PERU INAUGURATES CAMPAIGN TO PROMOTE CLOTHING EXPORTS

PERU INAUGURATES CAMPAIGN TO PROMOTE CLOTHING EXPORTS

It is said that clothes make the man, but in Peru's case, they may make the country.

Peru has embarked on an export promotion campaign in which clothing gets top billing.The move comes in the wake of a $557 million trade deficit last year and dwindling foreign currency reserves.

The government is determined to multiply Peru's current $40 million worth of clothing exports tenfold by 1991. A prime target market is the United States.

Business and government sources say the increase will come largely by conversion or expansion of the country's more developed textile industry, which currently exports about $175 million worth of yarns, cloth and non- apparel textile products.

The plan is to increase the local value added to textile goods by making the finished product - a move that hopefully will provide a greater amount of desperately needed dollars.

According to Enrique Cornejo, president of Peru's Foreign Trade Institute, the country could be earning an extra $3 in clothing exports for every $1 in textiles. If, for example, just half of Peru's 1987 textile exports were converted into clothing, they would have rendered $262.5 million more, he said.

Peru's current economic downturn is shrinking the domestic market, and producers are looking elsewhere for sales.

The new strategy was cautiously welcomed by the Exporters Association, whose members have taken a beating from unfavorable exchange rates.

Peruvian governments traditionally are less than open-handed with exporters, but the government of President Alan Garcia has been even more aggressive against exporters, said Ricardo Vega, president of the Exporters Association.

Clothing manufacturers, however, are now the most favored among the unfavored.

Recently, President Garcia issued a decree offering exporters of cotton, alpaca and wool garments the highest official exchange rate (75 intis to the

dollar), preferential granting of scarce dollars for imports of inputs and

machinery, and the highest rate of tax rebates for exports, 35 percent.

To qualify, a company must export 60 percent of its production, reinvest 60 percent of its profits, and its products must carry only 15 percent foreign content.

The decree brought cheers from the National Association of Industries' clothing manufacturers committee, with committee president Ricardo Marquez proclaiming that garment makers are sufficiently gung-ho to boost their exports this year alone by up to 60 percent.

Mr. Marquez, who produces blue jeans and other denim garments, says he has put in an order for 200 more sewing machines. He estimates only about 44 of his committee's 200 or so members are in shape to comply at the moment.

Clothing uses less than half its quota allowed under the U.S.-Peru bilateral textile agreement. The agreement limits U.S. imports of Peruvian textiles in all forms to 14 million square yard equivalents, 10 million of which are for cotton goods. The sub-categories are set by the Peruvian government.

Clothing gets about $40 million worth of the U.S. quota. Last year's exports were about $16 million.

The bilateral agreement, which expires in April 1989, is scheduled to be renegotiated later this year.

Peru is a top producer of high-quality, long-fiber Tanguis and Pima cotton. It also is the world's largest producer of alpaca.