Peru and Nicaragua begin negotiations on free trade agreement

The first round of trade negotiations between Peru and Nicaragua will conclude today.

Beginning on May 10, the negotiations mark the first step towards the nations’ goal of creating a bilateral free trade agreement. These initial talks have focused on issues of market access, rules of origin, sanitary measures and e-commerce, among others.

In the second round of negotiations, expect Tegucigalpa and Lima to prioritize two issues: Peru’s trade surplus and Nicaraguan access to the Latin American Integration Association (ALADI). Peru currently registers a sizable surplus in its trade balance with Nicaragua, largely due to exports of agricultural products, chemicals, explosives and metallurgy products. While the surplus has benefitted the Peruvian economy, attempts to close the gap are likely to prevent inflation in Peru and to boost the Nicaraguan economy.

Tegucigalpa also hopes that a free trade agreement will allow them to join ALADI, thereby gaining increased access to markets in 13 countries including South America’s largest economies: Mexico, Brazil and Argentina. Access to this network would greatly expand Nicaragua’s trade possibilities and boost their economy considerably, and Peru is likely to support these efforts as they will allow Lima-Tegucigalpa trade to expand past the $32 million traded in 2020.