WORLD TRADE
ORGANIZATIONWT/TPR/M/69
19 July 2000
(00-2986)
Trade Policy Review Body
30 and 31 May 2000
TRADE POLICY REVIEW
PERU
Minutes of Meeting
Chairperson: H.E. Mr. Iftekhar Ahmed Chowdhury (Bangladesh)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3
II. OPENING STATEMENT BY THE REPRESENTATIVES OF PERU 4III. STATEMENT BY THE DISCUSSANT 11IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 14V. REPLIES BY THE REPRESENTATIVES OF PERU AND
ADDITIONAL COMMENTS 20
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 32
ANNEX I RESPONSES PROVIDED BY PERU TO ADVANCE WRITTEN
QUESTIONS AND TO OTHER QUESTIONS RAISED DURINGTHE MEETING 34WT/TPR/M/69
Page 3
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The second Trade Policy Review of Peru was held on 30 and 31 May 2000.  The Chairperson,
Ambassador Iftekhar Ahmed Chowdhury of Banglade sh, welcomed the delegation of Peru, led by
Vice Ministers Rosario Almenara de Pezo and Alfredo Ferrero, and the discussant, Mr. Vassili Notis
(Greece).  As usual, the discussant would speak in his personal capacity and not as representative ofhis country.  In accordance with the established procedures, the discussant had made available, in
advance, an outline of the main issues he intended to raise.
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of the
procedures for the meeting.  The report by the Government of Peru was contained in document
WT/TPR/G/69 and that of the WTO Secretariat in document WT/TPR/S/69;  the main issues to be
raised by the discussant were contained in document WT/TPR/D/49.  Copies of advance written
questions, submitted by Canada;  Thailand;  New Zealand;  Hong Kong, China;  Switzerland; theEuropean Union;  Japan;  the United States;  the Republic of Korea;  and Bolivia, had been
transmitted to the delegation of Peru.  These questions along with written responses to these and other
questions raised during the meeting are contained at Annex.  If full replies could not be provided
during the meeting supplementary written replies could be provided later.WT/TPR/M/69
Page 4
II. OPENING STATEMENT BY THE REPRESENTATIVE OF PERU
1. The representative of Peru stated that since the first Peruvian Trade Policy Review in 1994,
which had described the economic policy followed by the country since 1990, the Government had
continued to apply the Stabilization and Structural Reform Programme, which had led to
consolidation of the economic model and of economic and trade reforms.
2. The objective of Peru's economic policy was to continue to strengthen the economic stability
achieved through the application of solid macroeconomic policies that would raise the standard of
living and, in particular, make for development and well-being.
3. The objective of Peru’s trade policy was to improve integration into the world economy,
boost the competitiveness of exports, promote investment, gain better access for Peruvian products,
and seek new market niches.
4. Despite the impact of outside factors on the Peruvian economy, Peru's Government had
maintained the same lines of action in its economic and trade policy during 1998 and 1999, which
reflected their clarity and predictability.
5. The results for 1999 and thus far in 2000 pointed to a recovery in the Peruvian economy.
Economic policy had brought inflation down to international levels and had resulted in positive
growth in GDP;  good medium-term results were anticipated.
(1) ECONOMIC ENVIRONMENT
6. Since 1990, the pillars of stabilization and growth in the Peruvian economy had been the
application of solid macroeconomic policies and a deep and broad programme of structural reforms.
7. The stabilization programme was based on strict fiscal discipline, prudent monetary policy
and a flexible exchange rate.  Over the last six years, Peru had continued a reform programmeintended to boost productivity and promote competitiveness.
8. The reforms undertaken by the Peruvian Government, complemented by a suitable legal
environment, meant that Peru was considered to be a good place to invest.
9.  The main reforms in recent years included:  systematic liberalization of trade in goods and
services and capital;  equal treatment for domestic and foreign investment;  a flexible labour market;an aggressive and transparent privatization programme;  financial sector reform;  reform of the
pension and social security system;  and a wide-ranging and focused poverty-reduction strategy.
10. As a result of this broad programme of structural reforms and exchange and trade
liberalization:  trade and foreign investment had gr own significantly;  GDP had grown by an average
of 5.7% a year between 1993 and 1999 - this growth had been driven by investments and exports,
which had grown over the same period at real average rates of 6.3% and 9.6% a year, respectively;
inflation had been brought down from over 7,000% in 1990 to 3.7% in 1999, the lowest rate in 40years;  international reserves were over US$8.8 bill ion or the equivalent of close to 15 months of
imports, reflecting the strength of Peru's external accounts.
(2) E
CONOMIC DEVELOPMENT AND ECONOMIC POLICY RESPONSE
11. Between 1997 and 1999, the Peruvian economy had been affected by consecutive external
shocks and, as a result, the Government had undertaken a series of timely and flexible actions in 1998and 1999 to reactivate domestic demand, provide sufficient liquidity for the economy, and improve
the competitiveness of businesses.  First, the Asian crisis had affected the prices of exports.  However,WT/TPR/M/69
Page 5
the lower prices had been compensated for by increases in production and export volumes, chiefly on
account of investments in the mining sector in earlier years.  Then, the El Niño phenomenon, apart
from affecting agriculture, fishery, and mining, had destroyed part of the public infrastructure.
Preventive works had largely cushioned the adverse economic impact of the phenomenon and, more
importantly, saved many human lives.  Last, in 1999, when the Peruvian economy was beginning torecover in response to better results in the agricu lture, mining and fisheries sectors, problems on the
international financial market had led to restricted liquidity, causing a drastic drop in domestic
demand in that year.
12. Since the start of the 1990s, the strict fiscal discipline that had been adopted, coupled with
growth in government revenues, had led to a reductio n in the total deficit of the non-financial public
sector. However, there had been a temporary increase in that deficit in 1999, chiefly due to lower
revenues owing to slacker domestic demand.  The Peruvian Government firmly believed that fiscaldiscipline had been and would continue to be a key element in its economic success.
13. Monetary policy was still geared to controlling inflation and the Central Bank only intervened
in the exchange market to neutralize unexpected fluctuations in the exchange rate.  The floating
exchange rate had helped to absorb part of the external shocks, while the Peruvian currency, the nuevo
sol, had depreciated in real terms during 1999, which improved exchange rate parity.
14. Signs of a recovery in the economy and in domestic demand had been apparent since the end
of 1999.  In 1999, the economy had grown at 3.8% and estimated growth for 2000 was between 4%
and 5%.
15. Trade liberalization in the last decade in Peru had led to a significant increase in Peru's trade
flows.  From 1993 to 1999, total trade had grown on average by 7.6% a year.
16. The economic policy measures, the investments being made, gains in productivity, and
increasingly active participation by exporters in international markets had made it possible to promote
exports over the last ten years and to enhance their competitiveness, resulting in significant growth in
export value and volumes.
17. Peru's exports to countries in the different economic integration blocks to which Peru
belonged had increased in recent years, giving Peruvian products access to new markets and
permitting exports to diversify.
18. From 1993 to 1999, exports had grown from US$3.5 billion to US$6.1 billion, an increase of
74% over the period.  Exports had shrunk in 1998 owing to deterioration in the prices of Peru's main
exports and lower fish meal and fish oil exports on account of El Niño.
19. Peru's imports had also grown, by some of 63% between 1993 and 1999, largely in the form
of inputs and capital goods, particularly for industry.
20. The structural reforms and the stabilization programme applied to the Peruvian economy,
coupled with the establishment of a legal framework for investment promotion and protection had
made for a substantial increase in foreign investment flows into Peru in recent years.
21. The stock of registered direct foreign investment had grown from US$1.642 billion in
December 1993 to US$8.573 billion in December 1999.  At December 1999, direct foreigninvestment pending registration was US$4.4 billion and foreign investment in the stock exchange was
US$2.7 million, or 32% of total trading on the exchange.WT/TPR/M/69
Page 6
22. Total foreign investment in Peru including the registered stock, investments pending
registration, and stock market investments ha d amounted to US$15.673 billi on in December 1999 and
investments in the coming years were estimated at US$12.426 billion.
23. One important aspect in the recovery of Peru's economy during the 1990s had been
regularization of relations with its foreign creditors and the restructuring of foreign debt.
24. Peru’s economic recovery had also coincided with an improvement in social indicators, such
as poverty indexes, illiteracy rates, access to basic services, and the infant mortality and life
expectancy rates.
25. In 2000, real growth in GDP was forecasted at between 4% and 5%, inflation at between
3.5% and 4% and the current account deficit at about 4% of GDP.  The privatization and concession
programmes would continue, with the goal of improving the efficiency and competitiveness of the
economy.  Peru was also committed to giving continued priority to improvements in social indicators.
26. Peru's medium-term objectives were:  sustained economic growth until GDP growth was
above 6% a year;  reduction in inflation to international levels;  reduction in the current account
deficit;  elimination of extreme poverty and reduction in poverty levels.  The Peruvian economic
programme would maintain macroeconomic stability a nd consolidate structural reforms, with the goal
of achieving sustained growth in the medium term.
27. In this context of structural reforms and macroeconomic policies in effect since the start of the
last decade, Peru’s trade policy should consolidate the process of liberalizing its trading system.  The
objective of trade policy was to create incentives that would permit the efficient allocation of
resources and promote the development of economic activities in response to market signals.
28. Peruvian legislation contributed to the free flow of goods and services, chiefly through the
wide-spread liberalization of foreign trade and capita l flows and the similar treatment of domestic and
foreign investment enshrined in Peru's constitution.
29. The economic policy applied over the last decade had been aimed at achieving a more open
economy, with macroeconomic stability.  The strength of Peru's economy had been an important
factor in preventing liberalization from being affected by the external shocks of recent years.Since 1999, the export sector had recovered to its level prior to the crisis and, in general, the economy
was recovering.
30. To assure the continuation of fiscal prudence in the medium term, in December 1999 Peru
had passed the Law on Fiscal Prudence and Transparency, whose main objective was to ensure fiscal
balances or surpluses in the medium term by building up surpluses in good times and running
moderate and non-recurrent deficits in periods of slower growth.
31. The macro-fiscal rules contained in that law established ceilings on: the annual fiscal deficit
of the consolidated public sector, at not more than 1% of GDP; annual increases in non-financial
spending by the general government, not exceedin g the annual inflation rate plus two percentage
points;  and increases in public borrowing.  As a transitory measure, in 2000, the maximum deficit
was set at more than 2% of GDP and at 1.5% for 2001.  The law also directed that a fiscal
stabilization fund be established.
32. Enabling regulations to the Law on Fiscal Prudence and Transparency, which had been
passed recently, established guidelines for the preparation and implementation of a multi-year
macroeconomic framework and observance of the macro-fiscal rules established in that law, as well as
the provisions relating to the fiscal stabilization fund.WT/TPR/M/69
Page 7
33. The Peruvian Government would continue to ma intain the macroeconomic stability that had
been achieved and would improve domestic savings.  Efforts to increase foreign investment in Peru
were being made, this was one of main objectives in joining different integration agreements.
Another objective was to increase total exports in future from 11% of GDP in 1999 to about 16%
in 2006.  To that end, Peru would continue efforts to increase and diversify products and markets. Anexport sector with these characteristics would achieve better results, to the benefit of economic
growth, and would have a positive impact on income and employment levels.
34.  With respect to world-wide efforts, the representative of Peru hoped that all economies
would allow greater access to their markets.  This would increase the possibilities of further
liberalization on Peru's domestic markets.
35. Peru had a truly open economy reflected in low levels of restrictions, consistent with its
obligations as a member of the World Trade Organization.  Average tariffs had been lowered from16% in 1994 to 13.2%.  Capital and other resources could move freely, and similar treatment for
domestic and foreign capital was the general rule.
36. Peru's main objective was to step up domestic efforts to meet the test of global economic
growth and an open multilateral trading system.  Based on its experience in participating in different
integration agreements, Peru acknowledged the efforts made by each country to find commonsolutions, so that regional and global growth could ta ke off and grow rapidly and a multilateral trading
system could be established.
37. An on-going review of the results of the mult ilateral system for Members' economies, coupled
with measures to accelerate greater openness, would contribute to global liberalization.  This would
make it easier to show, repeatedly, the benefits of trade liberalization and should be a permanenteffort.  Peru was committed to an open system of foreign trade, with low tariffs and the free
movement of capital.
38. The efforts of each country to open up more rapidly would mean that little-by-little all the
members would contribute to the liberalization of trade and investments.  Efforts to maintain a sound
and prudent economic policy with a view to stable  economic growth would also contribute to these
objectives.  Accordingly, the WTO's Trade Policy Reviews contributed to these objectives and made
it possible to evaluate and collectively appraise the full range of trade policies and practices of the
different Members and their impact on the functioni ng of the multilateral trade system.  They also
allowed for greater transparency and a better understanding of the trade policies and practices of
Members.
39. In this context, Peru would continue working to consolidate:  macroeconomic stability and
sustained growth as a necessary condition for improving the country’s productivity andcompetitiveness;  growth and diversification in exports to pave the way for production with higher
value added;  increased domestic and foreign investment to achieve higher employment levels and a
significant reduction in poverty, thereby assuring that the people would share in the benefits of the
economic growth that stemmed from trade liberalization.
40. Peru had complied with its commitments under the Uruguay Round, incorporating
the agreements into its national body of laws and adjusting its domestic legislation in areas such as
anti-dumping and subsidies, among others.  Peru would continue to comply with its commitments.
Since 1 April 2000, Peru had been applying the WTO Agreement on Customs Valuation to 100% of
its merchandise imports.
41. In the framework of a system of free trade and the free movement of capital, Peru would
continue to seek ways to improve its participation in all the trade organizations to which it belonged,
in an integrated context. Peru's positions should be viewed as more than just its economic policy;WT/TPR/M/69
Page 8
they were also its positions on trade with other countries and the positions of its partners with third
countries.
42. Peru was part of an increasingly globalized world from which it could not withdraw.
Prudence in economic management and perseverance in working towards the objectives of the
economic programme that had helped give credibility to the Peruvian Government’s economic policywould continue.  This would permit effective management of its macroeconomic policy and
constituted a fundamental element for investment and integration into the world economy.
43. Peru was particularly interested in the continued improvement of the multilateral trading
system.  The benefits that had accrued from comp lying with its commitments, particularly over the
last six years, had meant more investments, greater competitiveness, and better trading opportunities
for Peru.
(3) T
RADE POLICY
44. The Peruvian economy had become increasingly open in recent years, accompanied by
consolidation of the economic and trade model and reforms.  These reforms had had a major influence
on Peru’s economic results and on its international trade relations.  Peru would continue to apply
policies designed to create a more efficient, export-oriented economy.
45. In this context, the objective of trade polic y was to help lay the groundwork for sustained
growth and modernization of the Peruvian economy, seeking to boost its efficiency and productivity
in order to assure its internal and external comp etitiveness.  Peru’s trade policy of openness and
liberalization was also aimed at achieving better integration of the country in the world economy, in
order to reap the benefits of specialization on the international market.
46. Peru's lines of action for achieving these objectives were aimed at winning greater market
access for its products.  To that end, the Peruvian authorities were undertaking negotiations with a
clear strategic vision: consolidation of their country’s openness and creation of short-, medium- and
long-term opportunities to gradually maximize Peru's access to markets – from the simplest to the
most sophisticated – while achieving competitiveness through increasingly diversified exports with
higher value added.
47. It was also particularly important for Peru to  build up an international trade environment that
was stable, transparent and predictable, which allowed for increased access for Peruvian exports to the
international market.
48. Accordingly, Peru had not surrendered to protectionist pressures during the various
international crises and natural disasters that had affected the country, and had continued the work of
liberalizing the economy and complying with its international commitments.
(4) PERU AND WTO
49. Peru had been a contracting party to the GATT since 1951, and in 1995 it had become an
original Member of WTO. The legal framework established in the WTO constituted a fundamental
element of Peru’s trade policy. Peru had made the necessary adjustments in its domestic legislation to
comply with the commitments stemming from the Agreements.  Since 1 April 2000, Peru had been
applying WTO Agreement on Customs Valuation to all imported merchandise.
50. Peru would continue to participate actively in all matters related to WTO, and to work
towards the next negotiations to be held in this forum.WT/TPR/M/69
Page 9
51. In this regard, although the Ministerial Conference in Seattle had been unable to achieve the
objective of launching a new round of multilateral trade negotiations, awareness had been heightened
of the need to strengthen mechanisms for internal transparency in WTO negotiations, in response to
the deep concerns of developing countries.  This was essential for the future, since the revision and
design of an appropriate decision-making mechanism that guaranteed equitable and efficientparticipation by all the Members would allow Peru to make the most of the system’s benefits. The
representative reiterated Peru's conviction that consensus was and should continue to be the principal
basis for WTO decision making.
52. During the preparations for the Seattle Conference, Peru had been able to present proposals
and discuss key issues for its development, such as recognition of the economic and commercial value
of the traditional knowledge of local and indigenous communities in intellectual property rights.  This
was a fundamental issue for the future of Peru, which required further analysis and regulation at themultilateral level.
53. On the other hand, it was essential to provide support for Peru’s efforts to open up its
economy by liberalizing access to the markets of its trading partners.  In particular, exports of some
Peruvian products encountered problems with access to certain markets.  In 1992, Peru had applied to
export citrus fruit to the United States, when it had complied with the conditions established by theAnimal and Plant Health Inspection Service but to date no decision had been reached.  Another case
was exports of vicuña products. In 1995, Peru had asked the United States to reclassify vicuña to
permit imports of products made with that fibre,  in accordance with the CITES Convention.  Despite
having pursued the matter in Washington, the case had not yet been settled.
54. A further example of difficulties in market access was the discriminatory treatment in the
trade description imposed by the European Union on Peruvian sardines in comparison with Spanish
sardines, arguing that there were differences in the quality of the product which lowered the
commercial value of Peruvian sardines.
55. In the context of the world-wide process of globalization and interdependency of economies,
integration through modern and open schemes played a highly important role in the development ofthe economies and, hence, in the development of people.
56. Latin America and Peru, in particular, had participated actively in these trends. In recent
years, new integration processes had been developed and existing ones had been modernized.
Agreements had been signed on the creation of free-trade zones between two or more countries.
57. Peru was a member of the Andean Community , together with Bolivia, Colombia, Ecuador,
and Venezuela.  Programme and institutional reforms had been carried out under this subregional
integration scheme, intended to deepen the integration process, harmonize economic policies, anddefine common social policies that would raise the standard of living. Rules had been adopted to
create equity and transparency in competition, with a view to consolidating this progress.
58. Great importance had been attached to the exte rnal projection of the Andean Community, and
its members were negotiating as a block with Central America, Panama, the MERCOSUR countries,
and FTAA. As part of the Andean Community, Peru had negotiated an Economic ComplementarityAgreement with Brazil and an agreement on fixed preferences with Argentina, which was virtually
finalized and was expected to come into force in July 2000.
59. Under the Latin American Integration Associ ation (LAIA), an Economic Complementarity
Agreement between Peru and Chile had been signed  in 1998, which would permit a free trade zone to
be established.  The agreement set clear and permanent rules for trade between the two countries,which would facilitate bilateral investments and complementarity, thereby spurring the
competitiveness of both economies.  The bilateral agreement with Mexico has also been reinforced.WT/TPR/M/69
Page 10
60. In the hemispheric context, Peru had been participating very actively in the process of
building the Free Trade Area of the Americas (FTAA).  The negotiations had been launched in 1994
and were expected to culminate in 2005.  The FTAA was clearly a major challenge for Peru, which
was becoming more involved each day in this promising task.  The benefits Peru expected to reap
from the process would be apparent in the medium term, through better access for Peru's exports to anexpanded market of over 800 million people.  Peru's hemispheric negotiating strategy sought to
facilitate the entry of investments in both goods and services and to develop infrastructure to achieve
the competitiveness necessary to make the most of them.  The representative highlighted the
participation to this forum of the Andean Community under a unified voice.
61. The Asian-Pacific region was of vital importance for Peru’s economic and trade development.
Peru had been a full member of the Asia-P acific Economic Cooperation (APEC) forum since
November 1998.  The forum had evolved with the needs of its members to create a cooperationcommunity that promoted the free flow of goods, services, and investments.  Peru had a vision of
development based on the exchange of technologies, experiences, investments and trade that would
continually lead to higher productivity in Peruvi an economy, thereby making it more competitive and
efficient on the international level.
62. In the long run, the representative believed that Peru would be the APEC partner that
facilitated trade and investments between the economies of Asia and South America, on account of its
geographic position, its economic progress, and its trade links.
63. The trade policy followed in recent years had permitted Peru to make progress in diversifying
its foreign markets and export structure.
64. Among Peru's trading partners, the United States accounted for about 28% of total trade,
which had been facilitated by the Andean Trade Preferences Act.  The European Union and the LAIA
countries were also important trading partners, accounting for 21% and 24% respectively.  Total trade
with the Asian countries was 13%;  Japan (5.5%), the People’s Republic of China (3.6%) and Korea
(2.1%) were the largest partners.
65. Peru’s exports had grown by 33% since 1994.  The structure of exports had not changed, with
traditional exports accounting for about 68%.  In this group, mining and fish products accounted for
49% and 9.8% respectively.  However, in non-traditional exports, both textiles and chemicals had
been very dynamic in recent years, reflecting progress in exports of products with higher value added;
textiles had grown by 45% over 1994 levels.
66. Peru was convinced that openness helped to make its economy more competitive.
(5) C
ONCLUSION
67. Peru’s economic policy would continue to have the objectives of sustained growth in GDP,
consolidation of external sustainability and low inflation, as a contribution to the country’s economic
and social progress.  In an environment of free trade and free movement of capital, Peru would
continue to strengthen its role in all the trade organizations to which it belonged.
68. Peru confirmed its commitment to the multilat eral trading system while also promoting
regional integration and, in consequence, it believed in open regionalism.  Peru's objective was tointegrate into the world in a competitive fashion and,  to that end, it attached great importance to the
processes in which it was involved.  Also, opening up the Peruvian economy by lowering tariffs,
eliminating subsidies, and stressing free competition and non-discrimination against foreign
investments had given a vision of the future that had led Peru to consolidate the economic reforms and
make its products more competitive, thereby promoting economic development and, hence, that of thePeruvian people.WT/TPR/M/69
Page 11
III. STATEMENT BY THE DISCUSSANT
69. The discussant, noted that, in general, Peru had experienced a positive economic development
process during the 1990s.  Over the period, Peru had pursued a policy of privatization and sweeping
economic reforms with notable success:  GDP had grown by 5.6% a year between 1993 and 1999 in a
climate of consecutive and substantial reduction of inflation, which had fallen from 23.7% in 1994 to3.5% in 1999, accompanied by a reduction in the overall public sector deficit from 2.4% to 0.7%.
70. Peru received substantial direct foreign investments, which stimulated the transformation of
the economy and helped to boost productivity.  The success of structural reform, economic
stabilization and the establishment of a legal framework for investment promotion and protection had
been reflected in a significant increase in foreign investment, which had quintupled since 1993.
