Tariff Regimes in Latin America: Privileges and the Historical Experience of Chile and Peru

Abstract

This paper focuses on the effects of the consistently enforced liberal policies in Chile of the last 40 years in comparison to the inconsistent policies of the Peruvian government during the same period. Tariff policy can be used as a representative indicator of the liberal/protective economic approach given how important openness is to trade in the long term development of small economies. The first section explains tariff and tariff policy. The second details the historical development of tariff policies in Chile and Peru and the third part contains a comparison of their current tariff structures. Both countries started at a similar point in the 1970s, both utilize comparable natural resources and have a similar GDP ratio. However, only Chile has become one of the most developed economies in the region while Peru, although progressing rapidly in the last decade, is still lagging 10 years behind due to inconsistent policies applied during the '70s and '80s. By turning to neoliberalism in the '90s, Peru laid the foundation for their current strong economic development and is now, in some ways, even more open than Chile with a few exceptions in the textile, coffee and beef industries to which Peru applies high tariff rates to protect the jobs these industries provide.