The United Arab Emirates (UAE) and Peru have announced their intention to embark on negotiations for a free trade agreement (FTA) later this year, marking a significant stride in strengthening the economic and diplomatic relations between the two nations. The decision was unveiled during a World Trade Organization meeting held in Abu Dhabi and comes in the wake of Peru’s recent establishment of an embassy in the UAE, underscoring their commitment to fostering deeper ties. This forthcoming FTA holds particular significance as it would signify Peru’s maiden such agreement with a country in the Middle East and North Africa region, while concurrently marking the UAE’s inaugural FTA with an American nation.
In 2022, bilateral trade between the UAE and Peru soared beyond $1 billion, with Peru predominantly exporting gold valued at $1.03 billion to the UAE, and importing goods worth $44 million, primarily consisting of petroleum-based products. Peru is eyeing the FTA as a catalyst to bolster its export volume, aiming to tap into the UAE’s substantial demand for imported food items, given the reliance of its over 9 million populace on such imports. Peru, renowned for its exports of grapes, avocados, and blueberries, and its prowess in the fishing industry, envisions expanding its market share in the UAE through this agreement. Meanwhile, the UAE’s exports to Peru have predominantly comprised petroleum-based products, alongside manufactured goods like lighting components.
The potential benefits of the FTA are not limited to trade alone. DP World, a prominent UAE-based logistics company, has made substantial investments exceeding $700 million in key port installations in Peru since 2018, further solidifying the economic synergy between the two nations. For both countries, the FTA represents an opportunity to tap into larger markets. Peru currently boasts 19 free trade agreements, including with economic powerhouses like China, the European Union, and the United States. Moreover, it is actively engaged in negotiations with India and has previously explored talks with Turkey. On the other hand, the UAE has been expanding its FTA portfolio, recently signing agreements with South Korea and Pakistan, and pursuing negotiations with countries such as Britain, China, and Japan.
The UAE’s interest in Latin America and the Caribbean has also been on the rise, evident from initial overtures towards an agreement with the Southern Common Market, comprising Argentina, Brazil, Paraguay, and Uruguay. Furthermore, the UAE’s strengthening ties with Guyana, highlighted by the announcement of opening an embassy in Georgetown, underscore its growing engagement with South America. The impending FTA negotiations between the UAE and Peru represent a bilateral endeavor, distinct from the collective agreements pursued by the Gulf Cooperation Council (GCC). This bilateral approach is also evident in the UAE’s budding relationship with Guyana.
As both nations gear up for negotiations later this year, the prospects of a comprehensive FTA hold promise not only for enhancing trade but also for fostering deeper diplomatic and economic collaboration between the UAE and Peru, paving the way for a mutually beneficial partnership in the years to come.
