Bridges Weekly Trade News Digest • Volume 12 • Number 39 • 19th November 2008
China to Sign FTA with Peru; Other Deals May Soon Follow
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China and Peru were set to sign a free trade agreement at a high-level summit in Lima on Wednesday, finalising a deal that could make the Asian giant Peru’s number one trading partner.
The deal is just one of many that China has signed as it continues its search for new sources of raw materials and new markets for its manufactured goods. China is also in the midst of free trade talks with Australia, India, and Costa Rica.
China signed its first non-Asian free trade agreement, or FTA, with Chile in 2005. Since then, Beijing has honed its negotiating skills and expanded into new territory.
Chile is now assisting Costa Rica in negotiations toward a similar deal with China, and talks will begin in January in San Jose. The rest of South America is watching the trade deals closely, as China is a major importer of the continent’s abundant supply of base metals such as iron ore and copper.
China’s relations with India have been strained recently due to India’s close ties to the US, competition over Africa’s natural resources, and India’s growing trade deficit with China, but the two countries’ close economic links have prompted bilateral negotiations. With the recent completion of a feasibility study on a potential FTA, talks between the two countries seem poised to move forward.
China made headlines in April when it signed its first FTA with a developed nation, New Zealand. Now China has turned its sights to neighbouring Australia. Though the two countries have been in negotiations since 2005, 12 rounds of talks have still not produced any agreements. This could be due in part to the size of the proposed agreement, as Australia is seeking a comprehensive FTA covering all economic sectors. Australia has also reportedly been unsatisfied with the extent of the market access China has offered, especially concerning agricultural goods. The next round of negotiations will be held in Beijing this December.
ICTSD Reporting; “India and China,” IBEF, October 2008. “Chile helps Costa Rica with China FTA,” CENTRAL AMERICAN DATA. “Peru, China to view viability of free trade deal,” REUTERS. “Costa Rica seeks FTA with China,” CENTRAL AMERICAN DATA, November 11, 2008. “Costa Rica, China to launch free-trade agreement talks,” INO, November 17, 2008. “China and India: New Vision, Old Tensions,” BUSINESSWEEK, January 15, 2008. “China and Chile: South America Is Watching,” BUSINESSWEEK, November 18, 2005. “Australia-China FTA Negotiations,” AUSTRALIAN GOVERNMENT DEPARTMENT OF FOREIGN AFFAIRS; “Peru trade minister says China trade deal set,” AP, 19 November 2008.
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