Last January, as one of Donald Trump’s first executive orders, the United States withdrew itself from the Trans-Pacific Partnership, TPP. Since then, the remaining countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru and Singapore) have looked for more options to expand their markets and strengthen their economies. Despite the negative effects that Trump’s decision had on the potential benefits of the TPP, it also fueled a series of geopolitical actions that could bring positive results in the short-term for Latin America.
Among these actions, the most recent one is the agreement that Australia and Peru are working on. On May 24th, Australian Trade Minister Steven Ciobo and Peruvian Trade Minister Eduardo Ferreyros announced the start of formal discussions to establish a free trade agreement between the two countries.
According to the International Centre for Trade and Sustainable Development, Minister Ciobo highlighted the opportunities that Australian businesses could get from the Peruvian market. Ciobo also noted that Peru already had trade deals with the U.S., Canada, and the European Union. Having a trade deal with Australia would put the country in the same position as these economic powers.
The free trade agreement that’s starting to form between Australia and Peru is, evidently, a stepping-stone to a deal between various Oceania countries and the Pacific Alliance –composed of Colombia, Chile, Mexico and Peru–. In fact, El Tiempo, a Colombian news outlet, reported that the Mexican Ambassador in Chile, Rubén Beltrán, announced that Australia, along with New Zealand, would start negotiations with the representatives of the Pacific Alliance in the next few weeks. A clear date hasn’t been established, but the talks are, clearly, under way.
The advances of Australia and Peru and the announcement of the free trade agreement with the Pacific Alliance have important and positive repercussions for the Latin American economy. First, the market itself will expand allowing preferential access for Latin American products to a high consuming economy. The Australian Trade Minister, regarding the negotiations with Peru, said that they would pursue the export of services in various important sectors such as mining, finance, education, and health.
Furthermore, these agreements will also have a significant impact on tourism. During the IV Tourism Macro-Conference of the Pacific Alliance, the Chilean Minister of Economy, Development, and Tourism, Luis Felipe Céspedes, highlighted the growth of tourism for the countries within the Alliance. He said that the growth rate is more than 10%. The addition of Australia and New Zealand to the mix could push it even further.
LatinAmerican post | Juan Sebastian Torres
Copy edited by Susana Cicchetto