(1) E
CONOMIC AND INSTITUTIONAL ENVIRONMENT
71. Peru's positive economic developments, however, had had a social cost.  Real per capita GDP
had grown from US$1,000 in 1990 to US$2,500 in 1999, but this level was barely equivalent to what
it had been in the mid-1960s.  However, this should be put into perspective since, according to the
Secretariat’s report, the GDP estimates should be viewed with caution, given the importance of the
informal sector in the economy, which was estimated to account for close to half of total employment
in urban areas.
72. The considerable growth in GDP was accompanied in the 1990s by the creation of a
substantial number of jobs.  However, the Secretariat’s report indicated that a simultaneous increase
in the labour supply had resulted in a slight rise in unemployment.
73. Despite the increase, the unemployment rate was not at an excessive level today and the
situation was probably not of grave concern.  However, 37.4% of the economically active populationwas under-employed.  After several years of continued improvements in economic growth rates, the
poverty indexes had, unfortunately, not improved  significantly.  Although there was a slight
improvement in certain social well-being indicators, this positive development had been associated
with widening regional disparities and a slight increase in income inequality.
74. The discussant asked the Peruvian delegation to comment on these matters and explain these
developments in greater detail, particularly the fact that the process of liberalization and economic
growth had not had a satisfactory impact on social indicators.  He also requested more information on
the importance of the informal sector in the economy, since 50% of jobs and probably of GDP
originated in that sector, he wondered whether this was compatible with liberalization and
modernization.
(2) S
ECTORAL ISSUES
75. The discussant raised several specific sectoral issues.  Despite significant growth in GDP
during the 1990s, manufacturing activities made only a small contribution to the Peruvian economy.
According to the Secretariat Report, they had experienced extensive restructuring owing to an
increase in competition from imports.  The discussant believed that liberalization and modernization
had not favoured the manufacturing sector.  He asked the Peruvian delegation to provide an
explanation for this phenomenon and an assessment of the impact of this restructuring on jobs and onimprovements in social indicators.
76. The fishing industry was very important in Peru, accounting for 2.5% of GDP and about 9.8%
of total export earnings.  The country was the world’s largest producer and exporter of fish meal and
fish oil.  According to the Secretariat Report, privatization of the sector had led to major investments
to replace vessels and develop new activities.  But it appeared that this process had led to majorWT/TPR/M/69
Page 12
problems of over-investment and over-capacity, related to the Government’s support programmes,
which made fishermen reluctant to leave the industry, and the resource-management system.  The
report also mentioned that the problem of over- capacity, coupled with the high debt level and a
marked reduction in the catch in 1998, had put the fishing industry under strong pressure.  A
substantial part of the debt appeared to have been contracted by private fishing companies to acquireinstallations from the main State-owned corporation during the privatization process.  The private
companies were asking the authorities to establish a plan to finance a reduction in the fleet.  The
discussant asked the Peruvian delegation to give its assessment of the prospects for the fishing sector.
77. Peru produced a considerable amount of coca leaf and derived products. Most was exported.
Domestic production of coca leaf had dropped from 165,000 tonnes to 95,600 tonnes in recent years.
However, Peru’s share in world production of coca le af production continued to be over 40%.  Peru's
anti-drug strategy had received support from the international community, for example through tradepreferences granted by the European Union and the United States to Peruvian exports to foster
alternatives to coca leaf such as asparagus and co ffee.  However, according to the Secretariat Report,
to consolidate the results already obtained, it was estimated that a further US$1 billion investment
would be needed in the 1999-2003 period.  The Peru vian Government had allocated investments of
some US$660 million for this purpose and had appeal ed to the international community to make up
the difference.  According to the Report, donors had only pledged an additional US$56 million.  The
discussant requested more information on this matter, not just from Peru's delegation.
78. The Government's role as a major services supplier had shrunk drastically.  The ambitious
privatization programme had introduced important structural changes in most service areas.  Peru had
undertaken very broad commitments under the General Agreement on Trade in Services, which hadbeen subsequently extended to the telecommuni cations sector.  The commitments regarding
telecommunications services were particularly broad.  Sector-specific exemptions to MFN treatment,
regarding in particular land and maritime transport, were indefinite in duration.  Fortunately, the
clause on cargo reserve had been eliminated.  However, MFN treatment, was not guaranteed because
a reciprocity clause stipulated that participation by  foreign companies in Peru’s transport sector were
to be equivalent to the participation to which Peru vian companies were entitled in foreign countries.
The discussant wondered why bilateral agreements and the principle of reciprocity continued in
maritime transport.  He asked for Peru’s position regarding the current negotiations on trade in
services.
(3) T
RADE POLICY AND PRACTICES
79. The Peruvian authorities had expressed their satisfaction with the strengthening of the
multilateral trading system and its greater transparency and predictability.  However, they had pointedout that in some areas, the real results had not met the expectations raised at the end of the Uruguay
Round.  In particular, they had expressed concern in sectors such as agriculture, textiles, and clothing
owing to the limited level of liberalization that had been achieved.  The authorities had also
mentioned that the weakness of disciplines for the adoption of anti-dumping measures were leading to
abuse of this instrument for protectionist purposes.  Although a new round of multilateral negotiationswould probably be a better setting for a discussion  of problems of this kind, the discussant was
particularly interested in the Peruvian delegation’s opinion on this phenomenon and, more generally,
in learning Peru’s position on future negotiations.
80. According to the Secretariat, Peru mainta ined a relatively open trading system, which
reflected the broad programme of trade liberalization undertaken in the early 1990s.  Average MFNtariffs had fallen slightly, to 13.6% in 1996.  Peru had bound the vast majority of its tariffs at a ceiling
of 30%.  The discussant pointed out that the bound rates were generally higher than the applied rates
and the wide margin between applied and bound rates, as well as variable specific duties, undermined
Peru's commitments.  He asked whether the authorities planned in the near future to bind their tariffs
at a lower level.WT/TPR/M/69
Page 13
81. The use of non-tariff barriers appeared to be limited, except in rules pertaining to national
content.  There were also a number of provisions that favoured national suppliers in public contracting
and the use of tax incentives in regional, sectoral, and social policies.  Peru applied national-content
requirements to different government nutrition programmes and others, with the goal of promoting
and developing certain dairy-industry products.  These restrictions had been notified to the Committeeon Trade-Related Investment Measures in 1995 but were apparently still in force and no provisions
appeared to have been made for phasing-down or eliminating them.  However, the authorities had
indicated that the measures had not been implemented in practice nor had attempts been made to
enforce them.  The discussant asked the Peruvian authorities to comment on this and to describe any
future plans they had in this area.
82.  Peru's free zones and other special fiscal zones had been intended as regional development
instruments:  they were generally located in remote and economically depressed areas.  In their initialform, many of those zones had fallen short of their developmental goals.  Of the six industrial and two
trade zones originally created only two were active in 1996. New decrees had established new zones.
The main fiscal incentive was conditional on expo rt performance.  According to the information
provided in the Secretariat Report, the scope and complexity of the fiscal incentives raised some
concern.  The discussant requested the Peruvian delegation to provide more information on the natureof these trade measures and whether they would continue to be applied.WT/TPR/M/69
Page 14
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
83. The representative of the United States noted the progress made by Peru in liberalizing its
trade and investment regime over the past decade, and commended Peru for its strong adherence to
WTO disciplines and its substantial GATS commitments, although these were narrow in scope
compared with the levels of liberalization prevailing in its services sectors.  She welcomed the recentenactment of fiscally responsible legislation lim iting the government budget deficit to 1% of GDP
after 2002.  Noting that Peru's economic reform programme had slowed since 1997, the United States
urged Peru to renew privatization efforts, especially in the electricity and petroleum sectors, to
eliminate remaining distortions to competition and to spur growth.  The United States applauded
Peru's decision to open its telecommunications sector to full competition in August 1998, however,
nearly two years on, the telecommunication regulato ry body had yet to set cost-based interconnection
rates for two firms seeking to enter Peru's fixed-line telephony sector.
84. She welcomed the reduction of Peru's average tariff rate in April 1997, but noted that tariff
dispersion had been increased and several variable tariffs maintained.  She urged Peru to follow up on
the removal of its variable tariff on wheat by eliminating similar levies on other agricultural products,
and wondered how Peru would approach potential tariff increases as a result of the ongoing
discussions in the Andean Community on the adoption of a common external tariff.  The UnitedStates had some concerns about import and export restrictions introduced on certain commodities and
urged Peru to minimize these types of bans.  Peru's efforts to improve intellectual property rights
protection were encouraging.  Finally, the United States welcomed recent efforts to ensure that child
labour was not employed in Peru's increasingly important gold mining industry, although this
apparently took place in informal gold panning, which evaded regulation by the Government.  TheUnited States urged Peru to work to ensure that child labour was not employed in the gold industry.
85. The representative of the European Union recalled that it was Peru's second trading partner
and its  first source of foreign investment ahead of the United States and Japan.  Tariff preferences
accorded by the EU to the Latin American countries, in the framework of the Generalized System of
Preferences, for all industrial products and for a larg e number of agricultural and fishery products, had
contributed to the development of trade relations  between the two regions.  Specific preferences,
given to Andean countries involved in the control of illicit drug traffic and production since 1990, had
enabled Peru to diversify its exports and to increase the share of non-traditional exports.  Peru was the
prime beneficiary of Community aid to Latin Am erica;  support amounted to some €50 million
annually, focused mainly in the eradication of poverty.  The authorities had shown a singular will to
sanitise Peru's financial situation, to free up its foreign trade to improve its competitivity, and to create
a legal framework and climate conducive to investme nt. Peru had demonstrated its commitment to the
multilateral system and its confidence in the benefits of the system by the broadness of its
commitments on tariffs and on services, and by scrupulous discharge of its obligations, for instance on
customs valuation and protection of intellectual property.  The EU was particularly pleased that Peru
supported  a new complete and balanced round of multilateral negotiations, and was willing to work
with Peru and other countries in the developing world to ensure their effective and balancedparticipation in the negotiating process.
86. While Peru's reform efforts had been successful in many areas there remained some
weaknesses.  Some concerned the processes that were not completed and needed to be continued with
the simplification of customs procedures, a reduction of the gap between applied and bound tariff
rates, the elimination of certain local-content requirements, the reduction and the rationalization of thevarious fiscal incentives, and better management of fishing resources.  Other weaknesses were related
to the excessive dependence of Peru on the exploitation of its natural resources, which made Peru
highly sensitive to weather change and to the deterioration of the terms of trade.  This situation
required redoubling of efforts to develop manufacturing and services firms and to ensure major
diversification.  Nevertheless Peru's most important challenge was of a political and social nature.Despite of positive signs, recent economic development had not had sufficient impact on povertyWT/TPR/M/69
Page 15
reduction.  National income continued to be poorly distributed both regionally and by social class and
this exposed the country to the risk of instability and conflict.  The European Union believed that
incontestable political legitimacy and attention to the fate of disfavoured sectors of the population
were essential for Peru to continue with its programme of economic modernization.  The European
Union encouraged the Peruvian authorities to work in this direction, and would continue to combinesupport and watchfulness in its relations with Peru.
87. The representative of Canada voiced concerns that, in spite of serious irregularities in the
presidential electoral process and the withdrawal  of the monitoring mission of the Organization of
American States, the Peruvian authorities had proceeded with the second round of voting under
conditions that lacked transparency and credibility.  The electoral process had fallen short of the
standards that Canada and the international community expected.  She reiterated Canada's concern
regarding Peru's withdrawal from the binding jurisdiction of the Inter-American Court of HumanRights, a decision that sent negative signals to foreign investors, was also reiterated.
88. Canada commended Peru for the results of economic and structural reforms launched in the
early 1990s, and progress in economic and trade liberalization since its last review. Canada urged
Peru to update the calculation methods used in GDP measurement in order to clarify some confusion.
Canada welcomed Peru's commitment to freer trade in bilateral trade agreements with Chile, Mexicoand Ecuador, a commendable effort following the historic peace accord signed in 1998 after
longstanding border disputes.
89. Canada granted unilateral concessions through General Preferential Tariff schemes and noted
that such schemes had contributed to the diversification of Peru's export supply.  Peru's investment
regime was one of the most liberal and dynamic in Latin America, and that Peru was a growingmarket for Canadian investments, in particular for mining companies.  Efforts were being made to
initiate negotiations for a double taxation agreement between Canada and Peru.
90. Peru's privatization and concession programme had played a major role in improving national
infrastructure and enhancing the production capacities by attracting private investment.  However,
both programmes had slowed down in the last two years and Canada encouraged Peru to resume a
steady trend of privatization.  Canada also noted that there had been several instances where the
independence of the judiciary was brought into ques tion with reference to business disputes.  Canada
had signed a Trade and Investment Cooperatio n Arrangement with the Andean Community in
May 1999.  Peru's involvement in trade integration mechanisms at various levels such as of the APEC
and the FTAA had progressed.  Despite these signs of openness, Canada was concerned that,
following the consolidation of Peru's legal fram ework to enhance the transparency of government
procurement procedures, recent provisions had departed from the principle of national treatment.  Itwould be desirable if Peru would join the WTO plurilateral agreement on Government Procurement
and further open up its procurement market.  Canada looked forward to Peru reaffirming its
commitments, not only to liberalized trade, but also to transparent democratic institutions, recognizing
their important role in the development of trade and in sustaining investors confidence.
91. The representative of Thailand congratulated Peru for its economic and structural reforms and
urged Peru to continue its policy of open trade and investment regimes. The reduction of Peru's
applied average tariff was welcomed but high level tariffs were still imposed on some agricultural
products including rice and sugar.  Moreover, variable specific duties applied on some agricultural
products undermined the predictability of the Peru's tariff regime and might not be consistent with
Peru's commitments to the WTO.  Thailand wondered whether Peru had any plan to remove variablespecific duties.  Another major concern was Peru's rice policy, in particular the suspension of rice
imports since 1998.
92. The representative of New Zealand congratulated Peru on the general stability of its economy
and trade regime since its last review.  New Zealand welcomed Peru's commitments to a genuinelyWT/TPR/M/69
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open international trading system, in particular through its constructive role in multilateral fora such
as APEC and WTO, and regional integration schemes such as the Andean Community and the Latin
American Integration Association.  New Zealand congratulated Peru for its recent full implementation
of the WTO Agreement on Customs Valuation.  However, some practices that had a negative effect
on trade flows raised concerns.  In particular, while the tariff surcharges on agricultural products weredesigned to provide additional support for domestic agriculture, imposing costs on agricultural
exporting nations did not help to make Peruvian ag riculture more competitive in the international
arena.
93. The representative of Hong Kong, China welcomed the economic results of Peru's
liberalization programme and encouraged Peru to c ontinue in that direction.  Hong Kong, China also
commended Peru for its strong commitment and pa rticipation in the multilateral trading system,
reflected in particular by the strong commitments made under the GATS Agreement and the fullimplementation of the Customs Valuation Agreement.  Hong Kong, China encouraged Peru to review
and reduce various charges such as tariff surcharges, variable specific duties, customs clearance
charges, selective consumption tax, and general sales tax, which could substantially raise the nominal
rate of protection.  Hong Kong, China fully shared Peru's view that a balance and broad-based
package of multilateral trade negotiation, paying particular attention to specific needs and concerns ofthe developing and least developing Members was the best way to maximize gains for all WTO
Members.
94. The representative of Switzerland stated that the results of the programme of stabilization and
structural reforms carried out in Peru for nearly ten years were very encouraging.  Switzerland
congratulated the Peruvian authorities on these good macroeconomic results and on setting up an opentrading regime and a liberalized exchange market .  Efforts made to consolidate the legal and
institutional framework were also noted.  However some uncertainties and possibilities for
improvement remained.  Switzerland raised questions concerning various areas, ranging from the
level of bound rates to aspects linked to the intellectual property rights, government procurement,
incentive measures, and Peru's regional integration.  In particular Switzerland wondered whether Peruenvisaged reducing the gap between bound and applied rates, adopting the plurilateral Agreement on
Government Procurement, and simplifying its incentives system.  With respect to regional integration,
Switzerland noted the importance of Peru's trade with the United States and the European Union, and
wondered whether Peru had plans to conclude free-trade agreements with these partners.
95. The representative of Japan expressed appreciation for Peru's recent efforts in recovering
from the financial crisis.  Japan also appreciated improvements in the investment environment since
the early 1990s.  With respect to WTO commitments, Japan welcomed Peru's full  implementation ofthe Customs Valuation Agreement, and requested clarification on the schedule for narrowing the gap
between applied and bound rates.  Japan was interested in hearing Peru's views on the food security
issue; and commended Peru for the results achieved by its anti-drug strategy.
96.  The representative of Korea noted that bilateral trade relations with Peru had grown steadily
and expected the trend to continue since both countries participated actively in the APEC forum.  In
this context, Korea wondered whether Peru was c onsidering any specific trade liberalization and/or
trade facilitation measures, and if it was contemplating joining the APEC Business Travel Card Plan,
which permits the no-visa entry for businessmen, and easier customs clearance.  Even though Peru
had achieved relatively modest economic progress, it had continuously improved its trade and
investment policies in a way that helped its economic regime converge towards internationalstandards.  Korea hoped that Peru would continue it s reforms, in particular of customs procedures and
tariff protection.
97. Virtually all final anti-dumping measures adopted by Peru since 1995 were still in force in
December 1999, maintaining such measures might be a violation of Article 11.3 of the GATT 1994
Agreement on Implementation of Article VI.  Korea also raised concerns about the apparent violationWT/TPR/M/69
Page 17
of national treatment resulting from the differential levels of excise tax applied to used cars depending
on where they had been repaired or reconditioned.
98. The representative of Bolivia highlighted the excellent relations between her country and Peru
not only as a result of common history but also because of their joint efforts to established the Andean
Community.  Bolivia considered it important that  Peru's economy had achieved substantial growth
and improved social welfare indicators in recent years, and found it encouraging that Peru was
considered as a propitious area for foreign investment.  Peru could be considered as a good example
of a developing country that contributed to the multilateral trading system also through its active
participation in regional integration processes.  Bo livia shared Peru's interest in protecting the rights
of traditional and indigenous communities;  Bolivia would work to achieve the incorporation of such
protection in the WTO.  Bolivia also shared Peru's concerns on market-access issues resulting from
measures taken by trade partners which were not always full understandable.
99. The representative of Argentina was pleased to note that Peru's economic reforms had had
substantial results, in particular in reducing infl ation rate.  Argentina shared the belief that the
multilateral trading system should be strengthened on the bases of fair competition, the development
of comparative advantages, and the reduction of protectionism that would guarantee market access
and equitable participation for all members.  Argentina encouraged Peru to continue the process ofdeepening structural reforms, which would enable  it to consolidate its integration in the world
economy, and to continue efforts towards regional integration.  On specific issues, Argentina was
concerned by the limitation of the competencies of INDECOPI's Commission for Trade and Technical
Regulations in 1996, which apparently resulted in a greater margin of discretionality in the adoption
of measures that could be technical barriers to trade.  Argentina requested additional information onPeru's trade-related investment measure and national-content requirements for the promotion and
development of the dairy industry.
100. The representative of Colombia highlighted the results achieved by Peru through its economic
reform process which included unilateral trade liber alization and the deepening of trade relations with
the majority of countries in the American contin ent.  Colombia's relations with Peru had been
consolidated through the importance of the Andean Community.  Colombia commended Peru for its
commitment with regard to the principles of the WTO.  With respect to issues raised by some
delegations referring to current domestic events,  Colombia recalled that the purpose of the meeting
was limited to the trade policy review of Peru.
101.  The representative of Brazil particularly welcomed Peru's positive economic indicators,
which, to a large extent, were the result of a sustained political will and commitment to modernizing
domestic legislation and internal infrastructure aime d at promoting economic competitiveness.  It was
important to continue to eliminate remaining impediments to promote greater economic efficiency
and therefore enhance international competitiveness of Peruvian producers and exporters.  While the
improvements achieved so far in terms of welfare indicators were encouraging, much remained to be
done.  Brazil requested further details with respect to Peru's progressive reintegration since 1994 into
the Andean free-trade area following the suspension of its participation into the integration process inAugust 1992.  Brazil also requested additional information on Peru's participation in the APEC forum.
102. The representative of Norway recognized the macroeconomic performance and extensive
economic liberalization accomplished by Peru over the last ten years.  Substantial tariff cuts on
industrial goods, steps taken to eliminate non-tariff trade barriers, customs administration reform, as
well as the liberalization of Peru's investment regime were particularly welcomed.  However, Norwaynoted with some concern the introduction of some provisions in government procurement legislation
giving preferences to national suppliers.  Norway t ook note of Peru's efforts to ensure a sustainable
management of its fisheries resources and hoped that in the future the two countries would share
views on ways and means of tackling fishing over-capacity.  Norway shared Peru's views on theWT/TPR/M/69
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initiation of a new round of multilateral trade negotiations as well as its hopes that consensus would
be reached on a broad and balanced agenda that meet the interest of all WTO Members.
103. The representative of Uruguay considered Peru an important trading partner, and highlighted
the positive results achieved by Peru since the previous Review.  Agricultural production had
recovered considerably since 1994, which had resulted in a substantial increase in exports of suchproducts. Uruguay shared Peru's attachment to the strengthening of a predictable international trading
system based on the development of comparative advantages and on a reduction of protectionism.
104. The representative of Australia commended Peru for its commitments to the full
implementation of its Uruguay Round obligations, and reforms taken thus far, noting in particular the
elimination of non-tariff barriers and the substantial reductions made to tariff levels.  Australia looked
forward to the future reduction in bound tariff rates towards applied tariff rate levels.  Australia
welcomed Peru's open investment regime; Australia ranked fifth in Peru's top sources of investment
with the mining sector attracting the bulk of these capital inflows.  Australia worked closely with Peru
within the WTO and the APEC in pursuing bilateral, regional, and multilateral trade endeavours.
Australia particularly acknowledged Peru's strong  support for ongoing efforts to commence work in
the WTO on subsidies that contribute to fisheries over-capacity and over-fishing.  Australia was
concerned with the relatively high tariffs applied to dairy products and wondered whether there wereany plans for their reduction.  Australia also as ked for an assessment of the improvement in the
competitiveness of Peruvian farmers since the introduction of tariff surcharges, and under what
circumstance these surcharges would be abolished.
105.  The representative of Cuba recognized Peru's enormous efforts to reform its economy to
promote trade and investment on the terms required by the WTO.  Cuba acknowledged Peru's success
and the economic and social improvements achieved.  Peru was suffering from problems of access to
important trading partners' markets, which should be removed so that the country could increase its
income and better address its social problems.  Cuba shared healthy bilateral trade relations with Peru,
in particular through their participation in the Latin American Integration Association.  Cuba stated
that trade policy review mechanism was not intended as a forum to raise labour issues, which shouldbe raised within the context of the ILO.  Moreover, Cuba considered that comments on Peru's current
electoral process were inappropriate and that such  value judgment should not be expressed in the
context of the Trade Policy Review Mechanism.
106.  The representative of the Czech Republic indicated that Peru's exports benefited from
concessions granted by its country under the Generalized System of Preferences.  However, mutual
trade, especially in the last five years, seemed to be falling.  Peru's policy of opening its economy had
certainly contributed to achieving positive economic indicators, but it had also facilitated thenormalization of relations with foreign creditors and allowed a restructuration of foreign debt.
