RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/189 
12 September 2007  
 
(07-3780) 
Trade Policy Review Body Original: Spanish 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
PERU 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Peru is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Peru. Peru WT/TPR/G/189 
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CONTENTS 
 
  Page 
I. EXECUTIVE SUMMARY 5 
II. MACROECONOMIC ENVIRONMENT:  CURRENT SITUATION AND OUTLOOK 6 
III. CONCEPTUAL FRAMEWORK OF TRADE POLICY 7 IV. INTERNATIONAL TRADE NEGOTIATIONS 9 
(1) M
ULTILATERAL SPHERE  10 
(2) R EGIONAL SPHERE  12 
(3) B ILATERAL SPHERE  12 
(a) Trade Promotion Agr eement between Peru and the United States 12 
(b) Extension of Economic Complementar ity Agreement (ECA) 38 with Chile 13 
(c) Economic Complementarity Agreement (ECA) 58 between Peru and MERCOSUR 13 
(d) Early Harvest Protocol (EHP) between Peru and Thailand 13 
(4) N EGOTIATIONS IN PROGRESS  13 
(a) FTA between Peru and Singapore 13 
(b) Extension of Economic Complementarity Agreement (ECA) 8 with Mexico 14 
(c) FTA between Peru and EFTA (Switzerla nd, Liechtenstein, Norway and Iceland) 14 
(d) FTA between Peru and Canada 14 
(e) Association Agreement between  CAN and the European Union 14 
(f) Joint Feasibility Study:  China and Korea 14 
(5) C OMPETITIVENESS AND COOPERATION IN FOREIGN TRADE  15 
(6) I NVESTMENT PROMOTION AND PROTECTION POLICY  15 
(7) R ESULTS AND OUTLOOK  17 Peru WT/TPR/G/189 
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I. EXECUTIVE SUMMARY 
1. Since the last Trade Policy Review concerni ng Peru, the Peruvian economy has achieved 
sustained growth, recording an average rate of 4.6 per cent for the period 2000-2006;  moreover, for the period 2002-2006 the rate rose to 5.8 per cent.   During the same period Peru's volume of trade 
increased by 172.5 per cent, from US$14,324 to US $39,036 million.  This goo d performance is the 
result of responsible management of monetary an d fiscal policies which have made it possible to 
strengthen the Peruvian economy and make Peru an a ttractive country for investment.  Similarly, the 
favourable international climate has had a positive impact in particular on exports, leading to a record 
trade surplus (US$8,934 million) and a current acc ount surplus equivalent to 2.8 per cent of GDP 
(US$2,589 million). 
2. Over the next five-year period similar growth rates are expected, driven by the process of 
opening up trade on which Peru has embarked duri ng the present decade, together with unilateral 
opening up and internal reforms aimed at improving  competitiveness, strengthening institutions and 
increasing both public and private in vestment in infrastructure.  This opening up is also aimed at 
boosting the volume of trade and integrating Peru mo re fully into the global economy.  Peru hopes in 
the short term to achieve the degree of investment necessary for it to acquire observer status with the 
OECD (Organization for Economic Cooperation and Development). 
3. In this context, the purpose of trade policy is to contribute to the country's growth and 
development, helping to improve the well-being of  the population through a higher level of quality 
employment.  More specifically, Peru's trade po licy seeks to make the country more competitive by 
expanding markets for Peruvian-produced goods and services, improving the possibilities for the 
provision of capital goods and inputs for producers,  access to a basket of higher-quality and less 
expensive consumer goods for consum ers, and through the better conditions created for investment in 
the country. 
4. This approach and this objective were jointly ag reed by the Government, civil society and the 
main political parties in 2001 in th e National Agreement.  In order to  have strong, clear leadership on 
trade policy and its implementation, the Ministry  of Foreign Trade and Tourism (MINCETUR) was 
created in 2002.  From the time of its crea tion MINCETUR defined a medium-term strategy in 
relation to the Trade Negotiations Agenda an d the Internal Agenda on Competitiveness and 
Development of Foreign Trade. 
5. With regard to international trade negotiations, Peru firmly supports the ambitious conclusion 
of the Doha Development Round.  In the fra mework of the Asia-Pacific Economic Cooperation 
Forum (APEC), Peru has participated more fully in  recent years with a view to increasing its trade 
with the Asian countries, and will host the APEC's  2008 meetings.  In the context of regional and 
bilateral negotiations, after the stalling of the Free  Trade Area of the Americas (FTAA) negotiations 
in 2003, Peru embarked on a relaunch of bilateral negotiations.  Agreements have been signed with 
the Common Market of the South (MERCOSUR) a nd the United States of America, the Economic 
Complementarity Agreement (ECA) with Chile has b een extended, and an Early Harvest Protocol has 
been agreed on with Thailand.  At the present tim e Peru is negotiating agr eements with Singapore, 
Mexico, Canada, the European Fr ee Trade Association (EFTA) and the European Union (EU), and 
conducting joint studies on the feasibility of star ting negotiations with China and South Korea. 
6. With regard to domestic action to promote th e competitiveness and development of foreign 
trade, in 2003 MINCETUR laid the foundations of the Strategic National Export Plan (PENX), in full 
consultation with the publ ic and private sectors.  The Operational Action Plans for sectors, regions 
and markets and the trade facilitation and export cultur e master plans, which have a ten-year horizon, WT/TPR/G/189 Trade Policy Review 
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were drawn up within this framework and were grouped together in the National Competitiveness 
Plan of 2005 laid down by the National Competitiveness Council (CNC). 
