Tax & Accounting Blog

Keys of the Commercial Model of Peru with the European Community

Blog, Global Trade, ONESOURCE August 14, 2015

In the 1990s, in order to be more competitive, Peru started to export a large variety of products to other countries. Simultaneously, Peru opened its market in order to be able to import, at a lower cost, raw materials, equipment and technology that its firms were producing. At this time, the country used certain preferential commercial systems that economies like the United States and the European Union (EU) offered. However, although those systems were good, they turned out to be not enough for the growing demand in Peru.

In order to consolidate the worldwide introduction of its products, Peru decided to negotiate commercial agreements with the countries that represent an important part of the export market.  One of these was the Agreement with the EU, with negotiations that began June 2, 2012 in Brussels, Belgium and that entered into force on March 1 of the following year[1].

The subjects included in the negotiation were: Access to Markets; Rules of Origin; Customs’ Matters and Facilitation of Commerce; Commercial and Technical Obstacles; Health Measures and Plant Health Measures; Commercial Defense; Services, Establishment and Movement of Capital; Public Expenditure; Intellectual Property; Competence; Resolving of Differences, Horizontal and Institutional Issues; Commerce and Sustainable Development and Technical Assistance and the Strengthening of Capabilities.

Within the framework of this agreement, Peru offered immediate tax relief over five years for products of interest to the EU such as: motors, vehicles, machine parts, chemical products, lubricants, food supplements, whisky, malts, food preparations, and animal food and hop cones.

Furthermore, the South American country obtained preferential access for 99.3% of its agricultural products and 100% for industrial products. The products of interest to Peru such as asparagus, avocados, coffee, and artichokes amongst others will enter the European market duty-free.

This commercial agreement is part of a complete commercial strategy which aims to convert Peru into an exporting country, consolidating more markets for Peruvian products, developing a competitive and exportable supply and promoting commerce and investment. Peru is one of the 12 countries with the greatest biodiversity in the world and one of the largest genetic banks of flora and fauna on our planet. It’s for that reason that it has been agreed not to incentivize commerce or investment by reducing the levels of protection set out in environmental and labor legislation.[2]

The following chart explains the macroeconomic indicators of both the European Union and Peru and the importance of the Agreement between both countries as supported by the comparison of the commercial exchange between Peru and EU.  From 2001-2011 the commercial exchange grew at an annual average of 16%, moving to USD2.971 billion in 2001 and USD12.581 billion in 2011. In 2014, the commercial exchange increased by 29% compared to 2010. The population of the EU is vastly larger than Peru, providing a larger market for Peruvian products. Given the population of Peru being around 30 million, the indicators are that Peru ultimately is also being provided with a greater possibility for its industries to find a place in the EU market because of the agreement.


Table 1

The next three charts explain the evolution of trade after the signature of the trade agreement between Peru and the EU. The first graphic depicts the evolution of general trade since 2009, with the next two graphics providing an overview of the evolution of exports and imports. These graphs indicate the importance of benefits to Peru in both exports and imports by the growth in products and services imported from the EU and exports from Peru, thus helping Peruvian trade in general.


Table 2

Exportations Peru –European Union (EU-28) 2009-2013 and Jan-Sep 2014 (US$ Million)


Importations Peru – European Union (EU-28) 2009-2013 and Jan-Sep 2014 (US$ Million)



In the 1980s, Peru was a country a little bit isolated from the world trade because of economic and political issues. Years later Peru started to sign trade agreements with different countries and regions of the world. The most important agreement that has provided many benefits to Peru was with the EU. Today products of Peru are sold within the EU market easily giving access to each EU member state to Peruvian products. Concurrently, products from the EU arrive to Peru assisting the country’s national industry. The agreement between Peru and the EU has substantially improved market access for both EU and Peruvian companies exporting goods and services, as well as for investors.  But the main benefit of the agreement is that it has created new and important opportunities for companies and consumers on both sides.

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[1] The member nations that belong to the European Union make up a population of more than 500 million people and with a GDP per capita greater than US$ 34 thousand annually, which makes it one of the largest export markets.