External debt was still one of the most sensitive problems faced by Peru.  Czech representative wished
every success to Peru in the difficult road ahead to raise economic productivity and welfare.  Peru's
position in the world market would be helped by strengthening democratic institutions and by taking a
series of steps, mentioned in Secretariat and Go vernment reports, for the restructuring of the
economy, structural and regional diversification of foreign trade, and which included among other
things simplification of customs procedures.  Despite the regional integration process, the share of
Peru's trade with Andean partners was still relatively modest, the representative wondered whether
Peruvian Government expected trade with Andean partners to increase, and under what
circumstances, and what measures would be taken to achieve this result.  The Czech Republic wasconfident that further trade policy reforms would lead to a simplification of customs procedures and
would thus result in the elimination of unnecessary trade impediments.
107. The representative of Ecuador believed that Peru's efforts to implement its multilateral
obligations should be assessed positively by WTO Members, particularly taking into account the
difficult and rather hostile environment faced by developing countries such as Peru.  EcuadorWT/TPR/M/69
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appreciated the liberalization of trade and exchange rate, as well as improvements in the investment
regime.  The recent bilateral agreement was especially welcomed and had created great expectations
for both countries as it should allow the re-establishment of past trade-flow levels and the exploitation
of economic complementarity.  Ecuador also welcom ed Peru's decision to reincorporate progressively
the Andean integration process.  Ecuador encouraged its neighbouring country to further contribute tothe trade liberalization within the WTO and the different regional integration processes, in particular
with regard to non-tariff barriers applied to agricultural products.
108. The representative of India noted that Peru's generally open trade and investment regime had
remained largely stable since 1994.  India believed that Peru should seek to diversify its export
products into the processed sector to, inter alia , help meet the growing demand for imports through
increased export earnings.  Steps to expand non-factor services had already been taken.  In this
context, India was interested in an assessment of Peru's experience with horizontal servicescommitments in mode 4, namely movement of natural persons.  India also asked to hear Peru's
experience of participation in various regional initiatives and of steps taken in that context to avoid
trade diversion.
109.  The representative of Chile noted that the consolidation of bilateral relations with Peru was
based on three elements.  The first was the signing of LAIA Economic Complementarity Agreement
in 1998, which had eliminated all tariff duties for some 40% of bilateral trade flows;  tariffs on most
other products would be fully eliminated within a period of ten years, and a few others (representing
some 3% of current trade flows) within an 18-year period.  This had resulted in a 10% increase of
bilateral trade.  Both countries had demonstrated interest in accelerating their integration process, for
instance with respect to services, although no progress had been made so far in that area.  The secondelement concerned the air transport regime which, although less open than suggested in Secretariat
Report, had allowed a considerable increase of flight frequency between the two capitals as well as
the opening of new routes. Bilateral relations had also benefited from a recent agreement on
investment promotion and protection, which had resulted in increased guarantees for investors from
both countries. Chile recalled the commitment of both countries to preserve maritime resources and toprotect the marine environment in high seas of the south-east pacific with special mention to highly
migratory species.
110. The representative of Mauritius noted several commonalties with Peru, in particular both were
net food importing developing countries and therefore attentive to the issue of food security.
Mauritius had voiced several times the common concern that the Marrakech Decision on that issue
had yet to yield substantive results.  Mauritius also shared a common position with Peru with respect
to future negotiations, which should be based on transparent working methods that guaranteedequitable participation of all Members.  With respect to intellectual property rights, Mauritius
acknowledged that this was a difficult and expensive exercise for developing countries;  Peru had
given a fairly substantive mandate to INDECOPI, an initiative that should be encouraged.  Finally,
Mauritius underscored the importance of the concessions granted by developed countries through
Generalized System of Preferences schemes.
111. The representative of Venezuela recognized the important efforts made by Peru in its process
of economic liberalization and integration in the multilateral trading system.  Venezuela expressed its
disagreement with Canada's intervention in the co ntext of this review, considering that there were
other fora in which domestic policies could be evaluated and discussed.  Venezuela believed that it
was dangerous to refer to domestic policy behaviour while reviewing Members trade policies.WT/TPR/M/69
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V. REPLIES BY THE REPRESENTATIVES OF PERU AND ADDITIONAL 
COMMENTS
112. The meeting was reconvened on 31 May by the Chairperson, Ambassador Iftekhar Ahmed
Chowdhury of Bangladesh.  The presentation of the representatives of Peru and the subsequent
discussion was organized in three parts:  economic environment; trade policy by measure, and tradepolicy by sector.
(1) E
CONOMIC ENVIRONMENT
(i) Macroeconomic stabilization
113. The economic programme applied by the Peruvian Government over recent years had
engendered the conditions required for long-term sustained growth on the basis of the application of
disciplined fiscal policy, a prudent monetary policy, a floating exchange rate regime, and a growing
process of openness and commercial integration.  The results for 1999 and the current year showed arecovery of the Peruvian economy after the negative external shocks that had affected Peru in recent
years.
114. The main objective of Peru's economic programme was to achieve high sustained growth in
the medium term together with low inflation rates, which was believed to be essential for the creation
of permanent jobs and reduction of poverty.  Peru w ould continue with an austere fiscal and monetary
policy.  The approved macroeconomic programme for the next few years reflected Peru's undertaking
to provide fiscal balance or surplus in the medium term, which would allow only moderate non-
recurrent fiscal deficits during times of lower growth as established in the law on fiscal prudence and
transparency approved in December 1999.
115. Sustained medium- and long-term economic growth required increasing national and foreign
investment.  This was essential to improve the living conditions of the population and to reduce
poverty.  Macroeconomic stability provided the confidence and safety required for private investment.
(ii) Distribution of income and regional inequalities
116. The Government of Peru had implemented a social policy essentially designed to reduce
poverty.  To this end it had implemented programmes to meet the basic needs of the poorest sectors ofpopulation in the areas of education, health and nutr ition and thus to improve human capital.  There
had been signs of improvement in Peru's social indicators, such as the poverty and illiteracy ratios,
access to basic services, infant mortality, and life expectancy.  Economic recovery had helped in this
respect.  The considerable financial contribution by the State to social services had also borne fruits.
Total social spending per capita had increased from US$65 in 1991 to US$207 in 1998, i.e. by 218%,
while basic social spending (top priority, essential social services - food, health, education, justice,
housing, sanitation, energy), had grown from US$29 in 1991 to US$146 in 1998.
117. In this connection, the Government had introduced reforms in the role of the State with a clear
view to redirecting public spending towards a more efficient use of its resources within the framework
of a sustainable fiscal balance and bearing in mind that a priority target of the Government's social
policy was the development of the poorest sectors of the population and the fight against poverty.
Peru was improving the targeting of social programmes by designing a new instrument for theallocation of social investment resources on the basis of an updated poverty map.  In addition, in order
to enhance the efficiency of public spending, in particular social spending, a set of performance
indicators for the main social programmes was being developed with a view to evaluating their
management and their impact on the target population.WT/TPR/M/69
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(a) Education
118. In order to improve equitable access of the population to basic social services, special
emphasis had been placed on improving the quality of primary education in rural areas.  Attendance
and retention rates had improved under the educational system, and the focus had shifted towards a
substantive improvement in the quality of education.  In 1999, primary education coverage hadreached 98.5%, while the drop-out rate had decreased by half.
(b) Health
119. Access to health care had increased six-fold over the decade 1990-2000, from about 8 million
at the beginning of the decade to 46 million in 1999.  Insurance schemes were being introduced for
mothers, new-borns and school children, with priority access to health care for mother-infant groups
and populations that were at risk, bearing in mind the years of life potentially gained thanks to
preventive care and cost-benefit.
(c) Food and nutrition programmes
120. Targets had been established for the year 2000, such as the reduction of chronic malnutrition
among children under five years of age to less than 18%, and of anaemia among children to less than
28%.  The programmes included:
- Child Feeding Programme , designed to improve the diet of children from six months to six 
years of age;
- School Feeding Programme , designed to improve the diet, attendance and output of
schoolchildren;
- Programme for the Care of Children and Adolescents Exposed to Moral Hazards , designed to
improve the diet of children and adolescents exposed to moral hazards and living in homes,shelters, and rehabilitation centres;
- Programme of Food Support for Canteens , designed to improve the quality of life and raise
the nutritional level of the most vulnerable sectors of the population and to offer food safety
for sectors of the population living in extreme poverty.
121. Peru was committed to continue giving priority  to the improvement of social indicators.
(iii) Export diversification
122. Support for the export sector had been intensified by:  designing, agreeing and carrying out
coordinated activities with the private sector to foster the development of exports;  improving the
foreign trade information system, and channelling and disseminating information at home and abroad;
managing and channelling international technical and financial cooperation for the promotion of
exports;  promoting and advertising the exportable supply internationally;  promoting the generation
of further exportable supply and conducting activities aimed at diversifying and consolidatingmarkets;  and supporting the development of export capacity in the small and medium enterprises
through counselling, technical assistance and training.
123. To support the export of its manufactured goods Peru would continue to facilitate foreign
trade operations.  In this connection, the Government had made considerable efforts to streamline
customs legislation, rationalizing and simplifying foreign trade procedures.WT/TPR/M/69
Page 22
124. Peru's objective was to diversifying its exports, in particular high value-added exports.
Various factors were at play, including the continuity of a stable macroeconomic environment,
improvement in such services as ports and airports, and investment in general, particularly in transport
infrastructure and the development of human resources (knowledge and health).
125. As these factors helped to develop Peru's comparative advantages and lead to economies of
scale, a more varied exportable supply would be generated together with increased employment and
improved intersectoral links, with respect both to goods and services.
(iv) Investment
126. The structural reforms and the stabilization programme applied to the Peruvian economy, and
the establishment of a legal framework for the prom otion and protection of investments, had led to a
substantial increase in foreign investment flows into Peru over the past few years.  The stock of
registered foreign direct investment had increased from US$1,642 million in December 1993 toUS$8,573 million in December 1999.  In December 1999, foreign direct investment pending
registration amounted to US$4,400 million and foreign investment in the stock exchange had reached
US$2,700 million, representing 32% of the total stock exchange value.  Total foreign investment in
Peru, counting registered stock, investment pending registration, and investment in the stock exchange
had reached US$15,673 million in December 1999, and an estimated 12,426 million dollars ofinvestment was expected over the next few years.
127. Peru applied national treatment and the most-favoured-nation clause to foreign investments
established in the country.  Foreign investors enjoyed the same rights and had the same obligations as
national investors, and there was no discrimination between the two.  Private investors, national or
foreign, who met the legal requirements could conclude stability contracts.  CONITE had signed292 stability contracts with foreign investors.
(v) Privatization
128. The private investment promotion policy had generated considerable economic returns
together with increased private sector participation in all sectors of the economy in which it was
involved.  The privatization and concession programmes would therefore continue, with a view toimproving the economy's efficiency and competitiveness.
129. During the first quarter of 2000, the privatization and concession process had moved forward
energetically, as shown, inter alia , by the tendering of part of the Camisea gas field project awarded
last February.  During that period, a total of US$272 million had been raised through three operations:
the sale of shares in Edegel, the sale of shares in the electricity generating company Cahua y Pariac,
and the granting of a mobile telephone licence for personal communication services.  This amount
represented more than a third of the Government's target earnings for 2000.
130. In addition a concession had been granted for the river Chillon project, involving an
investment commitment of US$80 million over the next three years.  Until March 2000, the
privatization and concession programme generated over US$9,200 millions of earnings and
investment commitments of US$8,900 million.
131. These figures reflected a new dynamism in the privatization and concession process, and Peru
intended to do its utmost to maintain that momentum during year 2000 in order to continue
modernizing the country and fostering the growth in  economic activity that was so essential to the
generation of employment in Peru.WT/TPR/M/69
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(vi) Competition policy
132. Through the Free Competition Commission, the National Institute for the Defence
of Competition and the Protection of Intellectu al Property (INDECOPI) promoted the adoption of
pro-competition policies in all sectors of the economy without exception, including those for which
there was a specialized regulatory body.  It did so through various dissemination activities, marketfollow-up studies and consultations, and by issuing opinions on the handling of competition issues by
government or regulatory bodies.
133. Regarding antitrust regulations and trade defence (anti-dumping, countervailing duties and
safeguards), the laws and the commissions that decided on anti-dumping and competition cases were
different, independent, and autonomous in their decisions.  The fact that both commissions formed
part of INDECOPI enabled them to interact and exchange information.  Thus, in examining anti-
dumping and anti-subsidy cases an analysis was made of the structure and behaviour of the market inorder to evaluate the possible existence of anti-competitive practices, taking this element into account
in the investigation.
134. The decision not to control mergers responded to the current situation and the size of the
Peruvian economy.  Peru was trying to promote investment and economic growth, attracting domestic
and international capital.  In this context, Peru believed that the control of mergers would be anunnecessary obstacle, especially in view of the particular features of the Peruvian economy.  At the
same time, the control of mergers would involve investing resources that could be better used
elsewhere.  Thus, the inclusion in the antitrust law of an ex-ante  review of mergers was not planned
for the near future.
135. Concerning INDECOPI's role in the investigation of restrictive competition practices in all
sectors, and OSIPTEL's role in the telecommunications sector, the representative stressed that
OSIPTEL was autonomous and took its own decisions without the involvement of any other State
institution.  INDECOPI did not play any role in the investigations conducted by OSIPTEL.  However,
various types of consultations did take place be tween the two bodies (OSIPTEL and INDECOPI), and
there was constant coordination to ensure the exchange of experience regarding market analysismethodologies and the determination of dominant position.
(vii) WTO and regional initiatives
136. Peru was committed to the multilateral trading system, and the framework established by the
WTO constituted a fundamental element of the country's trade policy, as proved by the necessary
adjustments made by Peru to bring its domestic legislation into line with its commitments under the
WTO.
137. With respect to the launching of a new round of negotiations, Peru insisted above all on the
need to reform the internal transparency mechan isms governing the negotiations.  Peru supported a
broad, comprehensive but manageable, and above all balanced agenda, one which would be adopted
by consensus and not imposed, and which would take account of the interests of the developing
countries, some of which had undeniably had problems in implementing the Uruguay Round
Agreements.  The standard of living of the developed countries would depend on the purchasingpower of the less-developed countries.  The ultimate objective of the multilateral system was to raise
that standard of living.  For Peru, the principle of special and differential treatment was fundamental,
and it could not and should not be confined to the granting of longer time periods or offering technical
cooperation to facilitate implementation of the agreements.  Peru believed that this principle had to be
dealt with in substantive terms.
138. There were a number of subjects that could be included in a new round, and Peru had not yet
begun negotiating in this respect.  Some of them had been mentioned over the past days:  transparencyWT/TPR/M/69
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in government procurement, reduction in bound tariff levels, protection of traditional knowledge and
indigenous communities, and others such as electronic commerce, biotechnology, trade facilitation,
etc., in addition to the built-in agenda of services and agriculture, including the elimination of
agricultural subsidies.
139. Peru participated actively in the various forums, and did so simultaneously and in
coordination with the private sector and the various public entities involved.
140. Regarding the Andean Community (CAN), Peru  maintained an independent tariff policy
within the framework of Decision 414, and had not adopted the Andean Common External Tariff
(CET).  It was currently conducting an assessment of this mechanism in order to define a structure
and level consistent with the commitments assumed at the multilateral level and in the negotiations
taking place with third countries.
141. With respect to APEC, Peru was extremely inte rested in this cooperation forum's potential to
contribute to the voluntary liberalization of investment, goods, and services.  In addition to
contributing permanently to trade facilitation as a continuous process, Peru supported the
implementation of the APEC travellers card.  In the year and a half since Peru had become a full
member, it had been able, as a new member, to chair a considerable number of APEC meetings (small
enterprises, trade promotion, tourism, telecommunications), and in August 2000 it would be chairingthe meeting of the private members of APEC (ABA C).  Peru had had longstanding historical and
cultural ties with Pacific Asia, and believed that this factor, coupled with its geographical location and
the liberalization of investment, trade and services gave Peru the necessary comparative advantage
to strengthen its position in the medium term as the ideal platform for investment and trade by the
Asian-Pacific region in South America.  In conjunctio n with accession to APEC Peru had received the
visit of heads of State, authorities, and investors from various APEC countries, including Australia,
New Zealand, Japan, China, Korea, Singapore, Thailand, and Hong Kong, China.
142. The representative of Peru stressed the importan ce of relations with the United States and the
European Union.  Peru hoped to maintain the tari ff preferences of the ATPA and the Andean GSP,
and hoped to extend the time-period and, in the case of the ATPA, the range of products covered toinclude, in particular, clothing, which was Peru's main non-traditional export product.
143. The representative welcomed the figures indicating that illicit crops had been reduced by
66%, however, these were not final, and the battle for the definitive eradication of such crops had to
continue.  With respect to trade, in the framework of the FTAA Peru would create a free-trade zone
with the United States.  Peru was interested in deepening trade relations with the European Union.
144. Negotiations with MERCOSUR were at an advanced stage, and this would probably be the
first free-trade zone to be negotiated and consolidated with the CAN, opening up a market expandedby more than 300,000,000 inhabitants.
145. The discussant noted that Peru had been applying a social policy aimed at reducing poverty
and that an ongoing priority was to improve social indicators.  In order to improve the standard of
living of the population and to reduce poverty, su stained economic growth was indispensable.  He
recalled the need to take accompanying policies to correct eventual undesirable side-effects generated
by the trade liberalization process.  He welcomed Peru's support for comprehensive manageable
negotiations, and that it was open to the incorporation of new issues into the multilateral negotiations.
146. The representative of the European Union noted with satisfaction that Peru had shown interest
in trade facilitation issues and customs modernization, and welcomed in particular that Peru saw trade
facilitation as one of the issues to be included in a future round of trade negotiations.  Peru'sexperience with trade facilitation issues was a very interesting example, in particularly since Peru was
a willing and determined developing country.  The representative wondered whether Peru could makeWT/TPR/M/69
Page 25
a contribution under the Council of Trade in Goods presenting its experience in that area.  With
respect to preshipment inspection, he asked whether in the long term Peru could simply eliminate PSI
services and place the entire customs procedures under the Peruvian public services.
147. He requested additional details on Peru's relations with regional partners, in particular with
the Andean countries, and asked to what extent Peru was already involved in the Andean free-tradearea.  Given the objective of the adoption of a common external tariff by 2005, the representative
wondered whether the final objective of the Andean  countries was the implementation of a customs
union.  With respect to negotiations with MERCOSU R he requested clarification on the integration
process, in particular whether the current negotia tions were taking place between the two blocks,
between one block and each member of the other, or between each member of each block.
148. The representative of Peru confirmed that Peru had very open attitude to the WTO rounds but
that the issues of interest to Peru also included old issues that Peru would like to be settled in the
future round.  Peru and the Andean countries had a commitment to trade facilitation including at the
FTAA and APEC levels so that entrepreneurs could see tangible benefits in their day to day work.
Peru was interested in being able to participate an d support trade facilitating initiatives.  Peru would
be happy to share its experience with regard to this issue.  Peru was aware that this was an extremely
important area where benefits could be seen in a very short term.  Peru had conducted a successfulcustoms reform, although additional on-going work wa s needed.  With respect to Andean integration,
Peru participated in the free-trade area programme which was being worked on and would be
completed in 2005.  Peru did not participate in the common external tariff nor in the customs union.
The adoption of the common external tariff was a complex issue.  However, a common market,
implying the completion of a customs union, should be implemented by 2005.
149. Negotiations with MERCOSUR were handled at the Andean level.  However, negotiations
between the two blocks had been suspended in 1999,  and negotiations of agreements had been taking
place between the Andean Community and indivi dual members of MERCOSUR.  Peru understood
that these individual negotiations were only a transitional phase towards the negotiation of a free-trade
area between the Andean Community and MERCOSUR.  Negotiations with Argentina and Brazil hadalready been conducted and dates had been set for negotiations with Paraguay and Uruguay.
Negotiations between the two blocks should be initiated by the end of the year.
(2) T
RADE POLICY BY MEASURE
(i) Customs valuation and administration
150. In accordance with the commitments assumed by Peru, since 1 April 2000 Peru had been
applying the WTO Agreement on Customs Valuation to 100% of imported goods.  The National
Customs Superintendency, as the country's customs administration, had issued the regulationsnecessary for the proper application of the new customs valuation rules.  At the same time, various
training courses had been organized for customs administration staff and economic operators and
agents involved in foreign trade activities.
(ii) Origin
151. Certificates of origin had to be presented for imports of products subject to anti-dumping
measures in order to guarantee the proper application of such duties imposed by Peru.  This prevented
evasion through false declarations by the importer concerning the country or place of origin of the
products in question.  The exporting countries had to accredit the institution, persons or companies
granting such certificates in order to ensure their authenticity.  These certificates were provided on a
most-favoured-nation basis, i.e. they were required of all countries equally.WT/TPR/M/69
Page 26
(iii) Preshipment inspection
152. The preshipment inspection regime had been applied in Peru since 1992.  It had been
extremely useful to the country in avoiding under-valuation of imported goods, in particular, imports
for which there was no reliable database.  A number of goods had been excluded under the regime
either because of the value of the imports or because of the type of goods.  The regime hadcontributed to the process of modernization and improvement in the collection of customs duties.
153. The Government of Peru had decided to continue with preshipment inspection by specialized
companies following the implementation of the WT O Customs Valuation Agreement, adjusting its
activities in the customs valuation area accordingly.  The regime was applied following clearance of
the goods as a risk assessment.  The use of this regime was important for Peru, and no modifications
were planned.
(iv) Applied and bound tariff rates
154. Although there was a discrepancy between the bound level of 30% and the levels actually
applied, over the past six years there had not been a single case in which the tariff actually applied
exceeded the bound tariff.  On the contrary, tariff policy had dictated a reduction in the rates in force
for the sake of increased predictability.
(v) Surcharges
155. The agriculture sector was considered very sensitive in Peru in that it involved social groups
suffering from high levels of poverty, and it had been hard hit in recent years by the effects of the El
Niño phenomenon and the international crisis.
156. The additional tariff surcharge of 5% established by Supreme Decree No. 035-97-EF and
amended to 10% for certain meat products by Supreme Decree No. 141-99-EF were adopted in theframework of the Government's economic policy.  Supreme Decree No. 035-97-EF had not only
established the said surcharge, but it had amended tariff rates and had provided that the revenue
generated by the surcharge should go to the Agricultural Development Fund.
(vi) Variable specific duties
157. Variable specific duties had been established in the framework of the economic policy
adopted at the beginning of the 1990s, and there were no plans to modify them at present.  The
elimination of variable specific duties on wheat had taken place under that policy.  If the sum of the
ad valorem  tariff and the specific surcharge were to exceed the WTO bound rate, the bound rate
would be considered as a ceiling.
