# RutaPerú: COMMERCIAL OPENING IMPROVES EMPLOYMENT AND INCOME OF PERUVIANS

Since the mid-1990s, Peru has opted for trade openness as a fundamental pillar of its economic development model. Given the favorable results in production, consumption, employment and income, it is necessary to deepen trade openness, deepen policies that make it possible to take full advantage of the benefits of international trade and avoid a retreat towards protectionism.

According to official sources, in 2020 foreign trade (exports and imports) represented more than 43% of the country’s Gross Domestic Product1. “To take full advantage of its benefits, the country needs to implement policies that promote the development of productive capacities; reduce infrastructure gaps and transaction costs; promote free competition; make the reallocation of human and capital resources more flexible towards higher productivity sectors and allow their insertion in value chains ”, indicated Elena Conterno, president of IPAE.

In this sense, IPAE Business Association has just launched # RutaPerú: Importance of Trade Opening, which highlights the advantages of trade openness for the country since this is a powerful policy to increase the production of goods and services, employment quality and household income. Likewise, # RutaPerú details four great recommendations for the country to enhance the benefits in Peru of foreign trade:

1. Improve the competitiveness of companies with transversal policies

It is necessary to avoid implementing protectionist policies that seek to protect national production from foreign competition, through the increase in tariffs or other restrictions on imports, which, as history has shown, what they bring is a loss of well-being. On the contrary, it is necessary to concentrate efforts on increasing productivity, promoting that local companies strengthen their comparative advantages and gain access to new markets, without contravening the free trade agreements or the bilateral and multilateral trade agreements to which Peru is subscribed. , nor free competition policies. For this, cross-cutting policies are necessary that allow companies to: I) Produce with low logistical, financial and transaction costs, with an adequate infrastructure; II) Access qualified workers in a flexible labor market; and III) Operate in a context that promotes free competition, for which it is important that Indecopi have technical resources and ensure its independence from any political interference.

2. Promote the growth and diversification of the exportable offer with sectoral policies

Any measure will be ineffective without clear rules or reforms that contribute to creating an adequate climate of confidence to attract investment. Thus, for example, details are required in the prior consultation law, a well-defined land registry, and predictability in water use authorizations. In addition to cross-cutting policies, active export promotion policies with a territorial and value chain approach are important, particularly to take advantage of the productive capacities that Peru already has. These will help boost job creation and increase the income of the population, both in exporting companies and in their value chain. In addition, sectors such as forestry, tourism or aquaculture and their respective value chains can be promoted, for which the operation of the different public-private multisectoral coordination mechanisms must be strengthened, which facilitates the attention of needs and the closure of gaps in all regions of the country. Finally, a special tax and temporary labor regime to promote the development of value-added activities can expand the size of the export base through the inclusion of small companies in production chains. In this sense, the implementation of mechanisms that allow the sustainable growth of MSEs is required, instead of measures that promote their stagnation in this condition.

3. Increase the efficiency of logistics services

It is necessary to improve the infrastructure linked to the foreign trade value chain. The creation of infrastructure is essential to attract investment to different regions and increase competitiveness in a decentralized manner by reducing logistics costs. Competition in logistics services must also be promoted, for which it is essential to facilitate the flow of information and coordination between agents. In this sense, the implementation of the Information Module on Foreign Trade Logistics Services (MISLO) should be streamlined, so that users can have complete information on the export and import costs of different agents in the logistics chain, in such a way that that competition is encouraged.

4. Promote administrative simplification and digitization

The simplification of processes, procedures and certifications is necessary so that companies can reduce their costs and operate more efficiently. To do this, it is important to continue promoting early dispatch, the authorized economic operator with recognition from our main commercial partners (so that they reduce the revisions to Peruvian products) and the optimization of the procedures for obtaining health records.

The digital revolution can make an important contribution to reducing costs, facilitating information flows, improving communication and attracting new value chains linked to the development of technologies that improve productivity. This digitization must be both public and private. To promote the digitization of trade, it will be important to continue promoting the operation of the Single Window for Foreign Trade (VUCE) and the implementation of a risk-based approach in the control of goods, both customs and other control authorities such as sanitary.

You can download the complete National Development Route at: https://www.ipae.pe/wp-content/uploads/2021/11/Ruta-Peru-Apertura-Comercial.pdf

In the # RutaPerú: “Importance of the Commercial Opening” the proposals made by José Carlos Saavedra and Andrea Sotelo, from APOYO; and Laura Olivera and Renzo Castellares, from the Central Reserve Bank of Peru. For the elaboration of this Route, we appreciate the contributions and comments received from the members of the Strategic Committee for National Development of IPAE, officials from the Ministry of Economy and Finance, and the Ministry of Foreign Trade and Tourism, as well as Luis Mesías