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Countries, international trade, TPP, Trans-Pacific Partnership Agreement

TPP Country Profile: Chile and Peru

Chile

In 2014, the US traded about $31 billion worth of goods and services with Chile. While the US exported around $20 billion to the country, Chile only exported about $9 billion worth of goods and services to the US. These numbers made Chile the 22nd largest export market for American trade. The most popular US items in the Chilean market are mineral fuels, aircraft, machinery, and vehicles, along with agricultural goods such as beef, wheat, and animal feed. Chile, in return, exports some tasty goods to the US, including grapes and blueberries to the tune of $1.9 billion. The top Chilean export to the US, however, is copper. While US exports to Chile have declined slightly in the last year (5.6% from 2014 to 2015), overall US exports to Chile have increased 204% since the two countries enacted a trade agreement in 2003. The Trans-Pacific Partnership won’t be the first trade agreement for these two countries, but it is still a club worth joining.

That’s not to say the TPP doesn’t have its share of detractors in Chile. Some argue that the agreement is not only destructive to Chilean-Chinese trade interests, but that it will in fact corrupt the country and deal a blow to human rights, environmental protection, and public health. Chile, after all, already has trade agreements with all the other partner countries in the TPP. Chilean leadership, including minister of foreign affairs Heraldo Muñoz, insist that the TPP is a wise economic choice. And while the TPP won’t do much to increase the already existing US-Chile trade that has come from former trade agreements, it will help boost innovation. All Chile needs to do is be ready to bring some new, value-added products to market.

Peru

Peru is another Latin American partner country that is joining the TPP club. Like Chile, Peru already has a trade agreement with the US. But unlike Chile, Peru is gaining a few new markets because of the Trans-Pacific Partnership.

In 2015, US-Peru trade (both ways) totaled about $14 billion, making Peru the US’ 35th largest goods trading partner. Like Chile, Peru imported mineral fuels and machinery above all other US goods, but also enjoyed US’ plastics and corn. Besides corn, US soybeans, cotton, and wheat were important agricultural imports for Chile. On the other side of the trade, the US imported gold, avocados, asparagus, and knit apparel from Peru. The United States has been buying fewer Peruvian goods each year, and the trade has actually decreased over the last few years, down 12.8% since 2008.

Peru’s joining of the TPP will bring significant increases to Peruvian exports, up to $3.2 billion in 2025. This is the result of new markets for Peruvian goods, including Australia, Vietnam, Malaysia, and New Zealand. The TPP is also expected to help boost trade with countries that already have trade agreements with Peru. Small businesses are also expected to benefit from Peru’s entry into the TPP.

It is important to note that Peru negotiated special terms which will allow the country’s working class population to retain financially feasible access to medical drugs, and to protect their own industries such as dairy and entertainment. For example, Peru will have up to 11 years to prepare for the entry of free market, foreign butter before it must lower tariffs on the product. The country also will be allowed to insist that native Peruvians staff most of their entertainment industry, as well as that at least one Peruvian must be featured in every bullfight. Peru will have varying amounts of years to phase out their tariffs on agricultural products, six for fruits and vegetables and 11 for grains such as barley. Peru’s clothing manufactures will face increased competition with Vietnam, so that industry will not have to phase out tariffs for 11 to 16 years. It will take quite some time until we are able to see the full picture of how the TPP will affect Peru.

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