Peru

In 1990, the Peruvian government launched a major customs administration reform. The reform transformed what was generally considered to be an inefficient and "bad" customs administration into an efficient and modern administration that observers see as a model for others to follow. Moreover, the improvements resulting from the reform have been sustained to date, consolidated, and deepened.

The most important steps that would eventually ensure the success of the reform were taken at the very beginning and during the initial years of the process, when the legislative basis for reform was laid. With the support of the highest authority, reformers were able to work toward achieving their vision of a professional, modern customs administration characterized by integrity. Rather than tinkering with adjustments or improving existing systems and procedures, the reformers started with a clean slate; went for the best in organizational, managerial, and operational systems; and largely achieved their objective through quality design and planning. The customs administration changed dramatically within a few years, and the consolidation and deepening of the reform process continues today.

The modernization of a complex administration is, by its nature, a gradual process. One cannot pinpoint a fixed date when the new customs administration was established. The most intense years of reform were 1991-94, when the basics were developed and put into place, and 1995-98, when the reforms were consolidated and deepened. Following a brief leveling-off period, in 2000 the reformers made a push for further modernization, increased administrative efficiency, and better service to the trading community with a program of second-generation reforms that were based largely on more intensive use of technology. Today the customs administration continues to renovate itself in light of changes in the trading environment and technological developments.

Although Peru's achievements are formidable both in substance and in sustainability, continued vigilance and effort will be needed to prevent the quality of the customs administration from deteriorating. Risks are mainly economic and political, but some of a systemic nature may also arise.

This chapter begins by reviewing the circumstances and factors that stimulated the reform and underlie its success. Skeptics might reason that being perceived as successful is easier when a country starts from an extremely low point of departure and establishes what should have existed in the first place, but Peru's success in customs reform is much more than that. By starting from scratch, in many ways Peru surpassed the degree of modernization and the quality of management systems that can be found in many industrial countries. That is not to say that the system is perfect, and improvements and adjustments are possible or needed in a number of areas, but that situation is characteristic of customs administration. Given its position in the middle of foreign trade operations, customs administration needs to be flexible and able to adapt to changes in the sector.

Background and Origin of the Customs Reform

This section summarizes the characteristics of the trade and tariff regime and the customs administration in 1990 and how the economic crisis that erupted that year led to important policy and institutional reforms, including the customs administration reform.

Trade and Tariff Regime in 1990

In 1990, Peru's trade regime was characterized by intervention, regulation, and protection. The import tariff regime was complex, consisting of 39 diff...

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