Volume 5, Number 5, Page 5
Recent Developments in Brief
Antitrust/Antidumping Cases
MEXICO
U.S. Paper Companies Under Investigation
The Department of Commerce and Industrial Development published a preliminary resolution on an antidumping investigation of the U.S. paper industry. On Dec. 12, 1996, the National Chamber of the Cellulose and Paper Industries requested an antidumping investigation on U.S. paper imported under tariff categories 4802.52.01 and 4823.59.99.
The Chamber dropped its request four days later, but the Department resolved to continue the investigation and imposed preliminary antidumping duties of 24.12% on four U.S. paper manufacturers. Diario Oficial, 2/11/98.
Banking & Credit
ARGENTINA
Capital Goods' Tariff Rates Fall
Argentina will reduce the tariff on capital goods from the current rate of 14% to a scale ranging from 4-6%. The move is expected to increase imports and is a significant step toward opening Argentine markets.
DOMINICAN REPUBLIC
Monetary Board Restricts Dollar Transfers
According to a new resolution of the Monetary Board, deposits of US$500 or more in savings accounts will now be held for 15 days before withdrawals can be made, while there will be a 30-day hold on deposits into term accounts. The resolution will allow commercial banks to access these funds for loans to the export sector both to finance payments abroad for goods, services and capital, and to promote export industries that generate foreign exchange.
MEXICO
U.S. & Canadian Banks Subject to New Rules
Capital limits on U.S. and Canadian banks operating in Mexico were published by the Department of the Treasury. As of last June, the capital of all banks in Mexico totaled about $103 billion pesos. According to the new rules published by the Department, the maximum capital of each foreign bank may not exceed $1.5 billion pesos. As of last Dec. 31, the combined capital holdings of all U.S. and Canadian banks in Mexico may not exceed $12.6 billion pesos. The limit will increase to $14 billion pesos beginning April 30.
These rules do not apply to foreign banks which have purchased Mexican banks (e.g. Confía, a Mexican bank purchased by Citibank under special arrangements and through a procurement process). Diario Oficial, 2/13/98.
Bank, Insurance Company Permits Issued, Amended
The Department of the Treasury authorized the establishment of the insurance company St. Paul de México, S.A. de C.V. This new insurance company is affiliated with St. Paul Multinational Holding, Inc. from Delaware. The Department also amended a permit granted to Societé Générale Mexico S.A. to operate as a bank. Diario Oficial, 2/16/98 and 2/17/98.
Rules for IRA Operators Amended
The Department of the Treasury amended the rules establishing minimum requirements that must be met by companies that operate IRAs. The original rules were published Jan. 10, 1997. IRA programs are relatively new in Mexico and are gaining increasing attention from both Mexican and foreign-owned financial institutions. Diario Oficial, 2/12/98.
Consumer Law
MEXICO
Paint Standards Proposed
The Department of Environment, Natural Resources and Fisheries proposed technical standards applicable to paints and covering solutions. If approved, NOM-123-ECOL-1997 will establish the maximum levels of flammable organic contents in certain paints. The standard would also establish a procedure to detect the presence of these components. Diario Oficial, 2/17/98.
Auto Industry Promo Takes New Route
The Department of Commerce and Industrial Development published several amendments to a 9-year-old promotional and modernization program for the auto industry. The amendments to the Dec. 11, 1989 decree require companies to present annual figures on their trade balance and the domestic content of each of their products. Diario Oficial, 2/12/98.
Customs
MEXICO
Tax Rules Amended
The Department of the Treasury published several amendments to the tax rules applicable for 1997. The tax rules are published each year and are known as the Resolución Miscelánea de Comercio Exterior. These rules establish guidelines for tax and tariff payment and form the basis for regulations of special import and export programs. The Department also published new annexes to the tax rules. Among the annexes is a list of information that must accompany imports into Mexico. Diario Oficial, 2/10/98 and 2/11/98.
Energy
MEXICO
Container Standards Proposed
Technical standards applicable to gas containers were proposed by the Department of Energy. If approved, NOM-011-SEDG-1997 will apply to portable L.P. gas containers. The standards set manufacturing and maintenance rules. Diario Oficial, 2/18/98.
Verifying Unit Permits To Be Granted
The Department of Energy published a call for parties interested in being certified as verifying units. Certification will allow individuals to verify compliance with rules applicable to L.P. gas. Diario Oficial, 2/17/97.
Model Contracts Authorized
Several model contracts for electricity sales were published by the Energy Regulatory Commission. The first of the approved model contracts will be used by private entities when contracting with the state-owned Federal Electricity Commission (CFE) to sell electricity to CFE operations. Also approved was a model contract for the sale of production surpluses to the CFE. Diario Oficial, 2/11/98.
