In May of this year the beginning of the negotiations of the Free Trade Agreement with Australia in the city of Canberra was announced. From which the different chapters that comprise the FTA have been developed in the first two rounds of negotiations. What is sought with this commercial agreement is that preferential access of Peruvian export products is allowed to a very attractive market with high purchasing and investment capacity.
Australia is characterized as an economy with more than 24 million inhabitants, a high purchasing power (GDP per capita 2016: US $ 54,420), in addition to showing stable economic growth (GDP growth 2016: 2.8%) with low inflation and considered among the best buyers of goods and services in the world. These conditions profile Australia as a very attractive economy to strengthen trade and investment links in our country.
In 2016, our country’s total exports to Australia were US $ 260 million, led mainly by exports from the mining sector that reached a value of US $ 186 million, followed by exports from the agricultural sector with US $ 32 million and the fishing sector with US $ 24 million. This scale of exports allows Australia to be ranked 23rd in the ranking of the main destinations to which we export.
Regarding the main products exported from the Agriculture Sector to Australia that had the highest shipments in that year, coffee was exported with US $ 6.6 million, followed by fresh asparagus with US $ 4 million, Brazil nuts with US $ 2.4 million, quinoa grain with US $ 2.3 million and canned asparagus with US $ 2.1 million. These products would benefit from the commercial agreement as they represent an opportunity to increase shipments of our products to this potential market whose global demand for fresh fruits and vegetables reached around US $ 696 million in 2016.
Undoubtedly, the Australian demand for agricultural products has been concentrated mainly in coffee (even roasted or decaffeinated), whose consumption is very high in this country, which came to import US $ 452 million from the world and has Brazil and Colombia among its main suppliers, with exports of this product for around US $ 55 and US $ 33 million respectively in 2016. However, there are also other products with great demand from Australia that would represent an opportunity for the entry of our products to this market that has not yet been reached.
These products are: cashew nuts whose global imports by Australia reached US $ 131 million, fresh or dried avocados with US $ 72 million, fresh grapes with US $ 48 million, fresh kiwis with US $ 41 million, dry grapes with US $ 36 million, fresh garlic with US $ 34 million, nuts with US $ 22.3 million and red cranberries with US $ 21.9 million. Of course, the entry of these products into the Australian market will depend on the signature of the phytosanitary protocols by the relevant authority to grant these permits. The market opening to Australia for avocado is currently in process, a procedure that is being handled by SENASA.
In conclusion, this commercial agreement will represent an opportunity for the growth of both our shipments in products that we have been exporting since they would benefit from the release of tariffs upon the entry into force of the FTA (and from the fourth year on the artichoke and piquillo pepper prepared or preserved); as for products with potential income that would need to initiate phytosanitary procedures for their entry into this country. Therefore, there are advantages to signing this trade agreement with Australia so that our country strengthens its ties not only in the trade and investment sectors but also in others that benefit us mutually.
September 26, 2017
By: Karen De La Cruz, Analyst of Economic Studies and Market