UNCLAS SECTION 01 OF 02 LIMA 000156

SIPDIS

COMMERCE FOR 4331/MAC/WH/MCAMERON
TREASURY FOR MEWENS
USTR FOR BHARMAN AND MCARRILLO

E.O. 12958: N/A
TAGS: ETRD EINV ECON EFIN USTR PE

SUBJECT: JANUARY TRADE AND INVESTMENT BRIEFS

SUMMARY
--------------

1. This is an update on the following trade and investment news
from Peru:

Trade
-- Peru and Japan to Begin FTA Negotiations in February
-- Negotiations with EU May Conclude in 6 months
-- Chilean FTA Enters into Force on March 1
-- Peruvian Beer Company Exports to the U.S. and Europe
-- U.S. Demand for Peruvian Onions Decreases

Investment
-- US company NDG Invests in Peruvian Real Estate
-- Marriott to Construct a Hotel in Cusco
-- China Development Bank to Implement Projects
-- Chilean Company to Build Mechanical Parts Plant
-- Chilean Company to Build Petrochemical Plant
-- French Company to Invest in Petroleum Exploration
-- Dutch Company to invest Over $100 million in Retail

PERU AND JAPAN TO BEGIN FTA NEGOTIATIONS IN FEBRUARY
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2. The feasibility study for a trade agreement between Peru and
Japan will likely be presented on February 24-25, when President
Garcia travels to Tokyo to participate in the Expo-Peru 2009 event.
Proinversion, Promperu, and Jetro (Japanese External Trade
Organization) organized this event to encourage bilateral trade and
tourism between the two countries. The agreement with Japan will be
the first one for Peru with an Asian country that includes a
cooperation agreement on sustainable development. Toyota,
Mitsubishi, and Honda are among some of the Japanese companies
already doing business in Peru.

NEGOTIATIONS WITH EU MAY CONCLUDE IN 6 MONTHS
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3. The Peruvian Ministry of Trade and Tourism (MINCETUR) estimates
that trade negotiations with the European Union (EU) will conclude
within six months. In January, Peruvian negotiators traveled to
Belgium to meet with EU representatives to establish the negotiation
framework. [BACKGROUND: In June 2008, the EU decided to suspend the
fourth round of negotiations with the Andean Community. In October
2008, due to differences with Ecuador and Bolivia, the EU announced

it would pursue bilateral agreements with Peru and Colombia.
Bolivia considers the bilateral negotiation to be contrary to the
Andean Community and has submitted a complaint against Peru in the
Justice Tribunal of the Andean Community.]

CHILEAN FTA ENTERS INTO FORCE ON MARCH 1
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4. On January 8, Chilean President Michelle Bachelet announced that
the trade agreement between Chile and Peru will enter into force on
March 1, 2009. Trade between Chile and Peru reached $3 billion with
1,400 Chilean and 1,200 Peruvian businesses benefitting. Ninety
percent of these businesses are small and medium size.

PERUVIAN BEER COMPANY EXPORTS TO THE U.S. AND EUROPE
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5. Ajegroup, a Peruvian beer company, announced it will begin
exporting its Franca beer to the United States and Europe. The
company will invest between five and six million dollars in its
campaign. Beer sales will begin during the first quarter of 2009.

U.S. DEMAND FOR PERUVIAN ONIONS DECREASES
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6. In 2008, the U.S. demand for Peruvian white onions decreased.
Prior to 2008, the U.S. was Peru's largest market for the white
onion. As a result, Peru has turned to new markets to sell one of
its most popular products. Since 2007, a local Peruvian newspaper
has reported that onion sales have increased 938% to Colombia and
60% to Spain.

US COMPANY NDG INVESTS IN PERUVIAN REAL ESTATE
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7. The Managing Director of the U.S. company, NDG Investment Group,
announced its plans to add 15 real estate projects to its portfolio
in 2009. The company has 15 real estate projects ongoing. Planned
projects for 2009 include an office complex, hotels, and retail
stores. NDG wants to expand its real estate development projects
beyond Lima in the coming year. NDG anticipates at least five more

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years of work in Peru.

MARRIOTT TO CONSTRUCT A HOTEL IN CUSCO
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8. The Marriott Hotel Chain announced its plans to construct a five
star hotel in Cusco with an investment of $40 million. The hotel is
scheduled to open at the end of 2010.

CHINA DEVELOPMENT BANK TO IMPLEMENT PROJECTS
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9. As a result of the Cooperation Agreement signed by Peru and
China on November 19, 2008, representatives from the China
Development Bank met with directors of the Peruvian state bank,
Banco de la Nacion, to discuss various development projects. The
projects will involve work on the mass transit system, roads,
agriculture, and mining, among others.

CHILEAN COMPANY TO BUILD MECHANICAL PARTS PLANT
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10. The Chilean company, Salfa-Corp, plans to build a $10 million
metal parts plant in Peru for the production of hydraulic equipment.
Salfa-Corp is one of the largest home construction firms in Chile.
In Peru, the transportation, cement, and mining sectors will
benefit. The Peruvian plant will also export products to Colombia,
Venezuela, and Ecuador.

CHILEAN COMPANY TO BUILD PETROCHEMICAL PLANT
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11. Brescia and Sigdo Koppers of Chile plan to construct in Peru two
petrochemical plants worth $650 million. Company representatives
anticipate opening the plants in 2011. The plants will produce
710,000 tons per year of ammonia and 350,000 tons per year of
ammonium nitrate for domestic consumption. Construction of the
plants will likely create as many as 1,600 direct jobs and once
operational, it may employ approximately 400 people.

FRENCH COMPANY TO INVEST IN PETROLEUM EXPLORATION
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12. The French company, Parenco, seeks to invest $1.37 billion in
petroleum exploration at block 67 of the Maranon Basin. Block 67
holds possible resources of 300 millions barrels. Parenco estimated
that the block has the potential to produce up to 100,000 barrels of
oil per day.

DUTCH COMPANY TO INVEST OVER $100 MILLION IN RETAIL
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13. Makro, a Dutch-German chain of self-service wholesale stores,
plans to open 15 stores in Lima, Peru. The project will cost more
than $100 million over the next four years.
MCKINLEY