Hi Cady,
"People" is rarely plural. When it is, it a shorter way of saying "more than one type/group of people." More specifically, it refers to more than one demonym of people. In this example, there are two countries and thus two nationalities, so there are two demonyms (two peoples). Here's another example:
"Establishing friendlier trade relations between our three cities is a benefit for all three of our peoples."
I hope I helped answer your question. Please let me know if I didn't.