To learn more about this issue, see chapter 4 of Out Of the Border Labyrinth, a report published by the IDB’s Integration and Trade Sector, and IDB Working Paper series no. IDB-WP-701, “Posts as Trade Facilitators.”
Pítipo is a district with a largely rural population of 20,000 in Lambayeque department, in the north of Peru. In 2011, a group of women from the area managed to gain a footing in the local labor market by creating an association of craftswomen called Manos con Talento (Talented Hands), which makes clothing from organic, native cotton that members of the association grow, spin, and weave or knit themselves. There is huge potential demand for fibers of this type abroad but because they are manufactured on a small scale and producers are often in remote locations, accessing foreign markets can be very costly. It was not until 2014, that these artisans were able to send their first samples by mail to France using the Exporta Fácil (EF, Easily Export) program. Since then, not only have they continued exporting to France, but they have also started doing so regularly to Luxembourg and Argentina, too.[1]
The Exporta Fácil Program
Export formalities can create high financial and administrative costs for companies. The EF program simplifies the documentation needed to export products and allows postal services to handle the administrative side of the process as well as the logistics for shipments from small-scale producers of specialty goods, including samples. However, all communications around product details remain in the hands of the buyers and sellers.[2] This facilitates international market access for small companies like the one run by the craftswomen from Lambayeque who started Manos con Talento, who previously would have found it extremely hard to export their products because of how costly the traditional export system is.[3]
There are currently five EF programs in Latin America operating in the following countries: Brazil, Colombia, Ecuador, Peru, and Uruguay.[4]
Exporta Fácil in Action: Peru
In July 2007, the Peruvian government launched its EF program to facilitate trade by enabling exports to be sent through the postal service provided they met certain requirements. Although any formal company can export through EF, the program is explicitly aimed at small and medium-sized enterprises (SMEs). While there are no limits to the number of EF Declarations (DEFs) that each firm can issue, each DEF has to comply with the following requirements: (1) the total value of each DEF must not be greater than US$5,000; (2) a shipment can be made up of several packages, but cannot weigh more than 30 kilograms, as stipulated by SERPOST (the Peruvian postal service); and (3) the shipment cannot go to more than one buyer—in other words, firms must issue one DEF for each buyer that they are shipping to.
To export through EF, firms must first visit the SUNAT (the organization which enforces customs and taxation) website, fill in the DEF, print it, and take it to the nearest authorized SERPOST office along with the goods they wish to ship. SERPOST is Peru’s official postal service and is the only organization that can provide this service.
EF simplifies the export process for several reasons:
- The DEF is easier to fill in than standard export declarations as it contains fewer fields (figure 1).
- There are more municipalities with at least one post office that provides EF services then municipalities with a customs office. This means that companies do not need to go to major cities – where customs offices generally are located- to deliver their goods, which saves them time and money (figure 2).
- EF streamlines the administrative process for exports in comparison with the traditional customs system.
- Firms using EF also benefit from SERPOST’s assistance with customs formalities as the service acts both as a representative for them at customs and as a logistics operator, handling all the necessary administrative procedures for shipments to reach their final destinations. This frees firms from the need to hire a customs broker.
Figure 1. Peru: Single Customs Declaration (left) and Exporta Fácil Declaration (right)
Figure 2. Peru: Location of Customs Branches (left) and SERPOST Offices (right), 2014
Exporta Fácil Users: Firms, Products, and Destination Markets
The export values and the number of employees of firms that use EF are smaller than those that export using a traditional customs declaration and they are less diversified in product terms, although they are equally diversified in terms of their destination markets and they tend to operate more in areas that are far from the capital city (Lima) than regular exporters do. Proportionally, there are more EF firms in the Sierra region (for example, Cajamarca, Cuzco, and Junín) and in noncentral coastal departments (such as Lambayeque and La Libertad). This geographic distribution corresponds to that of highly specialized firms that face higher costs of trade or sell products to niche markets that depend on specialty local inputs. This spatial distribution pattern corresponds with that of SERPOST offices. In this sense, it is worth stressing that the number of municipalities that export products has grown on a par with those of postal offices (figure 3).
