Peru-mexico Relations: The Importance of Economic Development

Peru is the third country with the largest export of avocado food products, generating approximately 250 million dollars a year. The purpose of the essay is the analysis of their relationship and the history between Peru and Mexico in matters of export-import in many sectors. In addition, the benefits generated by their participation in alliances and agreements in a multinational and binational manner in these countries.

The relationship between Peru and Mexico has attributes that make it special since they are heir nations to the oldest civilizations in America, the Aztecs and Mayas in Mexico and the Incas in Peru, and also both have gone through similar transculturalization phrases such as the “Virreinato del Perú” and the “Nueva España”. All these aspects both nations share make both of them to recognize the huge historical, cultural, ethnic, and social roots they have in common. It is important to understand that the bond between these two parties was built at the hard times of trying to be independent from Spain and their Republic. After all these notable characteristics they share, the diplomatic relations between Mexico and Peru were established in 1893, two years after Peru was finally independent. After a few years, Mexico opened its first consulate in the capital of Peru, in October 1892, and succeeding that first step the embassy was settled on 14 of June 1937. However, during the construction of the bilateral relations, there was an accident that delayed this process, in 1932, a Peruvian newspaper wrote a letter inspired by the famous Peruvian politician, Víctor Raúl Haya de la Torre, in which he talked about the idea of building different styles of governing in Latin America and especially in Peru because he had the interest of following occidental ways of organizing their countries. The accident mentioned earlier was caused because the letter was addressed to a coworker of him and states the plan in detail and it was sent through a Mexican diplomatic bag to the capital Lima, which never arrived to the designer. This letter and accident caused indignation in Peru and the president accused the Mexican government of interfering in their internal moves and cut off the diplomatic relations between both nations. After a year, in 1933, the bilateral relations were finally restored due to the approaching of a new president in Peru. Following the established and stable relations, Peru and Mexico started to create more agreements that involve economic, social, and cultural aspects which benefit both parties.

Trade relations between Peru and Mexico in the modern era started when they signed the bilateral agreement in April 2011, and put in motion February 2012. Before they signed the treaty they had one that applied 100% tariffs reduction to less than 50% of the products from both parts, now we have preferential access to over 12000 products, the same way textile products from Peru will have 0% tariffs when they used to have 15%, which marks a huge difference. Technology products coming from Mexico will also be tariff-free, giving the Peruvian market accessibility in prices and freedom to choose the products they like the most. Given the fact that Mexico is one of the emerging 7 countries, it is important to make an alliance with them, also because our average commercial exchange has grown 13.7% every year (2000-2010).

Mexico and Peru also have international alliances in common, such as APEC and the Pacific Alliance, they look to improve relations between countries within those pacts and increase foreign investment and trade and tariffs as well. The Pacific alliance looks to have free trade exchange between the members, at this moment only 5, including Mexico and some of our south American neighbors such as Ecuador and Colombia. Having numerous pacts between two countries improves their trust between one another and builds a good relationship towards the future.

Some treaties that have been signed but have not been put in motion yet are the CPTPP and TPP agreements, all including Peru and Mexico basically have the same goals as the other treaties, but this time, more, and new countries are included in this agreements. Also, we have the TISA agreement which stands for ¨trade in services agreement¨ and seeks to boost services trades between the member countries, this agreement is not signed yet, it is still in negotiations, but it will be great for our international relations with Mexico as both Peru and Mexico are part of this agreement.

As observed, The Republic of Peru and The United States of Mexico have cooperated in trade agreements throughout history. Nevertheless, it is not the only field in which these agreements have become visible due to the fact that there are also agreements in the field of politics, culture, education, and defense, among others.

In politics, they have some agreements; for instance, the Agreement on Legal Assistance in Criminal Matters, signed in Mexico on May 2, 2000. Basically, it explains that a person who committed a crime and was sentenced outside his country has the possibility of serving it in his own country.

