JuNe 2008 45601 About the Author exporting by Mail - An innovative trade J. Luis GuAsch Facilitation tool senior Adviser on competi- tiveness and regulation, sustainable Development There are many firms mostly -micro and small- that are de facto Department, LAc region, the World bank. A spanish excluded from the export chain by virtue of their location (oper- national with an engineering Degree from Polytechnic ating in small villages or cities with minimum or no support for university of barcelona and a export services), information (knowing what it takes and how PhD in economics from stanford university, he has one exports), cost of export services (need to use customs and been at the World bank since 1992, assisting countries in logistics agents), lack of knowledge of proper packaging, etc. improving competitiveness. he is also a Professor of Our solution was to design a new tool that would tackle all of economics at the university of those problems. This tool is exporting by mail. california, san Diego. he led the design of the Peru trade and competitiveness Project, where this instrument was Background introduced as a component. the Competitiveness and trade Project was implemented by the World Bank in Peru with the objective of facilitating exports by micro and small firms located all over the country. the Bank team, building on the Brazilian experience, worked with the na- tional tax administration Superintendency (SUnat) and with the office of the Prime minister (PCm), the trade ministry, the ex- port Promotion agencies (PromPerU and PromPeX) and the Post office to develop and implement the tool. even with mini- mal publicity, the response has been ex- traordinary. this approach is currently be- ing considered or/and implemented in a number of other countries as well, with or without World Bank involvement. How it works this trade facilitation program is called "easy export." an individual or firm needs to take a package to the nearest post office (although pick-up service from the Post- office is also available), which provides free packaging. the sender has to fill out a form (export declaration) on the Internet (avail- able at the post office if needed). the post office weighs the package and scans the ex- port declaration form. the user pays the fee for the type of service desired. end of story. IFC SmartLeSSonS -- JUne 2008 1 customs agents, perhaps understandably, since they felt What is being exported they would be losing business. a compromise was reached based on setting a maximum value of the packages to be Jewelry, alpaca and cotton garments, food supplements exported (US$2,000) but with the agreement that we would (natural products), cosmetics, wood art and crafts, shoes revise the maximum value a year down the road (the plan is and leather, processed food, metal tools, etc. to extend it to US$10,000). another critical element was to secure financing for the post offices, since for the program Restrictions they needed a scale, a paper scanner, and in some cases In- ternet access (the latter if access was not available in the the value limit is US$2,000 (later to be extended to village, since the export declaration has to be sent to SUnat US$10,000). maximum weight is 30 kilograms. there are by Internet). We addressed that issue by committing some also limitations on the size: the sum of the three dimensions funds from the World Bank project. cannot exceed 3 meters. However, there is no limit to the number or frequency of packages to be sent. Impact Within six months since the start of the program, more than 300 firms have used easy export to ship goods with a value of more than US$300,000, and the trend is sharply increas- ing. most of the users are new exporters microentrepre- neurs and small firms. many of these are in some of the poorest areas of the country. and the trend is ever increas- ing. Since the beginning of the program, the monthly rate of increase in the number of firms and packages has been over 30 percent. Benefits Highly simplified trade logistics: the exporter does not need to use a customs agent, logistics agent, or freight for- warder, or to consolidate the merchandise, and even the packaging is provided for. all that is needed is to go to a post office (one that has a scale and a paper scanner) and to the project was implemented in two phases. We started by use the Internet to fill in the export declaration for the tax equipping 29 post offices, and in a second phase, based on agency. results, we would go to 60. to keep the process simple, we designed a quite simple export declaration form to be filled Other benefits in via the Internet. Competitive tariffs, and three types of service: urgent - 4 to We noticed that in many remote places, small cities and vil- 5 days delivery; rush - 7 to 10 days; and economical - 15 to lages, firms did not use or have access to proper packaging. 20 days. this includes free packaging, pick-up service, track- the solution was to provide the packaging at the post of- ing, insurance coverage and frequent user discounts and fice, and that has proven critical for the success of the pro- even credit services. all services are priced for cost recovery, gram. and to address the limited mobility of some of the so there is no subsidy. users, the program provides pick-up service through the post office. Finally, to address some of the concerns of the Lessons Learned microfirms, the post office also offers insurance and even credit services (the post office was responsible for finding the key motivation was to address the concerns of both the the proper partners for those services). micro and small producers that trade initiatives were only for the "big" guys. the issue can be politically sensitive, so another critical element was the support led by the export we decided to bring policymakers on board early on. We Promotion agency to locate clients abroad. reaching to secured the support of the Prime minister, and under his the Diaspora to identify friends and relatives and small dis- leadership we brought in the critical players: SUnat, the tributors as possible clients and recipients was critical. a minister of trade, PromPerU, PromPeX and the Post of- Web page and an online interactive database facilitate the fice. We also brought in the Brazilians to learn from their contacts. experience. While there were some concerns in the begin- ning, when we explained the details of the program, we 1) What we could have done better acquired the strong support and endorsement of those key players. Peru has signed a relatively large number of free trade trea- ties. most products exported to countries covered by the Where we did find some resistance was from the private treaties have zero tariffs, but to receive that benefit, 2 IFC SmartLeSSonS -- JUne 2008 a certificate of origin is needed, stating that the product and or parts were produced in Peru. that certificate is usually provided by a govern- ment agency or chamber of commerce. How- ever, in most small cities that service is not of- fered. We did not think of that as an issue then, but we are working on a solution that is rela- tively simple - the digitalization of the certifi- cate of origin, which will allow access online. We needed a more systematic publicity and in- formation campaign, not only on the existence of the program but also on the associated ser- vices offered and the range of products that could be exported. even as the impact has been significant, surveys have indicated that many firms were not aware of the option (that was not surprising, since there was not a significant public information program).that is being corrected. another improvement that would enhance the impact - and we are working on it - is the use of a local intermediary or broker to disseminate information about the program, to inform about products in demand, to facilitate identifi- cation of buyers abroad, etc. We believe this will lead to increased use of the service, to the benefit of the micro and small producers. 2) Critical elements for success as successful as the program has been, it will be even more successful when a broad publicity campaign is in place, an information and train- ing program to identify potential clients abroad is functioning, certificates of origin are digi- talized, an easy export Web portal has been launched, e-commerce tools are further en- hanced, and all post offices are provided with scales and paper scanners. 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