Peru: South America’s economic tiger, Page 2

  ** Insignificant

  Source: Census & Statistics Department, HKSAR Government

  Representing more than half of Hong Kong’s exports to the market, electronics, despite a dip in 2010, was at the forefront of Hong Kong-Peru trade, followed by fashion products such as clothing and footwear, gifts and premiums and toys. Buoyed by the country’s rising incomes and further trade liberalisation upon the implementation of the Peru-China FTA, Hong Kong’s exports to Peru are poised for stronger growth in the years forward. Hong Kong’s exports to Peru surged by 47% in the first half of 2011, way higher than the 35% growth witnessed for Latin America as a whole.

  Progressing with a friendlier trade environment in Peru

  As a small economy, foreign trade is one of Peru’s most important growth and development engines. Following important reforms of its trade regime covering continued cuts of tariffs and non-tariff barriers and optimisation of policy areas regarding legislation and regulation for foreign investment, Peru, a full member of APEC since 1998, has been fast integrating into the world trade community.

  Becoming a more liberal market

  One particular aspect of Peru’s efforts at trade liberalisation is its expanding web of trade accords. Located on the southern Pacific Coast, Peru has entered into an extensive web of trade accords with many countries of the Pacific Rim including Canada, Chile, Japan, Mexico, Singapore, South Korea, Thailand, the EU and US.

  Of greater interest to Hong Kong companies is Peru’s Free Trade Agreement (FTA) with the Chinese mainland, effective 1 March 2010. This was China’s second FTA with a Latin American country, following the signing of the trade accord with Chile in 2005.

  The Peru-China FTA rendered immediate duty-free entry to 60% of traded goods between the two countries, while tariffs on another 30% of traded goods will be phased out in 10 years time2.

  The FTA opens up market opportunities for a number of key export industries of the Chinese mainland which benefits from the removal of tariffs, including machinery and vehicles. On the other hand, examples of the many Hong Kong-sourced products that are

  eligible for immediate duty-free entry include electronics, textiles, toys, sporting goods, watches and clocks, and tools.

  On the back of the freer trade flow, Peru-China trade soared 46% to US$10 billion in the first year (i.e. Mar 2010 to Feb 2011) of the FTA, with China’s exports to Peru surging 57% and imports from Peru up 40%.

  On the other hand, highlighting the country’s interest in developing trade and investment with its Asia-Pacific neighbours, Peru, a full member of APEC since 1998, also signed a Co-operation Arrangement on Trade and Investment Facilitation with Hong Kong in November 2008, following a trade facilitation statement in May 2008.

  The Arrangement mainly aims to facilitate and promote bilateral trade in areas such as: (a) exhibitions and trade fairs; (b) financial services; (c) investment; (d) tourism; (e) rail, maritime and logistics transportation; and (f) sanitary and phytosanitary measures, while it also covers co-operation between the two economies in areas of intellectual property rights, customs and competition-related issues, as well as technical assistance and capacity-building in areas of mutual interest.

  As a proxy for the return on its trade liberalisation efforts, Peru’s total trade, in spite of a dip in the recession year 2009, increased more than four-fold from slightly greater than US$14 million to about US$65 billion over the decade to 2010.

  Peru’s foreign trade

  Source: BCRP

  Poised to bear fruit for Hong Kong traders

  One of the most persistent problems for Hong Kong companies wanting to tap the Latin American market is the extensive array of restrictive entry barriers including, but not confined to, high import tariffs and anti-dumping (AD) duties.

  In this context, Peru’s limited use of AD measures together with its simple tariff structure and relatively low tariff rates can offer Hong Kong companies a break that is hard to come by in the region!

  According to Peru’s National Tax Administration Supervisory Authority (SUNAT), more than half of the country’s tariff lines are now duty-free, while the highest tariff level applicable to economies with the most favoured nation (MFN) status is 11%.

  Tariff level

  Tariff line

  Number

  Proportion (%)

  0%

  4,106

  55.64

  4%

  1

  0.01

  6%

  2,480

  33.61

  11%

  792

  10.73

  Source: SUNAT

  As a member of the Andean Community (CAN), Peru adopts the Common Tariff Nomenclature of the Andean Community (NANDINA), which complies with the Harmonised System (HS) of the World Customs Organization. In general, the customs value of goods is determined on a CIF (cost, insurance and freight) basis.

  Continuing the Peruvian government’s policy of lowering trade barriers, the president of Peru issued on 10 April 2011 a supreme decree lowering the MFN duties in place on a range of imports, including textiles, apparel, footwear, certain food products and household appliances.

  Reductions that could be of interest to Hong Kong exporters include those on a range of textiles of HS Chapters 50 through 55, 58 through 60 and 63; apparel of Chapters 61 and 62; footwear of Chapter 64; household appliances and other items of headings 8114, 8418, 8419, 8422, 8433, 8447, 8450, 8452 and 8481; and certain edible vegetables and fruits, animal products and food products of Chapters 2, 7, 8, 9, 10, 16, 18 and 20.