7. This mix of coordinated policies has set the count ry on the path to growth, which will have a 
long-term positive impact on the well-being of the p opulation.  It has made it possible to achieve a 
sustained increase in productivity, which recorded a cumulative growth rate of around 20 per cent 
during the period 2001-2006.  This favourable econo mic growth situation is expected to continue, 
given the sound foundations of economic, trade and investment policy. 
II. MACROECONOMIC ENVIRONMENT:  CURRENT SITUATION AND OUTLOOK 
8. In 2006, economic activity recorded 8 per cent grow th in real terms, the highest in the last 
11 years.  The strong growth observed took place in a climate of high confidence on the part of 
businesses and consumers, fostered by a macroeconomic  environment in which prices were stable, the 
tax position was in surplus, credit was more dynamic and the international scene was one of high growth rates and favourable terms of trade. 
9. This growth was also associated with impr oved productivity in the factors of production, 
which together with higher levels of investment  impacted positively on potential GDP growth.  
Higher productivity was linked to an increase in formal employment, access to new export markets 
and a better business climate. 
10. In this situation, per capita income rose in 200 6 by 6.7 per cent over the previous year and if 
present per capita GDP growth rates (in the region of  6 per cent) are maintained, the projections of 
US$3,600 for 2007 are expected to rise to US$5,700 by the year 2015.  With such a figure, and with 
domestic social policies aimed at alleviating pove rty, it is hoped that total poverty and extreme 
poverty will decrease at a faster rate than that observed between 2001 and 2005. 
11. In December 2006, economic activity recorded its  66th month of continuous growth.  This 
growth was led by private investment and consumption. 
12. During 2006 private investment grew by 20.2 per cent, becoming the most dynamic 
component of domestic demand for the fourth consecutiv e year.  It is hoped that similar rates can be 
maintained over future years, given the good pros pects for global demand and the substantial increase 
in investor and consumer confidence in the country.  It is therefore expected that the annual flow of 
private investment into Peru will exceed US$20,000 million and represent 20 per cent of GDP.  
Furthermore, public investment will benefit from hi gh levels of tax recovery (tax revenues rose by 
28 per cent during 2006), which will enable the public investment/GDP ratio to increase to 4 per cent 
or 5 per cent of GDP over a period no longer than ten years. 
13. Private consumption rose by 6.5 per cent during 2006, sustained by the increase in national 
disposable income (11.9 per cent) and in employment (7.3 per cent).  In particular, the increase in employment applied in a general way throughout th e separate sectors of the economy and in varying 
forms from one geographical region to another.  It was greater in the provinces (8.3 per cent) than in 
metropolitan Lima (7.1 per cent) and was most ev ident in labour-intensive sectors such as agri-
business and in activities that were more dynamic such as construction, non-primary manufacturing 
and other services. 
14. Other factors which also contributed to sustai nable economic growth were price stability and 
exchange rate stability;  and in 2006, for the firs t time in history, Peru si multaneously achieved fiscal 
and current account surpluses in the balance of pa yments.  In that year, cumulative inflation was 
1.4 per cent, a rate below the lower limit (1.5 per cen t) of the Central Bank's target range (2.5 per cent Peru WT/TPR/G/189 
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plus or minus one percentage point), while the excha nge rate recorded a slight appreciation relative to 
the United States dollar (0.7 per cent), this being offs et by the appreciation in the currencies of Peru's 
principal trading partners relative to the United Stat es dollar (the real multilate ral exchange rate rose 
by 1.3 per cent). 
15. In the fiscal sphere, Peru managed to reduce its  tax deficit rapidly:  from an average of 
-2.4 per cent of GDP in the first three years of th e present decade, it achieved a surplus of 0.6 per cent 
of GDP in 2006.  This is the result of responsib le economic management and the increase in tax 
revenues, which have been boosted by the growth  of the economy and high international prices. 
16. As regards the balance of payments, a positiv e balance of US$708 million was achieved;  this 
is explained by surpluses both on current account a nd on financial account.  In particular, the trade 
balance showed a surplus for the fifth consecutive year, with a figure of US$8,934 million.  Over and 
beyond all the experts' pred ictions, f.o.b. exports reached a leve l of US$23,800 million in 2006, with 
an increase in each of the last three years of above  35 per cent annually.  This result is due to the 
41.9 per cent increase in traditional exports (mainl y accounted for by price increases) and to the 
23 per cent rise in non-traditional exports (due to both prices and volume). 
17. In 2006, Peru continued to s how a sound international liquidity position, due to the high level 
of net international reserves amounting to US$17,275 million, a figure equivalent to one full year's 
imports.  Moreover, the high level of  reserves ensures that Peru fulf ils its international obligations 
towards its domestic and foreign cred itors, which in turn serves to generate a climate of confidence 
conducive to inward investment. 
18. Consequently, good macroeconomic results and their ongoing positive trend have made it 
possible for the country's debt risk to be upgraded.  The EMBI+ country risk indicator calculated by the JP Morgan Chase investment bank at the end of 2006 verged on 120 basis points (the lowest level ever).  Similarly, two of the main international cl assifications have placed the principal instruments of 
Peru's public debt at just one step away from investment grade. 
