Know The Effect of Peru-Australia FTA in Business Opportunities in Australia
The Peru-Australia Free Trade Agreement was spearheaded by the recent collapse of the Trans-Pacific Partnership (TPP), due to the last minute pulling out of Canada following United States back in January 2017. In order to ensure that their exports will not be affected, Australia along with Peru had to secure a strong FTA. The whole trade deal negotiations were particularly short since the 11 countries included in the TPP met again in December of 2017. With this agreement, the two nations will be able to trade freely, and increase business opportunities in Australia. It was reported that 99% of tariffs that Australian exporters had to face was eliminated. Since Peru have one of the fastest-growing economies in Latin America with an average of 5.9% growth rate, the agreement paved the way for Australia to have direct and tax-free access of more than 30 million consumers.
One of the business opportunities in Australia is directed towards the sugar farmers in Queensland. Previous records show that Australia’s export of sugar have gradually dropped, and as if adding salt to the wound, the recent cyclones made it more difficult for sugarcane farmers to stay in business. With the help of this trade agreement, the lobby group Canegrowers said that an extra $13.5 million will be delivered to sugarcane farmers. It has been calculated that every year, Australia will be able to export 30,000 tonnes of sugar in Peru, that will eventually grow into 60,000 tonnes within five years.
Other industries will also be able to increase business opportunities in Australia. The mining sector is predicted to grow since Peru is known for their productive mining industry. In 2016, Peru’s mining industry accounted for over 15% of the country’s GDP and 59% of the country’s total exports.The trade of mining equipment, base metals, aluminum, iron, and steel is promised, along with duty-free access to mining machinery and parts. Not only will there be more business opportunities in Australia with regards to this industry, but this will also boost Peru’s mineral extraction accordingly due to Australian IT companies having the opportunity to export equipment free of taxes.
Another industry that will experience a boost due to the increase of business opportunities in Australia is the agricultural industry. There will be a huge amount of increase agricultural commodities such as beef meat, sheep meat, rice, dairy products, almonds, and wine. Tariffs on the export of Australian beef will witness a decrease (the highest being 17% as of November 2017), rice from Australia will be freely exported to up to 14, 000 tonnes per year within five years, and dairy products from Australia will have a duty free access to up to 10, 000 tonnes, also in five years. The wine industry will also have a promising opportunity and will be able to make itself known not only in the European Market but in the Latin American as well, since the previous tariff of 9% per bottle exported will be removed, increasing the number of Australian wines on the wine lists throughout Peru.