Questions for Our Man in Peru
U.S. exporters have new opportunities in Peru since the U.S.–Peru trade promotion agreement went into effect. John Simmons, the Department of Commerce’s senior commercial officer in Lima, offers some details on accessing this market.
John Simmons spoke recently with Doug Barry of the U.S. and Foreign Commercial Service about opportunities for U.S. businesses in that country, especially in the wake of the U.S.–Peru trade promotion agreement (TPA) that recently entered into force.
Cuzco, Peru, at night (stock.xchng photo)
Barry: George Washington declared more than 200 years ago that, to have friendly relations with other countries, our young nation should trade and exchange knowledge. It sounds like George Washington had it right all those years ago.
Simmons: Certainly with regard to trade in Peru, I think he did. It’s an interesting time to be here, and there’s a lot happening that’s of relevance to U.S. companies.
Barry: And what is the most relevant aspect of the new TPA with Peru? How is it going to benefit U.S. companies that choose to sell there?
Simmons: Probably the most immediate and noticeable aspect for U.S. firms is that as of February 1, 2009, about 80 percent of U.S. goods that are exported to Peru enter duty-free.
Barry: And what were the duties before the TPA went into effect compared to now?
Simmons: They varied quite a bit. You’re still seeing import duties of 2, 3, maybe 10 percent on some items from competitor nations. Most of our products will now come in at 0 percent.
Barry: Do U.S. businesspeople face a blizzard of forms and certificates of origin to fill out to take advantage of the TPA?
Simmons: Well, things like certificates of origin should get easier and more uniform. In general, Peru is a fairly bureaucratic place. But under the TPA, the goal is for all shipments coming from the United States into Peru to clear customs within 48 hours.
Barry: To get through this bureaucracy, your office offers assistance and guidance to U.S. firms. How do they get in touch with you to take advantage of what you offer?
Simmons: The easiest way is to search “U.S. Embassy Peru” on the Internet. From there, you’ll find a link to the Foreign Commercial Service section. And from there, you can find me and my staff members, who are identified by their industrial specialties. All kinds of information are available on the commercial relationship in key sectors, as well as broader information on the Peruvian economy, trade, and so on.
Barry: The notion that many here in the United States have of Peru is one of wonderful natural beauty, but also of a fair amount of poverty. Which Peru do you see, and what is the most important thing to keep in mind when judging this market?
Simmons: I think the most important thing to keep in mind is the pace of change in Peru. Poverty is still a concern, and the official poverty rate includes almost 40 percent of the population. In the past two years, though, Peru has achieved economic growth rates of 9 percent a year. And that’s really transforming the standard of living for many people and generating quite a bit of demand for imported products.
Barry: What are some of the markets that U.S. companies are selling to?
Simmons: We’re not just selling to the traditional consumers in Peru, which happens to be the mining sector, but we’re seeing diversification in the economy, which is then leading to diversification in the customer base for U.S. products.
Barry: And what are Peruvians consuming beyond the mining sector?
Simmons: Peru is undertaking some steady development of the oil and gas sector, so you’re seeing machinery related to oil and gas exploration and development become more prominent. The telecommunications sector has grown very quickly, so a lot of high-tech exports come from the United States—telecom, computers, and so on. Other things, like plastics, chemicals, and construction equipment, are also doing very well in this market.
Barry: What role does Peru play in the larger region? Is Peru a place that can act as a springboard to sales in adjacent countries?
Simmons: You’ve got a number of fairly prominent U.S. consumer good companies that traditionally have serviced the domestic market. They are now using Lima as their regional headquarters to serve Ecuador and Bolivia as well. Part of the reason for that is the relatively stable political situation in Peru.
Barry: Let’s say that I’m an American arriving in Peru for the first time. What can you tell me about what I should or should not do with respect to the business culture there?
Simmons: Peruvians are very used to dealing with foreigners. They are very gracious hosts. They’re very proud of their cuisine, which is unique to the region and is quite good. At virtually any function, they’re likely to serve you their national drink, which is a pisco sour.
Barry: Well, John, you’re making me both hungry and thirsty, and I want to thank you for sharing a little bit of Peru with us.
Doug Barry is an international trade specialist in the Department of Commerce’s Trade Information Center.
For More Information
U.S. exporters looking for more information about Peru can visit the U.S and Foreign Commercial Service’s Peru Web site. For more information on exporting to Latin America in general, contact the Trade Information Center at 1-800-872-8723 or visit www.export.gov.