Analysis of the Canada-Peru FTA
The Canada-Peru Free Trade Agreement came into effect on August 1, 2009. Its purpose is to improve bilateral trade and investment opportunities for companies in both countries, though provisions to safeguard worker's rights and environmental sustainability were also included. Both countries stand to benefit from a more open economic relationship; the Canada-Peru Free Trade Agreement is geared to advance this cause while ensuring a secure, safe and ethical system for trade and investment is in place.
History
In 2002 the Canadian Minister of International Trade announced that the Andean countries (Bolivia, Columbia, Equador and Peru) had agreed to begin exploratory talks toward the creation of a Free Trade Agreement. At this time, not all countries were in an economic position to talk seriously about such an agreement, however Peru had been experiencing uninterrupted economic growth since 2001, and in 2006 the rise of an ambitious economic trade agenda under the leadership of President Alan Garcia gave Canada-Peru free trade discussions new impetus. On June 7, 2007 official free trade negotiations began.
Canadian Benefits
Canadian companies are benefited from the lowering of tariffs on their products and services, which allows them to sell to and profit from Peruvian markets. The agreement commits Peru to eliminate 95 percent of its tariffs on Canadian exports; wheat, barley, lentils, peas, a variety of paper products and machinery and equipment were all given immediate duty-free access. The agreement includes provisions for better safeguards and improved stability for Canadian investments in Peru, which are considerable. Finally, the Free Trade Agreement permits Canadian companies to compete for Peruvian government contracts.
Peruvian Benefits
The Free Trade Agreement will help advance the economic development of the country as Canadian investment in the Peruvian mining and the oil industries is likely to increase. Canada is required to immediately eliminate 97 percent of its tariffs on Peruvian exports; gold, zinc, copper and petroleum oil exports are likely to increase. The people of Peru may also benefit from improving work conditions; included with the Free Trade Agreement was an Agreement on Labor Cooperation which requires that the Peruvian government respects the International Labor Organization's 1998 Declaration on Fundamental Principles and Rights at Work. Standards for health and safety, hours of work, wages and collective bargaining have been set and will be monitored.
Controversy
A month before the Canada-Peru free trade agreement came into effect in 2009, conflict in Peru's Amazonian region sparked concerns for the potential pitfalls of a growing Peruvian export industry. In June of 2009 President Garcia worked to repeal laws to open 45 million hectares of the Amazon and its oil, gas and forestry resources to private investors, measures he claimed were necessary to abide by a trade agreement with the United States. His efforts created a firestorm among indigenous populations in the region, who were not consulted, and the abuse of authority that these events highlighted caused some to be skeptical about the successful implementation of the Canada-Peru free trade agreement, which was expected in the coming weeks.
Debate
Debates over the benefits and drawbacks of open markets are centuries old, and the spread and intensification of capitalism across the globe is not going to end them. For free trade among international companies and investors to benefit the peoples of the countries involved, legitimate, fair and accountable government must be established and international transactions must have rules that can be monitored. The establishment of the Canada-Peru Free Trade Agreement is a step in the right direction in these respects.
