The Economic Partnership Agreement (EPA) was inked by Japanese Foreign Minister Takeaki Matsumoto and Peruvian Foreign Trade and Tourism Minister Eduardo Ferreyros in Tokyo.
According to the agreement, the new pact, which will come into effect once ratified by the Diet of Japan and Congress of Peru, will eliminate tariffs on more than 99 percent of the value of goods traded between both countries, within a 10 year timeframe.
Japan's Ministry of Foreign Affairs said that the agreement will "further vitalize both economies by strengthening reciprocal economic ties in wide-ranging fields."
The pact will see Peru's current nine percent levy on Japanese passenger vehicles and TVs lifted as Japan seeks to boost its competitiveness in both markets, particularly against its South Korean rivals.
To this point, Japanese officials said that the exports of cars and consumer electronic products will be increased as Japan seeks to become more competitive in the resource-rich South American country that already has five existing FTAs with China, the United States, Canada, Chile and Singapore and five more agreements waiting to be inked, including one with the European Union.
For its part, Peru will boost its exports of natural resources like zinc and copper as well as marine and farm products, Xinhua reported.
At the signing ceremony Matsumoto said he hoped the FTA would boost economic ties between Tokyo and Lima and Ferreyros said that the two countries held common beliefs and the agreement would be in the best interests of both countries' small and medium-sized businesses.
Bilateral negotiations to finalize the current FTA were launched in May 2009 and needed seven rounds of talks, the last of which was concluded in November last year.