In the field of culture, there is a cooperation agreement on tourism signed on April 2013 by the Peruvian tourism minister and Mexican tourism secretary. It consisted on promoting the implementation about professional exchanges in the tourism sector, furthermore seeking to increase of tourist flows in both countries. Talking about education is feasible to mention a cooperation agreement signed on October 1975 which was focused on the education of Peruvians and Mexicans. One important point on that arrangement was the collaboration between the libraries of each country to expand their bibliographic collections.

Likewise, each country has the responsibility to ensure the safety of its citizens, in this case through the defense field. For that reason, both countries signed cooperation in the fight against drug trafficking which allows both countries to share information on criminal and judicial records of citizens, aside from promoting training courses for police officers from both countries in various aspects of the fight against drugs.

These examples demonstrate that Peru and Mexico have very good cooperation in various fields besides trade, also these cooperations are as important as trade and seek to benefit both countries.

Foreign direct investment (FDI) is vital in many countries in order to support their economies, especially in developing countries such as Peru:

Over the past few decades, cross-border capital flows have been a major force driving economic globalization. In the long run, financial development and trade openness are more important for developing economies, while financial development with financial openness is more important for advanced economies. Foreign direct investment (FDI) plays a decisive role in resource allocation within the market ... It seeks market technology brands and enhances the global competitiveness among international inflows.

Thus, Peru has developed PAI (Programa de Apoyo a la Internalización) in May 07th, 2016 by MINCETUR (Ministerio de Comercio Exterior y Turismo). The main aim of the program is to increase the productivity of micro, small, and medium-sized enterprises (MSMEs) through instruments for technological diffusion, business innovation, and improvement of management and productive chains and access to markets. Export enhancement; consolidation of export activity and international bidding; franchises and commercial implementation are the application modalities for internationalization. The first modality applies to companies that are not regular exporters but have some experience exporting; in the second one, applies to regular exporters firms which already have significant experience working in international markets. The franchises modality is designed to support the commercial expansion of companies with extensive local experience. Finally, the commercial implementation modality is designed to support companies in their commercial implementation abroad as a group.

Peru and Mexico have had a strong relationship throughout history until today as mentioned before. There is a steady shift of dynamism between Peruvian and Mexican exporter as well as importer companies. According to an investigation done by MINCETUR evaluating the first semester of 2019; in one hand, it shows the important role of food exporting companies and the chemical sector, in food exporting companies those that export peppers and food for prawns present the largest shipments such as Vitapro, Agrícola Pampa Baja and S&M Foods. Vitapro exports food for prawns and it has increased its exports in 106% more. The last two companies export peppers and they had an increase of 34% and 12% more respectively. In the chemical sector, there was a higher shipment of Famesa Explosives (+70%) and Goodyear Company (+32%). Furthermore, more than 200 firms export some agricultural products to Mexico. In contrast to Repsol and Petroperú companies had a decrease in their hydrocarbon shipping sales of -51% and -42% respectively.

On the other hand, the number of importing companies exceeded 2 000 companies, more than 50% focused on sales of capital goods. More than 80 companies are dedicated to the purchase of vehicles. Samsung companies (television), Lg Electronics (television), and Kia Import (vehicles), decreased their sales by 12%, 30%, and 21% respectively.

Due to the internationalization program PAI, many companies could have monetary support so as to they can internationalize its products. Applause S.A. was selected in the Franchise category. This company presented the 'Aguaclara Brand Franchise' project for the Mexican market and will now have financing of up to S / 119,600.

In conclusion, the relationship between Peru and Mexico over time has been productive in the economic sector and in other diverse sectors, strengthening the alliance between these two countries in matters of export and import. Since Mexico is a country considered economically emerging and its future position in the world would benefit from the alliance and its treaties that it has with Peru to develop its trade with the world. So, Peru seeks to dynamize the relationship that exists between them and strengthen it for further progress.

Bibliography And References

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