Stockwell Day, Canadian Minister of International Trade has announced that legislation to implement Canada’s free trade agreement (FTA) with Peru has been adopted by Parliament and received Royal Assent.
The agreement is expected to benefit Canadian companies by eliminating tariffs on goods, promoting two-way investment and expanding access for Canadian companies in a key Latin America market.
“Ensuring free and open trade is vital to the international effort against the global recession. Canadians can count on our government to oppose protectionism and defend free and open trade on the world stage,” said Day. “This agreement with Peru will provide opportunities for Canadian companies looking to expand their business into Latin America. It will open new doors in key sectors such as extractive industries, manufacturing, agriculture and financial services—all areas in which Canadians have extensive expertise.”
Immediately upon implementation of the FTA, expected July 1, 2009, Peru will eliminate tariffs on virtually all Canadian exports, with most remaining tariffs to be eliminated within five to ten years. Products that will enjoy immediate duty-free access to Peru include wheat, barley, lentils, peas and selected boneless beef cuts, as well as a variety of paper products, machinery and equipment.
Canada will immediately eliminate its tariffs on almost all Peruvian imports. The rest will be eliminated over a three- or seven-year period, with the exception of over-quota tariffs on dairy, poultry, eggs and refined sugar, which are excluded from tariff reductions.
The FTA will provide enhanced and more secure market access in service sectors including mining, energy and professional services. Canada and Peru have also reached agreement on comprehensive disciplines for the financial services sector, including banking, insurance and securities.
The agreement incorporates the existing provisions of the Canada-Peru Foreign Investment Promotion and Protection Agreement, locking in market access for Canadian investors and providing them with greater stability, transparency and investment protection. Strong obligations are included that provide for the free transfer of capital related to investment, protection against expropriation without prompt and adequate compensation, and non-discriminatory treatment of Canadian investments. In addition, investors will have access to binding international arbitration to resolve disputes.
As a developing country, many of Peru’s products already enter Canada duty-free; the FTA will give these products more secure access to Canadian markets. The FTA also acknowledges the developing-country status of Peru by allowing the phase-out of its tariffs on products over a longer period than Canada.
The FTA also includes strong labour and environmental protection provisions.
In 2008, two-way merchandise trade between Canada and Peru reached CAD2.8bn (USD2.48bn). Peru is also an important investment partner for Canada, with an estimated CAD2.35bn worth of Canadian investment stock in the country at the end of 2008.
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