Trade as the Cornerstone of the Development Agenda
c. The removal of export subsidies; d. The adoption of new export promotion schemes, such as mechanisms for the inward processing procedure, temporary admission and transit, and the refund of indirect taxes paid during the production process through the “drawback” and “simplified drawback” mechanisms; e. A customs reform intended to facilitate foreign trade and achieve optimal and timely collection; f. Deferred tariff payment schemes for the import of machinery and equipment, in an effort to favor the modernization of the production sector; g. Rules to prevent unfair practices in international trade; h. Measures aimed at liberalizing capital movement and providing incentives for domestic and foreign private-sector investment. All restrictions on and discrimination against foreign investment were eliminated; i. Corrective measures for potential market distortions, such as price arrangements, abuse of market power and monopolies, protection of intellectual property and facilitation of access—entry and exit—to the market through the creation of the National Antitrust and Intellectual Property Protection Institute (INDECOPI). The international trade negotiations policy revolved around Peru’s active involvement in the Uruguay Round and the execution of the Final Act signed in Marrakesh in 1994, which implemented the Agreement establishing the World Trade Organization (WTO), effective January 1, 1995;5 whereby Peru entered into trade agreements strengthening its trade policy. Likewise, tariff trade agreements were reactivated in the framework of the Latin American Integration Association (ALADI), to favor access to exports and the import of supplies to achieve a more competitive domestic industry. In this regard, the bilateral negotiations led to trade opening obligations limited to “non-sensitive” products. These policies produced favorable results, as they not only allowed Peru to curb the hyperinflation process, bringing the inflation level down from 7,649% in 1990 to 15.4% in 1994, but also led to a recovery in economic growth, the closing of the fiscal gap of -6.7 (of GDP) in 1989 to 0.90 (of GDP) in 1994 and increased foreign trade on both the imports and exports side. 2.2. Inclusion of Trade Negotiations Issues in the Private Agenda: 1995–2000 The pace of economic opening and reforms was not kept in this period. Progress was made in specific aspects, as described below: a. The privatizations schedule was kept; b. Progress was made in the Tariff sector, even though at first the tariff average went down to 13% in 1997 (from 16% in 1995), it kicked back up to 14% in 1999. The tariff rate 5
By virtue of Congress Resolution Nr. 26407, passed by Peru’s Congress and published on December 16, 1994.
Published on Sep 14, 2007
this report was prepared by the integration and trade sector (int) as a contribution to the regional meeting on mobilizing aid for trade: la...