Peru: Redefining Independence

On July 28th, the 189th anniversary of Peru’s independence from Spain, Peruvians both at home and abroad could not help but feel a heightened sense of pride over their country’s prosperity. Peru has been identified as possessing the fastest-growing Latin American economy in 2010 and has achieved a commendable reduction in poverty and inequality, with its income per capita Gini coefficient decreasing from 0.54 in 1997 to 0.49 in 2006. Despite the global economic meltdown and domestic social and political instability affecting the country, these improvements in poverty and inequality signal a promising future. However, as the country continues to implement neo-liberal policies that have contributed to a 9.8% GDP increase in 2008, Peru must continue to guarantee its independence against economic opportunism through effective use of existing bilateral free trade agreements. These agreements should be seen not so much as ends in themselves, but rather as tools for promoting economic prosperity and higher living standards.

The Free Trade Agreement (FTA) signed with the United States in April 2006 reaffirmed the economic progress of Peru by laying a groundwork for future neo-liberal expansion. It secured access to the largest world economy, which would increase and diversify exports and eliminate trade distortions caused by tariffs, import quotas, subsidies, and non-tariff barriers. Furthermore, free trade would even out market competitiveness through a process of gradually lifting barriers.

Now, Peru is intensifying its free trade strategy. After achieving this bilateral trade agreement with the US in 2006, Lima began to pursue a similar deal with China. On March 1st 2010, Peru became the second Latin America country, after Chile, to enter into a bilateral free trade agreement with China. Peru now has access to a potential market of 1.3 billion people, in addition to the 320 million from the US and the 500 million from the European Union. As President Garcia has emphasized, “esta abierta la cancha para hacer goles,” meaning that the field is now open for all Peruvian entrepreneurs to utilize their audacity and take advantage of these markets.

But for the millions of Peruvians opposed to Garcia’s free trade strategy, the battle for the freedom and independence that Peru once strove to achieve is not over, and must be maintained now more than ever. While free trade agreements are known for opening up many opportunities for economic growth and expansion, special attention must be paid to the small print to avoid counterproductive effects. Peru’s agreement with China, a nation that has garnered a well-known reputation of disregard for environmental regulations and labor rights, merits close monitoring, especially since Garcia has been equally indifferent in these areas of concern.

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