Commission’s Resolutions Published
The Energy Regulatory Commission published the resolution of a meeting held Jan. 22 at which the Commission approved a proposed project to establish fees for the services of electric energy transmission. The project will be sent to the Department of Commerce and Industrial Development for comments. Diario Oficial, 2/10/98.
ECUADOR
U.S. Firm to Exploit Petroleum
ARCO, a U.S. company, has won an international bid to explore and exploit petroleum in the Ecuadoran Amazon, according to Ecuador’s Minister of Energy and Mines, Álvaro Bermeo. ARCO will build its operations on 200,000 hectares of rainforest. This concludes the seventh and eighth rounds in the government’s oil contracting efforts to expand national crude reserves. Ecuador currently produces 400,000 barrels of petroleum daily, of which 250,000 are exported.
PERU
New Structure in the Ministry of Energy
Following the recent amendments to the Law of Electricity Concessions, two organizations will work within the Ministry of Energy. The Comission on Electricity Rates (CTE) is responsible for setting rates on energy consumption. The Supervisory Council on Private Investment (Osinerg) will resolve consumer claims against power companies.
REGIONAL
Gas Pipeline Proposed
The Economic Commission on Latin America (ECLA) is recommending the construction of a US$8.8 billion gas pipeline which would run from Mexico to Panama. ECLA officials met with government officials and local business representatives from the region Feb. 20 to discuss the project. The pipeline could help alleviate periodic energy shortages caused by excessive demand on hydroelectric facilities in the region during drought periods.
Gas Pipeline to Benefit Peru, Bolivia, Brazil
A natural gas pipeline connecting La Paz, Bolivia and Peru's Puerto de Ilo is expected to help integrate the economies of both countries and to allow Bolivia to sell huge quantities of liquified petroleum gas (LPG) — derived from natural gas — to neighboring Brazil. Bolivia plans to export 30 billion barrels of LPG daily via a pipeline connecting Santa Cruz and Sao Paolo, Brazil.
Environment
MEXICO
Authority Granted to Water Officials
A resolution published by the Department of the Environment, Natural Resources and Fisheries grants new powers to the heads of several entities within the National Water Commission. Water administration officials may now grant permits for water discharges. Diario Oficial, 2/13/98.
Government Administration
MEXICO
In compliance with the Federal Administrative Law of Procedure, the Department of Commerce and Industrial Development (SECOFI) now requires that anyone appearing at the agency present either an identification card issued by the agency or a power of attorney for each matter before SECOFI. The card is available from SECOFI's General Bureau of Legal Affairs in Mexico City.
Insurance
ARGENTINA
Insurance Industry To Be Privatized
The Insurance Superintendency's announcement that it will privatize the general insurance register means that foreign companies will no longer have to purchase existing firms in order to gain entry into the general insurance market. The only restriction that will remain in place for all branches of insurance will be a set capital minimum. The minimum capital requirement will be increased, but for existing general firms the increase will be gradual.
Intellectual Property
PARAGUAY
U.S. Demands IP Reforms
The Office of the U.S. Trade Representative has announced it will impose trade sanctions on Paraguay unless the country reforms its intellectual property laws. U.S. Trade Representative Charlene Barshefsky praised Paraguay for its copyright and trademark laws, but criticized the lack of patent protection.
The USTR has said it is currently investigating Paraguay’s production and export of pirated goods and will make a decision by mid-July to either impose sanctions or to allow Paraguay an additional three months to undertake reforms. The president of the International Intellectual Property Alliance, Eric Smith, has endorsed the investigation, citing the $177 million in losses for American companies in 1996 due to the sale of pirated goods.
Labor
ARGENTINA
Labor Contracts to be Deregulated
A significant political-economic issue sure to draw much public attention this year is the so-called "flexibility" of the labor market. The term relates to the government’s efforts to develop a joint project between the Confederación Federal Laboral (Federal Labor Confederation) and the business sector to decentralize collective bargaining agreements, to gradually decrease the number of agreements that fail to reach completion, and to create a system of dismissal procedures. The government also wants to open the health care market to allow competition among both government and private companies offering health care services to workers. However, fierce resistance from union leaders has stalled this effort.
MEXICO
Amendments Proposed for Standard
Changes to a standard related to security measures in the workplace were proposed by the Department of Labor and Social Services. The proposed amendments would rename NOM-026-STPS-1993 as NOM-026-STPS-1997. The proposed standard would regulate colors and signs used to identify risks associated with the transport via pipeline of potentially hazardous fluids. Diario Oficial, 1/19/98.
Securities
MEXICO
Rules for Securities Traders Amended
The Department of the Treasury amended rules regulating companies that trade securities. Transitory Article No. 2, originally published last Aug. 28, was amended. Diario Oficial, 1/21/98.
