Trade Facilitation at the Peru–Chile Land Border: Policy Impact of Digital Importation and Prearrival Declarations

Abstract

This policy report examines the impact of the Peruvian Foreign Trade Public Policy implemented at the Santa Rosa Centre of Compliance (CAFSR) at the land border between Peru and Chile, presenting original research and quantitative analysis of statistics from the CAFSR at the Peruvian border collected by the National Superintendency of Customs and Tax Administration (SUNAT) from 2019 to 2022. The results show that customs compliance controls have been expedited, simplified, and modernised by both the digital importation process and mandatory prearrival customs declarations. However, the analysis calls for two further risk assessment strategies to be adopted by customs administrations in both countries. First, applying additional filters to identify fraud in prearrival customs declarations could expedite the release of low-risk consignments and help to ensure higher-risk consignments are subject to additional border restrictions. This paper suggests implementing an innovative blockchain technology that allows for the timely and accurate sharing of encrypted customs declarations to administrations in Peru and Chile. Second, upgrading infrastructure and logistics at the CAFSR could increase the capacity of the border post to facilitate increased binational trade.   As a result, expediting the flow of goods and reducing time and costs facilitate trade. To maintain and enhance the advances, evaluating the infrastructure, logistics, and the automatic assignation of control channels is necessary. The flow of goods increased at CAFSR, even though the percentage per type of control (physical, documentary, or free) remains steady. Hence, the evaluation and adoption of this paper's recommendations are necessary as they also include the Smart Borders Project, announced to be executed up to 2024, aimed to automatize customs control and make it less intrusive and more intelligent through the extensive use of technology, risk assessment and data mining.