WORLD TRADE  
ORGANIZATION  WT/REG281/M/1 
29 March 2011  
 
(11-1552) 
Committee on Regional Trade Agreements 
Sixtieth Session  
 
 
 
CONSIDERATION OF THE FREE TRADE AGREEMENT  
BETWEEN PERU AND CHINA,  
(GOODS AND SERVICES) 
 
Note on the Meeting of 14-15 March 2011  
 
Chairmen:  Mr. A. Suescum (Panama) and 
Mr. F. Riegert (France) 
  
1. The 60th Session of the Committee on Regional Tr ade Agreements (hereinafter CRTA or the 
Committee) was convened in Airgram WTO/AIR/3692, dated 31 January 2011. 
2. Under Agenda Item B.III of this session, the CRTA considered the Free Trade Agreement 
(FTA) between Peru and China (hereinaft er the 'Agreement'), goods and services. 
3. The Chairman
 said that the Agreement had entered in to force on 1 March 2010 and had been 
notified to the WTO by the Parties on 31 July 2009 under Article XXIV:7(a) of the GATT 1994 and 
the Understanding on the Interpretation of Article  XXIV of GATT 1994 as an Agreement establishing 
a free trade area (document WT/REG281/N/1) and under GATS Article V:7(a) as an Agreement providing for the liberalization of trade in services within the meaning of Article V of the GATS (document S/C/N/537).  The text of the Agreem ent was available, together with its Annexes, 
on the Parties' official websites. He also said th at the Factual Presentation on the goods and services 
aspects (document WT/REG281/1 dated 11 November 2010) had been prepared by the Secretariat on 
its own responsibility in full consultation with the Parties, in accordance with paragraph 7(b) of the 
Transparency Mechanism (TM) for Regional Trade Agreements (document WT/L/671).  
Additionally, written questions and replies on this  Agreement had been distributed in documents 
WT/REG281/2 and Add.1, dated 8 a nd 11 March 2011.  For the consider ation of the Agreement, he 
proposed to start by asking the Parties and then ot her Members for general comments.  The specifics 
of the Agreement would then be examined using th e factual presentation to guide the debate.  He 
suggested to go through the Factual Presentation secti on by section, and then look at the questions and 
replies document. 
4. The representative of China
 thanked the Secretariat for the opportunity to review the China-
Peru Agreement.  His appreciation also went to Members for their interest and the Peruvian 
delegation for their valuable contri butions to this presentation.  He said that this review had special 
significance for China as this year marked the 40th anniversary of the establishment of diplomatic 
relations between China and Peru.  During th ese 40 years, the economic and trade cooperation 
between the two countries had developed rapidly and the level of cooperation had been upgraded 
constantly.  Presently, China was Peru's second la rgest trading partner, while Peru was China's 
seventh largest trading partner in Latin America.  Peru was also becoming one of China’s primary 
destinations for investments in Latin America.  He expressed his delegation's belief that this 
Agreement would further enhance their bilateral coopera tion and bring it to a new level.  According to 
China's statistics, during 2010, the first year of its implementation, bilateral trade had increased by WT/REG281/M/1 
Page 2  
 