Taxes
MEXICO
Tax Rule Changes Published
The Department of the Treasury published new amendments — the eleventh set — to the 1997 tax rules. A list of new tax annexes was also published. Among the annexes is a list of entities authorized to issue tax deductible invoices. Diario Oficial, 2/13/98; 2/16/98 and 2/18/98.
June-November Fuel Taxes Published
The Department of the Treasury published the tax rates for natural gas used in vehicles during the months of June-November 1997. Separately, the Department published the tax rates for gasoline and diesel fuel purchased in June-October 1997. Diario Oficial, 1/21/98.
Transportation
COLOMBIA
TV Regulations
The National Television Commission has taken action in recent months to start the bidding process for satellite TV and public TV subscription services and to grant concessions for licenses to dozens of local channels.
- Nov. 24, 1997, Resolution 582: Grants concessions for private channels N1 and N2.
- Jan. 15, Acuerdo 032: Based on powers granted by Law 335 of 1996, ratifies special terms for bidding procedures for Direct Satellite Television.
- Jan. 22, Res. 21: Bidding open (Feb. 6-27) for the license to commercialize the Public Television Service.
- Jan. 23, Res. 023: Public bid No. 002 to commence (Feb. 2-23). The winner will be awarded the licenses for 56 local channels. The Commission expects the licenses to generate US$51.53 million.
MEXICO
Railroad For Sale
The privatization of the Southeast Railroad is underway. The Department of Communications and Transportation published a call for bids on the railroad line, which connects Mexico City with Veracruz and Coatzacoalcos, two important ports in the Gulf of Mexico. The federal government has sold most of its railroad lines and companies in the last few months. Diario Oficial, 2/18/98.
Airport Privatization Underway
The Department of Communications and Transportation published guidelines for the transfer of airports to private investors. The federal government has divided Mexican airports into four areas, which should facilitate joint ventures between the government and private investors. The privatization process will be conducted through public bidding. Diario Oficial, 2/9/98.
Various
ARGENTINA
Canadians Seek Business Pacts
Yet again Canada has acted on its growing interest in Latin America. A large contingent of Canadian business interests — from both the Canadian government and the private sector — landed in Argentina in January in search of signatures on more than 70 business agreements. Argentina and Canada renewed numerous existing bilateral agreements.
The business agreements signed relate to the financial, agricultural, forestry and education sectors. The spectrum of industries represented was broader than those contained in agreements with U.S. enterprises. The participating Canadian firms are strongly positioned in the areas of energy, banking, paper products and mining.
Government Seeks More Privatizations
After its success in privatizing the airports, the government is moving toward more privatizations. Preliminary steps to privatize Banco Nación will begin in March; Banco Hipotecario is almost ready to go public. The government is also moving toward privatizing the state television channel (ATC) and to sell residual stocks of already privatized businesses. Acquisition of companies generating and distributing electric power, also to be privatized, will be one of the major business opportunities of 1998.
WTO Ruling Appealed
Argentina has appealed a resolution from the WTO ordering the country to eliminate some tariffs applicable to textile products. A resolution on the appeal is expected next month.
New Image for Telecom Argentina
Under increasing competitive pressure in the privatized telecommunications market Telecom Argentina launched a new image campaign based on newer technologies. Telecom has invested over US$6 billion in Argentina since 1990, when it was awarded the telecommunications concession for the northern part of the country. Telecom will soon expand its cellular and Internet services.
CHILE
Asian Imports Increase Sharply
The growth of Asian imports during 1997 averaged 9.8%. During the first half of the year imports had declined, but a pronounced increase in the second half occurred.
Growth of Asian imports in the last trimester resulted from Asian products becoming more competitive after their currency devaluation. Thailand and the Philippines were the only countries that did not contribute to the growth for last year.
VENEZUELA
Privatization of Aluminum Corporation Approved
The privatization of the “Corporación Venezolana de Guayana” the state-run aluminum enterprise, was approved by Congress. The entire process is expected to be finalized within the first trimester of this year.
The Alcoa-Alcam consortium appears to be the most likely to win the bid.
REGIONAL
Treaty Creating the Cartagena Agreement’s Court of Justice Modified
According to the law approving the modifications to the treaty, the Cartagena Agreement’s Court of Justice, domiciled in Quito, Ecuador, will be comprised of five magistrates, one national from each of the member countries. Each magistrate will hold office for a period of six years and will be reappointed every three years. Reelection is possible only once. Venezuela, Special Official Gazette No. 5.187, 12/5/97.
Contributors to the summaries: Lic. Graciela Molinelli, Argentina; Ana María Carrasquilla from Gomez Pinzón & Asociados, Colombia; and Bentata Abogados, Venezuela.
