International trade is connecting the world’s frontiers.
Economic growth is being achieved by opening up to exterior markets and many countries are
nowadays unified by bilateral and multilateral agreements which enable the global market to
conduct a freer trade without restrictions. Trade negotiations are supervised by the World
Trade Organization whose intention is to eliminate the obstacles in trade between countries.
The liberalization process of a freer trade has however failed in certain sectors such as in the
agriculture. This sector is still highly protected in many countries and a concern in the
agricultural trade is that by having a high protectionism level in the global market it could
consequently lead to higher world prices and losses to developing countries that mainly work
in rural sectors and depend on the prices of their produce.
Peru is a developing country consisting of a large agricultural sector. More than half of the
inhabitants are small producers with economies of scale living in extreme poverty.
The country is today processing negotiations of a possible Free Trade Agreement with the
United States. The main concern of Peru entering the agreement is how the aperture of the
market is going to affect sensible unprotected sectors of small farmers. The sensitive produce
could be distortional on price and affect the farmers’ welfare because of the entrance of
subsidized produce from the American side.
The purpose of the study was to investigate the potential effects the Free Trade Agreement
between Peru and United States could have upon the Peruvian farmers in the sector of selfsufficiency,
producing any type of sensitive produce in relation to price and labour. I have
conducted the study from the farmers’ perspective.
The theoretical framework was divided in two parts to be able to cover the aspect of
international trade and moreover the national aspect involving the system of Peru.
The study was conducted interpreting a future happening and therefore the approach was the
hermeneutical using an abductive research method with a qualitative strategy which enabled
the observation to be conducted through interviews. The interviews were divided in two
different sectors. Four semi-structured telephone interviews with the administrative sector and
five structured interviews through an intermediary in the agricultural sector where performed.
My intention with the study was to interpret future happenings and not to generalize an
Furthermore the analysis was divided in four main factors based on the empirical and
theoretical observations to be able to analyze each category more deeply in an entire context
of both external and internal factors using the theoretical framework to support the arguments
of my observation.
The main conclusions of the study were that the potential effects of the Peruvian farmers’ in
price and labour would not be depending solely on the price fall of the sensitive produce
entering the market but on the ability of Peru to build stability within the country
implementing internal factors lacking today. This is to prevent the external factors of
worsening the conditions of the farmers. Consequently depending on how the situation is
handled internally in the country there could be two possible outcomes, one negative effect
and one positive effect.
Umeå: Handelshögskolan vid Umeå universitet , 2007. , 77 p.