The UAE and Peru have revealed their plans to commence discussions for a free trade agreement later this year. This announcement, made during a World Trade Organization meeting in Abu Dhabi, follows Peru’s recent decision to establish an embassy in the UAE. Notably, the two nations have previously inked various agreements, including an aviation pact last year.
Should the free trade agreement materialize, it would mark a significant milestone for Peru, representing its first such agreement with a country in the Middle East and North Africa region, while for the UAE, it would be its first with a nation in the Americas.
Bilateral trade between the two countries amounted to slightly over $1 billion last year, with Peru predominantly exporting gold, valued at $1.03 billion, to the UAE, which, in turn, imported $44 million worth of goods from Peru.
Peru anticipates that a free trade agreement will bolster its exports, particularly in the agricultural sector. With a population exceeding 9 million, the UAE heavily relies on food imports, presenting an opportunity for Peru to meet a portion of this demand. Notably, Peru boasts the title of the world’s leading exporter of grapes and is a significant player in avocado and blueberry exports. Additionally, Peru is renowned for its fishing industry, exporting fish for both human consumption and industrial purposes, along with fishmeal and fish oil. The country also sees potential for growth in garment and other manufactured goods exports.
Conversely, Emirati exports to Peru primarily consist of petroleum-based products, alongside some manufactured goods such as lighting components.
DP World, a prominent UAE-based logistics company, has made substantial investments in Peru since 2018, exceeding $700 million, with operational ports being key installations.
For both countries, a free trade agreement presents an opportunity to expand into broader markets. Peru currently boasts 19 such agreements, including with major economies like China, the EU, and the US. It is actively engaged in negotiations with India and has shown interest in talks with Turkey. Meanwhile, the UAE, primarily through the Gulf Cooperation Council, is pursuing agreements with various countries, including South Korea, Pakistan, Britain, China, and Japan.
The GCC, despite historically limited ties with Latin America and the Caribbean, is exploring avenues for collaboration, including discussions with the Southern Common Market, comprising Argentina, Brazil, Paraguay, and Uruguay. Furthermore, the UAE’s strengthening relations with Guyana, evidenced by the announcement of an embassy in Georgetown, indicate a growing partnership with South America’s sole English-speaking country.
The potential free trade agreement between the UAE and Peru would be pursued through bilateral negotiations, reflecting a pattern also observed in potential agreements with Guyana.
