In 1995, the United States trade surplus with Peru was $740 million, or $172
million greater than that in 1994. U.S. merchandise exports to Peru were $1.8
billion, up $367 million or 26.1 percent from 1994. Peru was the thirty-ninth
largest U.S. export market in 1995. U.S. imports from Peru totaled $1 billion in
1995, or 23.2 percent greater than those in 1994.
The stock of U.S. foreign direct investment in Peru was $836 million in 1994,
an increase of 33.1 percent over 1993. U.S. direct investment in Peru is
concentrated largely in wholesale and manufacturing.
Peru has a two-tier tariff structure with a 15 percent duty on the vast
majority of imports and 25 percent on the rest. The weighted-average tariff is
less than 16 percent, down from 80 percent when President Fujimori took office
in 1990. The Government has announced that it intends to move toward a flat 10
percent tariff, but no timetable has been set.
On March 21, 1991 Peru introduced "temporary" surcharges on eighteen
categories of agricultural products, covering five basic commodities: wheat,
rice, corn, sugar, and milk products. These surcharges are in addition to the 15
percent ad valorem tariff. The surcharges are calculated on a weekly basis,
according to prevailing international prices for each commodity, rather than the
actual price of the commodities entering Peru. As a condition for disbursement
of an Inter-American Development Bank trade sector loan, the GOP agreed to phase
out the surcharges over a three-year period ending in 1997. The Government began
reducing the surcharges in increments in April 1994. During 1995, because of
high prevailing international prices, surcharges were practically
Peru is a member of the Andean Pact but does not fully participate in the
Pact's free trade arrangements or abide by the Pact's common external tariff
(CET). The Andean Pact CET, which in reality applies only to Colombia, Ecuador,
and Venezuela, has rates of 5, 10, 15 and 20 percent. As of January 1, 1995,
products from other Andean Pact countries that fall under the five and ten
percent categories of the Pact's CET enter Peru duty- free. In addition, Peru
maintains bilateral agreements with each of the other four members of the Pact
that grant duty-free treatment to numerous products. The agreement with Bolivia
covers practically alltraded goods. As a result, about 75 percent of imports
from other Pact members currently enter Peru with zero duties. Peru has
committed itself to continue to broaden and harmonize these agreements with the
goal of liberalizing all trade within the Andean Pact.
Peru has partial free trade agreements which grant tariff preferences to most
Latin American countries under the Latin American Integration Association
(ALADI). Peru is currently negotiating a free trade agreement with Chile and has
initiated similar talks with Mexico. Negotiations for an association agreement
with MERCOSUR stalled in 1995.
Almost all non-tariff barriers including subsidies, import licensing
requirements, import prohibitions, and quantitative restrictions have been
eliminated. Peru applies a value-added tax (VAT) rate of 18 percent to most
products, and special consumption taxes, ranging from 10 to 50 percent, on
certain items. Peru's methodology of applying a "consolidated rate" to assess
special consumption and sales taxes on imported goods is burdensome, since the
taxes are applied consecutively.
Under a 1992 customs reform, most imported cargo must be pre-inspected by
contracted supervising firms to check for possible under-invoicing. The cost of
these inspections -- as much as one percent of the f.o.b. value of the goods --
is paid by the importer. Some importers have complained of excessive customs
delays caused by the pre-inspection system, while others have complained that
there are continuing difficulties with Peru's valuation system relating to
STANDARDS, TESTING, LABELING, AND CERTIFICATION
According to U.S. industry, Peru requires an inspector to be physically on
site to watch the preparation and sealing of containers of appliances. This
requirement is an added cost as well as a production scheduling burden if an
acceptable inspector is not available. The industry estimates that removal of
this barrier could save U.S. business from $1 to $5 million in administrative
Government procurement is normally handled by public international tender.
Contracts above a specified minimum value -- currently about $26,000 for
purchases of goods and services and $100,000 for public works -- must be
adjudicated by competitive bid. There is no statutory requirement to buy
Peruvian goods or services. Interested companies must purchase bid documents,
however, and bidders must have a localoffice or representative to qualify. Peru
is not a signatory to the WTO Plurilateral Agreement on Government
Peru does not provide any direct payment upon export. Exporters can receive
rebates of the tariffs and value-added taxes paid on their inputs. In June 1995
the Government approved a simplified drawback scheme which allows small
exporters to claim a flat 5 percent rebate, subject to certain restrictions.
