1.

Basic Facts and key Economic Indicators

2.

General Economic Situation and Recent Economic Performance

3.

General Political Situation

4.

Economic and Trade Policies

Peru is committed to a multi-lateral trading system, with a focus on actively

engaging global and regional markets through trade and investment. Peru is fully
committed to open and free markets to continually improve its competitiveness.
Active in both the regional and international community, Peru has successfully
negotiated 14 free trade agreements (FTA) that have entered into force including:
Canada, Chile, China, Costa Rica, European Free Trade Association (EFTA), European
Union, Japan, South Korea, Mexico, Pacific Alliance, Panama, Singapore, Thailand,
the United States, and Venezuela. Peru concluded negotiations with Guatemala that
have not entered into force, and it is currently negotiating FTAs with El Salvador
and Honduras.
Additionally, Peru is actively committed to multi-lateral and regional participation. A
member of the World Trade Organization since 1995, Peru is also a founding
member of the Andean Community, has a free trade agreement with MERCOSUR
and other agreements within the framework of the Latin American Integration
Association (ALADI). In total, Peru has 17 regional trade agreements in force with 52
countries. Approximately, three quarters of Peru's total exports and imports was
with trading partners with which Peru has regional trade agreements.
In hopes of becoming the South American hub for trade with the Asia-Pacific region,
Peru has joined the Trans-Pacific Partnership negotiations since 2009 with eleven
other countries to strengthen relations within the Pacific Rim. Another more recent
agreement with Mexico, Chile, Colombia and Peru in June 2012 created the Pacific
Alliance framework agreement, which just recently officially entered into force. More
extensive than even TPP, the Pacific Alliance commits to establishing an area of
deep integration resulting in the free movement of goods, services, capital and
persons between the member countries.
Overall, import duty rates in Peru vary from 0% to 11%, with the average duty rate
at 5.78%. Value-added tax is levied on imports at the standard 16%. In 2014,
exports from Peru were $37.8 Billion, which is an 8.12% decrease from 2013
exports. Imports totalled $42.2 Billion, resulting in a trade deficit of $4.8 Billion.
Summary of Perus Trade Composition
Major

Exports

% of Major

Imports

% of

2014
Mineral Goods
Precious Metals
Metal Goods
Foodstuffs
Leading Markets
2014
Mainland China
United States
Switzerland
Canada

Total
41.0%
21.7%
9.0%
7.2%
% of
Total
16.7%
13.8%
10.8%
7.5%

2014
Machine Goods
Mineral Goods
Cars
Chemical Products
Leading
Suppliers 2014
United States
Mainland China
Brazil
Ecuador

Total
25.4%
15.0%
12.3%
9.2%
% of
Total
18.7%
18.3%
6.0%
4.8%

Source: UN Comex database.

In general, foreign investors in Peru receive the same legal treatment as local
investors pursuant to the Law on the Promotion of Foreign Investment and the
decree-law #662 of 1991. Under the applicable laws a majority holding interest in
the capital of a local company is legal in Peru. Investment incentives generally
consist of tax exemptions and low-cost financing. Foreign capital can be invested in
all sectors of economic activity without prior authorization, with the exception of a
few sectors, such as the press, or implantations in border zones. Mining, finance,
communications, energy, and industry sectors comprise roughly 85.9% of foreign
contributions. Spain is the largest foreign investor in Peru, with the United States
and Great Britain not far behind.
5.

Bi-lateral Trade and Investment Between Hong Kong and Peru

Peru does not currently have a Free Trade Agreement in place with Hong Kong but in
2008 signed a Cooperation Arrangement on Trade and Investment Facilitation in
order to facilitate and promote bilateral trade in areas including exhibition and trade
fairs, financial services, investment, tourism, rail, maritime and logistics
transportation, and other measures. Intellectual property rights, customs and
competition-related matters, as well as technical assistance and capacity-building in
areas of mutual interests were also included in the agreement.
While no tax treaty or FTA exists between Peru and Hong Kong, Peru remains one of
the premier investment opportunities in South America as it has implemented
several investment and trade friendly policies. Foreign investors retain the right to
receive non-discriminatory treatment when compared to the national investor and
possess the freedom to conduct commercial and industrial activities and to perform
import and export operations. Furthermore, investors retain the right to remit
abroad profits or dividends, after payment of the corresponding taxes, and are free
re-exportation of invested capital, whether from a sale of shares, reduction of
capital or total or partial liquidation of investments. The Peruvian government has
removed all red tape allowing for unrestricted access to domestic loans, under the

same conditions than national investors and foreign investors can subscribe to Legal
Stability Agreements with the State over investment in the country.
In 2014, total exports to Hong Kong from Peru exceeded $157.4 Million. This amount
accounted for only 0.41% of total exports from the country and Hong Kong ranks
37th among Perus trading partners. Despite the low 2014 export value, this is an
83.9% increase in exports from 2013. Furthermore, this is contrasted by the
relatively low amount of imports from Honk Kong to Peru. Peru is Honk Kongs 83 rd
ranked trading partner and in 2014 accounted for 0.04% of imports, totalling $16.8
Million. Overall, between 2010 and 2014 imports from Hong Kong have decreased
by nearly 25.6% and between 2013 and 2014 by 11.7%. The chart below shows the
resulting trade balance between Hong Kong and Peru over the four-year period.
Peru Merchandise Trade with Hong Kong, 2010-2014 (in Million US$)

Imports
Exports
Trade
Balance

2010

2011

2012

2013

2014

22.6
78.9

15.8
91.9

20.6
96.5

18.9
85.6

16.8
157.4

56.3

76.1

75.9

66.7

140.6

% Change
2010/14
2013/1
4
-25.66% -11.11%
99.49%
83.88%
149.73%

110.79%

Source: UN Comex database.