  43.7% to US$9.2 billion, against US$6.4 billion in 2009.   He also pointed out that this Agreement was 
the first comprehensive free trade agreement Chin a had signed with a Latin American country and 
was a new landmark in China-Peru bilateral relations.  In the context of the global financial crisis, this 
Agreement also sent a positive m essage about the two countries' commitment to open up and fight 
protectionism. 
5. Another representative of China
 said that her country had st arted participating in FTAs in 
2002 and deemed them an effective approach to sp eed up domestic reforms, integrate into the global 
economy and strengthen economic cooperation with other economies.  This endeavour was a 
particularly important complement to the multilateral trading system.  Currently, China had 15 FTA partners involving 28 economies, for which ten FTA s had been signed already.  The China-Peru 
Agreement covered trade in goods, services, invest ment, rules of origin, customs procedures, 
intellectual property, trade remedies, TBT, SPS, etc.  With respect to trade in goods, it featured wide 
coverage and a high degree of openness.  All goods from both countries had been divided into five 
categories.  For the first category, tariffs had b een immediately reduced to  zero upon the Agreement's 
entry into force.  For the second and third categori es, it would take five and ten years respectively to 
remove tariffs.  Goods in the fourth category we re exempted from tariff elimination or reduction. 
Tariffs in the fifth category would be removed within five to 17 years.  Such a schedule implied that 
duties on over 90% of tariff lines would be eliminated  by 2027.  She added that products exempted 
from tariff elimination only accounted for 5.44% of Chin a’s and 8.05% of Peru’s total bilateral trade.  
This fulfilled the requirement of eliminating dutie s on "substantially all the trade” as set out in 
Article XXIV of GATT 1994.  As for trade in services, both countries had opened their domestic 
markets based on their WTO commitments.  In the case of China, ten sectors were covered under this 
Agreement, among which six sectors or sub-sectors en joyed improved access or were in addition to its 
GATS Schedule.  In the case of Peru, ten sectors were covered, among which 25 sub-sectors enjoyed 
improved access or had been added compared to its GATS Schedule.  With respect to investments, each Party provided not only national, most-favoured-na tion, fair and equitable treatment to investors 
or investment from the other Party, but also enco uraged facilitation of mutual investment.  The 
Agreement aimed at improving the investment environment, invest ment-related regulations and the 
legal system in both countries.  The Agreement also contained a Chapter establishing a cooperation 
mechanism to promote goods market access and effici ent settlement of any problems that might arise 
in implementing the Agreement.  Finally, she info rmed the Committee that since both countries had a 
long history and great diversity of traditions, the Parties had agreed to cooperate on the protection of 
genetic resources, traditional knowledge and folklo re.  She added that the Agreement had been 
warmly welcomed by business communities of both countries since its entry into force and had achieved rapid growth in the first year of its impl ementation.  Both Parties were committed to take 
advantage of this Agreement and further enha nce their cooperation in trade in services and 
investment.  She informed the Committee that he r delegation had provided written answers to the 
questions submitted by some Members and looked fo rward to further exchanges in this review. 
6. The representative of Peru
 thanked the Secretariat for the preparation of the 
Factual Presentation of the FTA between Peru an d China, as well as the Chinese delegation for their 
work during the negotiation process.  He also expres sed his delegation's gratitude for the interest and 
questions from Members regarding this Agreement and reaffirmed Peru's commitment to trade 
openness and the WTO's Transparency Mechanism.  He said that the FTA between Peru and China 
was a historic step for Peru and the result of a pr ocess of consolidation of bilateral ties which dated 
back to 1849, when the first immigrants from Chin a had arrived in Peru.  In addition to improved 
access to the Chinese market, this  Agreement established clear ru les, with a transparent and 
predictable framework for bilateral trade and invest ment relations.  As for trade dynamics between the 
Parties, he said that high growth rates exhibite d by the Chinese and Peruvian economies had led in 
recent years to an increase in the volume of imports of raw materials, natural resource-based 
manufactures, intermediate and capital goods as we ll as strong demand for imported consumer goods 
from both Parties.  The Agreement had boosted bila teral trade, which was expected to rise to  WT/REG281/M/1 
 Page 3 
 
 
  US$15 billion by 2015.  Chinese investments were al so expected to increase substantially in various 
sectors in Peru, which was its second most important destination in South America. 
7. Another representative of Peru  said that Peru's trade policy aimed at promoting sustainable 
growth and modernization of the Peruvian economy  by improving its efficiency and productivity.  
With such a strategy and in acco rdance with Peru's National Strate gic Export Plan 2003-2013, Peru 
had sought to become an exporter of goods and servi ces of high quality. In this context, multilateral, 
regional and bilateral trade negotia tions were key instruments to achieve this objective, strengthen 
goods and services market access, ensure a legal fr amework, contribute to consumer welfare, and 
increase efficiency and productivity through improve d access to inputs, technology and capital goods.  
She also reaffirmed Peru's commitment to the mu ltilateral system and highlighted that RTAs were 
complements to the multilateral system and not substitu tes.  She said that this FTA was important for 
Peru as it was the first comprehensive trade Agreem ent that China had entered with a developing 
country, and which covered goods, services and investme nts.  She also mentioned that at the same 
time an Agreement on the Cooperation and Mutual Ad ministrative Assistance in Customs Matters had 
been signed.  In her view, the Agreement was the most complete agreement China had negotiated so 
far as the Parties had the obligation to exchange o fficial information in order to fight customs fraud 
and irregularities.  The Agreement also include d provisions on standards to provide greater 
predictability and transparency to operators in each Party.  She emphasized the inclusion in the 
Agreement of a chapter on Intellectual Property (IP),  which contained provisions on the protection of 
genetic resources, traditional knowledge and folklore .  Such provisions gave a basis for future 
negotiations regarding the disclosure of the origin  or source of genetic resources and/or prior 
informed consent in patent applications.  The same chapter on IP included provisions for the 
recognition of geographical indications for each Party.   In the case of Peru, protected designations of 
origin included Cuzco's white giant maize, Peruvi an pisco, Chulucanas pottery and Lima beans.  The 
Agreement also contained a chapter on co-operati on that included areas such as research, science and 
technology, small and medium enterprises, inform ation technology, education, culture, mining and 
industry, tourism, agriculture, fishery, forestry and environmental protecti on, competition policy and 
traditional medicine. 
8. She added that the Agreement had strengthened ties between Peru and China and created new 
economic opportunities for Peru on trade in goods, services, investment and cooperation.  Just nine months after the entry into force of the Agreement, the balance was very satisfactory for Peru.  As of 
December 2010, trade flows with China had exceed ed US$10.5 billion, which was 44% higher than 
the previous year.  Export growth had been particularly important for non-traditional exports 
including wood, paper, fisheries, agricultural and chemical products.  She mentioned that China was a major source of investment for Peru, mainly in mining, but also in services.  In 2010, according to 
Peru's Private Investment Promo tion Agency, Chinese foreign direct investment (FDI) had reached 
US$262 million.  She also informed the Committee that the first meeting of the Commission of the 
Peru-China FTA was expected to take place in the fi rst half of the year in order to assess and monitor 
compliance and the correct application of the Agreem ent's provisions.  Finally, she reiterated that, as a 
GATT Contracting Party and WTO founding Member , Peru was fully committed to the multilateral 
trading system, and that RTAs were complementary and in no way a substitute for it.  She highlighted 
that Peru's trade agreements were in line with WTO provisions and promoted trade liberalization at 
the multilateral level.  The China-Peru Agreement contained commitments that contributed towards a 
multilateral agreement on the reduction of domestic support and elimination of  export subsidies.  
Finally, she welcomed any additio nal questions Members might have. 
9. The representative of the United States
 expressed his appreciation to  Peru and China for their 
detailed presentations, as well as to the Secretariat for its work on the Factual Presentation.  He observed that Table V.1 in page 50 of the Factual Presentation listed a number of agreements that had 
not been notified by the parti es, including the agreement between China and Chinese Taipei.  His 
delegation was thus interested in knowing when th e Parties intended to notify these agreements to the WT/REG281/M/1 
Page 4  
 