19. Macroeconomic prospects for th e Peruvian economy are favourable for the coming years.  
The ultimate goal of Peru's economic policy will rema in the improvement of the population's standard 
of living, and so it will continue to promote the su stained growth of GDP (between 6 and 7 per cent) 
and of employment, both in terms of quality (d ecent employment) and in terms of quantity (job 
numbers). 
20. Peru therefore considers it vital to maintain co mpliance with fiscal rules, to continue applying 
a prudent monetary policy, to open up markets furt her and to embark on a second series of structural 
reforms (in education, health and the judiciary, among other fields). 
21. Together with determined policies to reduce pove rty, this will make it possible to bring down 
the levels of irregular and precarious employme nt, which affect over 30 per cent of the active 
population, and at the same time to reduce present le vels of total and extrem e poverty, which affect 
44.5 and 16.1 per cent of the population, respectively. 
III. CONCEPTUAL FRAMEWORK OF TRADE POLICY 
22. Peru's policy of opening up and liberalizing trade seeks to integrate the country into the global 
economy, in order to enjoy the advantages of interna tional market specialization with the ultimate aim 
of improving the well-being of the population.  To that  end, Peru is paying par ticular attention to the 
strengthening of a system of predictable international trade based on fair competition, the 
development of comparative advantages and the reduc tion of trade barriers.  This was demonstrated WT/TPR/G/189 Trade Policy Review 
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between 2001 and 2006 by the fact that the simple average tariff fell from 11.9 per cent to 8.2 per 
cent, and the level of commercial openness expressed as the share of exports and imports in GDP rose 
from 26.9 per cent to 41.5 per cent over the same period. 
23. The general objective of trade policy is to help  lay the foundations for sustained growth and 
modernization of the Peruvian economy, seeking to im prove its efficiency and productivity in order to 
ensure its internal and external competitiveness and greater participation in global production systems. 
24. Peru's trade policy pursues two goals in partic ular.  The first is to develop and increase 
exports of goods and services, as well as trade, basically in non-traditional sectors, by implementing a 
comprehensive strategy to develop foreign trad e and improve conditions for the access of goods, 
services and investments to external markets;  a nd the second is to bring about conditions that will 
contribute to Peru's economic leadersh ip in the South American Pacific. 
25. Peru regards its effective integration into inte rnational markets as an opportunity to improve 
the well-being of its population in a sustainabl e way, by creating quality jobs and accumulating 
savings surpluses that will make higher levels of inv estment possible.  Fluid interaction with external 
markets enables more goods and services to be produ ced more efficiently in Peru, by achieving access 
to more markets and reducing production costs through the importation, transfer and distribution of 
new technologies.  Similarly, international integra tion offers an opportunity for consumers, who are 
able to take advantage of a broader range of choices,  with better quality/price ratios beneficial to their 
standard of living. 
26. Given the approach outlined in the preceding paragraphs, the need to establish long-term 
policies that will guide each government's decisions or  particular areas of concern was reflected in 
July 2001 by the signing of a National Agreem ent setting out the State's objectives, specific 
undertakings and policies, endorsed by representativ e sectors within the country.  Among these is the 
State's approach to the Foreign Trade Policy to Expand Markets with Reciprocity, which establishes 
the commitment to "develop a foreign trade policy b ased on a joint effort by the State and the private 
sector to achieve the competitive integration of th e country into international markets" and to 
"establish a tariff policy that will encourage the reducti on of tariff levels and dispersion, in conformity 
with our integration agreements  and multilateral undertakings". 
27. In this connection, the Ministry of Foreign Trade and Tourism (MINCETUR) was created in 
July 2002 with responsibility for defining, direc ting, implementing, coordinating and supervising 
policy on foreign trade and tourism.  It is also responsible for promoting exports and international 
trade negotiations, in conjunction with the Minist ries of Foreign Affairs a nd of Economy and Finance 
and other sectors of government within their respect ive areas of competence.  However, it must be 
pointed out that aspects relating to tariff policy are pla nned, directed and controlled by the Ministry of 
Economy and Finance (MEF) in conjunction with th e Ministry of Foreign Trade and Tourism and 
with the ministry for the sector concerned, where appropriate. 
28. In order to implement the Trade Policy and achie ve its goals, Peru uses three instruments:  
international trade negotiations, unilateral liberal ization of tariffs and domestic trade-related 
competition and development policies.  In this way a comprehensive agenda is defined for the purpose 
of increasing opportunities for selling Peruvian product s and at the same time boosting the country's 
production capacity, within a framework of intern ational competition which contributes to market 
efficiency. 
29. In the case of the International Trade Negotia tions (ITN), Peru's agenda operates on three 
complementary fronts:  multilateral, regional an d bilateral.  While Peru is counting on a Peru WT/TPR/G/189 
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comprehensive multilateral agenda, the possibility of  obtaining concrete results in the short and 
medium term is limited by the slow pace of this process.  For this reason, Peru has embarked in 
addition, during the present decade, on an intensive process of bilateral trade negotiations, so as to 
obviate the negative impact of agreements entered in to by third parties.  At the same time, Peru 
recognises the particular importance of regional ma rkets for exports and im ports, of both goods and 
services, and of investment. 
