During the month of July, talks are being held between the governments of India and Peru in order to reach a free trade agreement which will cover goods, services, and investment.
For the first time, the Asian country is negotiating an agreement with a Latin American economy, one of the more open and fastest growing within the area; Peru has a projected growth is of 4% for 2017, the highest in the region.
If the agreement is signed, it is expected that the Peruvian exports shipped to India would rise by 12% and clothes, fruits, vegetables, and chemical products would see the most demand. In January 2015, India and Peru set a Joint Study Group (JSG), which confirmed, in October 2016, the desirability of the agreement.
Peruvian president Pedro Kuczynski is strongly pro-business. It’s evident that Peru is embarking on a trip beyond its usual stomping grounds, thusly enhancing the reach of its economic relationship to an area which already presents interest in the Regional Comprehensive Economic Partnership (RCEP) and a free trade agreement with China.
Meanwhile, Asian economies such as China and India have a strong interest in Latin American natural resources. Indian industries and the IT sector would prove the effectiveness and mutual benefits of the partnership as Peru is a leading producer of copper, gold, and seafood.
One important issue the Asian nation will need to carefully address is the environment. Previous experiences with China have paved the way, through various red flags, for India to adequately manage the situation. In the past, there have been severe problems when it came to water supply, deforestation, and greenhouse emissions, as stated by the Boston University’s Global Economic Governance Initiative (GEGI).
These actions made by the Chinese caused not only environmental damage but also job losses and uncertainty on whether Latin American countries should allow Asian companies to hire foreign workers.
This agreement, if signed, would increase India’s actions within Latin American economies, impact the overall growth of the region, and affect various other areas including the cultural aspect of the area.
LatinAmerican Post | Andrés Felipe Ropero Santiago
Copy edited by Susana Cicchetto