(vii) Other charges
158. The selective consumption tax was levied on certain goods, including vehicles.  With respect
to the import of used vehicles, the legislation in force established two selective consumption tax rates:55% for imported vehicles entering any part of the national territory;  and 0% for vehicles entering
through the Centres for Export, Transformation, Industry, Trade and Services (CETICOS).  In the
latter case, the differentiated rate had been established to generate growth centres in selected areas of
the country and to generate employment in those areas.
159. The representative pointed out that while used vehicles that had been repaired or
reconditioned in the CETICOS did not pay selective consumption tax, the valuation basis for
calculating the import tax on such vehicles was higher, since the costs of repairing and reconditioning
the vehicle were added on, and this was reflected in a higher tariff and general sales tax.WT/TPR/M/69
Page 27
(viii) Import licences
160. The Peruvian Government guaranteed the right of any person to carry out foreign trade
operations without prohibitions or non-tariff restrictions of any kind.  In other words, Peru did not
have any prior conditions, such as import permits or licences, with the exception of emergency
measures designed to ensure the health of the population, safety, and internal order, and measures tosafeguard national identity and the rights and obligations arising from international agreements.
161. With the exception of these cases, Peru did not have any procedures for the granting and
administration of import licences and permits.
162. In the case of goods whose import was restricted, additional requirements were normally
imposed such as entry in the import register (in the case of explosives), certificates or special
authorizations, etc.  In none of these cases were licences required in order to protect domestic
production.
(ix) Commission on Technical and Trade Regulations
163. Although Legislative Decree No. 807 had m odified the functions of the Commission on
Technical and Trade Regulations (CRT), the Commission continued to be responsible for supervising
the regulations, which established conditions or requirements, to determine whether they constituted
unnecessary restrictions to trade.  In other word s, the CRT continued to evaluate the regulations
issued by the various sectors in order to prevent the introduction of para-tariff restrictions, to conduct
investigations, and to foster coordination meetings to  ensure that the sectors themselves reversed the
measures.  These improvements had contributed to reducing the number of measures, introduced by
the sectors, that could unnecessarily affect trade.
164. Similarly, the Decree established a mechanism through which the Commission issued a report
transmitted directly to the Presidency of the Council of Ministers so that it could adopt the appropriate
measures.  All of this had resulted in more effective supervision.
(x) Government procurement
165. Peruvian public-sector procurement legislation and procedures were open and transparent,
with the exception of a slight preference towards domes tic suppliers.  It had to be stressed that these
preferences were temporary and limited in scope.  In the framework of its economic policy, Peru had
not considered the possibility of acceding to the WTO Plurilateral Agreement on Government
Procurement.
(xi) TRIMs and domestic content
166. As a rule, Peru did not impose any conditions with respect to the use of domestic inputs.  In
the case of milk, while there was a law establishing the use of domestic milk as an input, in practice
this legal provision was not applied, since milk production in the country was insufficient andimported milk was needed.
(xii) Export measures
167. As mentioned, in order to support the export sector, the Peruvian Government placed special
emphasis on the facilitation of foreign trade operations, streamlining formalities and getting rid of
unnecessary requirements.  Among other measures, the temporary admission and import regimes,which permit the import of inputs or raw materials and packaging materials with suspension of import
duties for processing or incorporation into the exported product, had been made more flexible.WT/TPR/M/69
Page 28
168. Similarly, to support the modernization of manufacturing enterprises in general, a system of
tariff splitting of capital goods had been introduced, which enabled importers to defer payment of
import taxes.
169. At the same time, the Government had streamlined the refund of internal taxes affecting the
production of exported goods by establishing lower cost guarantees, thereby providing producers withenough liquidity to continue producing.
170. The facilitation measures, added to the efforts made in the areas of trade promotion, training,
and technical assistance in diversifying and consolidating Peru's export markets, had given the export
sector a proper framework for development.
171. The CETICOS had been created on the basis of the former free zones, their scope being
limited to certain areas of the country, for the chief purpose of generating employment through the
establishment in those areas of enterprises involved in storage, distribution, repair and reconditioningof vehicles, and production of goods.  This mechanism had been directly responsible for creating
more than 3,000 jobs, as well as the employment generated by related activities.
(xiii) Anti-dumping
172. Peru had shown a certain amount of restraint in using anti-dumping measures and had done so
in strict conformity with the WTO Anti-Dumping Agreement.  Peru considered that such measures
should be used only to counter unfair practices, and never for protectionist purposes.  Thus, the only
anti-dumping duty in force since 1995 applied to a country that was not a WTO Member and was
therefore not subject to the sunset clause.
(xiv) Intellectual property
173. Peru had made considerable progress in the protection and promotion of intellectual property,
an area in which it had acted firmly and with determination.  Firstly, in Peru it had been possible to
patent pharmaceutical and chemical products before the entry into force of the WTO Agreement, so
that the transitional provisions in Article 70.8 and 70.9 of the TRIPS Agreement did not apply.
174. At the same time, the exclusion from patenting of pharmaceutical product inventions on the
WHO list of essential drugs was justified under Article 65 of the TRIPS Agreement:  Peru had beenentitled to an overall period of five years during which it had not been obliged to apply the Agreement
(paragraphs 1 and 2), and an additional period of five years to delay the application of the TRIPS
Agreement with respect to technology sectors (in this case pharmaceuticals) not protectable in its
territory on the date of application of the Agreement (paragraph 4).  Consequently, Peru could
suspend the application of the Agreement with respect to the patenting of pharmaceutical products on
the WHO list for ten years (until 2005).
175. As regards parallel imports, the TRIPS Agreement left the regulation of international
exhaustion up to domestic legislation.  There was no obligation under the TRIPS Agreement to
prohibit the import of genuine products.  Andean Decision 344 and Legislative Decree 823 on
Industrial Property provided for a system of international exhaustion for patent rights.  The draft
amendment of Decision 344 did not provide for any substantial changes to the Decision, and the
system of international exhaustion of patent rights had been maintained.
176. On the other hand, the specific regulations governing border measures were being
incorporated into the new Andean Decision, which replaced Decision 344 and would be approved in
the next few weeks.  These measures were consistent with the TRIPS Agreement.  Without prejudice
to this fact, there were provisions in the legal system in force, both administrative and penal, designedWT/TPR/M/69
Page 29
to safeguard the rights of the owners of industrial property rights and copyrights against infringing
goods (pirated or counterfeit) entering through customs.
177. Regarding national treatment of artists and performers, Article 1 of Legislative Decree 822
(Copyright Law) expressly stipulated that protection was granted regardless of nationality or domicile
of the producer or owner of the publication or broadcast.  In other words, local and foreignphonographic productions were ensured the same level of protection regardless of their origin.
Article 48 of the said Law placed a limit on the author's right over reproduction of a work in cases
where a copy was made exclusively for personal use.  The subject of topographies of integrated
circuits was being dealt with in the draft amendment to Andean Decision 344, to be approved shortly.
178. Finally, Peru was engaged in a constant battle to combat piracy and counterfeiting.  The latest
measures adopted included the creation of a Co mmission against Adulteration, Falsification and
Piracy, bringing together a total of 17 entities including various unions, consumers' associations andpublic institutions.  Its objective was to organize coordinated action against piracy and to develop and
disseminate throughout the country a sense of respect for intellectual property.  To that end, a number
of coordinated inspection activities were planned together with seminars and announcements in the
different media concerning the protection of intellectual property.
179. As a result of these efforts, piracy had been on the decline in the country.  According to the
statistics of the Business Software Alliance and Motion Picture Association, the percentage of pirated
goods, chiefly films and software, had decreased considerably.  Pirated software had decreased from
98% in 1993 to 62% in 1999, while in the case of films, the figure had decreased from 100% in 1992
to 52% in 1999.
180. Peru was convinced that the educational campaigns conducted at all levels to promote respect
for intellectual property rights would have a positive impact in the medium term, since it was the
consumers themselves that would be rejecting pirated goods.
181.  The discussant asked whether the Peruvian Government had any plans to eliminate the trade-
related investment measure notified to the WTO, which was in any case not applied.
182. The representative of New Zealand appreciated the information provided about the sensitivity
of the agriculture sector in Peru and the difficulties faced as a result of El Niño and the financial
crisis, however she urged Peru to consider the elimination of the surcharges affecting agricultural
products.
183. The representative of Peru noted that the elimination of the trade-related measure had not
been considered, in particular since it was a fairly sensitive issue for domestic producers.  With
respect to preshipment inspection, Peru believed th at the mechanism would be maintained since it was
very important in the context of the customs modernization process, avoiding fraudulent declarationsof value.  Furthermore this mechanism was strictly in compliance with WTO Customs Valuation
Agreement.  On variable specific duties, Peru had no intention of eliminating these measures.
(3) T
RADE POLICY BY SECTOR
(i) Agriculture
184. The representative of Peru stated that emergency zoo-sanitary and phytosanitary measures
adopted in the country were aimed at establishing a proper legal framework for specific action to avert
invasions and entry of pests or diseases that were not present in the national territory.  These measures
were temporary and could be modified or repealed if there was sufficient technical information to
show that the risk had been controlled or reduced to an acceptable level or that the zoo-sanitary or
phytosanitary situation had changed in such a way as to render the measure technically unnecessary.WT/TPR/M/69
Page 30
185. For example in the case of rice, Supreme Decree Number 007-97-AG, published on
6 May 1997, stipulated that the import into Peru of rice grains from countries affected by
Khapra beetle (Trogoderma granarium Everta) should be contingent on the results of the
corresponding pest-risk analyses conducted by the national health authority, SENASA.  Thus, any
country affected by the pest wishing to export this product to Peru could ask the PeruvianGovernment to conduct such an analysis.
186. Guidance for the preparation of these pest-risk analyses was provided by the FAO Guidelines
for Pest Risk Analysis (1996).  These regulations essentially established that the study should begin
with the identification of the risk, then assess it s magnitude, and finally identify the phytosanitary
measures necessary to ensure proper sanitary protection for the country in respect of the quarantine
pest.
187. These measures might include such elements as verification at origin, certification in the
fields in which the crop was produced and the places in which it was gathered, processed and stored,
phytosanitary certifications at origin, inspection upon entry into the country, proper packaging and
packing conditions, quarantine treatment, etc.  In other words, the health authorities could authorize
the import of the product only when Peru had been ensured a proper level of protection with respect to
the pest.
188. In the case of coca, Peru was doing its utmost to reduce its cultivation, developing various
programmes for the promotion of native and alternative products.
(ii) Fishing
189. Peru owed the development of its fishing activities to the high profitability of its pelagic fish
industry producing fish-meal and fish-oil, and not to  government support measures.  The combination
of the actual fishing (fleet) and processing (plant) activities was able to maintain profitability, even
though there was an overcapacity with respect to the relative scarcity of marine resources.
190. Since the beginning of the 1990s, fishing activities had grown, fuelled by a recovery of
marine resources and, like other industries, the availability of foreign capital.  Both factors had
enabled many fishing enterprises to grow by increasing their level of indebtedness, at a pace that hadbegun to accelerate in 1994 when the fishing sector had reached its maximum production level.  In the
wake of these favourable developments, the hold capacity of the fleet had also increased together with
the installed production capacity of the industrial plants.
191. This over-capitalization had not encountered any problems until 1997, since it had been
helped along by the increasing prices of fish-meal and the availability of capital, which had enabled
the sector to pay off its interest and refinance its debts.  However, since the end of 1997, with the
El Niño phenomenon and the financial crisis, fish-meal and fish-oil production had been among themost affected sectors.  This was reflected in increased interest and a growing need to refinance
company debts.
(iii) Mining and energy
192. The first quarter of year 2000 highlighted privatizations and concessions in the mining and
energy sectors.
193. A call for bids for the second phase of the Camisea project was expected in June, including
transport and distribution, for which the pre-qualified enterprises were forming consortia.WT/TPR/M/69
Page 31
(iv) Services
194. The representative of Peru noted that the principle of reciprocity in maritime services and
financial services had been raised.  While this principle derived from the Constitution of Peru, it had
never been applied either in financial or maritime services.  Following the unilateral liberalization of
cargo transport, maritime services, in particular, were essentially being handled by vessels operatingunder foreign flags, as the domestic shipping industry was very small.
195. The reason for Peru's horizontal restriction under mode 4 (movement of persons) regarding
the maximum number of foreign workers who can be employed in enterprises in Peru was to favour
domestic employment, particularly in view of th e high levels of poverty and underemployment.
196. Peru had not tabled more commitments in respect of professional services because of the lack
of familiarity with the particular features of certain professional services due to the novelty of the
subject at the time the offers were made, coupled with local sensitivity to further opening up.Nevertheless, Peru would consider expanding its schedule of commitments, taking account of the
offers submitted by its trading partners.
197. Regarding participation in trade agreements invo lving services, Peru participated fully in the
General Framework of Principles and Rules for Li beralizing the Trade in Services in the Andean
Community (Decision 439, 1997), a framework that en visaged the creation of a free-trade area for
services in 2005.
198. On financial services and the reservation concer ning the making of claims through diplomatic
channels, under Peruvian law this applied equally to domestic and foreign companies (national
treatment), and indeed, the objective of the rule was to ensure that any complaint essentially took
account of that legislation and Peru's commitmen ts under the WTO.  This meant that a foreign
financial entity had to dispense making complaints through diplomatic channels in respect of its
business and operations within the country.
199. With respect to Peru's position concerning the services negotiations, in view of the extensive
opening up of the services market in Peru and the far-reaching offer made within the framework of the
General Agreement on Trade in Services (GATS), Peru was ready to participate in a forthcominground of negotiations where it would be able to improve its commitments in accordance with the
offers made by its trading partners.
200. The discussant noted the tremendous efforts Peru had made to reduce the cultivation of coca,
and wondered whether any delegation wished to comment on this issue, in particular with respect to
the large amount of funds needed.  He requested clarification on the principle of reciprocity limiting
Peru's GATS commitments.
201. The representative of Japan wondered whether the Peruvian Government implemented policy
measures to help the fishing sector overcome the over-capacity and over-fishing problems.  With
respect to the services sector, within the framew ork of the Andean Community, Peru was trying to
achieve a free-trade zone for services by 2005.  He requested a general policy statement explaining
Peru's position on this effort within the Andean Community and the services negotiations initiated
within the framework of WTO.
202. The representative of Peru pointed out that the Peruvian services sector was already
significantly liberalized, and that given this, Andean regulations tended to encourage others Members
to achieve similar levels of liberalization.  He also noted that Peru would have no objections to
negotiate further services liberalization in a new WTO round.  As regards reciprocity, this principle
was covered by the Constitution and the Banking Law for matters of public interest;  this principlehad not been used.  Finally, with respect to the concerns raised by Japan on fishing issues, Peru was
concerned with the conservation of fish resources.WT/TPR/M/69
Page 32
VI. CONCLUDING REMARKS BY THE CHAIRPERSON
203. We have had very open and constructive discussions.  Members commended Peru for the
consolidation of its economic stabilization and liberalization programme implemented since the early
1990s.  Despite external shocks, including El Niño and international financial crises, Peru has
achieved significant growth, sharply reduced inflation and attracted considerable foreign capital.  Nodoubt major factors in this performance have been sound macroeconomic policies, continued
liberalization of Peru's trade and investment regimes, the privatization process and efforts to develop a
reliable regulatory framework.
204. Members viewed Peru's trade and investment regimes as relatively open.  They noted that the
average applied tariff has been reduced since the previous Review and that the use of non-tariff
barriers remained confined.  The liberalization of investment rules and the establishment of a
favourable legal framework for the promotion and protection of investment have had impressiveresults, with foreign direct investment increasing five-fold since 1993.  Members welcomed Peru's
strong commitment to the multilateral trading sy stem.  In particular they noted Peru's full
implementation of the Agreement on Customs Valuation in April 2000.  They also welcomed Peru's
efforts to liberalize services activities, in particular the financial and telecommunication sectors.
205. Against this positive assessment, Members raised some concerns.  Members noted that the
application of tariff surcharges and variable specific duties on several agricultural products acted as a
disincentive to trade.  Members also invited Peru to consider undertaking new multilateral
engagements to close the wide gap between applied and bound tariff rates.  Some urged Peru to sign
the plurilateral Agreement on Government Procurement.  In relation with the latter, Members noted
that despite the recent adoption of a new legal framework, some provisions departed from the nationaltreatment principle.
206. Peru provided orally and in writing detailed clarifications on a number of additional features
of its trade and investment regime, including:
- importance of concessions granted under preferential regimes such as the EU Generalized
System of Preferences and the U.S. Andean Trade Preference Act;
- customs valuation and the preshipment inspection regime;
- revision of final anti-dumping duties, and non-preferential certificates of origin for goods
subject to these measures;
- fiscal incentives, in particular under the new free-zones regime;
- lower excise tax on used vehicles imported through the new free zones;
- local-content and trade-related investment measures;
- INDECOPI's responsibilities, including the Commission on Technical and Trade Regulations;
- competition policy practices, in particular with respect to interconnection rates to the fixed
telephony;
- participation in regional fora;
- the intellectual property regime;
- problems faced by the fishing industry;
- suspension of rice imports;
- schedule of commitments under the GATS Agreement;  and
- conditions applying to professional services provided by foreigners.WT/TPR/M/69
Page 33
207. Members appreciated the clarifications and responses provided by the delegation of Peru.
208. In conclusion, it is my feeling that this has been a very successful second Review of Peru's
trade policies.  Economic reform has paid off in  the form of growing GDP, trade, and investment.
Nevertheless, this has only been sufficient to brin g real GDP per capita back to its relatively modest
level of the mid 1960s.  I believe that the view of  several Members that there is need to achieve
further improvements in the quality of life of the Peruvian people deserves Peru's attention.  I am
pleased to note that this has met with concurrence from the Peruvian delegation.  It was to this end
and to secure the flexibility necessary to withstand and ride out future external shocks that Members
encouraged Peru to press on with its domestic reform process including further trade liberalization.
As Peru pursues such policies, I hope that other Members will be able to support Peru's efforts by
extending open access for its exports.WT/TPR/M/69
Page 34
ANNEX I
RESPONSES PROVIDED BY PERU TO ADVANCE WRITTEN
QUESTIONS AND TO OTHER QUESTIONS RAISED
DURING THE MEETING
ARGENTINA
The INDECOPI Commission on Technical Regulations
By eliminating the Commission's monitoring and qualifying powers the system appears to allow a
wide margin of discretion in the adoption of measures that could become technical barriers to trade.
It is therefore appropriate to inquire about th e existence of other supplementary mechanisms.
Although Legislative Decree No. 807 modified th e functions of the Commission on Technical
and Trade Regulations (CRT), the latter continues to be responsible for monitoring measures that
establish conditions or requirements so as to determine whether they constitute unnecessary
restrictions on trade.  In this connection, the CRT has continued to appraise regulations issued by thedifferent sectors with a view to preventing the establishment of para-tariff restrictions, has carried out
investigations and has promoted coordination meetings in order that the sectors themselves may
review such measures.  These changes have helped to reduce the number of measures adopted by the
sectors that might unnecessarily affect trade.
This Legislative Decree also established procedures enabling the Commission to issue a
report submitted directly to the presidency of the Council of Ministers so that the latter may take the
appropriate action, all of which has made supervision more effective.
TRIMs and local content
In view of the apparent non-application of the measure it seems appropriate to ask for further
information about the reasons for maintaining it in force.
In general, Peru does not place conditions on the use of domestic inputs.  Although there is a
legal provision requiring the use of domestic milk as an input, in practice it is not applied since local
milk production is insufficient and milk has to be imported.  Steps are being taken to revise thismeasure.
BOLIVIA
What is the point of the tariff surcharges on 352 agricultural products and what measures have been
taken to prevent the distortion of trade?
In Peru, the agricultural sector is considered very sensitive since it includes various
impoverished social groups, which in the last few years have also suffered from the effects of the
recent international crisis and the El Niño phenomenon.
The 5 % tariff surcharge introduced by Supreme Decree No. 035-97-EF and raised to 10 %
for certain meat products by Supreme Decree No. 141-99-EF is a measure adopted within the context
of the Government's economic policy, in accordance with Peru's commitments to the WTO.
Supreme Decree No. 035-97-EF not only introduced the above-mentioned surcharge but also reduced
the two tariff levels from 25 % to 20 % and from 15 % to 12 % respectively.  It also called for income
from the tariff surcharge to be channelled into the Agricultural Development Fund, which is used toWT/TPR/M/69
Page 35
support the anti-poverty campaign and promote agricu ltural employment with a view to raising the
standard of living of those involved in the sector.
Although questions have already been raised in the Committee on Subsidies and Countervailing
Measures concerning the drawback sy stem for small exporters, it would be useful to know whether it
has already had a perceptible effect on job creation and the competitiveness of these enterprises.
The purpose of the simplified drawback procedure is to refund the duty paid on imported
inputs incorporated in exports.  This measure has made possible the development of small and
medium-scale export businesses which in its turn has contributed to job creation.
Have the conditions of access to international markets favoured the policy of substitution of
alternatives to coca leaf cultivation? If so, then under what conditions?
Access to international markets for products developed under crop substitution programmes
has been facilitated by the unilateral granting of tariff concessions in connection, for example, with
the United States Andean Tariff Preference Act and the European Union's Generalized System ofPreferences – Andean, mechanisms introduced to help countries combat the illicit drugs traffic.
These systems are intended to enhance the competitiveness of substitute agricultural products
aimed at these markets and, together with the model applied under Peru's Alternative Development
Programme (PDA), one of the mechanisms of the anti-drugs campaign, to increase production andproductivity, improve product quality and business management and facilitate access to credit,
thereby making export markets increasingly accessible  to these products.  At present, approximately
80% of Peruvian exports enter the United States duty-free under various preference schemes, the
corresponding figure for the European Union being 93%.
The PDA seeks to replace illegal crops with alternatives capable of generating a genuine and
sustainable lawful economy. Coca plantations are being replaced by traditional crops such as coffee
and cacao, as well as by pulses, palm hearts and fruit trees.  In 2000, the area covered by the PDA
amounts to 25,524 hectares, including 19,422 planted in coffee, 4,482 in cocoa, 900 in pulses, 320 in
palm hearts and 400 in fruit trees, directly benefiting 12,956 farmers and generating 9,995 additional
jobs.
CANADA
What is the legal status of an investment in Peru  made by a foreign investor for which no stability
agreement has been signed with the State/CONITE w ith respect to national treatment, transfers of
returns out of the country and accessibility to foreign currency at market rate?
Peru applies national and most-favoured-nation treatment to foreign investment in the
country.  Foreign investors enjoy the same rights and have the same obligations as domestic investors,
since no discrimination is made between the treatment of national and foreign investors.
Foreign investors do not require prior authorization nor have to fulfil any other requirements
to carry out their investment operation.  The requirement to be listed on the foreign investment
register is purely for statistical purposes.
The stability agreement is an option not an obligation, for private, domestic or foreign
investors which meet the legal requirements.  It offers guarantees of stability of legal treatment of the
investment operation in the following respects:
- Income Tax Regime;
- Regime of Free Availability of Foreign Currency and Remittance;WT/TPR/M/69
Page 36
- Labour Regime;
- Export Promotion Regime;
- the stability of non-discriminatory treatment is also guaranteed, even though this
principle is already set forth in the Constitution.