30. With regard to the unilateral liberalization of ta riffs, in view of the small size of the country 
and in order to enhance efficiency in th e allocation of production resources and promote 
competitiveness, Peru has continued with the policy of  tariff reduction, at the same time as enabling 
trade distortion to be offset through commercial agreements. 
31. In order for the ITN to make an effective c ontribution to integrating Peru into the world 
economy, the opportunities they offer must be seized.  It is therefore necessary to implement in 
parallel a prioritized domestic agenda which fost ers competitiveness and the development of foreign 
trade.  That agenda may involve all aspects of the economy, but those that are directly linked to it 
relate to the development of a new competitive e xportable supply that utilizes the country's resources, 
to the facilitation of trade and to investment (infr astructure, procedures, finance) and promotion of 
trade. 
32. Strategies and activities linked to the development of foreign trade are set out in the Strategic 
National Export Plan (PENX).  This is the basi s of the Regional Export Plans (PERX), the Trade 
Facilitation Master Plan and the Operational Sector Plans (POS) covering Peru's supply sector, and 
also the Operational Destination Markets Plans (POM) covering external demand. 
IV. INTERNATIONAL TRADE NEGOTIATIONS 
33. Peru plays an active part in multilateral nego tiations within the World Trade Organization 
(WTO), with the aim of consolidating the gains ach ieved through the rules-based system and the real 
opening up of markets to the exportable supply of goods and services in the developed and developing 
countries.  It accordingly looks forward to the sp eedy completion of the ambitious, balanced Doha 
Development Round. 
34. Similarly, as part of Peru's trade policy, the st rategy of negotiating bila teral and regional trade 
agreements, together with the strategy of multila teral trade negotiations, aims to speed up the 
beneficial effects of greater trade liberalization and facilitation. 
35. As regards bilateral and regional agreements, Peru has been participating actively in the 
following negotiations and integration processes: 
Trade agreement/Integration initiative Status 
• Andean Community (CAN)  
• Asia-Pacific Economic Cooperation Forum (APEC) In force 
• Latin American Integration Association (LAIA)  
• Economic Complementarity Agreement (ECA) 58 between Peru and MERCOSUR   
• Economic Complementarity Agreement (ECA ) 38 with Chile /Extension of ECA 38 In force/Extension signed 
• ECA 8 with Mexico/Extension of ECA 8 In force/Extension under negotiation 
• Trade Promotion Agreement betwee n Peru and the United States Signed 
• Early Harvest Protocol be tween Peru and Thailand   
• FTA between Peru and Singapore   WT/TPR/G/189 Trade Policy Review 
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Trade agreement/Integration initiative Status 
• FTA between Peru and EFTA (Switzerland,  Liechtenstein, No rway and Iceland) Under negotiation 
• FTA between Peru and Canada  
• Association Agreement between CAN and the European Union  
• Joint Feasibility Study with th e People's Republic of China  
• Joint Feasibility Study with  the Republic of Korea Under evaluation 
• Free Trade Area of the Americas (FTAA) Suspended 
(1) MULTILATERAL SPHERE  
36. Peru firmly believes in the advantages and th e positive impact afforded by the Multilateral 
Trading System.  It has therefore taken part in  the GATT since 1951 and was a founder member of the 
WTO.  This firm commitment to the Multilateral System  is reflected in its active participation both in 
the technical committees responsible for overseei ng and supervising the implementation of the 
Uruguay Round agreements and in the Doha Development Round negotiations. 
37. With regard to the implementation of WTO ag reements, Peru's active participation in the 
WTO Committee on Sanitary and Phytosanitary Measu res is especially important, because it regards 
that committee as an important technical body that contributes to dialogue for the purpose of 
clarifying and explaining the provisions adopted by Me mbers in the health fiel d.  It is a means of 
seeking technical solutions to matters which may gi ve rise to conflict with the country's trading 
partners.  In this connection, there have been far-reaching discussions on matters of relevance to 
Peru's exports, such as recognitio n of equivalence, regionalization,  current European legislation on 
what are called novel foods , health measures affecting fish meal , etc.  Moreover, Peru has positively 
capitalized on the advantages afforded to a developi ng country by the Dispute Settlement System:  it 
has twice had recourse to the mechanism as compla inant, and has had a favourable outcome on both 
occasions.1 
38. With regard to the multilateral negotiations , Peru hopes that they will produce suitable 
disciplines whereby advantage can be taken of the opening up of markets for goods and services.  
This opening up must be accompanied by the elimin ation of hidden barriers to trade which prevent it 
from benefiting from the improved conditions of access obtained by tariff reductions and broader 
specific services commitments. 
39. It is therefore playing an active part in the current process of negotiation and has expressed its 
commitment to the success of the Doha Development Round.  Being convinced  that development is 
the key to better living conditions and that trade po licy is an instrument for achieving that objective, 
Peru considers that Doha offers a great opportunity  to strengthen the Multilateral Trading System and 
to demonstrate that it is an opportunity for all its members. 
40. Peru therefore takes an ambitious approach to  all the subjects under negotiation in the Doha 
Round.  However, in view of the wide range of subjects being dealt with in the WTO, allowing a trade-off among its Members, Peru has drawn up a lis t of its priorities for specific negotiating issues.  