Perus principal imports from Hong Kong in 2014 included electrical machinery and
equipment of HS Chapter 85 (US$3.05 million, or 18.19% share), printed books and
newspapers of HS Chapter 49 (US$3.03 million, or 18.09% share), iron and steel of
HS Chapter 72 (US$1.6 million, or 9.73% share) and plastics of HS Chapter 39
(US$1.4 million, or 7.77% share). However, of the top 10 imports 7 experienced
significant percentage decreases.
Top Peruvian Imports from Hong Kong in 2014, in US$
HS
Code

Commodity Description

2013

Change
2014 2013/2014

Electrical machinery and

85 equipment

1,699,95
3

3,049,854

79.41%

49 Printed books and newspapers

1,751,59
8

3,033,453

73.18%

72 Iron and Steel

2,407,36
1

1,634,567

-32.10%

39 Plastics

1,218,50
4

1,377,838

13.08%

84 Nuclear reactors
Miscellaneous articles of base
83 metal
Miscellaneous manufactured
96 articles

766,468

748,846

-2.30%

775,351

606,777

-21.74%

941,824

584,583

-37.93%

48 Paper and paperboard

Clocks and watches and parts
91 thereof

847,394

564,068

-33.43%

881,910

554,309

-37.15%

58 Special woven fabrics

881,910

501,300

-43.16%

Source: UN Comex database.

Despite import performance, Perus exports to Hong Kong have exploded in the past
year. The most attributable was from high shipments of edible fruit and nuts of HS
Chapter 8 (up by 134.29% to US$102.7 million), edible vegetables and certain roots
of HS Chapter 7 (up by 785.77% to US$4.9 million), and zinc and articles thereof of
HS Chapter 79 (up by 2249.80% to US$2.0 million).
Top Peruvian Exports to Hong Kong in 2014, in US$
HS
Code

Commodity Description

2013

Change
2014 2013/2014

43,852,201

102,742,50
2

134.29%

3 Fish and crustaceans

Articles of apparel and
61 clothing
Edible vegetables and
7 certain roots
Electrical machinery and
85 equipment

9,671,469

10,911,922

12.83%

9,078,111

8,274,515

-8.85%

554,305

4,909,867

785.77%

2,409,759

4,374,548

81.53%

74 Copper and articles thereof

2,514,718

3,308,085

31.55%

41 Raw hides, skins, and leather

Wool, fine or coarse animal
51 hair

2,008,799

3,160,752

57.35%

4,296,249

2,966,019

-30.96%

23 Animal fodders

2,190,537

2,357,800

7.64%

79 Zinc and articles thereof

85,470

2,008,370

2249.80%

8 Edible fruit and nuts

Source: UN Comex database.

6.

Overall Trade Relations and Major Trade and Economic Issues of

Interest Between Mainland China and Peru

Perus FTA with mainland China entered into force on 1 March 2010. Much of the
impetus of the FTA was to meet Chinese demand for Perus vast minerals and other
extractive resources which provide much-needed dynamism in local markets when
other international markets are depressed. For China, Peru is an important source of
minerals, primarily copper. The FTA also goes some way toward protecting sectors
vulnerable to Chinese competition notably textiles and apparel goods which a
valuable export for Peru. For Peru, increasing trade with China is a key way of
diversifying the export economy toward an area of growing international and
domestic demand. In 2011, less than one year after the FTA, China replaced the
U.S.A. as Perus main trading partner.
With the FTA duties on a range of mainland Chinese products were eliminated on
the date of implementation or have since been reduced gradually over the five-year
period since signing. The most notable reductions came with regard to: most fish
and seafood; wood pulp; most toys and games; cellular phones; vegetable fibres,
yarns and certain woven fabrics of HS Chapter 53; computers and parts thereof;
certain electronic equipment; lighters; pencils; headgear; umbrellas; clocks and
watches; urea; and laminated steel products. Duties on certain other mainland
Chinese products, including pharmaceuticals and certain textile made-ups, are
continuing to be phased out over a 10-year period.
Peru was able to shield several sensitive products from any tariff elimination
commitments, including: ballpoint pens, certain textiles, apparel and footwear and
certain tools and miscellaneous articles of base metals. These sensitive products
include a total of 592 tariff lines and account for about 10 percent of Perus total
imports from the mainland. Likewise, mainland China did not provide tariff
preferences to certain agricultural products and wood and paper products from
Peru.
Recently, China and Peru, in connection with Brazil, agreed to build more than 5,000
kilometers of railway lines which will connect the Atlantic and the Pacific with the
aim of increasing the size and speed of trade with China. Furthermore, Peru is
considered the leading location for Chinese mineral investment in Latin America,
and Chinese firms hold around 30 percent of the countrys total mining investment
portfolio. Chinese firms also have an important presence in Perus hydrocarbons
and commercial fishing sectors, controlling roughly 40% of the production in Peru.
These vast leaps forward are primarily due to the 2011 formation of the Association
of Chinese Enterprises, with 43 members and support from the Chinese Embassy. In
2014, the Association had 61 members, and 120 Chinese firms were legally
registered to operate in Peru, in mining and energy, telecommunications,
machinery, agriculture, construction and commerce.
China has been Perus most important trading partner in recent years, representing
its single largest export market and second largest source of imports after the
United States. Interestingly, since signing the FTA with China in 2010 Perus GDP

has grown by nearly 67%. In 2014, Peru exports to China reached $7.03 Billion, or
18.57% of total export value from Peru. Peruvian exports to China remain largely
primary goods, with four products copper, iron, lead, and fishmeal. Conversely,
imports in 2014 reach upward of $8.92 Billion, which accounts for 21.14% of total
imports.