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The debate on the United States – Peru Trade Promotion Agreement (PTPA) been has centered on the cost - benefit analysis of access to the market of the world’s strongest economy as opposed to the disadvantages implied by accepting higher standards in intellectual property matters. Thus, the discussion has been centered on that which in theory are called the static effects of integration, while omitting the dynamic effects and intangibles that the PTPA can contribute to the country’s benefit.

Among these intangibles we can mention are better institutional standards, the process of learning in regulatory matters, the diffusion of knowledge as a consequence of business undertakings in both countries through foreign investment or joint-ventures, and the deepening of the integration of services, which should not be forgotten in the evaluation. The facilitation of trade is another one of the important intangibles.

The subject of trade facilitation negotiated in the PTPA with the U.S. has served as a "trigger" to begin the pending structural reforms to reduce the transaction costs of our international trade to thus improve the competitiveness of the country as well as our productive sector.

What does Trade Facilitation Mean?

Miguel Izam, CEPAL researcher on the subject, indicates that the term trade facilitation corresponds to a concept that is still insufficiently defined. He maintains that a general and unquestionable way to understand it can be that it includes all deliberate actions, whether unilateral or negotiated, that tend to simplify the operational procedures and to reduce or eliminate the transaction costs that affect or impede international economic exchanges and movements. In broad terms, then, trade facilitation would be related to a wide variety of areas referred to as the international transactions of goods or services, as well as to the movement of capital and people, especially by businesses. Therefore, it is a concept that could refer to all the measures that attempt to reduce or eliminate any barrier to trade or to the displacement of productive factors among countries.

In its meeting of experts, UNCTAD clarifies that among the obstacles to transport and trade are differences in norms and regulations, inadequate transportation infrastructure, the insufficient use of information and communication technologies (ICT) and the lack of cargo insurance and civil responsibility and protection for local agents. Multiple certificates (for example, certificates of origin) and the lack of uniformity on which are required and who has the right to send them are frequent practical impediments to international trade.
UNCTAD also indicates that trade facilitation can reduce the general cost of international trade transactions by means of international alignment with fundamental procedures and commercial and transport documents. Facilitation has become more necessary during the past decade due to the trends in international manufacturing, improved access to markets produced by tariff reduction, the new geography of trade and the introduction of ICT.

Is a PTPA Necessary to Implement Trade Facilitation?

Numerous studies agree with the importance of the reduction of the transaction costs of trade among the policies aiming at trade facilitation. The Ministry of Foreign Trade and Tourism (MINCETUR) of our country has correctly diagnosed these needs in the Strategic National Exporting Plan, which establishes the steps to confront this type of situation. In principle, based on an aggressive policy of insertion into the international economy, trade facilitation would have to constitute a State policy and a priority of the private sector, which should not depend on a bilateral trade agreement. Unfortunately in Peru in many circumstances the capacity for reaction is inadequate, either on the part of the State or the private economic agents, thus lengthening the time necessary to make the structural decisions for the development of the country. In this matter the PTPA with the U.S. is acting as a catalyst for the reforms necessary to reduce the transaction costs of our foreign trade. Although some advances were registered in the 1990s in the matter of customs efficiency, the lack of infrastructure and a system of modern transport is placing our export sector in check.

The obligations assumed in the PTPA to publish on the Internet the customs norms, the office within the 48 hours in the destination, with no temporary transfer to other warehouses, the use of information technology, adoption of risk management mechanisms, prior notification of legislative changes in matters of foreign trade, cooperation, confidentiality of information, rapid shipment regimes, and anticipated resolutions are already bearing fruit. Although the implementation of these obligations is deferred for 1, 2 and 3 years after the entrance into force of the agreement, MINCETUR and the SUNAT, in coordination with the private sector, are ad portas to present a new package of norms that aim to facilitate our country’s trade. This is to make our companies more competitive, which will result in higher incomes and wages for all Peruvians. It might be asked whether without the incentive or "trigger" of the PTPA, these essential reforms would have been implemented at the same pace. This circumstance must also be entered as an intangible benefit of the PTPA.

tags : Peru business Free-Trade FTA USA PTPA import export

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