To this end: 
• Peru has stepped up its participation in the agriculture negotiations via strategic 
alliances with the principal players in the process.  This has been reflected in its 
                                                     
 
1 The cases concerned the trade description of scallops ("conchas de abanico"), and subsequently the 
trade description of sardines. Peru WT/TPR/G/189 
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return to the G-20 and its inclusion in the Cairns Group, which together represent 
Peru's participation in the G-33, demonstra ting a balanced strategy between offensive 
and defensive interests.  It is important to  point out that Peru has ceased to be a net 
importer of foodstuffs and become an e xporter of agricultural products that are 
winning international markets.  Consequently , where agriculture is concerned, Peru 
supports the complete liberalization of tr opical products and alternatives to illicit 
crops.  In conjunction with various countri es in the region, it has submitted proposals 
aimed at generating development in the ru ral areas of the country, making it possible 
for them to take advantage of trading opportunities by exporting their tropical and 
alternative products to markets which pl ace a premium on quality.  In addition, 
recognizing sensitivities in the world of agri culture, Peru supports the establishment 
of a list of special products.2 
• One matter of fundamental importance to  Peru is to obtain mechanisms which 
recognize the close link between genetic resources and traditional knowledge and the 
patent (intellectual property) system.  Th at recognition is becoming necessary in view 
of the absence of a multilateral protecti on framework to regulate and recognize the 
efforts made by native communities to c onserve traditional knowledge and genetic 
resources.  Therefore, Peru is actively pr omoting an amendment to the Agreement on 
Trade-Related Aspects of Intellectual Property Rights (TRIPS) in order that the grant of any patent involving a genetic resource or  traditional knowledge is made subject to 
the requirements of disclosure of origin, evidence of prior in formed consent and 
benefit sharing. 
• Peru attaches special importance to the negotiations on services and is playing an 
active part in those linked to access as well as to standard-setting questions.  In order 
to expand and diversify Peru's exports of services, requests have been made to the 
main trading partners to improve supply.  Similarly, Peru has presented an improved 
services offer which has been considered am bitious, in order to contribute to the 
opening up of trade and to greater effici ency and competitivene ss in the domestic 
production system.  At the same time, pr oposals relating to domestic regulation, 
mode 4 and subsidies have been prioritized. 
• With regard to the other Doha Round issu es, Peru is making a definite contribution 
with the aim of strengthening those disciplines that make trade flexible and transparent.  In the area of trade fac ilitation, various proposals for strengthening 
customs disciplines and boosting the trade in commodities, without neglecting proper 
customs controls, have been put forward.  Also, in order to avoid hidden 
protectionism which keeps products out, Pe ru is promoting and supporting proposals 
that contribute to a responsible, technical approach to anti-dumping investigations.  The subject of fishing subsidies deserves speci al mention:  Peru has participated from 
the outset in the " Friends of Fish " group which seeks to eliminate all subsidies that 
lead to over-exploitation of fish resources and distort trade in this sector, and to 
regulate certain exceptions. 
                                                     
 
2 However, its scope will have to be limited in order that this flexibility, as part of special and 
differential treatment, is the exception, not the rule;  otherwise tariff barriers damaging to the developing 
countries themselves may be created. WT/TPR/G/189 Trade Policy Review 
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41. Doha is an opportunity to contribute to devel opment in so far as ambitious positions are taken 
which ensure clearer rules assisting genuine access.  Th at being so, Peru is concerned that delays in 
this Round may cause a weakening of the Multilateral Trading System. 
(2) REGIONAL SPHERE  
Andean Community (CAN) 42. At the subregional level, Peru forms part of  the Andean Community, which now comprises 
Bolivia, Colombia and Ecuador and the organs and institutions of the Andean Integration System. 
43. Within this integration arrangement, reforms are being put into effect for the purpose of 
intensifying the Andean integration process within five areas of intervention:  free movement of 
goods and services, customs union, strengthening of the judicial/institutional system, a joint 
investment and production development plan, and programmes of support for Bolivia and cooperation 
with Ecuador. 
44. In this context, the Andean Free Trade Area, which Peru rejoined in 1997, was extended in 
January 2006.  From that date onward services, especially transport services, have also been liberalized in their various modalities. 
APEC 
45. Peru has been a member of the APEC, the la rgest forum in the Asia-Pacific region, since 
1998.  As a member, Peru has an obligation to meet  the Bogor trade liberalization goals by the year 
2020.  This means that the country must substa ntially reduce its tariff and non-tariff barriers 
worldwide by that date.  Similarly, belonging to APEC also means that Peru has to give effect to 
measures designed to facilitate foreign trade. 
46. Restating the undertakings entered into in th e APEC framework sends a positive signal to 
other countries, demonstrating Peru 's determination to reduce existing trade barriers;  this may be an 
important factor in encouraging foreign companies to  trade with Peru and make the country a regional 
hub. 
47. In 2008, Peru will host the Forum's meetings, with an opportunity to contribute to the 
establishment of APEC subjects and priorities, as well as to promote trade and investment 
opportunities in the country and Peru's image as an attractive country for foreign tourism.  APEC 
Peru 2008 will be the greatest and most important even t staged on Peruvian soil in all its history as a 
republic. 
