Volume 5, Number 10, Page 6
Agriculture, Mines & Cattle Industry
MEXICO
U.S. Estimates US$ 5.7 Billion in Agro-Exports in ‘98
The U.S. Government announced that U.S. sales of agricultural goods to Mexico will reach an estimated US$ 5.7 billion this year. This amount is an increase of 15-20% over 1997 figures. U.S. Trade Representative, Charlene Barshefsky, stated that U.S. agro-exports to its NAFTA partners are “literally flourishing,” and reiterated the importance of gaining congressional approval for fast-track authority. El Imparcial, 5/8/98.
Fruit Fly Standard Published
The Department of Agriculture, Livestock and Rural Development (SAGADAR) published a technical standard related to fruit flies. NOM-075-FITO-1997 establishes procedures and requirements for the transportation of fresh fruit that hosts fruit flies. The purpose of the standard is to avoid the breakout of the plague in pest free zones. Diario Oficial, 4/23/98.
Antitrust/Antidumping Cases
ARGENTINA
Dormer Tools Antidumping Investigation Closed
Argentina’s Ministry of Economy, Infrastructure, and Public Services closed their antidumping investigation into Dormer Tools S.A. of Brazil, finding no instances of dumping manufactured carbon steel thread cutting tools over a two year period between 1995-1997, and thereby settling the dispute under Mercosur tariff arrangements. Boletín Oficial, Resolución 445/98, 4/16/98.
Brazilian Gas Meters Investigation Resolved
An investigation into the possible dumping of Brazilian gas meters was closed, removing the antidumping duties previously imposed by the Department of Industry, Commerce, & Mining. Preliminary investigation into the importation from Brazil of volumetric gas meters with diaphragmic capacity of up to six cubic meters/hour (6 m3 /hr) resulted in the assessment of antidumping duties between 81-84 percent. Upon further investigation, no damage to the product’s domestic industry or market was found, and as a result, the duties were removed, thereby settling the dispute under Mercosur tariff arrangements. Boletín Oficial, Resolución 226/98, 4/15/98.
MEXICO
Cement Case Appealed
SECOFI announced that a U.S. antidumping investigation on Mexican cement was appealed. The Mexican company Cemex appealed the case, so a binational panel will review it, according to NAFTA’s rules.
The case is filed under number USA-MEX-98-1904-02. More information about the case may be obtained from: James R. Holbein, United States Secretary, NAFTA Secretariat, 14th Street & Constitution Ave., N.W., Suite 2061, Washington, D.C. 20230. Diario Oficial, 4/27/98.
Panel Decides Steel Case
A binational panel composed of NAFTA members published its decision regarding the second report on a case remanded to SECOFI; the panel had issued an original decision last September on this case, ordering SECOFI to consider some different elements of the case. On Jan. 13, SECOFI published a second report on the remanded case, confirming all antidumping duties established in the first report. New Process, a U.S. company, appealed SECOFI’s second report. The panel confirmed the second Report presented by SECOFI, denying New Process’ appeal. Diario Oficial, 4/27/98.
Banking & Credit
MEXICO
Currency Exchange Rules Amended
Mexico’s Central Bank amended the rules applicable to currency exchange. In Mexico, special authorization is needed to run a currency exchange entity. The amendments deal with accounting requirements. Diario Oficial, 4/29/98.
Communications
BRAZIL
Telebras to be Privatized
The Brazilian state-owned telephone company, Telebras (the largest telecommunications system in Latin America), is expected to be privatized in mid-July. The state expects to receive approximately US$ 21 billion from the sale of 12 Telebras enterprises. The privatization, as stated by the National Social Economic Development Bank, will include the participation of foreign capital. El Universal, 5/3/98.
MEXICO
Accounting Requirements for Companies Set
The Federal Telecommunications Commission (Cofetel) announced accounting requirements for telecommunication companies. According to the Federal Telecommunications Law, companies with public network concessions must present accounting information to the Commission. The rules to submit accounting information apply to, among others, Mexican long distance carriers such as Telmex, AT&T, MCI and Sprint. Diario Oficial, 4/21/98.
Rules on Long Distance Services Amended
The Cofetel announced amendments to long distance services rules, published in June 1996. Rule 22 was amended granting the Department of Communications and Transportation the power to impose sanctions on long distance carriers in certain cases. Diario Oficial, 4/22/98.
TELMEX Invests U.S. $87 Million
Teléfonos de México (TELMEX) invested U.S.$ 87 million over the last 18 months in its Measure Service (SMD), which allows the customers to verify their monthly bill. The company director said that in addition to the company submitting themselves to an external audit, they will submit to one made by the Secretary of Communications (SCT). In its first phase, SMD will be available by phone to customers from 272 cities itemizing their bills. During this period, 7.5 million customers, representing 83% of their customers in Mexico, will be served.
Consumer Law
MEXICO
Standards on Leather Goods Published
SECOFI published a technical standard on leather goods; NOM-020-SCFI-1997 establishes labeling requirements for both real leather goods and those manufactured with imitation leather. Diario Oficial, 4/27/98.
Customs
ARGENTINA
Eased Import Requirements for Components
The Ministry of Economy, Infrastructure and Public Services passed a resolution to exempt imported goods under tariff positions 8524.31.00, 8524.40.00, and 8524.91.00 from inspections. Imports primarily affected are components of machines or computers which can not function on their own, and whose only utilization is as part of a machine or computer that already falls under the current inspection regime. Boletín Oficial, Resolución 423/98, 4/16/98.
