On April 1-4, the first round of negotiations on upgrading the China-Peru FTA & second meeting of China-Peru Free Trade Zone Commission was held in Beijing. Director of the Department of International Trade and Economic Affairs Zhang Shaogang introduced the first round of negotiations on upgrading the China-Peru FTA and the effects of implementing the FTA.

Question: Could you please introduce the effects of implementing the China-Peru FTA?

Answer: The China-Peru FTA was signed in April 2009 and took effect in March 2010. It is one of the free trade agreements with the highest level of liberalization of goods trade that China has signed. Since the agreement took effect, it has achieved good results in general, and the utilization rate of the agreement has increased year by year. The China-Peru FTA has effectively enhanced the level of economic and trade cooperation between the two countries, strengthened the role of economic and trade cooperation as "anchor" and "propeller" in the relations between the two countries, and formed the economic and trade cooperation pattern where our interests are closely intertwined, which ensured the continuous development of bilateral relations. At present, Peru has become China's fourth largest trade partner and second largest investment destination in Latin America. After the signing of the FTA, China has become Peru’s largest trade partner and also the main source of investment.

Since the implementation of the agreement, the total import and export volume of goods trade between the two countries has reached more than US$120 billion accumulatively, in which the bilateral trade volume of goods trade in 2018 reached US$23.1 billion, up 14.7% year on year, 3.6 times as much as that before the implementation of the agreement. In the first three quarters of 2018, the import and export volume of bilateral service trade between China and Peru reached US$1.22 billion, up 33.4% year on year. In addition, the China-Peru FTA has created a more stable and transparent institutional environment for expanding two-way investment. At present, Peru has become Chinese companies’ preferred investment destination in Latin America. The number of China-funded enterprises in Peru has reached more than 170, nearly seven times higher than that before the implementation of the FTA.

The China-Peru FTA has made the two sides start exchanges and has brought tangible benefits to the enterprises and people of the two countries. Thanks to the successful implementation of the China-Peru FTA, the advantageous products of the two sides have entered each market at more favorable prices and through more convenient channels. Peru’s fresh grapes, avocados, fish oil, and cranberry have gradually landed the Chinese market, enriching the choice of Chinese consumers. China's mobile phones, automobiles, motorcycles, construction machinery have been selling well in the Peruvian market. The China-Peru FTA has given full play to the complementarity of the two economies and explored the growth potential of bilateral trade, which has enabled the bilateral trade to continue to expand and achieve mutual benefits and win-win results.

Question: What is the background and significance of the China-Peru FTA?

Answer: The negotiation on upgrading the China-Peru FTA is a major decision made by the leaders of the two countries based on the long-term development of bilateral relations. In November 2016, President Xi Jinping and Peruvian President Kuczynski reached an important consensus on jointly researching and studying the upgrading of the China-Peru FTA. In November 2018, Minister of Commerce Zhong Shan signed a memorandum of understanding with Peruvian Minister of Foreign Trade and Tourism Valencia, announcing that the negotiations on upgrading the China-Peru FTA are launched, and agreeing to speed up the negotiations and strive to draw a conclusion soon.

The upgrading of China-Peru free trade zone is China’s fifth upgraded negotiation after the upgrading of the FTAs of China-ASEAN, China-Chile, China-Singapore and China-New Zealand, and is an important move to implement the idea of “promoting the construction of free trade zones and advancing an open world economy” put forward at the 19th CPC National Congress, fully demonstrating China’s position and willingness to actively form a new pattern of comprehensive openness and firmly support free trade and economic globalization.

For a long time, China has attached great importance to the development of relations with Peru and the bilateral economic and trade cooperation has continued to develop healthily and rapidly. Conducting negotiations on upgrading the China-Peru FTA reflects the common hopes and needs of the two sides to further deepen and expand economic and trade relations, which is consistent with the interests of the enterprises and people of the two countries. A modern and high-standard China-Peru FTA will surely further enrich the connotation of China-Peru Comprehensive Strategic Partnership, make new and greater contributions to promoting economic development and improving people's well-being, and will also play a very important demonstration role in further deepening the mutually beneficial and win-win economic and trade cooperation between China and Latin America.

Question: What areas does the China-Peru FTA cover?

Answer: The China-Peru Free Trade Agreement was signed in 2009 and is one of the early FTAs that China signed with foreign countries. Over the past ten years, some new changes occurred in the two countries’ domestic legislation and the signing and implementation of FTAs and the international trade and investment rules have also been changing with the times. It is necessary for the two sides to further improve and enrich the China-Peru FTA based on the above situation and future development trends. According to the previous joint research on upgrading the China-Peru FTA, the two sides agreed to include service trade, investment, intellectual property rights, e-commerce, competition policy, customs procedures and trade facilitation, and rules of origin into the upgraded negotiations. In the first round of negotiation on upgrading the China-Peru FTA that was just concluded, the two sides conducted in-depth exchanges on the above issues and made positive progress.