(3) B
ILATERAL SPHERE  
(a) Trade Promotion Agreement between Peru and the United States 
48. The Peru-United States Trade Promotion Agreement (TPA) was approved by the Peruvian 
Congress in June 2006, and is now awaiting approval  by the United States Congress.  Once approved, 
the Peru-United States TPA will come into force pr ovided both parties have completed the domestic 
procedures for its incorporation in to domestic law.  Once the agreement comes into force, it is 
expected to produce the following benefits: 
• Guarantee of permanent preferential access to the United States market. Peru WT/TPR/G/189 
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• Consolidation of the policy of investme nt and opening up of  economic activities, 
affording certainty to investors. 
• Establishment of a judicial mechanism for settling trade disputes between the two 
countries. 
• Important opportunities for the export of professional services (engineers, 
accountants and architects). 
(b) Extension of Economic Complementar ity Agreement (ECA) 38 with Chile 
49. In June 2005 negotiations started with the aim of extending the scope of ECA No. 38 of 1998 
in the LAIA framework.  Extension of the agreemen t was agreed in August 20 06 and is now awaiting 
approval by the Chilean Congress.  It will consolidat e a legal framework in keeping with levels of 
services and investment, for the purpose of establishing a full Free Trade Area between Peru and Chile.  It should be noted that ECA No. 38 only contained provisions on trade in goods and set out a 
programme of liberalization for the entire tariff universe, with maximum periods of 18 years.  At the 
present time it only remains to reduce tariffs on a num ber of agricultural products with time-limits 
extending as far as 2008, 2013 and 2016. 
(c) Economic Complementarity Agreement (ECA) 58 between Peru and MERCOSUR 
50. ECA 58 was signed in the LAIA framework in 2003, came into force in 2006, and only 
contains provisions on trade in goods for the entire ta riff universe.  It lays down various timetables for 
tariff reductions between Peru a nd each MERCOSUR country, the ti me-limits for tariff reduction 
granted to Peru by Argentina and Brazil being up to eight years, and in the case of Paraguay and Uruguay up to 13 years.  On the other hand, the tariff reduction time-limits granted by Peru to 
Argentina and Brazil are up to 15 years, and those granted to Paraguay and Uruguay up to 13 years. 
(d) Early Harvest Protocol (EHP) between Peru and Thailand 
51. In October 2003, Peru and Thailand signed an  Outline Economic Association Agreement, and 
two years later signed an EHP at the APEC Summit.   That agreement, the first trade agreement 
between Peru and an Asian economy, seeks to sp eed up liberalization of trade in goods and to 
facilitate trade between the parties. 
52. The Tariff Reduction Programme contained in  the EHP includes over 70 per cent of each 
country's tariff universe, leaving 28 per cent of re duction arrangements to be defined in the case of 
Peru and 26 per cent in the case of Thailand.  The agreement also includes general provisions on rules 
of origin, safeguards, SPS, TBT, customs procedures and dispute settlement. 
53. In order for the agreement to come into for ce, Thailand is at present in the process of 
incorporating the whole of the EHP into its domestic  legislation;  for the purpose of reaching an FTA 
with Thailand, questions concerning services and inv estments, and the definition of the remainder of 
the tariff universe, are still awaiting negotiation. 
(4) N
EGOTIATIONS IN PROGRESS  
(a) FTA between Peru and Singapore 
54. Peru and Singapore announced their intention to negotiate an FTA in November 2004 during 
the APEC Summit in Santiago, Chile.  The negotiati ons with Singapore began in February 2006, and WT/TPR/G/189 Trade Policy Review 
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after three rounds most of the chapters have been  agreed.  Among those finalized are market access, 
specific requirements as to origin, investment, trad e protection, SPS, TBT, competition policy, dispute 
settlement, government procurement and cust oms procedures not relating to origin. 
(b) Extension of Economic Complementar ity Agreement (ECA) 8 with Mexico 
55. The extension of ECA 8 began in January 20 06 with the aim of increasing and diversifying 
bilateral trade between Mexico and Peru by extending and broadening the disciplines.  The 
negotiations cover such matters as market access,  services, investment, rules of origin, trade 
protection, SPS, TBT, dispute settlement, and mutual  recognition of appellations of origin.  It should 
be pointed out that ECA 8 was signed in the LAIA  framework and came into force in 1987.  Its 
provisions concern only trade in goods. 
(c) FTA between Peru and EFTA (Switzerland, Liechtenstein, Norway and Iceland) 
56. In April 2006, in order to strengthen trade rela tions between the two partners, Peru and EFTA 
signed an Agreement on Cooperati on in Economic Matters.  On the basis of that agreement, a 
Peru-EFTA Joint Committee, which held its first meeting in October 2006, was set up for the purpose 
of initiating talks on the bilateral treatment of trade disciplines for inclusion in a possible FTA.  The 
first round of these negotiations took place in June 2007 in Colombia, since that country is carrying 
out parallel negotiations with EFTA in conjunction with Peru. 
(d) FTA between Peru and Canada 
57. In 2001 Peru and Canada signed a Convention for the Avoidance of Double Taxation with 
respect to Taxes on Income and Capital, which came into force in 2004.  Peru and Canada 
subsequently decided to begin nego tiating a bilateral trade agreement in 2007.  As in the case of the 
Peru-EFTA FTA, the negotiations took place jointly w ith Colombia;  however, each country will have 
its own agreement with Canada.  The first round of  negotiations took place in Peru in July 2007. 
