The UAE and Peru have announced plans to initiate talks for a free-trade agreement later this year, signaling a significant step towards enhancing economic cooperation between the two nations. The announcement, made during the World Trade Organization Ministerial Conference (MC13) in Abu Dhabi, underscores the growing momentum in bilateral relations between the nations. Moreover, it builds on Peru’s decision earlier this month to open an embassy in the UAE. The two countries had signed other agreements, including an aviation agreement last year.
Exploring new trade frontiers
If successfully negotiated, the free-trade agreement would mark a historic milestone for both Peru and the UAE. It would be Peru’s first such agreement with a country in the Middle East and North Africa region, while also representing the UAE’s first trade pact with a nation in the Americas.
With bilateral trade reaching over $1 billion last year, Peru’s exports to the UAE amounted to $1.03 billion, while imports clocked $44 million. Peru aims to leverage the potential agreement to ramp up its exports to the UAE. Hence, the country sees an opportunity to address the UAE’s significant food and manufacturing import demand.
The UAE’s exports to Peru are primarily petroleum-based products alongside some manufactured goods, indicating potential avenues for diversification and expansion. Since 2018, key UAE-based company DP World has made substantial investments of over $700 million in Peru’s logistics infrastructure, paving the way for enhanced trade and economic collaboration.
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Gateway to larger markets
For both countries, the free-trade agreement represents more than just bilateral trade enhancements. It serves as a gateway to larger markets, offering opportunities for increased trade and investment flows. Peru’s existing trade agreements with global players like China, the E.U., and the U.S. further underscore its potential as a strategic partner.
Moreover, the UAE’s pursuit of free-trade agreements outside its immediate geographic area reflects its commitment to expanding its global reach and diversifying its trade partnerships. While negotiations with Peru proceed bilaterally, the UAE is actively exploring opportunities with other nations, including Guyana and members of the Southern Common Market. This includes Argentina, Brazil, Paraguay and Uruguay.
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