Other policy measures to encourage exports are under discussion.
LACK OF INTELLECTUAL PROPERTY PROTECTION
Peru has made improvements in its intellectual property rights protection but
does not yet appear to provide adequate and effective protection. As a result,
Peru has been placed on the "watch list" under the Special 301 provision of the
1988 Trade Act each year since 1992. The United States continues to raise
intellectual property rights issues with Peru. Peru, which is a WTO member, has
ratified its Uruguay Round implementing legislation, but has not fully
implemented the provisions of the WTO Agreement on Trade- Related Aspects of
Intellectual Property Rights (TRIPs).
Patents and Trademarks
In late 1993 the Andean Pact passed two Decisions on the protection of patent
and trademarks and of plant varieties -- Decisions 344 and 345 -- which took
effect in Peru as of January 1, 1994. The Decisions are comprehensive and offer
a significant improvement over previous standards of protection for intellectual
property in the Andean Pact countries. For example, they provide a 20-year term
of protection for patents, a reversal of the burden of proof in cases of alleged
patent infringement, and also allow each member of the Andean Pact to improve
its own respective patent law. The portions of the decisions covering protection
of trade secrets and new plant varieties are generally consistent with world
class standards for protecting intellectual property rights.
However, Decisions 344 and 345 remain deficient in several respects. These
include compulsory licensing provisions, working requirements, restrictions on
biotechnology inventions which prohibit patents on animal species or materials
derived from the human body, denial of pharmaceutical patent protection for
patented products listed on the World Health Organization's Model List of
Essential Drugs -- although Peru's domestic patent law allows patents to be
taken out on these products -- lack of transitional ("pipeline") protection, and
lack of protection from parallel imports. The Decisions also fail to address
procedures for enforcing intellectual property rights.
Decisions 344 and 345 supersede Peru's old industrial property law of 1992,
which was passed in response to the Andean Pact Decision 313. Progress in the
enforcement of patent and trademark regulations has resulted from the creation
in December 1992 of the "National Institute for the Defense of Competition and
Protection of Intellectual Property" (INDECOPI), which is in charge of
protecting intellectual property in all its forms. While INDECOPI has had some
success, jurisdictional conflicts between INDECOPI and the Peruvian justice
system continue to hamper efforts to enforce trademarks.
Andean Pact Decision 351, which took effect in Peru on January 1, 1994,
establishes a generally effective and Berne-consistent system. However, it fails
to address procedures for enforcing intellectual property rights. Peru is in the
process of updating its national copyright law to address enforcement
Piracy of copyrighted material is widespread, although protection of
copyrights is improving with government efforts to seize pirated merchandise and
fine violators. Illegal copies of technical books, textbooks, audio cassettes
and motion picture videos are widely available. Pirated software is also widely
available. The Peruvian Government has conducted raids on large-scale users and
publicly destroyed pirated software. The government also has conducted raids on
vendors of pirated books, audio cassettes and videos. More needs to be done,
however, to combat piracy in all its forms and to improve coordination between
INDECOPI and the criminal justice system.
Motion picture industry losses in Peru have occurred due primarily to video
piracy and unauthorized exhibitions by video theaters. Cable television systems
also illegally intercept and retransmit copyrighted material. 1995 losses due to
motion picture piracy in Peru are estimated to be $4 million.
Peru has greatly liberalized its investment regime since 1990. National
treatment for foreign investors is guaranteed in the 1993 Constitution.
"Juridical Stability Agreements" are available to foreign investors in the
mining and petroleum sectors, guaranteeing tax, foreign exchange and regulatory
stability for a period of ten years. There are no restrictions on remittances of
profits, dividends, royalties or capital.
Arbitration is an accepted alternative to the courts. The September 1993
establishment of the Lima Chamber of Commerce's International Arbitration Center
has helped to institutionalize this option.
Rules regarding hiring of foreign personnel have been liberalized, although
foreign employees still may not make up more than 20 percent of the workforce of
a company established in Peru -- whether owned by foreign or national interest
-- and their combined salaries may not account for more than 30 percent of the
total payroll. Services companies, including banks, and free trade zones are
exempted from these hiring limitations. In addition, a company may apply for
exemption from the limitations for foreign managerial or technical