Texbrasil, Abit, Apex Brasil, Peru

Brazilian exports to Peru are expected to grow in the coming years. That is because starting on January 1, 2014 over 5 thousand products will be added to the preferential tariffs list for Peruvian exports. According to a study by the National Confederation of Industry (Confederação Nacional da Indústria – CNI), which is leading a delegation of 70 Brazilian companies keeping tabs on President Dilma Rousseff’s visit to Peru, only 687 products currently have preferential tariffs.

The reduced tariffs are a result of Economic Complementation Agreement 58 (Acordo de Complementação Econômica 58 – ACE 58), which was negotiated by the two countries in 2003 and took effect early this year. Like all agreements, ACE 58 follows a timeline for tariff reductions, gradually lowering import taxes between the countries. By 2014, the agreement stipulates that 85% of products should be freely traded between the two countries.

However, right away in the first year that the agreement was valid, Brazil eliminated 98% of tariffs for 6,524 products traded; while Peru eliminated tariffs for only 10% of products. In addition to the advancement planned for next year, Peru should eliminate tariffs for all products by 2019.

The 5,000 products whose taxes will be cut starting in 2014 account for an average of 56% of the value of Brazilian exports to Peru and are mostly manufactured products. According to CNI’s Director of Industrial Development, Carlos Abijaodi, tariff reductions represent a major opportunity for Brazilian companies. “In addition to protecting the market from competition with other countries, exporters will have the chance to expand sales to Peru, since Brazilian products will be more competitive,” explains Abijaodi.

Even before tariffs were cut, Brazilian products were already winning over the Peruvian market. Last year, Brazil exported USD 2.4 billion to that country. That is 9.1% more than in 2011. Sales of automobiles, which totaled USD 570 million last year, or 23.8% of shipments, led the list of exports to Peru. The machinery and equipment sector came in second, with sales that reached USD 452 million; and in third are chemicals, with sales of USD 288 million in 2012.