MercoPress. South Atlantic News Agency

Peru and Chile reach free trade agreement

Peru announced it had successfully concluded negotiations for a free trade agreement with Chile which is to be signed next Tuesday, “opening a new era” for a bilateral relation which historically has been full of diplomatic conflicts.

The agreement was reached through the expansion of the existing Chile-Peru Economic Complementation Agreement dating back to 1998.

"We've concluded negotiations with Chile for FTA", said Peruvian Foreign Trade and Tourism minister Mercedes Araoz during a press conference in Lima.

"The agreement will be signed next Tuesday when Chilean Foreign Affairs minister Alejandro Foxley visits Lima. Chile is one of the most stable economies in Latinamerica", underlined Araoz.

The FTA also includes an understanding ruling reciprocal treatment for mutual investments.

Since taking office last July Peruvian President Alan Garcia has made fluid relations with Chile a main objective of relations with the country's southern neighbour, in spite of a background of diplomatic disputes and differences regarding maritime delimitation between both countries.

In a reciprocal move Chilean president Michelle Bachelet was present at the taking office ceremony in Lima last July 28 and stood next to President García during the impressive traditional military parade, plus singing the Peruvian national anthem.

Chilean investments in Peru have grown considerably in the last few years and currently total over 4 billion US dollars in such sectors as air transport with Lan; retailing with stores of famous names in Chile and other sectors such as food and manufacturing.

However according to the Peruvian-Chilean Commerce Chamber Peruvian investments in Chile hardly reach 50 million US dollars.

Peruvian exports to Chile reached 1.13 billion US dollars in 2005, which represent a 78% increase over 2004, while imports from Chile totalled 625 million US dollars last year, according to private sources from the Exporters Association of Lima.

Peruvian president Garcia has also been strongly lobbying to convince Chile to return to the Community of Andean Nations, since "we need to learn from the most successful economy in the South American Pacific range".