How to really “optimise” free trade between Peru and China

Negotiations to upgrade the Peru–China FTA have failed to address the impacts of fishing and mining, or involve civil society

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Peru’s exports to China consist overwhelmingly of metals and fishmeal. Negotiations to ‘optimise’ a 2008 Free Trade Agreement (FTA) have not considered the social and environmental impacts of these sectors (image: MINCETUR)

Lima recently hosted the second round of negotiations to “optimise”, or maximise the benefits of, Peru’s Free Trade Agreement (FTA) with China. The full schedule for talks has not been publicly announced but the negotiation of the first FTA in 2008 consisted of six rounds throughout the year.

So far, official negotiations over how to optimise the China-Peru FTA have addressed trade in services, investments, procedures, rules of origin, intellectual property, and e-commerce. There has been no analysis of the serious environmental and social impacts of the two most significant financial and commercial activities that the two countries engage in: mining and fishing.

95%

of Peru’s exports to China since 2008 consisted of metals, minerals and fishmeal

In the past ten years since the FTA was introduced, fishing and mining have accounted for 95% of an aggregate US$76 billion of exports to China, according to official Peruvian figures. Of this, 83.5% corresponds to mining products, mainly copper, and 11.4% to fishmeal.

The Las Bambas and Marcona mining projects, and the data on illegal Chinese fishing in Peruvian seas, show the urgent need for a comprehensive analysis of the impacts of trade and investment with China if the FTA is to be genuinely “optimal”.

According to a report by the Collective for Chinese Finance and Investment, Human Rights and the Environment (CICDHA), in the past two years, seven states of emergency have been implemented at Las Bambas, a copper mine operated by China Mineral and Metals Group (MMG).

This has meant limiting fundamental rights such as the freedom of movement and association as the government tries to avoid opponents of the mine blocking the delivery of minerals to shipping ports.

According to the Peruvian Constitution, the state of emergency should be a measure for exceptional circumstances. However, authorities have used it regularly to control the local populations using blockades as a strategy to demand compliance with environmental laws and their right to consultation and fair compensation for land acquired by the project.

The Peruvian government has not managed to diversify exports or attain a substantial increase in value-added exports to China

To date, the Las Bambas conflicts have left four people dead. In the case of the Marcona iron ore project, Chinese company Shoungang Hierros del Peru has been sanctioned multiple times for violating Peruvian labour laws.

Shougang’s violations range from irregular outsourcing and fraudulent contracting, wage discrimination and non-compliance with health and safety regulations (following fatal accidents) to mass dismissals.

Meanwhile, hundreds of unlicensed Chinese boats fishing for squid and anchovy have been identified in Peruvian waters since 2014. In the following years, PRODUCE, the government agency in charge of regulating fishing, seized protected species such as seahorse from Chinese vessels.

In April, NGOs the International Federation of Human Rights (FIDH), Peru Equidad, CooperAcción, and CICDHA urged Edgar Vásquez, Peru’s minister of commerce and tourism, to integrate into the FTA “measures to ensure that development and infrastructure projects are fully compatible with human rights and are respectful of the environment and the sustainability of natural resources”.

The Peruvian government has not managed to diversify exports or attain a substantial increase in value-added exports to China through the first FTA. On the contrary, the primary export model has been strengthened at the expense of nature and the rights of local communities.

The following rounds of negotiation to “optimise” the Peru-China FTA should be an opportunity to change this.

Parties negotiating an “optimised” China-Peru FTA should consider three key elements: providing space for the full and permanent participation of non-governmental organisations in the following rounds of negotiations; an independent and comprehensive assessment of the impacts of trade and investment with China, especially in the mining and fishing sectors; and incorporating specific chapters on environmental issues and human rights.

In the era of the climate crisis, globalisation requires a new vision of trade and investment that prioritises environmental and community protection over corporate profit.