The World Trade Organization (WTO) has reported that Peru has launched an investigation into what is seen as an import glut that is jeopardizing the commercial health of manufacturers in Peru’s clothing and textile industry.
This comes after the country’s Commission on Dumping, Subsidies and the Elimination of Non-Tariff Trade Barriers of the National Institute for the Defense of Competition and the Protection of Intellectual Property (Indecopi) reported that imports of clothing between 2016 and 2020 increased by 253.8% and it continues to increase – in 2021 (January – June) it increased by 8.9% year-on-year. As a result, between 2016 and 2020, apparel imports increased their share of the Peruvian apparel market by 13.4%, increasing it by an additional 2.9% year-on-year in January-June 2021. The report concludes that there is a reasonable indication of injury to the domestic apparel industry, including its internationally important alpaca segment.
“Peru is a small market compared to China and some other Asian countries. Thus, a garment can enter Peru for much less than the value of an identical or similar product entering the United States, a market several hundred times larger than ours. Such a situation has favored a disproportionate increase in imports from China and other Asian countries, causing serious damage to the national clothing industry in Peru, which is why guarantees are necessary,” Martín explained. Reaño, director of the Peruvian Committee of Textiles and Clothing of the National Society. of industries.
Indecopi pointed out that Chinese and Bangladeshi suppliers were causing the most problems by increasing their exports to Peru, the aim of the safeguard duty being to give “pymes” (small and medium-sized enterprises) and mipymes (micro-enterprises) locals a fair chance to compete with the clothing giants of Asia.
The investigation is still open and affected parties can comment until February 24. Nevertheless, at any time, Indecopi may recommend the application of provisional safeguard rights for a period of 200 days. If this happens, a government commission composed of the Ministry of Economy and Finance (MEF), the Ministry of Production (PRODUCE) and the Ministry of Foreign Trade and Tourism (MINCETUR) will consider whether to confirm the rights. They have “a relatively short period of time to decide whether the provisional measures are applied or not,” Reaño said.
He doubted the decision would be challenged at the WTO, saying Peru had a stricter standard for imposing these tariffs than in global trade agreements. He added that there was no threat to the free trade agreements that Peru has signed with its partners or the WTO. Peru signed a Free Trade Agreement (FTA) with the United States in 2009 and with the European Union in 2012.
Peru’s government, led by President Pedro Castillo, leader of the Marxist Free Peru party, says the country has maintained one of the lowest tariff and non-tariff restrictions on importing clothing in the world in the past five years. years, which has mitigated the increased flow of garments from China and Bangladesh to the Peruvian market.