The EU appreciates Peru’s commitment to undertake economic and institutional reforms to help the country grow on a more predictable and sustainable path. We note in particular its efforts to reform the judiciary and to fight against corruption, including via the framework of the National Integrity and Anti-Corruption Plan.
We understand that the government is seeking to improve the business environment and promote economic growth through the implementation of a "National Competitiveness and Productivity Plan", which takes on infrastructure, funding, human capital, innovation, business climate, labour market, foreign trade, institutional development and sustainability. The EU would be interested in learning more about the results of implementing the plan.
Peru has a strong and deep trade and investment relationship with the EU. In 2018, the EU accounted for 13.5% of Peru’s total trade. Moreover, the EU is the biggest foreign investor in Peru. The bilateral Trade Agreement provisionally implemented since 2013 has had positive impact as it contributed to a diversification of Peru’s export base. The share of agricultural products now account of 37% of Peruvian exports to the EU, compared to 24% in 2012.
The EU appreciates Peru’s commitment to the multilateral trading system and its willingness to cooperate in providing solutions to the ongoing crisis of the WTO as well as in exploring new issues by participating in the Joint Statement Initiatives.
The EU notes Peru’s strong engagement to the regional trade integration; Peru is party to the Comprehensive and Progressive Agreement for Trans Pacific Partnership; it is working on a deep integration in the Pacific Alliance and is strengthening ties with the Mercosur. The EU is interested in the deepening its relations with the Pacific Alliance: for example, the Joint Declaration on a partnership between the Pacific Alliance and the European Union was signed on 25 September in New York.
Despite the positive overall trade relationship, the EU has some concerns that it wishes to express. In this context, we welcome that Peru chose the alternative timeframe for its TPR, which enables us to have a preliminary examination of the replies to our written questions in advance to the meeting.
Firstly, the Selective Consumption Tax on alcoholic beverages - which continues to been applied in a discriminatory manner. During its last TPR, Peru had committed to address the situation. We regret to note that the recent reform brought with Supreme Decree No 093-2018-EF has in fact further increased the tax gap.
We appreciate the reply of Peru to our advance written question on this matter, stating that the "the current tax structure is compatible with the obligations in the WTO and the application of taxes is not based on their origin". However, the EU notes that pisco continues to be excluded from the system of the excise taxation and a specific tax is applicable. The magnitude of the tax differential and the fact that the beneficiary of the differentials (pisco) is by Peruvian law a domestic product, is evidence that this dissimilar taxation system is applied in a manner so as to afford protection to domestic production. We invite Peru to explain the grounds for this differential treatment by replying to the follow-up question that we will submit on this issue.
Secondly, more efforts are needed to cut red tape and procedures for effectively accessing Peru’s market. EU operators are concerned with the burdensome import procedures, for example for sanitary and phytosanitary registrations. We would also like to see faster approval procedures for EU applications.
Thirdly, as indicated in our written questions, we would invite Peru to explain the rationale of some TBT measures, such as the labelling requirements regarding health warning on food packages. We would like to encourage Peru to review its Advertising Warnings Manual to allow the use of stickers without any limitations in time in line with international practices.
Lastly, the EU attaches high importance to the protection and effective enforcement of geographical indications on the international scene, both at multilateral and at bilateral level and looks forward to continuing the regular exchanges with Peru on these matters.
On behalf of the EU, I look forward to a constructive exchange of views during this review and I wish Peru’s delegation the utmost success during its 5th Trade Policy Review.