Any investment, whether domestic or foreign, not covered by a stability agreement is subject
to possible changes that may be made by the Government in the above regimes on a non-
discriminatory basis as between domestic and foreign investors.
Peru is a Party to the International Centre for the Settlement of Investment Disputes (ICSID)
Convention.  Can any investment-related dispute involving the Peruvian Government, including those
related to a foreign investment covered by a stability agreement signed with the State/CONITE, besubmitted by a foreign investor to ICSID for arbitration?
The Stability Agreements provide for a dispute settlement mechanism in line with arbitration
procedures.  Foreign investors wishing to have recourse to international arbitration may apply for this
option once a stability agreement has been concluded.
CONITE has signed 292 stability agreements with foreign investors and only in a few cases
have foreign investors applied for international arbitration to settle disputes.
In 1998, Peru eliminated the surcharge on a variety of agricultural products including wheat and
wheat products, a move which was interpreted as its continued willingness to liberalize its
international trade.  In August 1999 however, the Peruvian Government added two more lines to be
covered by the tariff surcharges and increased the surcharge to 10% on meat imports.
Given that these surcharges now cover some 350 products, reducing trade in these goods, what plans
does Peru have to eliminate these surcharges?
In Peru, the agricultural sector is considered very sensitive because it includes extremely poor
social groups, who in recent years have also suffered severely from the international crisis and the
effects of El Niño.
The 5% tariff surcharge established by Supreme Decree No. 035-97-EF and increased to 10%
for certain meat products by Supreme Decree No. 141-99-EF, is a measure adopted within the
framework of the government's economic policy.  Supreme Decree No. 035-97-EF not only
established this surcharge but also altered tariff rates and provided for the revenue from the surcharge
to be channelled to the Agricultural Development Fund.
What is Peru's intention with respect to seeking status as an observer and acceding to the Agreement
on Government Procurement?
Peruvian rules and procedures on this issue are open and transparent;  Peru has not considered
the possibility of acceding to the plurilateral Agreement on Government Procurement, nor ofparticipating as an observer.  Nevertheless, we think that transparency of government procurement
could be one of the issues to negotiate in a future round of negotiations.
The Secretariat Report notes that Peru maintains a "registry of disqualified contractors".  What are
the conditions resulting in a supplier being placed on the registry?  Once a supplier is placed on thelist of disqualified contractors, is there a process for being qualified once again?
The conditions resulting in a supplier being listed in the registry of disqualified contractors
are specifically enumerated in Article 177 of Supreme Decree 039-98-PCM, dated
28 September 1998:WT/TPR/M/69
Page 37
"Article 177  – Without prejudice to the imposition of penalties of a contractual nature to
which the contractor may be liable, the court shall impose the administrative penalty of temporary or
definitive disqualification on suppliers, bidders, and contractors who:
(a) having been awarded a contract have wi thout justification failed to sign it;
(b) have without justification failed to fulfil the obligations derived from the contract,
giving rise to its cancellation;
(c) have finished a contract having accumulated the maximum penalty for delay as
established in the contract;
(d) have signed a contract with the government despite being barred from doing so in
accordance with Article 9:II of the Law;
(e) have signed a contract with the government despite being disqualified from doing so;
(f) have participated in restrictive practices, according to the provisions of Article 10 of
the Law;
(g) have subcontracted without authorization by the government agency responsible or
with firms which are barred or disqualified from contracts with the government;
(h) have furnished forged documents or sworn statements containing false information to
the Authorities, to the Council, or to the National Registry of Contractors;
(i) have signed a contract, in the case of physical works, without being listed in the
National Registry of Contractors or being listed with a different competence or
speciality to that authorized;  or
(j) have failed to fulfil the affidavit referred to in Article 33 and in the last paragraph of
Article 40.
Suppliers, bidders or contractors falling under sections (a), (b), (c), (d), (e), (f) and (g), shall
be temporarily disqualified from government contracts for a period of no less than one (1) year.
Suppliers, bidders or contractors falling under sections (h), (i) and (j), shall be temporarily
disqualified from government contracts for a period of no less than two (2) years.  The Council, may,
through a resolution setting out the reasons therefor, reduce the penalty below the minimum limit
established for each case where it finds that there are extenuating or exonerating circumstances as to
the responsibility of the offender.
Disqualifications shall be applied accumulatively.
When the same supplier, bidder or contractor has been temporarily disqualified for periods
amounting to more than twenty-four (24) months over  the course of sixty (60) consecutive months, it
shall be permanently disqualified from government contracts".
The Superior Council for Government Procurement ( Consejo Superior de Contrataciones y
Adquisiciones del Estado  – CONSUCODE), which is in charge of the Registry of  Disqualified
Contractors, removes suppliers, bidders or contractors from this register when they have completed
their period of temporary disqualification (Supreme Decree 039-98-PCM Art. 185 – Law, andArticle 33 of the Regulation of the National Registry of Contractors and the Registry of Disqualified
Contractors, Ministerial Resolution 043-99-PCM).
We note that the regulatory reform process in Peru  includes the establishment of a number of sectoral
regulatory entities to guarantee the efficient allocation of resources in sectors with natural monopolycharacteristics or requiring highly specialized re gulation.  Does INDECOPI (National Institute for
the Defence of Competition and the Protection of Intellectual Property) have a rule in advocating the
adoption of pro-competitive policies, decisions, guidelines, etc.  in such sectors and if so, what is the
nature and extent of this role?WT/TPR/M/69
Page 38
Through the Free Competition Commission, INDECOPI has the role of promoting the
adoption of pro-competitive policies in all sectors of the economy without exception, including those
in which a specialized regulatory body exists.  It  fulfils this role through various information
activities, market studies, responding to queries and giving its opinion on competition issues through
government agencies and regulatory entities.
INDECOPI also has the task of investigating and punishing anti-competitive practices in all
sectors of the economy, including those in which a regulatory body exists, with the sole exception of
the telecommunications sector, in which market monitoring and punishment of competition offences
are the direct responsibility of a specialized regulatory body, OSIPTEL.
There is also a continuous exchange of information between the regulatory bodies and
INDECOPI, which enables them to remain in contact and so reach proposals with the maximum
regulatory transparency.
INDECOPI's mandate includes both  anti-trust and trade remedies.  We note that it is not uncommon
for conflicts to arise between anti-trust policy and enforcement and trade remedy policy andenforcement.  Given INDECOPI's dual responsibility for both anti-trust and trade remedies, are there
any measures in place to respond to conflicts that may arise?  Does one policy or law have
precedence over the other?
The laws and commissions deciding anti-dumping and competition cases are separate,
independent and autonomous in their decision-making.  The fact that both commissions are part of
INDECOPI enables interaction and exchange of in formation to take place between the commissions.
To investigate anti-dumping and anti-subsidy cases, an analysis is made of the structure and behaviour
of the market, which is taken into account when an assessment is made of the possibility of the
existence of anti-competitive practices.
INDECOPI's Competition Tribunal acts as a higher administrative tribunal in order to resolve
dumping, subsidies and competition-related cases.  An advantage of this system is that while the
Tribunal respects the policy objectives and principles of both instruments, it also includes in its
analysis the effect of the requested measures on consumers.  This fosters coordination between both
commissions and enables a balance to be struck so that the trade remedy instruments are used in a
technically sound and responsible manner.
No policy or law exists indicating an order of priority between competition policy and trade
remedy policy.
INDECOPI is in charge of investigating restrictive competition practices in all sectors with the
exception of the telecommunications sector which is under the jurisdiction of the OSIPTEL.  Can
INDECOPI play any kind of role, such as an in tervener, in investigations of OSIPTEL regarding
restrictive competition practices in the telecommunications sector?
OSIPTEL has complete autonomy to take decisions without the intervention of any other
State institution.  INDECOPI does not have any role in the investigations carried out by OSIPTEL.
However, various types of consultations are held between the two institutions (OSIPTEL and
INDECOPI) and there is permanent coordination in or der to exchange experience with regard to the
methodology of market analysis and th e determination of dominant position.
The Secretariat Report states that "the anti-trust law regulates anti-competitive behaviour rather than
market structure, typifying specific practices as abuse of dominant position or as restrictive.  Thus,
economic concentration is not regulated in Peru, apar t from the merger review process in the electric
power sector".WT/TPR/M/69
Page 39
Given that Peru's competition law has been in  place for some time now, and INDECOPI has had
some enforcement experience, has there been any discussion about the necessity for and possibility of
incorporating broader economic concentration review provisions in the anti-trust law?
The decision not to control mergers responds to the current situation and the size of the
Peruvian economy.  Peru is trying to promote investment and economic growth, by attracting
domestic and international capital.  In this context INDECOPI is of the opinion that control of
mergers would be an unnecessary obstacle, particular ly considering the characteristics of the Peruvian
economy.  Furthermore, control of mergers would require allocating resources which at the moment
we think should be used for other purposes.  In view  of this, to include an ex-ante merger review in
the anti-trust law is not something that is planned fo r the near future.  Nevertheless, it is an issue that
INDECOPI is continuing to study and examine various fora and seminars.
Peru has taken giant steps towards enforcement of intellectual property protection, which has been
positively seen and supported by other WIPO member States.  We are aware that an effective and
efficient regime to regulate intellectual property has become a major issue in Peru, particularly given
the increase of foreign investment in the country.
Will the Peruvian Government take further measures to improve enforcement of its intellectual
property legislation, particularly in view of the increasing levels of piracy in the country?
Day in, day out, Peru is making great efforts to combat piracy and forgery, many of which are
public knowledge, while others take place in the strictest confidence.  Amongst recent measures
adopted, a Commission to Combat Adulteration, Forgery and Piracy has been created, bringing
together a total of 17 entities including various trade and consumer associations and public
institutions.  Its aim is to carry out coordinated activities to combat piracy and develop and spread
throughout the country a culture of respect for intellectual property.  With this in mind, plans arebeing made for coordinated inspections, seminars and publicity relating to the issue of intellectual
property protection in various media.
Furthermore, INDECOPI carries out an active education campaign at all levels to foster
respect for intellectual property rights, which we are sure in the medium term will have positive
results, since consumers themselves will reject pirated products.
As a result of these efforts, levels of piracy have been reducing in the country.  According to
statistics from the Business Software Alliance and Motion Picture Association, the percentage of the
pirate market, mainly affecting films and software, has reduced considerably.  Thus in software sales,
the pirate market has shrunk from 98% in 1993 to 62% in 1999 and in the case of films it has fallen
from 100% in 1992 to 52% in 1999.  Although we know that any calculation of piracy cannot beaccurate, these statistics do indicate that piracy in Peru is not on the increase.
Canada commends Peru for the important steps it has taken to encourage telecommunications
competition, however, OSIPTEL, the regulatory body,  has not yet acted on the interconnection tariff
measure nor on removing per minute charges for Internet access.  We note that Peru has adopted theobligations in the Reference Paper on Basic Telecommunications, requiring interconnection be
ensured at cost-oriented rates.  What is Peru's approach to ensuring compliance with these
requirements?
Peru is most concerned to foster competitio n in the telecommunications sector in order to
achieve greater competitiveness in the domestic production sector and to benefit end users.
With the aim of reducing the uncertainty which could be generated by negotiation with the
dominant operator, in the initial stages of liberalization, OSIPTEL established a maximum or default
"interconnection charge" as a referential and temporary measure.  A comparison of charges in theWT/TPR/M/69
Page 40
region was made in order to determine this charge.  OSIPTEL has established the necessary standards
in order to facilitate the signing of interconnection contracts and it is currently setting the applicable
interconnection charges in accordance with the commitments under the Basic Telecommunications
Reference Paper of the WTO and the aforementioned standards.
OSIPTEL's approach has been to encourage the negotiation of agreements between parties
within the framework of its WTO commitments, including transparent and reasonable cost-based
charges.
Furthermore, per-minute charges for Internet access are coming down in view of the greater
competitiveness of the fixed telephone sector.  At present, Internet access, long-distance calls and
other telecommunications services are offered by other large providers such as Firstcom andBellsouth, and it is expected that the market will continue to grow and telecommunications services
costs in general continue to fall.
There are no restrictions in Peru's GATS Schedule regarding the use of satellites to provide
telecommunications services.  What are the authorization process and conditions, if any, for a foreignsupplier of satellite services to provide services in Peru?
To provide any public telecommunications service in Peru, regardless of the media used,
providers are required to obtain a concession or, in the case of value-added services, to obtain a
registration.  In order to do this, they must fulfil the requirements and follow the procedure providedfor in the legal framework for telecommunications.  This framework does not establish restrictions on
the nationality of public telecommunications services firms, other than the condition that foreign
businesses are required either to be domiciled in the country or name a representative legally
domiciled there.
CZECH REPUBLIC
Historically, the Republic of Peru has participated in the processes of hemispheric integration, mainly
in the region of Latin America.  Thus, it is a me mber of the Inter-American Development Bank (IDB)
and the Latin American Integration Association (ALADI), the founder and host of the Andean Pact
and has taken an active part in the negotiations concerning the creation of a free-trade area of the
Americas (FTAA).  On the other hand, the structure of its external trade indicates that the share ofLatin America, especially the member countries of the Andean Community (CAN), in the total volume
of Peru's foreign trade is relatively small, as confirmed by the Secretariat Report.
Within the context of economic restructuring, is the Peruvian Government expecting an increase in
trade with the countries of the Andean subregion?  If so, under what conditions, and what measures
and/or instruments is it thinking of using to achieve this goal?
Peru's objective is to diversify its exports, especially those which call for greater value added.
This process involves various factors, including macroeconomic stability, improvements in services
such as ports and airports, general investment and, in particular, investment in transport infrastructureand the development of human resources.
Insofar as these factors make for greater comparative advantages and economies of scale can
be achieved, Peru will be able to offer a more varied range of exports, thereby creating more jobs and
promoting closer intersectoral linkage, in both goods and services sectors.
In this context, the Andean Community's share of our trade has been increasing, reaching
about 10.5% in 1999. However, it should be noted that the CAN is our main market for value-added
products.WT/TPR/M/69
Page 41
EUROPEAN UNION
What plans do the Peruvian authorities have to ph ase out preshipment inspection completely and by
when?
Pre-shipment inspection is a system that has been applied in Peru since 1992.  The system has
been very useful in preventing fraudulent declarations of the value of imports, particularly those for
which there is no reliable database.  Certain goods have been excluded on the basis of import value or
type.  The system has helped to modernize and improve the collection of customs duties.
The Government of Peru has decided to continue with preshipment inspection by verification
firms following the implementation of the WTO Agreement on Customs Valuation, while adjustingtheir participation in the area of customs valuation.  The system is used after clearance of the goods
for risk-assessment purposes.
As the system is important for Peru, there are no plans to change it.
It seems that tariff surcharges between 5 and 10 % introduced in 1997, initially as a temporary
measure, have become more or less permanent.  The EU is wondering whether the maintenance of
these surcharges is necessary since they affect a number of products of interest to the EU.  What are
the prospects of Peru removing these surcharges or phasing them out?  Is there a deadline for such a
process of phasing out?
The tariff surcharges were introduced in the context of the economic policy adopted by Peru
and for the time being no changes are contemplated due to the fact that the agricultural sector is a
sensitive one, and includes social groups living in extreme poverty.  These people suffered severely
from the recent international crisis and the effects of the El Niño phenomenon, and need such apolicy.
Does Peru have any plans to join the Plurilatera l Agreement on Government Procurement, and if so,
by when?  If this is likely to occur, what steps does she have planned to change her national
legislation to bring it into line with the fully comprehensive nature of the Plurilateral Agreement?
(For example, elimination of her 10% favouring of domestic suppliers.)
Peru has no plans to join the Plurilateral Agreement on Government Procurement.  It should
be pointed out that the 10% favouring of domestic suppliers is a temporary measure, in force until
July 2000.
Could Peru explain how far decisions on, for ex ample, requests for anti-dumping action from
Peruvian industry take account of competition issues in practice?  What are the advantages and
drawbacks of Peru's organizational arrangeme nts, i.e. implementation of anti-dumping and
competition law through the same body?  Could this constitute a useful model for other countries?
The arrangement in Peru is to combine the competition authority and the authority responsible
for investigating cases of dumping and subsidies in the same body (INDECOPI) under the umbrella,
as the administrative body of second instance, of the competition protection division of the
INDECOPI Tribunal.  The administrative body of second instance issues common criteria and
guidelines for both authorities.  For this reason, the Anti-Dumping and Subsidy Commission cannot,
in its investigations, avoid consideration of the effects of competition on domestic producers and themarket in general.  In all its anti-dumping in vestigations, INDECOPI complies strictly with the
provisions of the WTO agreements.  Specifically, in determining injury and causal relationships it
uses concepts such as "non-injurious price", the existence of barriers to domestic market access, the
situation of other domestic competitors, and the effects of imports from third countries.WT/TPR/M/69
Page 42
The advantage of this structure is that it makes it possible to avoid generating distortions in
the market and prevent the use of anti-dumping and countervailing measures such as protectionist
instruments which prevent access by new competitors to the domestic or regional market in order to
consolidate the dominant position of certain enterprises.  The negative effects of this would be
reflected in the intermediate and final consumers which INDECOPI is also responsible for protectingthrough the Commission for Consumer Protection.  The Peruvian Government recommends the use of
these criteria to the extent that they help to promote competition in Peru.
INDECOPI's organizational model allows a numbe r of synergies between different areas and
economies of scale, since it brings under the same roof issues such as competition, anti-dumping,
subsidies, safeguards, market access, technical standards, technical barriers to trade, consumer
protection, advertising, unfair competition, capital restructuring and intellectual property.  Theadministrative and management costs are lower than where there are separate bodies for each issue
and this is very important when trying to reduce the size of the public sector.  Furthermore, the
INDECOPI model includes the Economic Studies Section, as a centre for support and coordination of
the work of the other sections of INDECOPI.  This allows savings on resources and leads to a
comprehensive vision of competition issues, includin g protection of intellectual property.  From the
point of view of enterprises and consumers, INDECOPI has brought about a reduction in transaction
costs by helping to simplify State administration.  Other countries in Latin America are interested in
learning about and emulating the INDECOPI model.
In INDECOPI's view, the trade liberalization and structural reforms that have taken place in
Peru are only the first step, which must be follow ed by an effort to strengthen the competitive
environment in the market and promote competition.  Through its various functions and areas,
INDECOPI promotes competition and competitiveness among enterprises, which are regarded as key
factors in growth and development.
Could the Peruvian authorities clarify the system of fiscal incentives they operate and comment on the
scale of aggregate support provided? (paras. 131 to 135)
The system of fiscal incentives is described in detail in section 4(iv), paras. 131 to 135 of the
Chapter on Trade Policies and Practices by Measure in the Secretariat report and in sections 2(iv) and
3(iii) of the same Chapter.  However, we would appreciate clarification of the concept "scale of
aggregate support provided" in your question.
What is the justification for maintaining a number of local content measures that are not utilized in
practice?  What plans does Peru have to e liminate these measures and by when? (para. 141)
In general, Peru does not place conditions on the use of domestic inputs.  Although there is a
legal provision requiring the use of domestic milk as an input, in practice it is not applied, since local
milk production is insufficient and milk has to be imported.  Steps are being taken to revise this
measure.
Could the Peruvian authorities clarify the role INDECOPI plays in assisting the enforcement of
intellectual property, particularly with regard to the actions it takes to ensure the same degree of
protection for foreign and local recording artists alike?
Article 1 of Legislative Decree 822 expressly lays down that protection is provided
irrespective of the nationality or domicile of the products or the owner of the publication ordisclosure.  The same degree of protection is assured to domestic and foreign phonographic
productions irrespective of their origin.WT/TPR/M/69
Page 43
What plans does Peru have to bring her intellectual property legislation in line with the national
treatment provisions of the TRIPS Agre ement and the Berne Convention, and by when?
In Peru, "national treatment" is already incorporated in the copyright and industrial property
laws.
Could Peru clarify whether Article 48 of her 1996 Copyright Law provides for the retroactive
protection of sound recordings and the protection of topographies of integrated circuits?  If not, what
steps does she have planned to make this compliant with the WTO TRIPS Agreement, and by when?
Article 48 of the Copyright Law limits the right of reproduction to making a copy of a work
for exclusive personal use.  The subject of topographies of integrated circuits is being covered in thedraft amendment to Andean Decision 344, which will be approved within the next few weeks.
What provisions are being made to introduce transitional protection for pharmaceutical products
under Article 70(8) and what provisions are made for exclusive marketing rights under Article 70(9)?
In Peru, it has been possible to patent pharmaceutical and chemical products since before the
entry into force of the WTO Agreement, therefore the transitional provisions of Article 70(8) and
70(9) of TRIPS are not applicable.
Please explain how Article 7(e) of Decision 344 co mplies with the principle of non-discrimination in
Article 27.1 of TRIPS in relation to pharmaceutical products?
The exclusion from patenting of inventions of pharmaceutical products listed as essential by
the World Health Organization is justified under the provisions of Article 65 of TRIPS:  Peru had the
right for a general period of five years not to apply the Agreement (paras. 1 and 2) and also has anadditional period of five years to phase in the application of the Agreement where it concerns
protection of areas of technology (pharmaceutical products) which did not have such protection in
Peru at the time of the application of the Agreement (para. 4).  Consequently, Peru may delay the
application of the Agreement in relation to the patenting of pharmaceutical products listed by the
World Health Organization for ten years (until 2005).
HONG KONG, CHINA
It is mentioned that the review mandate of the Commission on Technical and Trade Regulations
appears to be a valuable transparency and analysis instrument to help prevent regulatory red-tape
and sectoral interests from undermining the benefits of  overall liberalization.  However, it is noted
that the authority originally assigned to the Commi ssion was weakened by Legislative Decree No. 807
of 18 April 1996.  It is also stated that coinciding with the limitation imposed on its competencies, the
Commission's review activities have fallen sharply since 1996.  Would the Peruvian authorities share
with us the reasons for the sharp decrease of the Commission's review activities?  We are interested
to know if Peruvian authorities have taken any other measures, apart from the reviews initiated by the
Commission, to enhance transparency and to prevent regulatory red-tape.
While the functions of the Commission on Technical and Trade Regulations were altered by
Legislative Decree No. 807, it continues to be responsible for supervising provisions establishing
conditions or requirements to determine whether they constitute unnecessary restrictions to trade.  The
Commission has therefore continued to assess the regulations issued by the various sectors in order toavoid the establishment of para-tariff restrictions.  It has also carried out investigations and promoted
coordination meetings so that the sectors themselves can take responsibility for reversing such
measures.  These improvements have helped to reduce the number of measures issued by sectors
which could unnecessarily affect trade.WT/TPR/M/69
Page 44
Furthermore, the Legislative Decree established a mechanism in which the Commission
issues a report which is transmitted directly to the President of the Council of Ministers so that the
latter can adopt the corresponding measures, all of which has improved the effectiveness of the
supervision.
It is mentioned that emergency sanitary and phytosanitary provisions may be adopted to suspend the
entry of products that threaten Peru's sanitary and phytosanitary conditions.  The Commission on
Technical and Trade Regulations found that some of these measures were non-tariff barriers.  We are
interested to know what specific actions the Peruvian authorities  would take with respect to those
measures.  Will they be removed automatically?
