Looking to the East -- Peru and South Korea to discuss a FTA in March

Peru and South Korea have agreed to hold the first round of negotiations for a Free Trade Agreement this March, according to Peru's Minister of Foreign Affairs and Trade.

Korean President, Lee Myung-Bak (left)

Peruvian President, Alan Garcia (right)
Photo: ANDINA /Jack Ramon

Preliminary work for the FTA was compiled in Lima January 20-21, days after the Asian Pacific Economic Cooperation (APEC) had concluded.

“At the preliminary talks, the two sides agreed upon the scale, formation, process and schedule of the Korea-Peru FTA, and together laid the groundwork for effective negotiations in the future," the ministry said.

The two sides will now examine each others drafts of the Agreement before meeting in March, at which point they will debate and hopefully find a middle ground on how to go about opening each market up to one another.

This is great evidence of something that has been written about on this site since its creation, that is—the Pacific countries of Asia and South America are finding cooperating in both economic and political contexts is beneficial for all parties and increasingly necessary in this global and interconnected world.

Chinese Economy in Focus -- China may cut rates again to ensure "gentle slowdown" doesn't turn ugly

On the ground, things don't seem so bad in China. As I report from Suzhou, China I see construction booming on both a residential level on in terms of infrastructure. However as Bloomberg LP paints in a article you can view here, things aren't so pretty on a macro level.

Actually they may depend on what you think "pretty" is. Economic growth will slow this year. 3rd Quarter growth in 2008 when released is expected to come in at around 9%, down from 2007's astounding 11.9%. Considering the state of the global economy many argue 9% is still quite healthy. However for a country seeking to fast track its economic development and solidify its position in the global economy the slowing growth rate is not welcome news.

The government is acting quick to stem the problem, having already reduced interest rates three times in the past two months. Will it be enough? Probably not...

For one, the reckless speculation from abroad and domestically on Chinese equities has fully exploded in investors faces this year (including my own). The CSI 300 is down a whopping 69% in 2008 so far, and has not seen the rallies other Asian markets like Hong Kong, Korea and Japan have seen when the west introduced their respective bailouts, lowered interest rates and set up new lending facilities.

Chinese Media, Xinhua reports export orders dropped in the 3rd quarter to their lowest level since 2005. Home sales have plunged 59% in Beijing and 39% in Shanghai so far in 2008.

All this looks bleak, but a casual observer may add that between 2005 and 2008, both Beijing and Shanghai have continued to grow rapidly. Few can deny the changes which have manifested in each city in the past 3 years, not to mention the rapid change which occurred between 2000-2005.

My observations are simple. China was indeed growing too fast for its own good, this financial crisis is simply bringing it back down to reality. China will continue to grow but due to the nature of its export oriented economy it must do so within the context of the world economy. All the while it does have the capacity to cushion its own slowdown with its domestic economy and macro policies which will help spur growth in the domestic market.

Check out this Bloomberg article to get a full picture.

News Line: South-South Cooperation -- Asia-Latin America Business Boom

1) Latin Business Chronicle: Asia-Latin Trade Boom - by Joachim Bamrud

With the U.S. economy continuing to show weak results, Latin America is increasingly betting on Asia. Latin American exporters have found eager markets in countries like China, Japan and India, while Asian companies, in turn, are boosting their exports to Latin America.

"The growth of Asia will drive the business with Latin America," says R. Viswanathan, India's ambassador to Argentina, Uruguay and Paraguay and widely considered India's leading expert on Latin America. “Both governments and business have started looking at the potential for complementary cooperation between the two regions....

"Trade will grow despite short-term commodity price fluctuations because demand in Asia remains high for Latin America’s resources," says Michael Diaz, managing partner at U.S.-based law firm Diaz Reus, which serves many clients involved in Asian-Latin American business....

*** You must be a full member of the Latin Business Chronicle to access the full article. Click here for the free expert

2) Gazprom, Total to invest $45 billion in new exploration in Bolivia reports Business News Americas Russian oil company Gazprom and French oil major Total (NYSE: TOT) have signed an MOU with Bolivia's state hydrocarbons company YPFB to invest US$4.5bn in a new natural gas project in Bolivia, a YPFB spokesperson told BNamericas, confirming local press reports.

The three companies will develop the project in the southeast of Bolivia, where Total is already producing natural gas from six wells, the spokesperson said.

