Insight – Peru-Australia Free Trade Agreement boosts agricultural, fisheries and forestry exports

5 April 2022

The Peru-Australia Free Trade Agreement (PAFTA) entered into force on 11 February 2020.

Since PAFTA’s establishment, Australian agricultural, fisheries and forestry (AFF) exports to Peru have grown from $7.5 million in 2019 to $57.5 million in 2021. This 668% increase in export value was mainly driven by a large increase in malting barley and malt exports, for use in Peru’s brewing industry.

On 14 July 2021, Peru joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The tariff reductions under CPTPP further improved market access and the competitiveness of Australian exporters in the Peruvian market.

Opportunities for Australian exporters under PAFTA

PAFTA has increased the competitiveness of Australian AFF exports to Peru by reducing or eliminating barriers to trade. This includes substantial tariff reductions on a range of Australian exports (Table 1).

Table 1: Tariff rate reductions for selected Australian agricultural and fisheries exports to Peru under PAFTA

Commodity

Pre-PAFTA

Post-PAFTA

Beef & veal

11-17%

Immediate reduction to 0% for most cuts. Remaining cuts are reduced yearly until reaching 0% in 2025

Sheep meat

9%

0%

Pig meat

9%

Immediate reduction to 0% for most cuts. Remaining cuts are reduced yearly until reaching 0% in 2025

Wheat

0%

0%

Seafood

0–9%

0%

Dairy products

0–9% + SPFPa

0% or Tariff Rate Quota

Rice

0–9% + SPFP

Tariff Rate Quota

Beverages, spirits and vinegar

0–9%

Immediate reduction to 0% for some commodities. Remaining commodities are reduced yearly until reaching 0% in 2025

Fruit and vegetables

0-17%

Immediate reduction to 0% for most commodities. Remaining commodities are reduced yearly until reaching 0% in 2025

SUGAR

9% + SPFP

Tariff Rate Quota


Source: DFAT & UN Comtrade (accessed March 2022)
Note: a: SPFP is the Price Band System of Peru. It allows additional duties to be applied if the cost, insurance and freight (CIF) price is lower than the designated floor price. The SPFP system can also reduce duties if the CIF price is higher than the designated ceiling price.

Peru market snapshot

Peru’s demand for AFF imports has risen in recent years. The value of AFF imports rose by 19%, from $6.3 billion in 2016 to $7.5 billion in 2020.

There is strong demand in Peru for a range of AFF that Australia produces. In 2020 Peru imported:

  • cereals – $2.15 billion
    • corn – $1.67 billion
    • wheat – $773 million
    • rice – $248 million
  • animal or vegetable fats and oils – $708 million
  • dairy products – $363 million
  • seafood – $238 million
  • meat and edible offal – $221 million
  • beverages, spirits and vinegar – $156 million
  • fruits – $157 million
  • vegetables – $152 million
  • sugar – $82 million.

Peru’s AFF imports have historically been supplied by countries in the Americas. However, the European Union (5%), Thailand (2%) and New Zealand (2%) also maintain sizable market share (Source: UN Comtrade 2022).

Figure 1: Peruvian AFF imports by country (2016 to 2020)
Figure 1

Australian AFF export growth to Peru driven by demand from the brewing sector

The substantial rise in Australian AFF exports to Peru over the last two years is a result of increased malting barley and malt exports.

PAFTA increased the competitiveness of Australian barley by immediately reducing the tariff rate from 9% to 0%. This placed Australian barley on equal footing with Argentina, Canada, Chile, EU and US (Source: ITC Market Access Map 2022).

In 2021, barley exports accounted for 97% of Australian AFF exports to Peru, up from 46% in 2020.

Australian malting barley and malt are predominately used to make beer, a popular beverage in Peru and the wider Latin American region.

Figure 2: Australian AFF exports to Peru (2017 to 2021)
Figure 2

Resources

The Australian Government’s network of Agriculture Counsellors provided information for this article. More information about the Agriculture Counsellor network, including contact details, is available on the Department of Agriculture, Water and the Environment website.

Additional information about the Peru market is available on the Austrade website.

The tariff schedule for PAFTA can be found on the Department of Foreign Affairs and Trade (DFAT) website. DFAT has also published a guide to using the CPTPP. DFAT’s FTA Portal has more information.

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