  WTO.  As in past CRTA sessions, he reiterated that  his delegation viewed non-notified agreements as 
a blind spot in the understanding of RTAs and thei r implications for the multilateral system.  He 
therefore encouraged the Parties to notify the remaining agreements as soon as possible. 
10. The representative of the European Union (EU)
 asked the Parties to explain the raisons why 
the Agreement did not include any provision rega rding the elimination and prohibition of export 
duties applied to goods.  She further asked the Parti es to elaborate on current and future export duties 
on trade between the Parties and how they intended to  ensure compliance with the obligations set out 
in GATT Article XXIV to eliminate duties and other restrictions on substantially all trade between the 
Parties. She underlined that in accordance with Ar ticle XXIV, Members had the obligation to cover 
export duties in their liberalization commitments.  With regard to non-notified agreements, she 
encouraged the Parties to notify the remaining agreements as soon as possible and welcomed any 
further information the Parties would like to share. 
11. The representative of Peru  replied that the appropriate way of notifying the remaining 
agreements was currently being di scussed within the Latin America Integration Association (LAIA), 
as the countries concerned were members of that organization.  She remarked that WTO Members 
had been informed of the conclusions of these RTAs in the biennial reports presented to the 
Committee on Trade and Development.  Her answ er had been sent in writing to Members. 
12. In response to the EU's question, the representative of Peru  answered that Peruvian exports 
were not subject to any duty, according to Article 54 of the Single Text of the General Customs Law 
adopted by Supreme Decree N° 1029-2004-EF of 12 September 2004.  This document had been 
registered by the WTO Secretariat in Peru's last Trade Policy Review in 2007. 
13. The representative of China  replied that all China's agreemen ts signed with other partners had 
been notified except for the one invol ving Chinese Taipei.  For the latte r, she added that China was in 
the process of coordination with Chinese Taipei a nd would keep Members informed about further 
developments.  She added that the reason for no t having a provision regarding export duties was 
because China had no such provision in any of its FTA s with other parties.  Based on its negotiations 
with Peru, China had considered that in cluding such a provision was not necessary. 
14. The Chairman  said that the consideration of the goods and services aspects of the FTA 
between Peru and China had allowed the Committ ee to clarify a number of questions and oral 
discussion of the Agreement could be concluded in accordance with paragraph 11 of the Transparency 
Mechanism.  If any delegations wished to ask fo llow-up questions they were invited to forward 
submissions in writing to the Secretariat by 22 March 2011  and the Parties were asked to submit 
replies  in writing by no later than 5 April 2011.  In accordance with paragraph 13 of the Transparency 
Mechanism all written submissions, as well as minutes of  this meeting would be circulated promptly, 
in all WTO official languages, and would be made available on the WTO website. 
15. The Committee took note  of the comments made. 
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