  As a result of these changes, imports into Peru are currently subject to ad valorem tariffs of 0%, 4%, 6% or 11%, while the MFN duty rates for some of these products are now even more favourable than the 2011 preferential duty rates for Chinese mainland goods under the Peru-China FTA3.

  General import tariff rates of Peru

  HS Code

  Description

  MFN rate (%)

  as of 2011

  01

  Live animals

  0, 6

  02

  Meat and edible meat offal

  0, 6, 11

  03

  Fish and crustaceans, molluscs and other aquatic invertebrates

  0, 6

  04

  Dairy produce; birds’ eggs; natural honey; edible products of animal origin, not elsewhere specified or included

  6

  05

  Products of animal origin, not elsewhere specified or included

  0, 6

  06

  Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage

  0, 6

  07

  Edible vegetables and certain roots and tubers

  0, 6, 11

  08

  Edible fruit and nuts; peel of citrus fruit or melons

  6, 11

  09

  Coffee, tea, maté and spices

  0, 6, 11

  10

  Cereals

  0, 6, 11

  11

  Products of the milling industry; malt; starches; inulin; wheat gluten

  0, 6

  12

  Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruits; industrial or medicinal plants; straw and fodder

  0, 6

  13

  Lac; gums, resins and other vegetable saps and extracts

  0, 6

  14

  Vegetable plaiting materials; vegetable products not elsewhere specified or included

  6

  15

  Animal or vegetable fats and oils and their cleavage products prepared edible fats; animal or vegetable waxes

  0, 6

  16

  Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates

  0, 6, 11

  17

  Sugars and sugar confectionery

  0, 6

  18

  Cocoa and
cocoa preparations

  0, 6, 11

  19

  Preparations of cereals, flour, starch or milk; bakers' wares

  0, 6

  20

  Preparations of vegetables, fruit, nuts or other parts of plants

  6, 11

  21

  Miscellaneous edible preparations

  0, 6

  22

  Beverages, spirits and vinegar

  0, 6

  23

  Residues and waste from the food industries; prepared animal feed

  0

  24

  Tobacco and manufactured tobacco substitutes

  6

  25

  Salt; sulphur; earth and stone; plastering materials, lime and cement

  0, 6

  26

  Ores, slag and ash

  0, 6

  27

  Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes

  0, 6

  28

  Inorganic chemicals; organic or inorganic compounds of precious metals, of rare earth metals, of radioactive elements or of isotopes

  0, 6

  29

  Organic chemicals

  0, 6

  30

  Pharmaceutical products

  6

  31

  Fertilisers

  0

  32

  Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks

  0, 6

  33

  Essential oils and resinoids; perfumery, cosmetic or toilet preparations

  0, 6

  34

  Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, "dental waxes" and dental preparations with a basis of plaster

  0, 6

  35

  Albuminoidal substances; modified starches; glues; enzymes

  0, 6

  36

  Explosives; pyrotechnic products; matches; pyrophoric alloys; certain combustible preparations

  0, 6

  37

  Photographic or cinematographic goods

  0, 6

  38

  Miscellaneous chemical products

  0, 6

  39

  Plastics and articles thereof

  0, 6

  40

  Rubber and articles thereof

  0, 6

  41

  Raw hides and skins (other than furskins) and leather

  0, 6

  42

  Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silkworm gut)

  0, 6

  43

  Furskins and artificial fur; manufactures thereof

  6

  44

  Wood and articles of wood; wood charcoal

  0, 6

  45

  Cork and articles of cork

  0, 6

  46

  Manufactures of straw, of esparto or of other plaiting materials; basketware and wickerwork

  6

  47

  Pulp of wood or of other fibrous cellulosic material; waste and scrap of paper or paperboard

  0, 6

  48

  Paper and paperboard; articles of paper pulp, of paper or of paperboard

  0, 6

  49

  Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans

  0, 6

  50

  Silk

  0, 6, 11

  51

  Wool, fine or coarse animal hair; horsehair yarn and woven fabric

  0, 6, 11

  52

  Cotton

  6, 11

  53

  Other vegetable textile fibres; paper yarn and woven fabrics of paper yarn

  0, 6, 11

  54

  Man-made filaments

  0, 6, 11

  55

  Man-made staple fibres

  0, 6, 11

  56

  Wadding, felt and nonwovens; special yarns, twine, cordage, ropes and cables and articles thereof

  0, 6

  57

  Carpets and other textile floor coverings

  6

  58

  Special woven fabrics; tufted textile fabrics; lace, tapestries; trimmings; embroidery

