Following on from the UK’s vote to leave the European Union last June, British Prime Minister Theresa May outlined the country’s plans for “Brexit” on Tuesday. During a speech Prime Minister May announced that the UK would be leaving the EU, the Single Market, taking control of its borders, and leaving the European Court of Justice in what is described as a “clean” or “hard” Brexit, but what does all this mean for Peru?
Peru, along with Colombia already has a free-trade agreement signed with the EU, but it’s still yet to be ratified by all 28 member countries (ratification is still outstanding from Austria, Belgium, and Greece). Once ratified the agreement will open up Peru’s and the EU’s markets to each other, and make trade and investment more stable and predictable. The UK has already ratified the deal but presumably once Brexit takes effect the country with a population of 64 million (the EU’s second largest economy) will no longer be included in the agreement.
On the surface, this seems bad for Peru, but it does not necessarily mean so – Once the UK is officially out of the EU one of two things could happen. First, depending on how negotiations go between the UK and EU, it is possible both parties could come to an agreement in which the UK inherits all of the trade agreements it signed as part of the EU, and thus the deal with Peru would remain intact. If this does not happen then both the UK and Peru will need to find their own bi-lateral agreement, free from any EU influence. Negotiating a new trade deal with the UK could be lengthy, and could take a few years to reach, however it could represent opportunity for Peru.
In fact, Peru’s Trade and Tourism Minister Eduardo Ferreyros has announced work has already begun on securing a post-Brexit bi-lateral trade deal with the UK. Speaking back in October, Ferreyros said that Peru is working towards ensuring that current export arrangements into the UK continue and that it is hoped there will be “no gaps” when Brexit finally happens. Ferreyros also suggested that although official negotiations cannot begin until the UK actually leaves the EU, informal talks are ongoing and Peru sees opportunities in reaching a bi-lateral agreement that will allow for an increase in export of goods and services. The UK is a major buyer of Peruvian goods and thus it is essential for some sort of trade agreement to be in place post-Brexit.
In sum, the impacts of Brexit on Peru will be marginal and could actually be positive for trade. However, it is of essence that some sort of deal with the UK is intact when the country finally does leave the EU (likely to be 2019), and thankfully the Peruvian government acknowledges this, and are already working on getting an agreement in place.