Australia and Peru have sealed a free trade agreement, which has been roundly welcomed by the exporting community Down Under.

The Peru-Australia Free Trade Agreement (PAFTA) will lead to the elimination of 99.4% of tariffs on Australian exports to Peru.

Agriculture and fishing are set to benefit most. Immediately, all tariffs will be eliminated on seafood, sheep meat, kangaroo meat, most horticulture products and wheat. Within five years, all beef tariffs will be dropped, while pork will see big cuts in its current tariff, which can be as high as 17%.

Lisa McAuley, CEO of the Global Trade Professionals Alliance (GTPA) and former head of the Export Council of Australia, tells GTR: “The GTPA supports the principle of expanding both Australia and Peru’s free trade agreement network by entering into high-quality agreements. While multilateral agreements are best, and multi-country agreements such as the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) are second-best, there can also be value in bilateral deals with countries like Peru and Australia.”

Bilateral trade in goods and services between Australia and Peru was worth A$590m in 2016, a growth of 51.2% from 2015. The Australian government estimates that PAFTA will see the current export of 30,000 tonnes of sugar to Peru grow to 60,000 within five years, 7,000 tonnes of dairy growing to 10,000 tonnes, and 15,000 tonnes of sorghum growing to 20,000 tonnes.

McAuley adds: “Latin America is a dynamic and growing region with opportunities for goods and services exporters in all sectors. Along with the market access openings, part of the value of free trade agreements is they put a country on the map for exporters. For some sectors, Peru – and Latin America more broadly – can offer far better business opportunities than Asia.”

The Peruvian trade and tourism minister Enrique Ferreyros, meanwhile, described PAFTA as the “most ambitious bilateral agreement signed by Peru so far”.

“PAFTA will bring us even closer to one of the most important markets in the Asia-Pacific region, whose inhabitants have a high purchasing power. I’m sure the deal will provide great opportunities for our goods and services exporters,” he says.

Peru’s total exports to Australia were US$185mn in 2017, the majority of which was in the minerals sector. This represented just 0.4% of Peru’s trade revenue, with the minister hopeful that the agreement will help double agricultural exports to Australia by 2021.

Both countries will be involved in the signing of the CPTPP, which is expected to happen on March 8 in Chile. Peru is the second CPTPP member with which Australia has negotiated a bilateral free trade agreement, after Japan.

“I think the various bilateral agreements underway between CPTPP members serve three purposes,” Deborah Elms, CEO of the Asian Trade Centre, tells GTR. “One, to remind the broader community that trade remains open; two, to capture a few additional details that cannot be promised in a larger setting; and three, as a fallback option just in case there are challenges with getting CPTPP signed and implemented on schedule.”