Peru welcomes Obama, but worries its U.S. trade deal could unravel under Trump

LIMA, Peru — As President Obama hobnobs with other heads of state at the Asia-Pacific Economic Cooperation (APEC) summit here on Saturday, there will be no disguising how the fierce protectionist rhetoric of his successor has rattled his Peruvian hosts.

The Andean nation has long prided itself on its embrace of free trade. It was an enthusiastic advocate of the now-stalled Trans-Pacific Partnership (TPP) and has signed more than a dozen bilateral agreements, including with the European Union, China and Japan, accords credited with helping Peru become one of Latin America’s best-performing economies. One of the mainstays of that growth has been Lima’s trade pact with Washington. Since it took effect in 2009, U.S.-Peruvian commerce has boomed from just under $9 billion in 2010 to nearly $14 billion in 2015, helping haul millions out of poverty here and establishing Peru as an upper-middle-income nation.

Americans, meanwhile, have benefited from increased access to Peruvian goods, everything from organic artichokes and quinoa to gold, silver and other metals mined in the Andes.

Yet those gains could be at risk if President-elect Donald Trump follows through on his campaign promise to renegotiate U.S. trade deals, in particular the bilateral Peru treaty, a scenario that former foreign minister Eduardo Ferrero Costa views as “likely.”

Peru’s new president, Pedro Pablo Kuczynski, sounds worried.

“To anyone who wants to propose protectionism, I suggest that you read the history books about the 1930s,” he said on the eve of the APEC summit, in comments that appeared to refer to the Great Recession in the United States — but might equally have applied to the rise of Nazism in Germany.

Previously, during the U.S. election campaign, Kuczynski, a former investment banker and economy minister, had warned that Trump’s proposed wall along the border with Mexico would be a “crime” and compared it to the Berlin Wall.

With the notable exceptions of Russia and, possibly, China, his concerns about the future of Pacific trade are mirrored throughout the APEC nations.

One Pacific country that does appear well positioned whatever trade policy Trump eventually implements is the target of some of his bitterest campaign attacks: China.

The Asian giant already rivals the United States as the principal trading partner of many Latin American and Asian nations and is expected to push its own Pacific Rim free-trade deal now that the U.S.-led TPP appears dead in the water. The response in Peru, which has strong historic ties to the Asian giant including a large, influential Chinese community — and already trades more with China than with the United States — could serve as a warning to the United States.

In an op-ed column for the Peruvian newspaper El Comercio, Harold Forsyth, a former ambassador to Washington, predicted the “transcendence” of a vast Beijing-inspired Pacific Rim free-trade area leading the way for Peru’s bilateral trade with China to “reach unimaginable limits.”

Will Trump really welcome that kind of scenario? And will his administration be content to look on from the sidelines as Beijing sets the rules for regional economic integration?

Despite Kuczynski’s fears, some here in Peru, such as Forsyth, have already moved on from worrying about that question. Instead, they are focusing on the new opportunities to further their country’s national interest — with or without the United States.