What Happened to the Cuckoo?

Eight years ago, in his campaign to return to the Government Palace, Alan García stated that it was not necessary to sign a free trade agreement with the United States. For him, the Peru-United States Trade Promotion Agreement was a “cuckoo” that would eat up our agriculture, industry and consumers. Once he was president, however, García became a proponent of the agreement; his administration was characterized by a resolute determination to plough ahead with signing the Trade Promotion Agreement and paving the way for global commercial integration.

García, of course, has not been the only presidential candidate to scare the public with this cuckoo when campaigning for office. Five years later, during the election, Ollanta Humala declared on television that “it is humiliating for a nation to sign free trade agreements that obligate it to hand over its sovereignty in exchange for uncertain benefits.” At that time, the current president described the TPA as a “monstrosity” that “it was necessary to renegotiate,” and the plan of his original government — “The Great Transformation” — indicated that the TPA would bring “a decline in economic activity.” In fact, this position even became defended using force, literally, by the Peruvian Nationalist Party: We all remember the terrible scandal propagated by the congress-elects Nancy Obregón and Elsa Malpartida, who, on the day that Congress ratified the TPA with the U.S., assaulted Parliament security personnel when Parliament prevented them, by force, from interrupting the plenary session. Yet, once in power, Humala reconsidered his protectionist stance and became, like Garcia, a promoter of new free trade agreements, such as the TPA with the European Union.

The last few years have witnessed how these miraculous episodes of radical ideological conversion have been fortunate for the country. This week, for example, we published the news that after four years of the TPA with the United States, bilateral trade has grown by 105 percent. At the same time, according to Amcham Perú, since 2009, American purchases of Peruvian products have increased annually by 20 percent; and according to the Association of Exporters, the U.S. was the second destination on the list for our exports in 2012. Contrary to what was maintained by “The Great Transformation,” economic activity has increased while the suggestion that the agreement would not bring benefits to national producers has been discredited.

On the other hand, Peruvian agriculture did not emerge as a big loser from the agreement, as some people had predicted. According to information from Cómex-Peru (the Association of Peruvian Foreign Trade), the level of agricultural exports is higher now than before the agreement came into effect. In 2008, traditional agricultural exports to the United States were worth $167 million, whereas by 2012 they reached $217 million (in the previous year they had reached the record sum of $415 million). The value of non-traditional agricultural products, for their part, went from $568 million to $901 million last year. Asparagus and coffee, furthermore, have become the fourth and fifth biggest exports, respectively, to the United States.
Has it been the case then, as many predicted, that the TPA has resulted in us being a country that only exports raw materials? Well, no. The agreement has made it possible for important industries to develop in our country thanks to access to one of the world’s biggest markets. In 2012, the metallurgical industry, for example, exported almost 50 percent more than in 2008.

Fortunately, in recent years, the truly great transformation we have witnessed has been the attitudes of both Humala and García to commercial liberalization. The result has been an ample increase in the number of opportunities for Peruvians to do business and buy on better terms, and all in all has improved their quality of life.

This experience of the TPA with the United States surely proves that we must celebrate the fact that the government has signed an agreement with the European Union. It also demonstrates that President Humala should seek to open up new markets to Peru, such as those countries that last year participated in the Summit of South American-Arab countries; the sum total of consumers in these countries exceeds that of the United States. Finally, this experience should teach us an important lesson: When a new politician appears and tries to scare us at election time by denying the benefits of free trade agreements, we would do well to remember that the cuckoo does not exist.