Lima: Bilateral trade between Thailand and Peru could rise 25% next year to $500 million under a new free trade area agreement, says Vachara Phanchet, the Thailand Trade Representative.

Mr. Vachara, who is leading a Thai business delegation to Peru and Mexico until Sept 30, held talks with Carlos Posada, Peru's vice-minister of external commerce and tourism, to work on overcoming obstacles to the FTA.

Mr. Vachara said the two countries still needed to improve customs regulations and tariff structures, and the Thai House needed to approve the agreement.

Bangkok and Lima have agreeed to cut import duties on up to 70% of the products traded between the two countries.  The deal will help Thai exports including pickup trucks, electrical foods, plastic products, rubber, and automotive parts. Peru's focus is on seafood, forest products and minerals.

Under the FTA, Thai businesses will also be eligible for incentives to expand their investment in Peru.

The two countries' leaders are expected to endorse the pact at the Apec CEO Summit in Japan in November, and it would become effective on Jan 1.

Peru is ranked 82nd among Thailand's trading partners with average bilateral value of $180 million a year in the past five years.  Thai exports averaged $114.7 million per year but dropped last year due to the sluggish global economy.