The adoption of emergency animal health and phytosanitary measures is aimed at establishing
an appropriate legal framework for specific action against the risk of attack and/or introduction of
pests and/or quarantine diseases not previously found within the national territory.  As may be seen,
emergency measures taken by Peru have a temporary application period and are amended or removed
where enough technical information is available to suggest that the risk has been controlled or reduced
to acceptable levels or that the animal health and/or phytosanitary situation has changed in such a waythat the application of the measure is no longer technically necessary.
It is stated that there are no regulations to allow holders of IPRs to prevent imports of patented
products legally placed in the market abroad, but that the relevant decision of the Commission of the
Cartagena Agreement to which Peru is a signatory may be modified to institute such measures.Would the Peruvian authorities provide further information on the nature and timing of the
modifications under consideration, and how will this affect the protection of intellectual property
rights in Peru?
A system of international exhaustion for patent rights is provided for in Andean Decision 344
and Legislative Decree 823 (Article 35(a) subsection (a) of Decision 344, in conjunction with
Article 66(a) of Legislative Decree 823.)
In the draft amendment to Decision 344 no substantial changes to the current Decision are
envisaged, and the system of international exhaustion for patent rights has been maintained.
We envisage that the amendment of the Andean Decision on industrial property will be
approved in the coming weeks.
It is mentioned that the Banking and Insurance Law limits the amount of capital that a financial
enterprise may invest in subsidiaries to 40% of th e net worth of the investing company (except in the
case of general insurance companies investing in subsidiaries specialized in life insurance which is45%).  We note that except for the life insurance sector, this limitation is not reported for other
financial services in Peru's Schedule.  We would like to know if Peru would consider inscribing the
limitation in this regard into its Schedule?
Article 34 of the Banking and Insurance Law stip ulates that companies of the financial system
may set up subsidiaries in order to carry out certain operations and general insurance companies may
set up subsidiaries operating in life insurance and vice versa, as well as companies operating as
finance companies and health providers.
Furthermore, the Law stipulates that the total amount invested in subsidiaries cannot exceed
40% of the net worth of the investing company, except in the case of general insurance companies
investing in subsidiaries specialized in life insurance.WT/TPR/M/69
Page 45
However, these provisions do not constitute a restriction since the limit on investment in
subsidiaries is not a market access limitation, because access is still available to companies other than
subsidiaries.
Consequently, these provisions should not be seen as part of the market access limitations for
financial services appearing in Peru's Schedule in the General Free-Trade Treaty.  This restriction
should therefore be removed from Peru's Schedule.
It is mentioned that Peru has scheduled a MFN exemption in banking and securities services
reserving its right to adopt protection measures in response to actions taken by other countries.  We
would like to know if there is any incidence of invocation of this right and whether Peru has any plan
to remove this exemption.
Article 5 of the Banking and Insurance Law stipulates that for treatment of foreign
investment, where appropriate, the Superintendency of Banking and Insurance takes into account
criteria based on the principle of reciprocity, whenever the public interest is affected, pursuant to
Section III of the Economic Regime of the Political Constitution.
This Article is part of the legal framework contained in the Political Constitution of Peru and
there are no plans to amend these provisions:  in view of their exceptional nature in a free market
economy, the principle has not been invoked to date.
With the termination of exclusivity by Telefónica del Perú in local fixed telecommunications services
and long-distance national and international services, has Peru still maintained any restriction on
market entry?  If the answer is affirmative, we would like to know what the restrictions are and
whether there is any timetable to remove them.
When, in August 1998, Telefónica  decided to end its five-year monopoly one year early, the
telecommunications sector was entirely liberalized.  There are no restrictions on the entry of new
companies into the market, except for purely tec hnical reasons such as when availability of the
electromagnetic spectrum imposes a limit on the number of operators, as is indicated in Peru's list of
specific commitments (GATS/SC/69/Suppl.1).  In such cases concessions are granted through public
tender.
It is noted that broadcasting services are reserved to Peruvians by law.  We would like to know
whether Peru would consider reviewing this rest riction with a view to relaxing/removing it.
In order to obtain authorization to provide broadcasting services in Peru, apart from meeting
the requirements stipulated by law, the applicant individuals or legal entities and their shareholdersmust be of Peruvian nationality.  To date no plans have been considered to change this legal
requirement.
It should be pointed out that Peru has not included such a change in its list of commitments on
broadcasting services, nor do we currently foresee this happening.
JAPAN
Investment
It is reported that CONITE is entitled to conclude, on behalf of the State and before the investment
and related registration is made, law stability agreements with foreign investors and receiving
companies.WT/TPR/M/69
Page 46
- Would there be any disadvantage if an investment is made without concluding a law stability
agreement?
- Please explain the contents of such law stability agreements.
- Are the contents similar to that contained in an investment protection agreement?
(page 17, paragraph 15, of the Secretariat Report)
Peru applies national and MFN treatment to foreign investment in the country.  Foreign
investors have the same rights and obligations as domestic investors and there is no discrimination
between foreign and domestic.
There is no prior authorization or action required for making foreign investments.
Registration of the foreign investment is needed only for statistical purposes.
The Stability Agreement is not an obligation but an option for private investors, domestic and
foreign, who comply with the legal requirements.  The Stability Agreement offers guarantees of the
stability of the legal regime in relation to the development of an investment from the following
standpoints:
- Income tax regime;
- free availability of currency and transfers;
- labour regime;- export promotion regime;
- and also guarantees the stability of nondiscriminatory treatment, although this
principle is already enshrined in the Constitution.
An investment (domestic or foreign) that is not covered by a stability agreement is
exposed to any changes that the Government might make in the above-mentioned regimes, on the
basis of non-discrimination between domestic and foreign.
Investment protection agreements supplement the internal investment regulations and are the
same as stability agreements with respect to non- discriminatory treatment (national treatment) and
remittances.  The transfer provisions of the investment protection agreements have a broader coverage
than those of the stability agreements.  The latter relate only to remittances corresponding to directinvestment (capital) and technology transfer, while the former generally include interest, swings and
all kinds of transfer relating to investment.
Has Peru established an enquiry point enabling info rmation to be obtained on its investment regime
and domestic laws?
The National Foreign Investment Commission (CONITE) offers foreign investors an
information and guidance service, in coordination with public and private sector institutions,
including the network of diplomatic missions abroad.
CONITE has a foreign investment web site www.mef.gob.pe/peruinv/ which covers the main
aspects of the procedure of establishing a business in Peru and enables the legal texts to be consulted.
Specific questions on foreign investment in Peru can be addressed to conite@meg.gob.pe.WT/TPR/M/69
Page 47
Customs valuation
Peru had been granted a waiver regarding the application of the Agreement on Customs Valuation
until 1 April 2000.  The Secretariat Report states that, since 1 January 2000, Peru has been applying
the provisions of the Agreement to half of the headings in its customs tariff (page 26, paragraph 13).
Did Peru fully implement the Agreement on 1 April 2000?
If not, please explain the expected schedule for applying the provisions of the Agreement to all the
products.
Since 1 April 2000, Peru has been applying the WTO Agreement on Customs Valuation to
100% of imports.
Tariffs
Japan appreciates that Peru has bound all tariff items.  However, the bound tariff rates at 30% are
much higher than the applied tariff rates (the average applied MFN tariff is 13.6%).  Please explainthe schedule for narrowing the gap between bound tariff rates and applied tariff rates.
Peru's bound tariff of 30% for the tariff universe, apart from certain agricultural products, is
the second lowest in Latin America. Peru would be prepared to negotiate a lower bound level within
the context of a future round of multilateral trade negotiations, in exchange for equivalent concessionsby its trading partners.
Regulations, standards and other technical requirements
It is reported that the Commission on Technical and Trade Regulations has the competence to
pronounce upon the non-applicability of administrative measures that infringe the principle of
freedom to trade included in the Legislative Decree No. 668.  However, the authority originally
assigned to the Commission was weakened by the Legislative Decree No. 807 of 18 April 1996, which
no longer allows the Commission to suspend or de clare the non-applicability of non-tariff measures
when these are introduced through Supreme Decrees or Ministerial Resolutions.  (Page 38,
paragraph 62, of the Secretariat Report)
Do any procedures exist to review, prior to their introduction, whether or not non-tariff measures,
which are to be introduced through Supreme Decrees or Ministerial Resolutions, infringe the
principle of the freedom to trade included in the Legislative Decree No. 668?
Although Legislative Decree No. 807 modified th e functions of the Commission on Technical
and Trade Regulations (CRT), the latter conti nues to be responsible for monitoring measures
establishing conditions or requirements so as to determine whether they constitute unnecessary
restrictions on trade. In this connection, the CRT has continued to appraise regulations issued by the
different sectors with a view to preventing the establishment of para-tariff restrictions, has carried out
investigations and has promoted coordination meetings in order that the sectors themselves mayreview such measures.
This Legislative Decree also established procedures enabling the Commission to issue a
report submitted directly to the presidency of the Council of Ministers so that the latter may take the
appropriate action, all of which has made supervision more effective.
Competition
Has Peru concluded any bilateral or regional cooperation agreements regarding competition?
Please explain how the Government of Peru copes with transborder anti-competitive behaviour.WT/TPR/M/69
Page 48
Peru has not signed any bilateral or regional cooperation agreements on the subject of
competition.
Please explain how the Government of Peru copes with transborder anti-competitive behaviour.
In cases of transborder anti-competitive behaviour the "effect doctrine" is applied. This means
that in Peru the prejudicial effects of anti-competitive practices are sanctioned, no matter what the
origin of those practices or behaviour. In actual fact, there has never been any case of this type.
IPR
Please provide the details of the border measures regarding industrial property.
Specific provisions concerning border measures are being incorporated in the new
Andean Decision replacing Decision 344, which will be approved in the next few weeks. These
provisions relating to border measures are consistent with the TRIPS Agreement.
At the same time, the existing legislation includes provisions, both administrative and
criminal, designed to safeguard the rights of industrial property and copyright holders against
infringing goods that enter through customs.
Agriculture
Peru relies on imports for its food products, includ ing main crops.  Japan is of the view that food
security is an important issue for a net-food impor ting country like Peru.  Please explain Peru's
opinion on this point.
The Peruvian Government understands food security as the adequate availability of a
country's food supply, access for the population to that food and its efficient use. The achievement of
food security in this sense is a priority of Peru's agricultural policy.
We consider that this objective can be achieved insofar as it is possible to establish the
conditions necessary to encourage agricultural production and productivity linked with the adequateavailability of resources for the application of production support measures and a stable and
transparent international market ensuring equal opportunities for free competition, which in the
medium term should enable Peru to become an agricultural exporter.
Fishing
It is reported that the fishing industry faces problems relating to over-investment and over-capacity.
For what reason, does Peru think, such problems have occurred?
It is also reported that over-investment and o ver-capacity are linked to the Government support
programmes.  Does Peru think that the Government subsidy is one of the reasons which has caused
such problems?  Please explain if Peru thinks that such problems are caused by other factors.
(page 63, paragraph 24, of the Secretariat Report)
The development of Peruvian fishing activity  is due to the high degree of industrial
profitability of deep-sea fishing for fish-meal and fish-oil production and not to Government support
measures. The integration of the extractive (fishing fleet) and processing (factory) sectors can still be
profitable even under conditions of over-capacity due to the relative scarcity of marine resources.WT/TPR/M/69
Page 49
In the 1990s, the fishing sector experienced a sustained increase in its resource-recovery
activities and, like other industries, in the availability of external capital.  These two factors
encouraged many fishing enterprises to expand by assuming more debt, a process which intensified
after 1994 when the fishing sector reached the maximum level of production.  As a consequence of
these favourable developments, the hold capacity of the fleet and the installed capacity of theprocessing plants also increased.
This over-capitalization did not create any problems until 1997, being supported by the rising
trend in the price of fish-meal and the existence of available capital, which enabled the sector to pay
the interest and refinance its debt.  However, from the end of 1997, with the emergence of the El Niño
phenomenon and the financial crisis, the part of the fishing sector producing fish-meal and fish-oil
was the worst affected, due to the scarcity of the resource, which led to increased interest and debtrefinancing requirements.
Services
Are foreign lawyers, who have qualifications as a lawyer in a country other than Peru, allowed to
provide foreign legal services in Peru?  If so, please explain the conditions, if any, for providing such
services.  Please also explain if there is any restriction or limitation on the services which foreign
lawyers can provide.
For a foreign lawyer to provide legal services in Peru his professional qualifications must be
revalidated by the National Assembly of University Presidents or a Peruvian university, in compliance
with the normal requirements of the institutions concerned, such as examinations, papers, professional
experience, etc.
To plead before the Peruvian courts, he or she must be a member of a Peruvian bar
association.  Some of these associations have different membership dues for nationals and foreigners
depending, in some cases, on whether membership is permanent or temporary.
KOREA, REPUBLIC OF
Anti-dumping Duties (Secretariat's Report, paragraph 55 of page 35)
According to the Secretariat's Report, virtually all final anti-dumping measures adopted since 1995
were still in force as of December 1999.  If the measures continue to be maintained, they may be
possible violations of Article 11.3 of the GATT 1994 Agreement on implementation of Article VI
which stipulates that any definitive anti-dumping duty shall be terminated on a date not later than five
years from its imposition.  Is the Peruvian Govern ment considering reviewing the cases so as to
terminate improper impositions of the anti-dumping duties?
With respect to anti-dumping duties it should be pointed out that Peru has used anti-dumping
measures moderately and in strict accordance with the WTO's Anti-dumping Agreement.
Peru agrees that anti-dumping duties should not be maintained for more than five years from
their imposition, unless a review shows that an ex tension is justified.  The Peruvian anti-dumping
regulations accord this right to WTO Member countries and also allow exporters and other interested
parties to request that any definitive duties applied be reviewed or examined after they have been in
effect for at least six months.
Imposition of the Selective Consumption Tax on imported used vehicles (Secretariat Report,
paragraph 45 of page 33)WT/TPR/M/69
Page 50
Imports of new vehicles are taxed at 30% whereas used vehicles are taxed at 55% unless they have
been reconditioned or repaired in a certain processing zone, in which case they are exempted from
the ISC.  As this seems to be conductive to violat ions of national treatment, Korea wishes to inquire
whether the Peruvian Authorities have any intention to review the regulation concerned.
As the Selective Consumption Tax (ISC) is levied  both on producer-level sales in the country
and on imports of goods subject to the tax, Peru is not in violation of the principle of national
treatment.  Moreover, although used vehicles that are imported through the ports of Ilo, Matarani and
Paita and repaired or reconditioned in the CETICOS are zero-rated for ICS, the ad valorem  customs
duty and general sales tax are applied on a higher valuation basis that includes parts and labour, this
being reflected in a higher recovery of tax, which thus offsets the lower rate.
APEC (Secretariat Report, paragraph 34, page 22)
Peru has participated in the APEC forum since 1998.  Is the Peruvian Government considering
proposing any specific trade liberalization and/or trade facilitation measures to this forum?  Is the
Peruvian Government contemplating joining the APEC Business Travel Card Plan which permits theno-visa entry for businessmen and easier customs clearance?
APEC has set up a working group on the development of trade facilitation principles.  Peru
has submitted comments for analysis by the working group, including the suggestion that a
consolidated table of the progress made by each member economy be drawn up in order to identifythose trade facilitation measures on which there is agreement and which could be used as a basis for
the formulation of trade facilitation principles.
As for the APEC Business Travel Card Plan, the system would help Peruvian enterprises to
arrange smoother and quicker business trips to the economies of the Asia-Pacific region, whilemaking it easier for Asian and Pacific enterprises and investors to visit Peru.  The competent national
authority is being consulted about the possibility of Peru's joining the system.
GPA (Secretariat Report, paras. 80-87, page 41)
Several provisions of the Peruvian Government procurement regulation seem to depart from the
principle of national treatment by according preferences to national suppliers.  Is the PeruvianGovernment considering joining the Government Procurement Agreement and the Transparency
Agreement which is currently being discussed among WTO Member Countries?
The Peruvian Government procurement regulations and procedures are open and transparent,
except for slight preferences for national suppliers. It should be pointed out that these are temporaryand of limited extent.  Peru has not considered the possibility of acceding to the WTO's Agreement on
Government Procurement.  However, we consider that transparency in Government procurement
could be one of the negotiating issues in a future round of negotiations.
NEW ZEALAND
We note that Peru currently applies a 5% tariff on 296 agricultural tariff lines and a 10% surcharge
on a further 56 items.  What is the rationale for the 5 to 10% tariff surcharge on agricultural
products?
In Peru, the agricultural sector is considered very sensitive because it includes extremely poor
social groups, who in recent years have also been seriously affected by the international crisis and the
effects of El Niño.WT/TPR/M/69
Page 51
The 5% tariff surcharge established by Supreme Decree No. 035-97-EF and increased to 10%
for certain meat products by Supreme Decree No. 141-99-EF, is a measure adopted within the
framework of the Government's economic polic y.  Supreme Decree No. 035-97-EF not only
established this surcharge but also altered tariff rates and provided for the revenue from the surcharge
to be channelled to the Agricultural Development Fund.
We note that these surcharges on agricultural products are "temporary".  What time frame does Peru
foresee for the elimination of these surcharges?
As we have indicated, the surcharges constitute measures adopted within the framework of
the Peruvian Government's economic policy and no change has been considered to date because of the
sensitivity of the agricultural sector, which makes such policies necessary.
We are pleased that applied tariff rates appear to be below bound levels.  We are concerned,
however, at the wide variation between applied and bound rates, which undermines the predictability
of the regime.  What mechanisms does Peru have in  place to ensure that fluctuations in commodity
prices do not result in applied tariffs going beyond Peru's maximum tariff commitments?
In principle, during their period of application the variable specific duties have never
exceeded the WTO bound levels.  Nevertheless, if the sum of the ad valorem  tariff and the specific
surcharge were ever to exceed that level, the planned mechanism is to apply the bound level as an
upper limit.
Pursuant to Supreme Decree No. 114-93-EF Peru carries out a periodic review of the Customs
Tables.  This review is a monitoring mechanism which takes into account movements in international
prices, thus ensuring that the "floor" prices of products do not exceed the bound levels.
SWITZERLAND
There is still a wide margin between the applied and the bound rates of generally 30%.  This
undermines the predictability of Peru's tariff regime.  Is Peru ready to reduce this margin by
adjusting the bound tariffs to the applied rates?
Peru's bound tariff rate is 30% for all tariff lines except certain agricultural products, which is
the second lowest level in Latin America.  Peru would be prepared to negotiate a lower bound level in
a future round of multilateral trade negotiations in return for equivalent concessions from its trading
partners.
Peru has introduced in 1997 a more transparent regulatory framework concerning Government
Procurement.  However, Peru is still not a member of the WTO Plurilateral Agreement on
Government Procurement.  Is there a chance that Peru will adhere to this Agreement in the near
future?
Peruvian rules and procedures on this issue are open and transparent;  Peru has not considered
the possibility of acceding to the Plurilateral Agreement on Government Procurement.  Nevertheless,
we think that transparency of government procurem ent could be one of the issues to negotiate in a
future round of negotiations.
Only a minor part of Peru's products are exported towards the Andean Community and the Latin
American Integration Association.  On the other hand, the share of exports to the USA and Europe
has significantly increased over the last five years.  Against this background, is it Peru's intention to
conclude free trade agreements with the EU and the United States?WT/TPR/M/69
Page 52
Negotiations for the Free-Trade Area of the Americas (FTAA), involving the participation of
34 countries from America and the Caribbean, including the United States, will result in a Free Trade
Agreement.  Peru is also interested in deepening trade relations with the European Union.
According to the report by the Secretariat, all "inventions that have industrial applications can be
patented with certain exceptions, including:  … inventions related to pharmaceutical products listed
as essential by the World Health Organization." (page 55, §151) Could Peru explain the TRIPS-
compatibility of this exception?
The exclusion from patenting of inventions related to pharmaceutical products listed as
essential by the WHO is justified in accordance with Article 65 of TRIPS:  Peru was entitled to a
general period of five years of exemption from implementation of the Agreement (Nos. 1 and 2) andfurthermore an additional period of five years to delay implementation of the Agreement with regard
to products from the technology sectors (pharmaceutical products) which did not receive such
protection in Peru at the time of implementation of the Agreement (paragraph 4).  Consequently, Peru
may suspend implementation of the Agreement with  regard to the patenting of pharmaceutical
products listed by the WHO for a period of ten years (until 2005).
Until now, holders of IPRs could not prevent the im port of patented products legally placed in the
markets abroad.  Thus, parallel imports of patented products seem to be possible.  However, the
report by the Secretariat indicates that modifications to Decision 344 of the Commission of the
Cartagena Agreement may institute changes to this regime (page 56, §158).  Could Peru providemore information about the actual regime and about the ongoing discussion on this issue?
A system of international exhaustion for patent rights is provided for in Andean Decision 344
and Legislative Decree 823 (Article 35(a) of Decision 344 in conjunction with Article 66(a) of
Legislative Decree 823).
In the draft amendment to Decision 344 no substantial changes to the current decision are
envisaged, and the system of international exhaustion for patent rights has been maintained.
THAILAND
We note that Peru uses the variable specific duties mechanism on a number of agricultural products.
We would like to see more information as follows:
Please explain the data sources that Peru uses for calculating the f.o.b. reference prices for each
agricultural product, especially rice.
The information sources used to establish f.o.b. reference prices for the agricultural products
affected by the Variable Specific Duty, are as follows:
Product Information source (code) Application of code
Rice Reuters CPC 022 From 3 Apr il 2000, pursuant to Supreme
Decree No. 032-2000-EF
Maize (corn) Reuters CPC 017 From 3 April 2000, pursuant to Supreme
Decree No. 032-2000-EF
Sugar Bloomberg-Code SUGRCSCS From 14 August 1999, pursuant to Supreme
Decree No. 133-99-EFF
Whole milk
powder"Dairy Market News" USDA
Western Europe publication
(highest price)From 11 October 1994, pursuant to Supreme
Decree No. 133-94-EFWT/TPR/M/69
Page 53
We should indicate that these information sources are used because they give the international
prices of reference markets for each product, comparable in type and quality to those of the domestic
industry.
Why does Peru use the U.S. consumer price index as an element to adjust the reference f.o.b. price for
each agricultural product?
Peru uses the U.S. consumer price index (CPI) because the U.S. is a major trading partner and
because it is a generally good indicator of international inflation.
Please explain the mechanism to monitor whether the variable specific duties are beyond the
commitment level.
In principle, during the period of application of the variable specific duties, they have never
exceeded the WTO commitment level.  However, if the sum of the ad valorem  tariff and the specific
surcharge were to exceed that level, the commi tment level would be applied as an upper limit.
Pursuant to Supreme Decree No. 114-93-EF, Pe ru carries out a periodic review of the
Customs Tables.  The update takes into account movements in international prices and reduces the
difference between the "floor" prices and those observed in the market.
We note that Peru already eliminated the variable specific duties mechanisms for wheat products.
Does Peru have a plan to eliminate the mechanism for other products in the future?