  6, 11

  59

  Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use

  0, 6, 11

  60

  Knitted or crocheted fabrics

  11

  61

  Articles of apparel and clothing accessories, knitted or crocheted

  11

  62

  Articles of apparel and clothing accessories, not knitted or crocheted

  6, 11

  63

  Other made up textile articles; sets; worn clothing and worn textile articles; rags

  6, 11

  64

  Footwear, gaiters and the like; parts of such articles

  11

  65

  Headgear and parts thereof

  6

  66

  Umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-crops and parts thereof

  6

  67

  Prepared feathers and down and articles made of feathers or of down; artificial flowers; articles of human hair

  6

  68

  Articles of stone, plaster, cement, asbestos, mica or similar materials

  0, 6

  69

  Ceramic products

  0, 6

  70

  Glass and glassware

  0, 6

  71

  Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal and articles thereof; imitation jewellery; coin

  0, 6

  72

  Iron and steel

  0

  73

  Articles of iron or steel

  0, 6

  74

  Copper and articles thereof

  0

  75

  Nickel and articles thereof

  0

  76

  Aluminium and articles thereof

  0

  78

  Lead and articles thereof

  0

  79

  Zinc and articles thereof

  0

  80

  Tin and articles thereof

  0

  81

  Other base metals; cermets; articles thereof

  0, 6

  82

  Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal

  0, 6

  83

  Miscellaneous articles of base metal

  0, 6

  84

  Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof

  0, 6, 11

  85

  Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles

  0, 6

  86

  Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling equipment of all kinds

  0

  87

  Vehicles other than railway or tramway rolling stock, and parts and accessories thereof

  0, 6

  88

  Aircraft, spacecraft, and parts thereof

  0, 6

  89


  Ships, boats and floating structures

  0

  90

  Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof

  0, 6

  91

  Clocks and watches and parts thereof

  0, 6

  92

  Instruments; parts and accessories of such articles

  6

  93

  Arms and ammunition; parts and accessories thereof

  6

  94

  Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated sign illuminated nameplates and the like; prefabricated buildings

  0, 6

  95

  Toys, games and sports requisites; parts and accessories thereof

  6

  96

  Miscellaneous manufactured articles

  0, 6

  97

  Works of art, collectors’ pieces and antiques

  6

  98

  Commodities and transactions not classified according to kind

  0, 4

  Source: SUNAT

  Another important and favourable feature of Peru’s trade regime is its limited use of anti-dumping measures. Unlike other South American economies such as Argentina and Brazil, Peru has currently only nine anti-dumping measures against imports of China origin. This is particularly favourable when considering the wide array of anti-dumping measures in other Latin American countries such as Brazil where there are currently some 30 AD measures in place against Chinese imports.

  Peru’s AD duty measures against Chinese mainland products

  (as of 15 Jun 2011)

  Product

  HTSPE

  classification

  Anti-dumping duties

  Date of original imposition

  Date of expiry

  Woven fabrics of cotton and polyester/cotton mixes

  5208.12.0000, 5208.13.00.00, 5208.19.0000, 5208.22.00.00, 5208.23.0000, 5208.29.00.00,

  5208.32.0000, 5208.33.00.00, 5208.39.0000, 5209.11.00.00, 5209.12.0000, 5209.19.00.00,

  5209.21.0000, 5209.22.00.00, 5209.29.0000, 5209.31.00.00, 5209.32.0000, 5209.39.00.00,

  5514.21.0000

  US$0.435/kg for fabric with FOB price lower than US$3.740/kg. The difference between US$4.175 and the FOB price for fabric with FOB price of at least US$3.740/kg but lower than US$4.175/kg. No AD for fabric with FOB price lower than US$4.175/kg.

  11/11/2005

  04/06/2014

  Polyester/cotton poplin fabrics

  5407.81.0000, 5407.82.0000, 5512.11.0000, 5512.19.0000, 5513.11.0000, 5513.21.0000, 5514.11.0000, 5514.21.0000

  US$1.29/kg

  21/05/2004

  30/5/2015

  Various fabrics (cotton and mixed)

  5209.42.0000, 5513.31.0000, 5513.41.0000, 5515.11.0000, 5515.12.0000

  US$0.43 to US$3.21/kg

  02/08/1995

  16/08/2012

  Bodyboards and kickboards

  9506.28.0000, 9503.90.0000

  US$0.4/unit (kickboards), US$3.1/unit (recreational bodyboards), US$15.1/unit (bodyboards for waves)

  25/06/2000

  26/07/2012

  Footwear

  Sandals

  6402.19.0000, 6402.20.0000, 6402.91.0000, 6402.99.0000, 6403.91.0000, 6403.99.0000, 6405.10.0000, 6405.90.0000

  6402.19.0000, 6402.20.0000,

  6402.91.0000, 6402.99.9000

  6403.91.9000, 6403.99.9000,

  6405.10.0000, 6405.90.0000

  11.11% to 900%

  US$0.62 to US$4.55/pair

  16/03/1997 – 31/01/2000