(e) Association Agreement between CAN and the European Union 
58. Since 1 July 2005, Peru has benefited from th e System of Generalized Preferences which the 
EU applies to developing countries and is known as SGP Plus;  it previously benefited from SGP 
Drugs.  These preferences are established unilaterally and there is a risk that the EU will decide not to 
renew them.  For this reason it is important for Peru  to strengthen its trading links by way of a free 
trade agreement which will guarantee the permanent enjoyment of the benefits which it currently 
receives under SGP Plus.3 
59. In July 2006 the final "Joint Valuati on" document, containing conclusions and 
recommendations, was approved.  Similarly, the An dean Community submitted the Andean view of 
the Basis for Negotiation.  The negotiations were be gun in Bolivia in June 2007, and the first meeting 
took place in Brussels in July 2007. 
(f) Joint Feasibility Study:  China and Korea 
60. In May 2007 Peru and China set  up a committee to carry out a Joint Feasibility Study to 
evaluate the impact and potential benefits of a b ilateral free trade agreement.  Both parties undertook 
                                                      
3 The system envisages that 7,200 subheadings out of a total of 9,200 will be exempted from payment 
of ad valorem  duties. Peru WT/TPR/G/189 
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to complete the study within the next three or f our months, after which the decision will be taken on 
whether to start negotiations on the agreement. 
61. During the Summit of APEC Leaders in Hanoi, Peru and Korea held talks to initiate the 
preparation of a Joint Feasibility Study to evalua te the potential impact of a bilateral free trade 
agreement between the two parties.  It was proposed  that this study should be carried out by the 
private or academic sector in each country. 
(5) COMPETITIVENESS AND COOPERATION IN FOREIGN TRADE  
62. Between 2000 and 2006, Peru ra ised its level of competitiveness and improved its relative 
position in the World Economic Forum's global competitiveness rankings.  However, there are still 
some areas in which major improvements can be ma de, including better infrastructure development, 
institutions, education and the quality of public administration. 
63. Various indicators show that between 2000 and 2006 the competitiveness of local businesses 
improved.  On the one ha nd, labour productivity rose by 20 per cen t and unit labour costs fell by 6 per 
cent.  On the other hand, the value of total e xports grew by 245 per cent and the value of non-
traditional exports by 141 per cent.  This expansi on was accounted for by the 61 per cent increase in 
the number of export enterprises, the 13 per cent increase in the number of export markets and the 
20 per cent increase in exportable supply. 
64. The export sector plays a fundamental role as an engine of growth, creating jobs and fostering 
development.  In particular, export growth makes it possible to reach a far larger market, and one with 
much greater purchasing power, than the domestic ma rket, and if the exports are of high added value 
the increase has the effect  of improving the country's well-being by  way of more jobs, higher wages, 
an increase in foreign exchange reserves a nd ultimately a better standard of living. 
65. Peru is therefore developing a clear and c oordinated strategy to access foreign markets and 
take advantage of existing opportunities abroad, as well as turning its export potential to good 
account.  As has been said, this strategy focuses on three fronts – development of foreign trade, 
international trade negotiations and unilateral tariff management. 
66. Peru has used technical assistance and interna tional cooperation opportunities as a tool to help 
boost trade, build capacity and modernize its institu tions.  Accordingly, it attaches special importance 
to the WTO Aid for Trade initiative. 
(6) INVESTMENT PROMOTION AND PROTECTION POLICY  
67. Private investment grew by 20.2 per cent in 2006 against a background of stability and 
economic expansion, low inflation rates, better conditions of access to funding and a favourable 
international climate – factors which fostered great er sales and profits and higher expectations on the 
part of entrepreneurs regarding the future of th e economy.  Technological renewal projects and plant 
extensions went ahead in response to high levels of demand (especia lly in manufacturing and mining).  
Similarly, the construction of commercial and resi dential premises, oil expl oration and exploitation 
works, projects linked to electrical power genera tion, mining and quarrying, were all prominent.  
Regarding investment in capital goods, the main area s of note were construction, mining, electricity 
distribution and telecommunications. 
68. Public investment grew by 12.7 per cent in 2006, owing mainly to higher spending by central 
and local government.  It should be mentioned that the bulk of public investment was concentrated in the second half of the year, in response to the grant of a supplementary appropriation for the 2006 tax WT/TPR/G/189 Trade Policy Review 
Page 16 
 
 
year (Law No. 28880) in the framework of the "investment shock" process.  A series of public 
projects were taken forward during that period in such sectors as sanitation, road repair and 
improvement, transport and communications. 
69. Investment performance is being sustained in a stable legal framework.  In this connection, 
the Peruvian Constitution of 1993 contains rules la ying down essential principles such as to guarantee 
a legal framework conducive to the development of private investment in general and foreign 
investment in particular, for example: 
• Freedom of private initiative against the background of a social market economy and 
economic pluralism. 
• Freedom of work, business, trade and industry. 
• Definition of the subsidiary role of the State in economic activity. 
• Free competition and prohibition of monopo lies, and measures to combat abuse of 
dominant positions. 
• Freedom of contract. 
• The possibility of the State's providing  guarantees and sureties via law contracts 
(contratos ley ). 
• Equality of treatment for domestic and foreign investment. 
• Possibility of submitting disputes involving the State to domestic or international 
arbitration tribunals. 
• Guarantee of freedom to possess and dispose of foreign currency. 