The variable specific duties were established within the framework of the economic policy
pursued by Peru since the early 1990s and no change is currently foreseen.
This mechanism aims to reduce the impact of fluctuations in world prices on domestic prices.
Could Peru please explain more details of the susp ension of rice imports from all countries?  Does
Peru notify this measure under the SPS Committee?
In order to reduce the trade effects, does Peru have any plans to approve the import of rice on a case-
by-case basis if a certificate of Gorgojo Khapra free is attached.
Does Peru have a plan to lift the measure in the near future?
Pursuant to Supreme Decree No. 007-97-AG, published on 6 May 1997, the importation into
Peru of rice grains from countries affected by the "Khapra Beetle" ( Trogoderma granarium Everta) is
contingent upon the results of a pest risk analysis (PRA) performed by the National Agricultural
Health Service (SENASA).  Any country affected by th is pest wishing to export such products to Peru
may request the Peruvian Government to carry out such an analysis.
The outline for the procedure for PRAs is based on Resolution No. 25 of the General
Secretariat of the Andean Community, published on 24 November 1997, adopting the "Andean
Phytosanitary Standard for Pest Risk Analysis ", based on the FAO "Guidelines for Pest Risk
Analysis" (1996).  In short, these standards stipulate that a study should be carried out once a risk has
been identified, in order to assess the extent of the risk and ultimately to identify the phytosanitary
measures which need to be applied in order to afford the country an adequate level of sanitaryprotection against the quarantine pest.  Such mesures could include aspects such as verification at
origin, certification at sites of production, gathering, processing and storage, phytosanitary
certification at origin, inspection on entry into the country, adequate conditions of packing and
packaging, quarantine treatment, among others.  In  other words, the country's Health Authority willWT/TPR/M/69
Page 54
grant authorization for the importation of the product from that origin only when it has made certain
that Peru is adequately protected against the quarantine pest.
This measure will be amended or withdrawn only when sufficient technical information is
available to suggest that the risk has been controlled or diminished to acceptable levels or that thephytosanitary and/or animal health situation has altered so as to make the application of the measure
no longer technically necessary.
UNITED STATES
I. ECONOMIC ENVIRONMENT
The Secretariat Report notes that Peru's economic recovery during the 1990s has resulted in
improved social welfare indicators but that it has also been accompanied by growing regional and
income inequalities.  What steps is the Government taking to address these problems?
The Peruvian Government has been carrying out a social policy essentially targeted on
poverty reduction.  It has launched programmes whose objective is to meet the basic needs of the verypoor, chiefly in the fields of education, health care and nutrition, thereby raising the level of human
capital.
There have been visible improvements in our social indicators, such as poverty rates, literacy
rates, access to basic services, infant mortality and life expectancy rates, thanks partly to our country’seconomic recovery.
The Government’s major financial efforts in the field of social spending have borne fruit.Per capita  social spending rose from US$65 in 1991 to US$207 in 1998, that is, by 218%.
Furthermore, if we look only at basic social spending  (top priorities are essential social services in the
areas of nutrition, health care, education, justice, housing, sanitation and energy), growth in per capita
spending is 400%, having risen from US$29 in 1991 to US$146 in 1998.
The Government has carried out functional refo rms with the clear aim of redirecting public
spending to achieve greater efficiency in the use of resources, in a context of sustainable fiscal
balance, since the advancement of the very poor, i.e.  the fight against poverty is a priority objective of
its social policy.
Improvements are also being made in targeting social programmes, with a new tool that has
been designed to allocate social investment spending on the basis of an updated poverty map.
To make public spending, particularly social spending, more efficient we are preparing a set
of performance indicators for the main social prog rammes, with a view to evaluating the quality of
programme management and the impact on the beneficiaries.
The report notes that United States ATPA preferences appear to have contributed to a significant
increase in Peruvian exports to the United States.  What is the Government's assessment of the ATPA
programme in helping create licit alternatives to coca cultivation?
Our exports to the United States grew by about 25% a year from 1993 to 1999.  This increase
has led to the creation of licit jobs.  Our underlying principle is that every licit job created is a battlewon against drug trafficking.
By supporting the development of export industri es, ATPA is directly helping to create new
licit jobs, which means that the rural population, in stead of migrating to coca-growing areas in searchWT/TPR/M/69
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of work, is migrating to areas where licit export industries are creating new jobs, as a legal
employment alternative that offers security and stability.
ATPA was passed to help the Andean countries combat illicit drug trafficking and, in this
field, Peru has made impressive gains:  65% of illegal crops have been eradicated and the hectarageplanted has fallen from 120,000 hectares to 38,000 hectares.  The coca plantations are now being
replaced by traditional crops such as coffee and cacao, pulses, palm hearts and fruit trees.  In 2000,
the area covered by the alternative development programme amounts to 25,524 hectares, with 19,422
planted in coffee, 4,482 in cacao, 900 in pulses, 320 in palm hearts and 400 in fruit trees, directly
benefiting 12,956 farmers and generating 9,995 additional jobs.
III. TRADE POLICIES AND PRACTICES BY MEASURE
Measures directly affecting imports
Peru's exports are concentrated in primary and semi-processed products, mainly from mining and
fishing activities.  Private sector organizations complain that counter-productive taxes hamper their
ability to diversify their exports.  What types of tax reform, educational and other reform programmes
does the Government plan to introduce to bolster manufactured exports?
Support for the export sector has be en stepped up through action to:
(a) Design, coordinate and carry out activities in conjunction with the private sector to
promote export development;
(b) perfect the foreign trade information syst em and channel and disseminate information
internally and externally;
(c) manage and channel international technical and financial cooperation for export
promotion;
(d) promote and publicize exportables internationally;(e) promote new exports and take steps to diversify and consolidate markets;
(f) support the development of the export capacity of small and medium-sized enterprises,
through advisory and technical as sistance services and training.
To bolster manufactured exports, Peru will continue to facilitate foreign trade operations. In
this area, the Government has made significant efforts to improve customs legislation by rationalizing
and simplifying foreign trade procedures.
Our objective is to diversify exports, particularly those with higher value added.  Various
factors are contributing to this process, including a continuing stable macroeconomic context,
improvements in services such as ports and airports, investment in general and investment in transport
infrastructure and human capital promotion in particular.
Insofar as these factors make for greater comparative advantages and economies of scale can
be achieved, Peru will be able to offer a greater range of exports, thereby creating more jobs and
promoting closer inter-sectoral linkage in both goods and services sectors.
With continuing improvement of Peru's customs administration under way, could Peru outline any
intentions with regard to further diminishing th e role or otherwise phasing out the PSI regime?
Preshipment inspection is a system that has been applied in Peru since 1992.  It has been very
useful in preventing fraudulent declarations of the value of imports, particularly those for which thereis no reliable database.  Certain goods have been excluded on the basis of import value or type.  The
system has helped to modernize and improve the collection of customs duties.WT/TPR/M/69
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The Peruvian Government has decided to continue with preshipment inspection by
verification firms following implementation of the WTO Customs Valuation Agreement, while
adjusting their participation in the area of customs valuation.  The system is used after clearance of
the goods for risk assessment purposes.
As the system is important for Peru, there are no plans to change it.
Recognizing that non-preferential certificates of origin are only required for tariff lines subject to
anti-dumping and countervailing duties, Peru requires that such goods be accompanied by a
certificate of origin issued by the competent authority in the country of origin.  The United States
Government has no provisions for officially certifying the origin of exported goods and does not
officially recognize any body such as a chamber of commerce as being authorized or otherwise
competent to make origin determinations.  Why does Peru require this seemingly unnecessary
procedure?
We require the presentation of certificates of origin for imports of goods subject to anti-
dumping and countervailing duties in order to guarantee that the duties imposed by Peru are appliedproperly, thereby avoiding evasion through false d eclarations by importers regarding the country or
place of origin of products subject to anti-dumping duties.  The procedure applied by Peru is based on
the Kyoto Convention.  The certificate operates on a MFN basis, in other words, it is required from all
countries equally.
How does Peru ensure that the certificates of origin prepared in exporting countries are undertaken
in a manner that is consistent with Peru's rules for determining origin, which would be necessary for
Peru to grant uniform treatment to WTO Members for purposes of determinations of origin on goods
imported into Peru?
As mentioned above, this requirement is based on the procedure and recommendations of the
Kyoto Convention, which requires exporting countries to accredit the certifying institution, with the
names and signatures of the issuers of the certificates, in order to ensure that they are authentic and
legitimate and that supporting documents will be available should customs request them.
Please describe the procedures by which Peru implements Article 2(h) of the Rules of Origin
Agreement with regard to providing binding assessments of origin upon individual request by theprivate sector in advance of goods being traded.
Binding assessments of origin issued in advance by customs authorities are not expressly
mentioned in the customs legislation.  However, the General Customs Act and its enabling
Regulations allow for the single import declaration to be processed prior to the arrival of the goods inthe customs territory, provided it is intended for a single consignee who has not committed any
infraction subject to a fine, and in the interim the customs authority may issue an opinion as to
whether the goods comply with the origin  stated in the documentation presented.
Moreover, the disciplines established in Article 2 and Annex II of the WTO’s Rules of Origin
Agreement for the transition period prior to completion of the work on harmonizing the rules of origin
being carried out by WTO and WCO are being applied by customs, in accordance with the applicable
legal provisions.
(2)(iii) Tariffs
Please describe Peru's position on tariffs, including any plans to raise tariffs for some goods as a
result of ongoing discussions in the Andean Community on a common external tariff.WT/TPR/M/69
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With regard to the discussions on a common external tariff in the Andean Community, the
mechanism is currently being evaluated in order to determine a structure and level that are consistent
with multilateral commitments and negotiations unde r way with third countries.  As in the past, Peru
will respect its commitments under WTO.
Peru reduced its average tariff from 16% to 13% in April 1997.  At the same time, it doubled the
number of tariff rates through the application of a temporary 5% surcharge on certain agricultural
commodities.  When does the Government plan to remove these surcharges?
The surcharges are part of Peru’s economic policy and for the time being it has no intention of
changing them, since the agricultural sector is a sensitive one which includes various impoverished
groups, which have been hard hit by the recent international crisis and the El Niño phenomenon andneed policies of this kind.
(2)(iii)(c) Variable duties
The report notes that Peru removed its variable tariff on wheat in 1998 but similar tariffs remain on
other agricultural products.  It also states that Peru's average tariff on agricultural goods is about
one-third higher than the average tariff on manufactured goods.  What are the Government's plans as
to the removal of remaining variable tariffs?  Does the Government contemplate reapplying the
variable tariff on wheat?
Variable duties were established under the economic policy adopted by Peru in the
early 1990s and there are no plans to change them at present.  The variable tariff on wheat was
removed as part of that policy.
(2)(iii)(f) Concessional import regimes
Please explain in detail the concessional import regime in which there is a suspension of import
duties and other applicable taxes on certain goods to be re-exported.  Please provide full details
including eligible goods, duration of exemption, and eligible recipients (including what constitutes
eligibility).
Temporary import
In accordance with the General Customs Act and its enabling Regulations, approved by
Legislative Decree No. 809 and Supreme Decree No. 121-96-EF, respectively, the temporary import
regime permits certain foreign goods, specified in a Ministerial Resolution of the Ministry of
Economic Affairs and Finance, intended to be used for a specific purpose in a specific place andre-exported within a determined period without having undergone any modification, except for
normal wear and tear to be imported with suspension of import duties and other applicable taxes.
The temporary import period will be that specified by the interested party in its application,
which will be approved automatically, but may not exceed 12 months.  If the term requested isshorter, extensions will be approved automatically simply upon renewal of the guarantee, but may not
exceed the 12-month maximum.
In duly justified cases, an additional period of up to six months may be requested for packing
materials for exports.
Beneficiaries of the temporary import regime must provide a guarantee equivalent to 100 %
of the import duties and other taxes, to be presented together with the application, in order to ensure
that the goods are re-exported within the period requested.  Re-exports may be made in one or more
shipments through customs offices other than the office of entry.WT/TPR/M/69
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By way of exception, the status of temporary imports may be regularized in the following
cases:
(a) When the goods are cleared for home use, in which case compensatory interest equal
to the TAMEX monthly average will be charged per month or part thereof, countingfrom the date of registration of the temporary import declaration to the date of the
application for clearance for home use.
(b) When the goods have suffered a degree of wastage or been totally or partially
destroyed by accident or force majeure, as established in the Regulations.
Ministerial Resolution No. 287-98-EF/10 and amendments thereto approved a list of goods
that may be admitted under the temporary import regime.  It includes:
1. Professional, technical, scientific and pedagogic equipment, parts and accessories for
use in a specific task.
2. Laboratory and research apparatus and equipment.
3. Goods for display at official events, duly authorized by the competent entity.4. Samples used to demonstrate a product to be sold in the country.
5. Advertising materials.
6. Live animals for shows, competitions or sporting events and pure-bred animals for
breeding.
7. Musical instruments, equipment, technical materials, costumes and stage props for use
by artists, orchestras, theatre or dance groups, circuses and the like.
8. Vehicles for use in sports competitions.
9. Vehicles adapted and equipped for scientific research and soil and surface analysis
and exploration.
10. Vehicles adapted and equipped for scientific research, analysis, tests, soil and surface
exploration and/or drilling.  Also, vehicles used to provide services linked to the
activities of companies that have obtained a supreme resolution granting them the
benefits of Legislative Decree No. 818, and extensions and amendments thereto.
11. Floating docks and vessels such as dredgers, tugs and the like intended to provide an
auxiliary service.
12. Fishing vessels leased abroad by domestic companies to expand their fleets.
13. Vehicles, vessels and aircraft entering the country for tourism purposes.
14. Vehicles carrying freight or passengers in transit which enter through customs border
crossings, not subject to international treaties and conventions signed by the country.
15. Moulds, matrixes, plates and reproduction equipment for use in industry and graphic
arts.
16. Ships and aircraft under a foreign flag, their equipment and spare parts, for repair,
maintenance or installation, including, where applicable, fishing gear.
17. Apparatus and instruments used directly in the provision of services.
18. Broken machinery, engines, tools, instruments, apparatus and their components or
accessories for repair in the country.
19. Equipment, machinery, apparatus and instruments directly used in the production
process, except for motor vehicles for freight or passenger transport.
20. Articles that do not undergo modificati on or transformation when incorporated in
goods for export and which are necessary for their presentation, preservation or
packaging.
21. Packing materials, containers, pallets and the like.
22. Printed and developed cinematographic film, with or without recorded sound or with
recorded sound alone, and videotapes with image and/or sound for television stations.WT/TPR/M/69
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Temporary admission
In accordance with the General Customs Act and its enabling Regulations approved by
Legislative Decree No. 809 and Supreme Decree No. 121-96-EF, respectively, the temporary
admission regime is the customs procedure that allows  certain foreign goods to be admitted into the
customs territory with suspension of import duties and other taxes and exported within a given period
after having undergone transformation or processing.  These goods must be materially incorporated in
the product exported.
Temporary admission may be granted for raw materials, inputs, intermediate products, parts
and components materially incorporated in the product exported, including goods that are absorbed by
the product in the production process.  Items such as catalysts, accelerants or retardants consumed inthe production process may also be granted temporary admission.
Temporary admission is not granted for goods used as an auxiliary in the production process,
such as lubricants, fuels or any other energy source whose function is to generate heat or power, or for
spare parts since they are not materially incorporated in the end product and are not directly used inobtaining the product.
Any natural or legal person may make use of temporary admission, which is automatically
granted for a period of 24 months.
Persons applying for temporary admission must post security for the duties and taxes
suspended.  The guarantee may be valid for a less er period than that mentioned in the preceding
paragraph and may be renewed up to the maxi mum period simply by lodging new security.
Applications must be accompanied by an  input-output table showing the amount of
goods used per unit of the compensating product to be exported and the amount present in waste and
by-products, with or without commercial value.  This table need only be presented with the first
declaration, unless the variables change.
Temporary admission is automatically cancelled by customs when the compensating products
are directly or indirectly exported or enter an industrial free zone or a free warehouse.  It will also be
automatically cancelled in the following cases:
(a) Upon the re-export of goods admitted temporarily or in excess with commercial
value.
(b) Upon the clearance for home use of goods admitted temporarily as such, contained in
compensating products and/or in excess with commercial value.  The following rulesapply in this regard:
The applicable taxes will be those in effect on the date of registration of the import
declaration plus compensatory interest equal to the TAMEX monthly average, per
month or part thereof, counting from the date of registration of the declaration.
(c) Destruction of goods admitted temporarily, either accidentally or as a result of
duly-substantiated force majeure.
As stated in paragraph 35, "Over two thirds of these concessional entries related to the mining
industry".  Could you please explain in detail what goods constitute the concessional entries in
relation to the mining industry.
In 1998, imports of mining products under th e temporary admission procedure amounted to
US$234.83 million (68.2% of total imports under that procedure).  US$97.99 million (41.7%) of that
total were primary mining products, US$132.76 million (56.5%) were semi-processed miningWT/TPR/M/69
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products, US$1.6 million (0.7%) were processed mining products and US$2.45 million (1%) were
scrap.  The main products imported included:
ProductC.i.f Value
US$ Million
Gold, other unwrought forms 107.07
Copper ores and concentrates 89.88
Copper mattes 7.52
In 1998, imports of mining products under the temporary import procedure amounted to
US$18.72 million (3.4% of the total imported under that procedure). US$0.65 million (3.5%)
corresponded to semi-processed mining products and US$18.1 million (96.5%) to processed mining
products.  The main imports included:
ProductC.i.f value
US$ Million
Cast iron or steel tanks with a capacity of 50 litres 6.35
Stoppers and caps 3.08
(2)(iii)(g) Concessions
Section III, paragraph 37 of the Secretariat Report describes which donations made to public sector
entities are exempted from import duties and internal taxes.  Please provide full details including
eligible goods, duration of exemption, under what arrangement the donations are being made and
eligible recipients (including what constitutes eligibility).  Also, please state whether these goods
constitute a portion of the "two thirds of these concessional entries related to the mining industry", as
previously mentioned in the question above.
There is no exhaustive list of donations to the public sector from abroad which may enter the
country free of import duties and domestic taxes, i.e. the general sales tax (IGV), the selective
consumption tax (ISC) and the municipal promotion tax (IPM).  However, for donations to the
education sector (private and public educational institutions) there are two lists of products,
established in Supreme Decree No. 046-97 -EF and Supreme Decree No. 003-98-EF.
Tax-free donations to the public sector can be made in the following forms:
(a) Imports of goods financed by donations from abroad, provided they are used to carry
out public works under technical cooperation agreements between the PeruvianGovernment and other States or international governmental organizations.
(b) Imports of goods donated to national public sector departments and agencies, except
for enterprises by any donor, whether or not made under cooperation agreements for
programmes, projects and activities concluded by the Peruvian Government and
foreign governments or international governmental organizations.
(c) Imports of goods for social welfare projects expressly approved by the Peruvian
Government, donated by foreign governments or international organizations to
foreign international technical cooperation agencies and institutions (ENIEX)
registered with the Ministry of External Relations or to non-governmental
development agencies (ONGD-Peru), or donate d by individuals or public or private
entities established abroad to private non-profit institutions.WT/TPR/M/69
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These imports do not form part of the two-thirds of imports made under the temporary
admission and temporary import procedures.
(2)(iv) Other charges affecting imports
I.(4)(iii)6 and (2)(iv)5.  Peru notes that used vehicle imports face an ISC tax of 55 % unless they
have been reconditioned or repaired in a CETICOS trade and industrial processing zone.
Paragraph (4)(iii)6 specifies that such vehicles must be designed and built as left-hand-drive vehicles
and were never written-off in an accident.  However, that paragraph also states that these criteria do
not apply to used vehicles imported through the ports of Ilo or Matarani.  Why are different criteria
used in different CETICOS?  What type of recond itioning or repair is necessary to exempt a used
vehicle from the ISC tax in Ilo or Matarani?
Under the Peruvian legislation imported used vehicles that are repaired or reconditioned in
CETICOS are taxed at 0%.  This is a general provision and is applied without distinction to the
CETICOS in Tacna, Ilo and Matarani. However, as part of the comprehensive policy to create poles
of development in depressed areas, it was decided that only used vehicles complying with therequirements and imported through the ports of Ilo and Matarani could enter the CETICOS. No port
in Tacna was mentioned because there is no port in that department. Accordingly, used vehicles
destined for the CETICOS in Tacna have to be imported through one of the two above-mentioned
ports.
We also understand that the subject of re-imposing the variable levy on wheat is being considered.
We would urge Peru to re-consider any such action as it is contrary to the spirit of trade
liberalization Peru is following in the FTAA and WTO negotiations.
As mentioned previously, there are no plans for any changes at present.
(2)(v)(a) Import prohibitions and restrictions
What administrative or other objectives does the GOP have that require the submission of an
application or other documentation (other than that required for customs purposes) to various
relevant administrative bodies as a prior condition for importation into the customs territory of Peru?
Legislative Decree No. 668 eliminated para-tariff restrictions such as licences, opinions, prior
and consular approvals, import and other registers, and prior conditions of any kind that affect the
import or export of goods.
The only measures still in effect are the prohibitions established in the Single Text on
Prohibited Exports, in the General Law protecting the country’s cultural heritage and other measures
ordered by the Ministries of Agriculture and Health to safeguard public health (sanitary certificates)
and measures bearing on external security and internal order intended to ensure peace and public well-
being.
(2)(v)(b) Import licensing
The report by the Secretariat indicates in paragraph III.2.i(a) that import licences may be required
for specific goods.  Peru has provided notifications in documents G/LIC/N/3/PER/1 of 27 August
1996, G/LIC/N/3/PER/2 of 19 Januar y 1999, and G/LIC/N/3/PER/2/Add.1 of 8 October 1999, that no
administrative procedure relating to import licensing ex ists in Peru.  Please clarify the use of import
licensing in Peru.WT/TPR/M/69
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As stated earlier, the so-called ‘import licence’ was eliminated pursuant to Legislative Decree
No. 668, and today there are no procedures for granting or administering import licences or permits,
with the exceptions mentioned in the preceding response.
Are the goods listed in Table III.6 as "restricted goods" imported through an import licensing
programme?  Are there any similar requirements that apply to goods that are not listed in
Table III.6?
We repeat that there are no import licences.  For products whose importation is restricted,
there are generally additional requisites, such as inclusion in registers of importers (in the case of
explosives) and special certificates or permits for reasons of security or public health.
(2)(viii) Government procurement
We note in paragraph 84 that in order to be eligible to bid for public tenders, Peru requires that
suppliers of public works be registered in the National Registry of Contractors and must not appear
in the registry of disqualified contractors.  What is the rationale behind this requirement?  Is thisnecessary for efficient Government procurement?  Who may register and what is required for
registration?
The rationale behind having everyone who wishes to bid on public works register in the
National Registry of Contractors is to avoid any subjective pre-qualification by public agencies whencontracting public works. It also serves to keep  track of who is executing the largest Government
investments in the country.
