other deals, including the Thai FTA. There’s a great deal of expectation regarding the potential benefits of the arrangement.

So this has yet to become a political issue?

Up until now, yes. Although certain NGOs and labour union groups are taking a very militant stance against FTAs, up until now this has been conducted in a very muted manner.

What does Peru expect to gain from the FTA with Thailand?

We are expecting to benefit in two different areas. One has to do with trade. We believe that the FTA is a two-way bridge. Businessmen are keen to gain access to both the Thai market and Southeast Asia with Thailand as the gateway. Thai entrepreneurs can also export goods to Peru with Peru as the projector for their presence in Latin America.

The second is related to benefits stemming from an increase of investment for Thai entrepreneurs, who can develop new business ventures in different areas in fishery, agriculture, infrastructure development and petrochemicals.

But won’t the distance between Thailand and Peru throw up fresh problems?

The beauty of the market is that the entrepreneur will seize on emerging opportunities.

Let me tell you something. Our third-largest trading partner is China, which is clearly very far. Yet we have to take into account our large ethnic Chinese community, which accounts for 10 per cent of the population, and they are very successful.

I believe the ethnic Chinese community will play a major role in taking advantage of these fresh opportunities.

What remains to be done in the fourth and fifth rounds of negotiations in Lima?

In the fourth and fifth rounds, we have a number of pending issues such as ironing out rules and regulations. Most importantly, we have to continue honing the chapter concerning market access. [That] issue will demand full attention from our negotiating team.

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