Figure 3. Peru: Number of Municipalities That Export Products and Number of Exporta Fácil Offices, 2005–2014
Exports from firms that use the EF system are mainly made up of highly differentiated goods such as clothing and jewelry as well as toys, ceramics, and artworks. Developed countries, whose demand for differentiated goods is relatively high, explain a larger proportion of exports through the EF system than through the traditional one. On average, these markets account for over 70% of EF exports but explained just 40% of traditional exports. Consequently, EF seems to be the right channel for SMEs to export small batches of highly differentiated products to more sophisticated, demanding destination markets.
What impact has Exporta Fácil had on exports of specialty goods? Initial econometric evidence
As stated above, companies that use the EF system tend to export specialist goods produced on a small scale. The very nature of these companies means that the impact of the program will be at the local level and it is thus unlikely that it will radically alter the country’s aggregate exports.
Indeed, the evidence suggests that EF is associated with higher levels of exports at the municipal level. This increase in exports may be attributed to the growth in the number of destination markets reached and especially in the number of exporting firms. Specifically, some municipalities seem to have managed to reach new destination markets thanks to the EF system. In contrast, no systematic effects on export intensity have been observed. In short, EF has helped municipalities to venture into international markets and expand and diversify their exports.
What mechanisms explain the positive impacts that EF has had on municipalities’ export outcomes? First, the evidence suggests that the EF program favors experimentation: the program has a positive effect on the probability of a firm starting to export and, more specifically, of starting to export a new product or to a new destination market. Second, the evidence suggests that EF allows exporters to learn: gaining export experience through the EF system tends to be associated both with greater regular exports and a lower rate of failure for these exports. Companies that become regular exporters after using EF seem to be better prepared for diversifying their destination markets. Finally, the evidence reveals that the export knowledge companies acquire by using EF is transferred to other firms: companies located in the same municipalities as ones that export a certain product to a given destination market through the EF system are more likely to export that same product/destination combination through the traditional channel.
The future of Exporta Fácil programs
EF has had positive impacts at the municipal level and has facilitated experimentation and learning among companies that use it. However, can the program be improved to enable higher gains? These programs need to be expanded to include imports, as has already happened in Brazil and Peru through their Importa Fácil (Easily Import) programs, and their main operating principles and eligibility criteria should be coordinated between the different countries. For example, in Peru, the value of each shipment cannot exceed US$5,000, but in practice, the value of most shipments is below US$2,000, which is precisely the threshold that many countries have set for the simplified administrative handling of imports. Simpler, more coordinated procedures on both sides of the border would favor this type of operations.
[1] Sources: https://www.youtube.com/watch?v=Hm503CHwOJs (link in Spanish), http://www.andina.com.pe/agencia/noticia-artesanas-lambayeque-exportan-prendas-algodon-nativo-a-francia-517245.aspx (link in Spanish)
[2] Although these costs can be brought down by hiring intermediaries, small companies and, in particular, the ones that produce specialty goods on a small scale tend not to opt for this solution. There are two reasons for this. First, intermediaries add their own profit margins, a cost which is difficult for small companies to take on. Second, to establish a sales relationship for specialty goods, it is likely that producers will need to send samples to potential buyers and the designs and features of the products will then need to be adapted based on direct communication with these buyers about product specifications. This back-and-forth process means that the standard role of the intermediary may not be cost-effective.
[3] Likewise, some companies go from exporting through intermediaries to becoming direct exporters. Given that the EF program eliminates the double profit margin (that of the producer in addition to that of the intermediary), it is to be expected that this would lead to an increase in revenue from exports.
[4] Other countries in the region also have simplified export regimes, but with different regulations to EF in terms of the authorized postal services and the limits in the size and value of shipments. For example, Argentina recently launched “Exporta Simple”, a scheme that operates with courier services. In this article, we focus on regimes that rely on officially designated postal services, leaving cases like Argentina out of the analysis.
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