Managing the Minerals Sector: Implications for Trade from Peru and Colombia

Managing and regulating the extractive industries can pose substantial challenges to minerals-rich countries. Aiming to overcome the “resource curse”, some countries attempt to generate greater gains from their natural resources by using trade policy instruments such as export restrictions. Others look to create a balanced regulatory framework to maximise gains from sustainable extraction and minimise the negative spillover effects. Colombia and Peru have aimed to do the latter. This study examines their experiences as regards some aspects of the management of their extractive industries. In particular, it examines the design of the tax system as it applies to non-renewable resources, the reform of the distribution of revenues from the sector, and strategies for tackling illegal mining. These policy areas are important to ensure that the extraction of natural resources benefits the economies and societies of the two Andean nations.