The requirements for registration are established in the Single Text on Administrative
Procedures of CONSUCODE and are as follows:
Application addressed to the Manager, enclosing:
• A sworn statement on the accuracy of the information provided, pursuant to
Law 25035.
• Certificate that the members of the technical staff are registered with the CIP or the
CAP.
• Initial balance sheet (for recently-establi shed companies), balance sheet for the
preceding year submitted to SUNAT, sufficient financial statements to demonstratethe solvency of the executor of the works, signed and sealed by C.P.C.
• Simple copy of the technical staff payroll for the month before the application is
submitted, duly registered with the Ministry of Labour.  If computerized payrolls arepresented, attach the corresponding authorization.
• Simple copy of the incorporation documents and the most recent capital increase, if
any, duly registered in the public registries.
• Undocumented curricula vitae of the members of the technical staff.
• In the case of works completed abroad, the contracts and other supporting documents
should be registered by the competent authority, whose signature will be certified bythe local Peruvian Consulate and authenticated by the Ministry of External Relations
in Peru.
• For completed private works, the building contracts, municipal certificate of
compliance and builder’s declaration containing a priced description of the building,
endorsed by the owner and duly certified by the competent authority.
• Additional documents demonstrating the execution of the works declared in the
application, when warranted.WT/TPR/M/69
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• The sworn statement regarding corporate partners referred to in Article 7° of the
Regulations Governing the National Register of Contractors, when warranted.
• A sworn statement of organizational adequacy, indicating human resources,
equipment and material means.
A receipt showing payment of the corresponding fee, equivalent to 1 tax unit (UIT)
(S/. 2,900 for the year 2000) should also be att ached.  The procedure is initiated by CONSUCODE’s
Document Processing Office.  The approving authority is the Office of the Manager of the NationalRegistry of Contracts.  A ruling must be given within five working days.  The period allowed for
correcting deficiencies is 30 calendar days from the issue of the comment sheet.
New legislation has been adopted since Peru's first TPR in 1994, consolidating the legal framework
for, and enhancing the transparency of Government procurement procedures.  Please describe the
specific transparency measures that are included in this legislation.
One of the main features of the new Peruvian legislation in this area is that Law 26850 has
unified the rules governing the processes of Government contracting and procurement of goods,
services and works into a single body of law, thus providing greater procedural transparency. The
Law enshrines the principles of competition, impartiality, transparency and fair and equal treatment to
ensure that the Government obtains goods and services of the required quality in a timely fashion andat reasonable cost.
The Senior Council on Government Contra cting and Procurement (CONSUCODE) has been
established as the entity responsible for ensuring compliance with contracting and procurement
procedures by public sector agencies.  The legislation has also created the Government Contractingand Procurement Tribunal as the last administrative instance for settling disputes between
Government agencies and bidders.
The Secretariat Report notes that Peru is not a member of the WTO Plurilateral Agreement on
Government Procurement.  Does the Government plan to become a member to the Agreement?  Whatsteps does the Government plan to take to bolste r confidence in its public procurement system?
Peru has not considered the possibility of acceding to the WTO Plurilateral Agreement on
Government Procurement.
(3)(iii)(a) Export prohibitions and restrictions
Recently the Government of Peru has applied export bans on unprocessed Uña de Gato and Maca.
What does the Government hope to accomplish by banning exports of unprocessed Uña de Gato and
Maca?  These products are in the market development stage outside of Peru.  What is the Government
of Peru's justification for these restrictions?
The measure is consistent with our WTO commitments, which do not exclude provisions to
preserve the native genetic heritage and improved crops or public health and phytosanitary and
zoosanitary measures, which are governed by their own laws and specific regulations.
Maca and Uña de Gato were being extracted in large amounts from the native forests in our
Amazon area, affecting the resource, which is why the measure seeks to prevent depredation of the
species.  Extraction is permitted only in areas under controlled management.
Consequently, the measure is necessary to promote the sustainability of these species and the
management of native forests.WT/TPR/M/69
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(4)(iii) Free zones and other special fiscal zones
The Report states that the Peruvian Government has indicated that the CETICOS have boosted
activities related to the reconditioning and repair of vehicles.  However, current Peruvian law does
not permit reconditioned auto parts, certified as safe throughout the world and in widespread use inPeru, to be used in the CETICOS.  Why does the Government prevent the use of these parts in the
CETICOS when they are permitted to be used  in the remainder of Peru's territory?
For reasons of safety, Peruvian legislation stipulates that in the CETICOS vehicles involved
in accidents must be repaired and the steering of  right-hand-drive vehicles converted using new parts
and components.  This requirement applies only to certain parts or components which, unless they
meet the necessary quality standards, could affect the safety or even the structure of the vehicle.  Thelegislation also allows for the possibility of other parts and components being repaired or adapted.
(4)(vi) Trade-related investment measures and local-content requirements
The Secretariat Report notes that the trade-related investment measures in the milk sector have not
yet been eliminated.  Given that these measures are not enforced and appear to be inconsistent with
Peru's obligations under the TRIMs Agreement, why are there no plans for eliminating these
requirements?
In general, Peru does not place conditions on the use of domestic inputs.  Although there is a
legal provision requiring the use of domestic milk as an input, in practice it is not applied since local
production is insufficient and milk has to be imported.  Steps are being taken to revise this measure.
The Report also notes that Peruvian poultry grow ers have agreed to buy some domestic maize and
sorghum production.  What benefits do the growers receive for making such a commitment?  If nobenefit is provided, then please explain why the growers would agree to such an agreement.
The agreement between the maize and sorghum producers and poultry growers is a private
one and its purpose, under the auspices of the Ministry of Agriculture, is to promote production and
employment and to boost the producers’ productivity and efficiency since they have to supply a
product equal in quality to the imported product and on better terms.  However, the agreement is
flexible since if a producer fails to satisfy the conditions, the poultry grower is not obliged to purchasehis product.  Poultry growers benefit from a greater negotiating capacity with producers and because
they are assured of supplies of an input that is important for poultry production.
(4)(viii) Intellectual property rights
The Secretariat Report notes that Andean Decision 344, which is part of Peruvian legislation, is
under revision to ensure consistency with the provisions of the WTO TRIPS Agreement.  When does
the Government expect to conclude this process?
It is expected that the amendment to the Andean Decision on industrial property rights will be
approved in the next few weeks.
Peru has made significant progress in reducing software and video piracy in recent years.
Nevertheless, piracy in most areas remains double or  triple the rate in developed countries.  What
further steps is the Government taking to improve IPR protection and abide by its WTO TRIPScommitments?
Peru is making daily efforts to combat piracy and counterfeiting, many of which are public
knowledge, while others are carried out in strict secrecy.  The most recent steps include the
establishment of a Commission to Combat Adulteration, Counterfeiting and Piracy, which bringsWT/TPR/M/69
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together a total of 17 entities, including different professional and consumers’ associations and public
institutions.  Its purpose is to coordinate action to combat piracy and develop and disseminate a
culture of respect for intellectual property in the country.  Plans are being made for coordinated
monitoring activities, seminars and publication of advertisements concerning the protection of
intellectual property in the different media.
INDECOPI is carrying out an active education campaign at all levels to promote respect for
intellectual property rights.  This will undoubtedly have a positive impact in the medium term, since
consumers themselves will reject pirated products.
Piracy in the country has been reduced as a result of these efforts.  The pirate share of the
market, mainly in films and software, has been cut back considerably, according to statistics put outby the Business Software Alliance and Motion Picture Association.  Thus, in software, the pirate
share declined from 98 % in 1993 to 62% in 1999 and in the case of films, it dropped from 100%
in 1992 to about 52% in 1999.  Although we are aware that these figures are not exact, they are an
indication that piracy is not on the rise in Peru.
IV. TRADE POLICIES BY SECTOR
(2) Agriculture
The Report notes that Peru's agricultural sector is marked by a dual structure – an efficient export
sector alongside subsistence farmers.  Does Peru's current high level of agriculture protection makesense given this dual structure?  Are policies aimed at supporting prices of commodities produced by
subsistence producers discouraging development of agricultural exports?  Does the Government have
any plans to introduce quantitative restrictions on the import of agricultural products?  Does the
Government have plans to encourage export of its production surpluses?
Given the nature of the agricultural sector, the Government’s current policies are to lay the
foundations for the development of a modern economy, but this requires time, sufficient technical,
scientific, financial and human resources and an international environment that permits free
competition in a transparent and stable market, not dominated by distorting mechanisms that depress
international prices and affect the domestic market.
In world trade, various mechanisms are being used by third countries to support their
domestic agriculture and subsidize their agricultural exports.  In many cases, this has made their
exports artificially competitive, transforming food-importing economies into net exporters and turning
agricultural economies such as Peru’s into food importers.
We therefore consider it advisable to maintain certain tariff protection measures that are
consistent with Peru’s commitments under the WTO, in order to support the modernization of our
agricultural sector and create the conditions for making it competitive and sustainable over time,
including so-called commodities, such as sugar, dairy products, rice, yellow maize and wheat, which
have high growth potential.
The Government does not intend to introduce quantitative restrictions, nor does it encourage
the export of surpluses, although it endeavours to achieve food security.
(4) Mining and Energy
The Government's scheme for developing the Camisea natural gas field calls for the project to be let
in two stages, including upstream and midstream se gments, and for gas prices to be regulated at the
wellhead.  As a result, the Government has experienced some difficulty attracting firms to bid on the
midstream component of the project.  The Government recently announced that it would hold a tenderWT/TPR/M/69
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for the midstream component on 22 June.  What plans does the Government have, if any, to make the
midstream component more attractive to international oil companies?
Peru’s policy of promoting private investment has resulted in significant economic inflows
and greater private sector participation in all the sectors of the economy in which it participates.  Forthis reason, the privatization and concession programmes will continue, with a view to improving
economic efficiency and competitiveness.
The privatization and concession process has been dynamic in the first quarter of 2000, as
demonstrated by the contract for the Camisea field stage awarded last February, among other
examples.
Bidding on stage two of the Camisea project will be held next June and includes transport and
distribution. Pre-qualified companies are establishing consortia in preparation for the bidding.
(4)(ii)(a) Hydrocarbons
In recent months, Peru's energy parastatal co rporation PetroPeru, on instructions from the
Government, has actively participated in the retail fuels business to reduce high gasoline prices.
When does the Government plan to withdraw PetroP eru from the retail gasoline market?  When will
the Government privatize the Talara, Cochan and Iquitos refineries?
In general, PetroPeru has limited its participation in the marketing of liquid fuels derived from
hydrocarbons to the level of wholesale distributor.  At present it plays a very sporadic role on the
retail level and only temporarily in specific cases in isolated parts of the country.
Although the project to privatize the petroleum industry calls for complete privatization of the
refining business, its scope is currently being evaluated, given the lessons learned from past
privatizations and the form in which they were carried out, in order subsequently to study and
determine whether a given privatization is advisable and which models would be used to carry it out.
Once a decision is reached, a timetable will be established by COPRI.
(6)(i) Services:  General features
Please report on the status of Peru's participation in the General Framework of Principles and Rules
for Liberalizing the Trade in Services in the Andean Community.  In particular, we are interested in
the scope and coverage of the Agreement and the progress  Members have made in achieving
liberalization targets.
Peru participates fully in the General Framework of Principles and Rules for Liberalizing
Trade in Services in the Andean Community (Decision 439, 1997).
The framework applies to measures that affect trade in services in all service sectors and all
modes of supply, including those provided by the central, regional and local public sectors and by
delegated entities. It does not apply to services supplied in exercise of government powers or to airtransport services.
With respect to progress, the framework includ es a commitment to liberalize services markets
no later than 2005. Although the framework has existed since 1997, the lists of restrictions on trade in
services of the five members are in the process of consolidation.
In this regard, does the Government of Peru have any plans to notify the Agreement to the Council for
Trade in Services, pursuant to GATS Article V?  If so, when should we expect this notification to take
place?WT/TPR/M/69
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In order to comply with GATS Article V, paragraph 1, once the lists of restrictions of the five
countries have been prepared and consolidated, the corresponding notification will be made.
(6)(ii) Financial services
Please provide specific information concerning the general procedures used by the Banking and
Insurance Supervision Department for the purposes of authorizing the opening, transfer and closing
of enterprises and entities in the financial system.
The general procedures for the opening of financial institutions are as follows:
Establishment and minimum capital:
• The institutions must be established as corporations.
• Permits to organize and operate must be obtained from the Office of the
Superintendent of Banks and Insurance Companies (SBS).
• There are minimum capital requirements, which differ for institutions engaging in
multiple operations, specialized institutions, insurance companies and institutionsoffering auxiliary and related services.
Permission to organize:
• The organizers, who may be natural or legal persons, must have a good reputation
and be financially solvent;  at least one of them must have subscribed to the company
capital.
• Applications to organize must provide the information and formal requirements
specified by the SBS, such as draft articles of incorporation, a list of organizers and
shareholders, and two copies of the market, financial and management feasibilitystudy.
• A guarantee equivalent to five % of the minimum capital made out to the SBS must
be lodged.
• The opinion of the Central Reserve Bank is required, except for institutions offering
auxiliary and related services.
• Once the SBS grants authorization, the institu tion is issued with a certificate, which is
published in the Official Gazette.
• Joint and several guarantees that the institution’s capital will be subscribed are
required.  Both guarantees remain in effect until 30 days after the board of directors
takes office.
Permission to operate:
• When all the requirements have been met, the SBS will authorize the institution to
operate.  It issues a decision granting an operating certificate valid for two years
which must be published by the company within 30 days of being issued.
Transfers are basically governed by the same conditions of establishment, organization and
operation.
Institutions in financial difficulty are subject to a series of measures before a decision is
reached as to whether they should be closed, i.e:WT/TPR/M/69
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• Precautionary oversight;
• receivership;
• dissolution and liquidation.
The precautionary oversight  period lasts for a maximum of 45 days and different measures
can be applied to help the institution recover, the main ones being evaluating and determining its real
net worth and studying whether it can be rehabilitated by writing off losses and/or through fresh
capital contributions by the shareholders.
The institution can be placed in receivership  for  a maximum of 45 days and the SBS is
empowered to suspend operations and place restrictions on the board of directors, prohibit any
operation that would reduce legal reserves and also initiate all types of processes to collect
outstanding debts.  First, the real net worth is dete rmined and then losses are paid off out of the legal
and optional reserves or, when necessary, out of the institution’s capital.
The dissolution and liquidation  period begins when the receivership period expires and on the
grounds established in the General Corporation Act.  At that time, all judicial and administrative
actions to collect outstanding debts cease and a public call for submissions is made to manage and
supervise the process. The order of priority for payments is: labour obligations, depositors and
insured, tax obligations and other obligations. Institutions in the financial system have a deposit
insurance fund (FSD) which insures depositors for up to approximately S/. 65,718, an amount that isupdated quarterly based on the wholesale price index.
Are the authorization procedures limited to reviews of prudential criteria, or do they also pertain to
any of the measures listed in GATS Article XVI which would affect market-access commitments for
foreign suppliers?  Do the same criteria apply to foreign firms wishing to establish branch offices?
The authorization procedures include prudential measures such as the provision of
information, requirements regarding the suitability and solvency of the organizers and shareholders,
company feasibility studies and minimum capital requirements.  However, as indicated in Peru’s
schedule of commitments in GATS, the General Act stipulates that companies in the financial and
insurance system should be established as corporations, except those whose nature makes this
impossible. This is the only measure related to the provisions of Article XVI of GATS.
Authorization for the establishment of foreign firms in the financial and insurance systems
follows the same procedure as for domestic firms. Also, branches of foreign banks have the samerights and obligations as their counterpart domestic institutions. In addition, such branches are
empowered to conduct business following their established practices, provided they are not contrary
to Peruvian law and are not considered inadequate or imprudent by the Office of the Superintendent.
Additionally, what administrative procedures are in place for independent and impartial review of
administrative decisions?
Applications for reconsideration of all administ rative decisions issued by the Office of the
Superintendent in exercise of its powers may be submitted to the official who issued them and
decisions may be appealed to the Superintendent, the second and final avenue of appeal, within the
period specified in the General Administrative Procedures Act.  This rule is not applicable to
decisions made by the Superintendent, in his best judgement, in the exceptional cases established inthe General Financial and Insurance System Act and the Organization Act of the Office of the
Superintendent of Banks and Insurance Companies.
A decision by the Superintendent exhausts administrative avenues and any further appeals
must be made to the courts.WT/TPR/M/69
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With regard to Peru's GATS Schedule, we seek clarification as to the meaning and application of the
reservation concerning the making of claims through diplomatic channels.
Under Peruvian law, which is equally applicable to domestic and foreign firms (national
treatment) the objective of this rule is to ensure that all claims are based on Peruvian legislation andcommitments under WTO, and the foreign financial entity is required to waive the right to make
claims through diplomatic channels relating to business and operations it carries out in the country.
Please indicate when Peru will make more comprehensive commitments in insurance services.
The regulatory framework in the insurance sector  is intended to protect the interests of the
insured by safeguarding the economic and financial solidity of insurance and ancillary companies.  Toachieve that economic and financial soundness, the regulatory framework provides for the
liberalization of the insurance market and the principle of equality between national and foreign
investors.  These conditions are essential for achieving the competitiveness necessary in today’s
markets.
The legal framework applicable to insurance a nd ancillary companies is consistent with the
extensive liberalization needed in the insurance market, without neglecting fundamental issues
pertaining to prudential criteria and the solvency of companies and procedures for adequately
identifying and covering the risks they run.
(6)(iii) Telecommunications
We understand that OSPITEL, the Peruvian regulator, is reviewing the uniform interconnection rate
of $0.29 (established by OSIPTEL Resolution No. 18-98 of October 1998) and other interconnection
rates, in light of Peru's WTO commitment to establ ish cost-oriented interconnection rates.  It appears
that the uniform interconnection rate is not sufficiently cost-oriented, given other tariffs charged by
the major carrier in Peru (Telefónica de Perú) which are either substantially lower ($0.011 for off-
peak measured local service) or barely higher ($0.031 for long-distance service) than the uniform
interconnection rate.  How quickly will Peru act to set new interconnection rates, including the
uniform interconnection rate, which reflect cost-orientation.
To reduce the uncertainty that could be created by negotiating with the dominant carrier,
when the sector was being opened up, OSIPTEL established a ceiling or default interconnection rate,
which is a temporary reference rate. To determine that rate, a comparison was made of rates in the
region. OSIPTEL has issued rules to facilitate the signature of interconnection contracts and is in the
process of defining the applicable interconnection rate, based on the commitments made in the WTO
basic telecommunications reference paper and the above-mentioned rules.
(6)(v) Other services
Distribution
Please explain the rationale for the extensive "positive" list of items for which Peru scheduled
wholesale and retail trade services commitments in the GATS.  It would be helpful if Peru could
inform Members as to which items these GATS commitments do not apply to.
The basic rationale is that most of the services included in the list did not and do not have any
legal restrictions on market access or national treatment. This facilitated the preparation of a broad list
of commitments.WT/TPR/M/69
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Those commitments do not apply to any other distribution service included in the Central
Product Classification that is not on Peru’s schedule of commitments.  However, even in such cases,
Peru does not maintain restrictions on access or national treatment.
Business and professional services
Please explain why Peru has not tabled commitments in some business and professional services,
such as legal services, medical services, courier services and particularly computer-related services,
which are critical in building a domestic information technology sector.
No commitments were made with respect to the services mentioned, since at that time, owing
to the novelty of the subject, we were not familiar with the details of certain professional services.Their sensitivity to further liberalization was also a consideration.  Peru is considering expanding its
schedule of commitments, based on the offers made by its trading partners.
We seek clarification of certain requirements with respect to accountancy, architectural and
engineering services.  Peru indicates that professionals supplying these services must have theirprofessional degrees recognized, except in the case where there are reciprocal conventions, and must
also enrol in the relevant professional college.  Please specify the requirements a foreign professional
must meet to obtain such recognition.
In these professions, depending on the circumstances, recognition requires that degrees be
revalidated by the National Assembly of University Presidents or by a national university, in
compliance with the normal requirements of the institutions concerned, such as examinations, papers,
professional experience and other requirements.
In the case of the College of Architects, no inter-institutional agreement has been signed.
However, Peruvian and Ecuadoran architects are able freely to provide their services, without
revalidation of the professional degrees conferred by their respective colleges.
Also please provide information on the number and type of reciprocal conventions in these sectors to
which Peru is a party.  Please also verify that foreign providers may enrol in the relevant professional
college without discrimination.
Peru has signed specific bilateral conventions on the mutual recognition of university studies
and degrees with the People's Republic of China, Co lombia, Paraguay, Argentina and Spain. It is also
a party to the following multilateral conventions on the recognition of university studies and degrees:
Agreement on Academic Degrees with Bolivia, Colombia, Ecuador and Venezuela;  and the Regional
Convention on the Revalidation of Studies, Degrees and Diplomas in Higher Education in LatinAmerica and the Caribbean with Brazil, Colombia , Cuba, Chile, Ecuador, El Salvador, Mexico,
Nicaragua, Panama, Venezuela, the Netherlands, the Holy See, Surinam, Slovenia and Yugoslavia.
Membership in a professional college in Peru, depending on the profession, may entail
different membership dues for nationals and foreigners which, in some cases, may depend on whetherthe membership is permanent or temporary.
Tourism
With respect to restaurant and lodging services, please describe the licencing process as it works in
practice.
In both cases, interested companies must apply for registration in the Master Taxpayer
Register and obtain an operating licence from the pertinent district or provincial municipality. Once
these requisites have been complied with, they are authorized to begin operating. Classification of theWT/TPR/M/69
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establishment is optional in both cases and, if applied for, the evaluation is made by the Ministry of
Industry, Tourism, Integration and International Trade Negotiations.
URUGUAY
Please comment on paragraph 24 of the Secretariat Report: "… Revenue from the surcharge is
channelled to the Agricultural Development Fund, complementing the Fund's income from variable
specific duties. The introduction of the present surcharge system in 1997 may be seen, at least in part,
as an attempt to find alternative income sources for the Agricultural Development Fund in the face of
tightening budgets, and strong commodity prices that reduce the take from variable specific duties"
(Secretariat Report, WT/TPR/69, page 29).
Income from the tariff surcharge is intended for the Agricultural Development Fund whose
purpose is to support the anti-poverty campaign and the promotion of employment in the agricultural
sector with a view to raising the standard of livin g of the people linked with this sector. Policies of
this type are justified by the fact that, in Peru, the agricultural sector is considered very sensitive since
it includes various social groups with high levels of poverty, which in the last few years have alsosuffered from the effects of the recent international crisis and the el Niño phenomenon.
Please comment on paragraphs 26 and 30 of the Secretariat Report concerning variable specific
duties.
Variable specific duties were established within the context of the economic policy first
adopted by Peru in the early 1990s. The aim is to soften the impact of world price fluctuations on
domestic prices. In practice, this mechanism has largely succeeded in stabilizing prices on the
agricultural market which, by definition, are highly volatile.
In relation to paragraph 28 and the reference to th e mechanism having been eliminated for wheat
products in August 1998, is there any similar plan or programme for doing the same in the future with
respect to rice?
At the moment, there are no plans for any changes in the legislation.
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