The EU and Peru (along with Colombia and later Ecuador) signed a trade agreement in the summer of 2012, which came into effect in March 2013. With Britain then an EU member, its bilateral trade with Peru was governed by the rules of this agreement. As a result of the deal, tariffs for 99.3% of agricultural and 100% of industrial products have preferential access to the EU.

As a result of Britain’s departure from the European Union and its single market, the UK and Peru signed a continuity trade agreement in 2019 to effectively replace the current one with the EU. The agreement, which took effect from the 1^st of January 2021, covers trade in goods and services, including provisions on rules of original, preferential tariffs, technology transfer, intellectual property, geographical indications and government procurements. In addition to these key elements, it facilitates political dialogue and other forms of cooperation on issues such as human rights, labour laws and environmental protection.

The UK Government has stated that there will be no additional tariffs or barriers on top of what currently exist under the EU trade deal. The two notable changes will be an increase in Tariff Rate Quotas (see below), and the implementation of greater Agricultural Safeguards for Peru.

Brief summary of the agreement

Detailed overview

In general, most sectors will remain tariff free (at least under certain quantities) as they currently are under the EU deal. The new UK trade agreement also introduces a set of new Tariff Rate Quotas (TRQs) that will gradually increase the quantity of various products allowed to enter the UK market at a zero or reduced tariff rate. Compared to the preceding EU deal, this new agreement will increase the volume of agricultural goods that can be imported from Peru without facing a tariff. However, the goods that have been granted increases in their TRQ, such as dairy products and cane sugar, are not Peru’s main competitive agricultural exports. As a continuation from the prior EU trade agreement, Peruvian exporters will face no tariffs in almost all areas of its specialized sectors such as agriculture, mining, and textiles.

Detailed list of the new UK deal’s tariff and quota regulations

Further information on agricultural safeguards

The trade balance between the countries is considered favourable to Peru, which has tended to run a surplus with the UK since 2009. Despite long run growth in exports to the United Kingdom, from 2018-2020 Peruvian exports decreased from US$703 million to US$430 million, due to traditional gold exports going to the United States instead. However, exports to the United Kingdom in 2021 rose again, reaching US$1,345 million on account of a large uptake in the export of liquid natural gas as the UK attempts to lessen its dependency on the unstable European gas supplies, resulting from the Russia-Ukraine conflict. This said, the general increase in exports from 2012 to 2021 has been significantly driven by rapid growth in the non-traditional sectors, which increased from US$178 million to US$430 million, a growth of 142%, owing mainly to growth in the agribusiness sector. While natural gas has contributed greatly to the increase of exports to the UK, it is important to recognise that value added exports represent a variety of Peruvian products, ranging from Alpaca fibre based textiles to fresh produce such as avocados and grapes- even including seafood, coffee, wood, and art crafts.

Conversely, there has been a steady decrease in Peru’s imports from Britain. In 2021 Peru imported a total of US$220 million compared to the US$311 million in 2012. This can be explained by a decrease in demand for heavy machinery. Most of Britain’s exports to Peru tend to be heavy machinery, cars and medicine.