Amid the global chaos and disruption caused by the Coronavirus (COVID-19), which has seen the cancellation of flights, installation of travel bans and the closing of borders, it is fair to say that Australian businesses are yearning for some good news.
Fortunately, there is something to smile about, particularly for those in the agricultural and resources sectors. The Peru-Australia Free Trade Agreement (PAFTA) (which entered into force earlier this month) will provide a further gateway into the bustling and ever-growing Latin American market. One which has a demonstrated track record and appetite for free trade. Australian exporters now have a foot in the door in one of the fastest growing economies in Latin America.
Australian exporters - particularly in the beef, mining and dairy sectors - are now set for greater market access and reduced tariffs creating cost competitiveness. These opportunities are recognisable immediately. Peru removed 93.5 per cent of its tariffs upon PAFTA’s entry into force. This number will rise to 99.4 per cent over the coming years, giving Australian exporters enormous access to a consumer base of 31 million, a population on par with that of Malaysia’s.
In addition, the agreement could also provide some respite for Australian tertiary centers which are currently feeling the pinch from the Coronavirus as Chinese students remain uncertain as to when and if they can continue their studies in Australia. Should Chinese student numbers subsequently fall in the medium to long term, the addition of PAFTA is well placed to help attract more Peruvian students to study in Australia and further efforts toward more diversified education, services and export sectors. Considering that the Colombian student presence is already more noticeable in our universities, there is no reason why Peruvian students could not follow suit.
It would seem that with the intense focus on COVID-19 and ongoing protectionism that the benefits of free trade have somewhat flown under the radar in recent times. However, that does not mean that the entry into force of PAFTA should be ignored. As a growing market in a region with a track record for free trade, Peru presents an additional avenue through which Australia can seek to thrive in an ever-changing global landscape.
