Free «Free Trade Agreement» Essay Sample


A free trade is defined as a system of policy that gives traders and opportunity to engage in trading activities with out any form of interference from the government and this privilege is enjoyed as per the law of comparative advantage policy which allows trading partners to mutually derive gains from trade of goods and services (Weintraub, 2004).

Free Trade Agreement between Canada and Peru (FTA).

The Canada-Peru free trade agreement was first effected on august 1st of the year 2009 and its chief bilateral purpose was to improve the bilateral and opportunities for investment for the companies found in the two countries. In addition to that provisions for safeguarding the workers rights as well as promoting environment sustainability were also included in the agreement. The agreement between the countries was intended to benefit the two countries by offering a more open economic relationship while at same time ensuring a secure, ethical and safe system for investment activities and trade establishment.



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Canadian benefits

One of the benefits that Canada derives from being involved in free trade agreement with Peru is the advantage of its companies to benefits from selling to and profit from Peruvian market as a result of the lowered tariffs on their products and services. In addition to that it serves to committing Peru to eliminating 95 percent of the tariffs it imposes on Canadian exports. For instance in predicts like wheat, variety of products derived from paper, peas, machinery and equipment got a free an immediate duty-free acess. Some benefits that Canada also gets from engaging in the free trade is the better safeguards as well as improved stability for all of its considerable investments in Peru. Finally, Canada through the free trade has permitted its companies to also compete for contracts offered by the Peruvian government (Millen, & Holtz, 2007).

Peruvian benefits

The Peruvian engagement in the free trade agreement with Canada plays a great deal in helping in advancing its economic development especially through the increased investments by Canada on the Peruvian oil and mining industries. The agreement prompts Canada with immediate effect eliminate a whooping 97% of all its tariffs on the exports of Peru. Peruvian export products that are likely to increase as a result of the Canadian tariffs waiving include copper, gold, zinc and petroleum oil. In addition to that Peru also stands a chance of benefiting from the free trade agreement from improved working conditions in the country, which also includes an agreement on labor cooperation which expects the country to strictly adhere by the International Labor Organization's declaration of 1998 which focuses on the fundamental principles as well as rights at work. Finally the duration of working hours, health and safety standards, wages as well as collective bargaining has been set and will be subject to a monitoring process.

The three companies that are going to benefit most as a result of the free trade agreement between Canada and Peru is the oil industry, the tourism industry and the labour industry. The tourism industry will improve as the countries will experience and upsurge in tourist visitors while the oil industry will benefit due to increased capital investment put into it in terms of mining as well as transportation.

The free trade agreement between Canada and Peru has experienced setbacks during its implementation especially with sensitive issues concerning opening of the Amazon and the Peru's oil fields to private investors without carrying out enough consultation with the local communities which are part of the stakeholder in the implementation of the agreement (Weintraub ,2004). In conclusion the debate offer the advantages an disadvantages of open markets that result from free trade agreements like the one above promote globalization and benefits the people of the member countries and only a legitimate, accountable and fair government can be able to deliver such agreements successfully with support from established international rules for monitoring purposes.


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