Production from the project could reach 26Mm3/d.

Click here to access the full article from Business News Americas

3) Garcia and Lulu discuss increasing bi-lateral trade and investment between Peru and Brazil reports Andina News

Sao Paulo, Sep. 18 (ANDINA).- President Alan García held Thursday evening a meeting with his Brazilian counterpart, Luiz Inácio Lula da Silva, to discuss about bilateral relations and the possibility to attract more investments to Peru....

President Alan Garcia and his Brazilian counterpart
Luiz Inacio da Silva in San Paulo. Photo Sepres

García said Thursday morning that during the meeting he will propose to his Brazilian counterpart “a reinforced bilateral agreement”, a kind of Free Trade Agreement (FTA), which will include speeding up a tariff exemption process....

Click here to access the full story in english from Andina News

News Line: Peru

1) Peru, Singapore to become hubs of Asia Pacific Regions, says Giampietri

Lima, Sep. 11 (ANDINA).- Peru and Singapore, considered an important economy in Asia, are about to become the most important hubs in the Asia Pacific Region, which will allow foreign investments access to this region and vice versa, noted the President of the Extraordinary High Level Commission APEC 2008 (CEAN) Luis Giampietri, who said both countries are in a privileged geographical position and have a perfect port and airport infrastructure to facilitate businesses.....

Luis Giampietri - Vice President of the Republic of Peru

Click here to access the full article from Andina

2) ChinaTel Group to bis for wireless 2.5gHz spectrum licenses in Peru
Lima, Sep. 14 (ANDINA).- ChinaTel Group, a business entity seeking to acquire and operate WiMAX networks in key markets throughout the world, plans to participate in an upcoming auction to bid for wireless 2.5GHz spectrum licensing for Peru... Click here to access the full article from Andina.

3) Canadian and Australian investors explore business opportunities in Amazonas, Peru Amazonas, Sep. 14 (ANDINA).- A group of business people from Canada and Australia has visited the Peruvian department of Amazonas to explore various investment opportunities and tour the several local tourist attractions....

Canadian ambassador Geneviéve des Riviéres and the Australian consul were pleased by the warm welcome they have received from local residents and businesses.

The delegation flew over the Pongo de Manseriche, located in the Condorcanqui province, to observe the potential of this watershed as well as appreciated the magnificent Gocta Waterfall, the third highest in the world.

They also visited on Sunday the Kuélap Fortress, which is the most extensive monument of the Peruvian ancestral past.....

Click here to access the full article from Andina

4) Analysts predict British Direct Investment in Peru likely to surpass 2007 record of $2.9 billion

Lima, Sep. 14 (ANDINA).- British direct investment in Peru would increase this year, surpassing 2007's record $2.9 billion, the third largest foreign investment in the country last year, said the British Ambassador to Peru, Catherine Nettleton.......

"In December last year, the major foreign investors in Peru were Spain with 3.7 billion dollars (23.25 pct), the United States with 2.9 billion (18.54 pct) and the United Kingdom with 2,9 million (18.14 pct)", she detailed......

Among British companies operating in Peru are HSBC, Standard Chartered Bank, Royal of Scotland, SAB Miller, Rio Tinto, Anglo American, Monterrico Metals, BHP Billiton, Xtrata, Minera IRL and Menzies Aviation.

Other companies are Orient Express, Emissions Trading, Icecap, Ecosecurities, Unilever, British American Tobacco, GlaxoSmithKline, AstraZeneca, Willis Insurance, PWS, Jardine Lloyd Thompson, WPP, Cadbury Schweppes, CSM Logistics, Gold Oil, Pan Andean Resources and Shell......

Click here to access the full article from Andina

5) Korea interested to explore possible investments in development related projects

Bagua Grande, Sep. 14 (ANDINA).- The director of Korea International Cooperation Agency (Koica) in Peru, Woo Chae-Suk will visit this Tuesday the northern city of Bagua Grande in the Utcubamba province (Amazonas) to assess and explore a variety of business opportunities in the area.

"Koica volunteer program coordinator, Kweon Ok Hee, will accompany Chae Suk on his visit in which they will get to know the economic, social, educational, agricultural, health and environmental situation of local residents," Amazonas municipal representative Edwin Hidalgo Ocampo announced today.

Click here to access the full article from Andina