• Inviolability of property and determinati on of exceptional grounds for authorization 
of expropriation, subject to payment following assessment;  application of the equality principle in tax matters;  a nd recognition that no tax may produce 
confiscatory effects. 
70. The legal framework for dealing with investme nt is based on the principle of "national 
treatment".  Foreign investment is permitted without restriction in  the great majority of economic 
activities and does not require prior authorizati on as such.  The acquisition of shares owned by 
domestic investors is wholly permitted, whether through the stock market or through transactions 
outside it. 
71. Regarding the country's WTO commitments, no selection mechanism or performance 
requirement is applied to or imposed on foreign i nvestors as such.  In the case of investments which 
benefit from legal stability agreements with the Stat e, the requirements are the same as for domestic 
investors. 
72. Every enterprise is entitled to organize and deve lop its activities as it sees fit.  Peru has 
repealed all the provisions of law which laid down production methods or indices, which prohibited or 
required the use of technological inputs or pro cesses and, generally speaking, intervened in 
companies' production processes depending on the type of economic activity they pursued, their Peru WT/TPR/G/189 
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installed capacity or any other similar economic fact or, with the exception of the legal rules governing 
industrial health and safety, environm ental conservation and public health. 
73. With the aim of consolidating a legal framewo rk which safeguards and protects investment 
and helps to create a climate conducive to a greater flow of foreign investment, Peru has been very 
active in negotiating bilateral, regional and multila teral instruments whose purpose is to establish 
guarantees of treatment, protection and access to investment dispute settlement mechanisms. 
74. Peru has signed 31 bilateral agreements on the reciprocal promotion and protection of 
investments with countries in the Pacific Basin,  Europe and Latin America, as well as the Trade 
Promotion Agreement with the United States (pending approval by the United States Congress), 
which contains a chapter on investment.  In the case of the United States, mention should also be 
made of the agreement with the Overseas Private I nvestment Corporation (OPIC) on the provision of 
risk cover for North American investments in Peru. 
75. Peru has bilateral investment agreements with  the following trading partners:  Argentina, 
Australia, Belgium-Luxembourg Economic Union (ratified), Bolivia, Cana da (signed), Chile, 
Colombia, Cuba, Czech Republic, Denmark, Ecuador, El Salvador, Finland, France, Germany, Italy, 
Malaysia, Netherlands, Norway, Paraguay, People's Re public of China, Portugal, Republic of Korea, 
Romania, Singapore, Spain, Sweden, Switzerland, Thailand, United Kingdom, United States (ratified), and Venezuela. 
76. At the same time, Peru is a member of th e Multilateral Investment Guarantee Agency 
(MIGA) and has acceded to the Convention establis hing the International Centre for Settlement of 
Investment Disputes (ICSID) and the Convention on the Recognition and Enforcement of Foreign 
Arbitral Awards (New York Convention). 
(7) R
ESULTS AND OUTLOOK  
77. Since 2002, Peru has returned to the path of grow th started at the beginning of the last decade, 
managing to achieve 8 per cent growth in GDP durin g 2006.  This means that, after two periods of 
expansion and one of stagnation (1998-2001), Peru today presents a picture of macroeconomic 
stability, an appropriate monetary policy based on th e set of inflation targets which has enabled the 
country to maintain a low, stable inflation rate, a GDP growth rate above the regional average, and an 
absence of external imbalances – all factors whic h help to bring about a climate conducive to 
investment.  This is perhaps the reason why Peru currently occupies third place in the macroeconomic 
stability table within Latin America. 
78. Assuming a stable international situation, with  a responsible fiscal and monetary policy in 
operation (based on the set of explicit inflation ta rgets), it is hoped that over the coming years 
economic growth will be kept at an annual average of 7 per cent, that accumulated inflation will be 
1.9 per cent, that private investment will exceed US$20,000 million and that the balance of payments 
on current account will reach a surplus of 1.5 per cent relative to GDP. 
79. In particular, in accordance with the Multi-annua l Strategic Sector Plan for Foreign Trade and 
Tourism 2008, where foreign trade is concerned it is expected that the degree of openness in the trade 
in goods4 will exceed 50 per cent by 2011 and that by that year the value of non-traditional exports 
recorded in 2006 will have doubled. 
                                                      
4 Exports+imports/GDP. WT/TPR/G/189 Trade Policy Review 
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80. Furthermore, as a consequence of access to new mark ets, it is expected that the percentage of 
non-traditional exports linked to trade agreements wi ll rise above 80 per cent by 2010.  Similarly, the 
diversification of exportable suppl y will continue to be encouraged, with a view to increasing the 
number of markets for Peruvian exports and the number of exporting companies;  this, together with 
the advances in terms of infrastructure, instituti ons and quality of management, will enable Peru to 
improve its global competitiveness ranking. 
81. Nevertheless, despite the fact that macroeconom ic stability and the openi ng up of trade have 
helped to boost growth and therefore had positive eff ects in reducing poverty, Peru is aware that it is 
not enough to rely solely on openness and/or growth in order to eradicate poverty.  For this reason, 
complementary policies, both cross-cutting and in  particular sectors, are being developed ( Sierra 
Exportadora  Programme, Growth Programme, Regional Ex port Plans, etc.) which seek to help 
expand the impact of growth on poverty and in this  way to speed up the reduction in the number of 
very poor and extremely poor people, whether in ru ral or in urban areas, and so improve income 
distribution in the country.  
__________