Peru trade minister answers TPP critics

Magali Silva says small countries need to enter mega-regional agreements to thrive, writes Fran O'Sullivan

Magali Silva talks a good game when it comes to promoting the upside of the Trans-Pacific Partnership for Peru.

Silva is adamant that Peru's small to medium-sized enterprises will be the prime beneficiaries from TPP -- a point she made passionately at last Thursday's signing of the agreement at Auckland's SkyCity.

Silva believes anti-TPP protesters often put a one-sided view.

"I think misinformation is being distributed all over the world," she says. "Something that I have noticed is that when we have the 'pros' and 'cons' of the agreement, for some people and some countries it depends on the glass with which you see it.

"Some people are against free trade. They don't believe in globalisation. I completely respect that. But I always ask them to see the world from the other side."

She is confident TPP will bring dividends and points to Peru's previous 17 free trade agreements which she says have been beneficial.

"When we were signing an FTA with the US they said our agriculture will disappear. That we will not be able to eat chicken. And American farmers will completely destroy our economy.

"Well, seven years on, our agriculture sector exports are multiplied by five. We have created 1,500,000 new jobs just in the agriculture sector alone.

"If you take into account the impact of those new jobs -- for transportation; for logistics; for new schools; for the people who are earning money and new services -- we will have been adding a couple of points to GDP."

For the past 10 years, we had half of our population living under the poverty line, 15 million Peruvians under poverty line. Today we have reduced that to less than 33 per cent.

She says with pride that 95 per cent of Peru's trade basket is now liberalised. Peru also belongs to the Pacific Alliance, the "most dynamic group in Latin America" (Peru, Mexico, Colombia and Chile) -- "the first year we eliminated visas between Peru and Mexico we saw an increase on 35 per cent of tourists coming from Mexico".

The economist was shoulder-tapped to join President Ollanta Humala's Administration as Vice-Minister for Micro Enterprises from her role as a manager at Peru's Central Bank.

In 2013 she was promoted to Minister for Foreign Trade and Tourism, plunging her into the midst of the lengthy TPP negotiations.

Her entree into a frontline ministerial office was not easy.

"I was a person who had zero exposure to the media asking questions," she laughs. "I wanted to die."

After three years' exposure to the vigorous international clamour surrounding TPP she has become a polished performer who is well able to marshal arguments for why Peru wanted the mega agreement, including at the recent World Economic Forum in Davos, Switzerland.

"I had the opportunity to be in a panel with Joseph Stiglitz who has been one of the most anti-TPP advocates and he is the most important because of being a Nobel Prize winning economist," Silva recalls.

You see the same protesters all over the world. Complaints like we have been negotiating in secret, that we are losing sovereignty in our states and that prices of medicines are going to be increased.

"I asked Stiglitz if he knew that from the point of view of a small economy like Peru -- and with globalisation -- the only way you can compete is by getting into alliances and belonging to mega-regional agreements like the TPP."

The TPP negotiations were (at times) bruising for Silva. I've seen really tough moments," she recalls.

"Probably the most powerful one was in Maui when we all came really prepared to close the negotiations and we encountered a problem that we were not part of directly because it was the automobiles and the dairy industries."

Peru was not directly involved -- "it was the US and Mexico and Canada and New Zealand that were encountering difficulties".

Silva was shocked.

"I called my president and I told him that the negotiations were broken. Obviously the first question that he had was, 'Okay, was it because of us?'" She relates her answer was: "No president."

"We had to work really, really strong to find the momentum and work again."

Silva had attended many prior ministerial meetings.

"You see the same protesters all over the world," she says. "Complaints like we have been negotiating in secret, that we are losing sovereignty in our states and that prices of medicines are going to be increased."

She has ready answers on this score.

First, secrecy: "According to Peruvian law, officials have to promote transparency but an exception was made for the TPP negotiations. When you negotiate you can't just go to the whole public and announce because then you lose among your partners.

"We said we would finish the negotiations on October 4 and we completed. We said we would have the text to the public in 30 days and now we are translating in Spanish and French."

Second, sovereignty: "We have already adopted arbitration and that is why so much foreign investment is coming into our country. There have been 11 arbitration processes and we have won nine of 11. We completed the arbitration laws 25 years ago before we started completing trade agreements."

Third, medicines: "Nine years ago we signed an FTA with the US. At the time they were saying price of medicines would increase, that people with cancer and Aids would die because there wouldn't be enough medicine.

"But on the contrary, prices of medicine went up less higher than the general inflation and we increased the supply of medicines that we have.

"What people don't understand is that in Peru we have a patent system; that we have 20 years of protection. We signed that even before we signed any FTAs.

"What you have now you would be having in the future when the TPP is approved. The five years of data protection [for controversial biologics] are within the 20 years."

So will Peru pass TPP?

Peru's Prime Minister Pedro Cateriano has said Peruvians are aware of how important TPP is to the country's development, and he is confident it will be ratified by the Congress in due course. But it is bound to receive more scrutiny as Peru is in the midst of a presidential election campaign.

Three prime presidential candidates for the April presidential and congressional elections are in favour. But the favourite, Keiko Fujimori -- daughter of former president Alberto Fujimori -- has yet to declare her position.

For Silva the rationale to support TPP is clear.

"For the past 10 years, we had half of our population living under the poverty line, 15 million Peruvians under poverty line. Today we have reduced that to less than 33 per cent.

"We have to continue reducing that because we don't want in another 10 years any Peruvians living under the poverty line. It is our goal."

She is also confident TPP has set higher standards for the environment and for labour rights to avoid exploitation of less developed nations.

"Those are the things no one talks about.

"We know poor countries all wanted 100 per cent of our expectations. But this is not possible, you have to sacrifice something. But as yet we have found a balanced view that will be good for all the countries."

As for Silva, she will not be trade minister when TPP finally goes into effect (assuming it is ratified). She will leave office along with President Humala.

"What happens next is I go back to the central bank on July 28, which is a holiday, to my new job."

Magali Silva

• Appointed Minister of Foreign Trade and Tourism Peru, 2013.
• Career: Formerly Vice-Minister Micro Small Enterprises and Industry; deputy manager macroeconomic statistics, Central Reserve Bank of Peru

Peru's TPP upside

• More access for SME businesses to new markets including NZ.
• Prime winners: agriculture (including quinoa) fishing, alpaca wool and textiles.