Latin America

Earl of Effingham Excerpts

Thursday 7th December 2023 Lords Chamber

[The Earl of Effingham (Con)]

My Lords, I thank my noble friend Lady Hooper for bringing forward this important debate. Although noble Lords will not find it on my entry in the register of interests, I am proud to say that my wife is Peruvian and I have been a regular visitor to the country for the past 27 years. I want to take this opportunity to highlight its economic developments, our relationship with Peru and the possibilities that we can seize upon, which will benefit both the UK and Peru.

When I first arrived at Jorge Chávez Airport in Lima on a warm, sunny day in December 1996, nothing could quite have prepared me for what was about to happen. I walked out of the relatively controlled arrivals area into a cacophony of hundreds of gentlemen shouting “Taxi!” at the top of their voices. The road from the airport to the residential area of Lima was lined with cars that would have been most unlikely to pass their MoT in the UK. It was also clear that, unfortunately, this was a country where poverty and economic hardship were borne by a number of the population.

Fast-forward 27 years and the Lima that I first encountered back then has been completely transformed. There is now a well-maintained three-lane highway from the airport, lined with shopping centres and restaurants. The old cars have, for the most part, been replaced by shiny new vehicles, and less of the population appears to be experiencing difficulty. Once-makeshift towns are now areas bustling with communities, shops, restaurants and roads. There are new residential developments all over the city, and future buildings appear like mushrooms at every visit. There is a burgeoning middle class, growing from around 15% in 2006 to 34% in 2019, made possible by access to capital in the form of mortgages and loans. Consumer spending has risen as more and more people are lifted out of poverty and the country’s middle class expands. To be clear, poverty levels are still too high: there was a steady decline from 57% in 2004 down to 20% pre pandemic but that had risen back to 28% in 2022, and those in the middle class have dropped from 43% down to 20% as a result of the recent global economic turbulence. However, we should remain optimistic that this can trend back to pre-pandemic levels.

Peru’s economic success has been driven by mining, agriculture, natural resources and tourism. The statistics tell the story. The country has the world’s largest reserve of silver, at 98,000 metric tonnes, as well as significant reserves of gold, lead and zinc. Peru provides half of the world’s supply of the superfood quinoa. Breathtaking experiences such as Machu Picchu, Cusco—the capital of the Inca empire—and untouched rainforest complete with pink dolphins, jaguars and river otters are all part of the scenery. The country boasts more than 4,000 species of butterfly and 2,100 species of fish, both respectively the largest species numbers of their kind in the world.

It is no surprise that, of all Spain’s colonial conquests on that continent, it was in Lima that it decided to install its viceroy. Peru was the jewel in the crown as far as it was concerned. It is also worth flagging that Peru has three distinct regions—the coast, the jungle and the mountains—each with its own unique climate, gastronomy, culture and trade opportunity. Peru has 28 of the world’s 32 climate zones, and it is this rich and deep diversity which, in my mind, makes Peru one of the key Latin American countries that we should continue to develop ever-stronger links with.

As recently as October of this year, we celebrated the 200th anniversary of our bilateral relationship. The UK is one of the leading investors in Peru. Our very own Hay Literary Festival, which promotes culture and social responsibility, takes place every year in Arequipa, the birthplace of Peru’s most famous Nobel Prize-winning writer, Mario Vargas Llosa. The previous Foreign Minister was one of over 270 Peruvian Chevening scholars who have been welcomed in the UK over the years.

The reintroduction of direct London to Lima flights will commence this month; the removal of short-term visa requirements just over a year ago for Peruvians visiting the UK will open up further partnership opportunities on business, tourism and trade; and, following accession to the CPTPP, UK business visitors will also enjoy an extended length of stay in Peru.

From a trade perspective, UK exports were £373 million in 2023, and the UK is now the most important European market for Peru. Peruvian exports of liquefied natural gas to the UK hit over £1 billion between November 2021 and March 2022, versus just over £80 million over the three-year period prior to that.

There are many reasons we can be confident that our relationship will continue to grow and that bilateral trade and investment will increase, but there are a number of areas which merit further consideration.

Notwithstanding the CPTPP agreement, what are the Government doing additionally to help UK SMEs diversify their supply chains and look to Peru, and indeed Latin America, as a partner? The Peruvian economy is well known to the likes of Anglo American and Rio Tinto, but what about our smaller companies, which could undoubtedly benefit from engaging in trade with their Peruvian and Latin American counterparts, but for which the continent is simply not on the radar? For example, in the fertiliser sector, small and medium-sized Peruvian farms are importing high-tech machinery to improve quality and production capacity. British-made machinery could surely compete in that space.

Many nutritionists say that, if they had to save one country in the world after a disaster, it would be Peru, due to the abundance of its superfoods such as quinoa, which is now a staple in many parts of the globe. When paired with exercise, these superfoods should promote physical and mental well-being. Given the ever-increasing importance of this post pandemic, I ask the Minister: what are the Government doing to increase trade in these types of superfoods from Latin America and encourage consumption as part of a nationwide health and well-being strategy?

In summary, there are many ways in which the UK and Peru can enjoy a mutually beneficial relationship across a variety of industries, trade and knowledge sharing. Accession to the CPTPP will be a great enhancement, but there are still many other opportunities for us to pursue.