Energy
MEXICO
Partial Privatization of Pemex Set for July
Efforts to privatize several subdivisions of Pemex will officially begin in July, according to an announcement by Secretary of Energy, Luis Téllez. 49 percent of Pemex’s shares will be available to private investors, while the government will retain control of the other 51%. Proposals for the privatization process were originally scheduled to be finalized in mid-1999, but the timetable was altered due to the “critical” situation of the petrochemical industry. El Imparcial, 5/7/98.
Commentaries Requested
The Energy Regulation Commission (CRE) is requesting commentaries on a proposal by Pemex. The proposal sets general conditions for providing services for transportation of natural gas. Copies of the proposal may be obtained at the office of the CRE located at Horacio 1750; First Floor; Mexico, D.F. or at the web site of the CRE at http://www.cre.gob.mx in the “last news” section. Concessions to distribute natural gas in Mexico have been granted in different cities. Diario Oficial 4/29/98.
VENEZUELA
Hold up in the Privatization of Electricity
The Venezuelan Investment Fund (FIV) in charge of the privatization of industries and energy warned that new investors will not enter the electric sector unless Congress approves draft legislation submitted this year. FIV is committed to setting up a legal framework for the privatization process. Congressional inaction will not stop the privatization process of the electric sector.
FIV is already working on a schedule for privatizing two companies but this could prove problematic if the sector does not have a legal framework. The government expects to sell two state electric utilities in the third quarter of the year.
Environment
ARGENTINA
New Wildlife Commission Formed
The Department of Natural Resources and Sustainable Development announced the formation of the Advisory Commission for Endangered Wildlife and their Habitat, which will be comprised of representatives from government organizations such as Customs, Foreign Relations and International Commerce, as well as private wildlife protection interests. Once the membership has been selected, the commission will establish their mission and objectives specific to wildlife preservation in Argentina. Boletín Oficial, Resolución 209/98, 4/16/98.
EL SALVADOR
Environmental Project to Map Natural Resources
On May 18, US Vice-President Al Gore and the Central American Environmental Ministers will sign a project to develop a tridimensional map of Central America’s natural resources. NASA will carry out the experimental project using radar images and satellite pictures. El Nacional, 5/4/98.
Foreign Investment
ARGENTINA
Large Investments in the Industrial Sector
Fourteen new industries will begin construction to expand plant capacity involving an investment of more than U.S.$ 900 million. A study made by the Center of Studies for Production (Centros de Estudios de Producción), a branch of the Department of Industry, identified the following projects:
- Pirelli, with an investment of $200 million, has begun to expand the production in their tire-manufacturing plant.
- Scania will invest $80 million.
- Mercedes Benz has projects involving an investment of $23 million.
- Petroken has begun expanding their plant in Enseñada, with an investment of $40 million.
Foreign Investment Grows
Argentina is the third largest recipient of foreign investment in Latin America, after Brazil and Mexico, according to the Economic Council for Latin America and the Caribbean. Compared to the same period in the 1980’s, foreign investment in Argentina quadrupled between 1990-97, reaching a total of US$ 23.6 billion.
The growth was fueled by flexible laws on foreign investment, economic stability and a 5.5% GNP growth in the region. Argentina’s main source of foreign investment is the United States. Clarín, 5/5/98.
Government Administration
MEXICO
Organizational Manual Published
The Department of Energy has published its own organizational manual. The manual gives information about the structure and activities of the Department, historic background, and the legal framework. Diario Oficial, 4/28/98.
Insurance
MEXICO
Reserve Requirements Amended for Insurance Companies
The Department of the Treasury (SHCP) amended reserve requirements for insurance companies. The rules were originally published on Dec. 18, 1995 and have been amended several times. They are known as “Rules for the Creation and Increase of Reserves of Current Risks of Insurance Companies.” Diario Oficial, 4/20/98.
Labor Law
MEXICO
Individual Retirement Account Rules Amended
The SHCP has amended the rules regarding the administration of IRA’s. The changes are included in Circular CONSAR 22-2 which amends a previous Circular published on Dec. 10, 1997. The Circular sets requirements and procedures that IRA administrators must comply with regarding the collection and administration of IRA’s. Diario Oficial, 4/29/98.
Real Property
MEXICO
Registry to Modernize
SECOFI and the State of San Luis Potosí signed an agreement to modernize the state’s public registry. The modernization initiative will allow the registry to be fully electronic. SECOFI plans to license the developed software to other states. Diario Oficial, 4/23/98.
Securities
MEXICO
Disclosure Rules on Securities Information Amended
The SHCP amended rules regarding disclosure of securities information. Circular 11-28 Bis was amended to allow companies to provide information electronically to the Mexican Stock Exchange. The information will be transmitted to the Stock Exchange through the “Emisnet” network. Diario Oficial, 4/29/98.
Taxes
ARGENTINA
Donations Earn Tax Exempt Status
The Legal & Technical Subdivision of Argentina’s Customs Administration approved new regulations regarding the donation of imported goods, awarding tax exemption under the conditions stipulated by Article 17 of Law 23.871. Exempted beneficiaries of donations include all centralized and decentralized government entities or divisions, as well as the Catholic Church, other religious entities and other organizations included under Article 20, Clauses E-F of Capital Gains Tax Law. Boletín Oficial, Disposición 49/98, 4/15/98.
Transportation
BRAZIL
Air Fare War
Brazilian airlines are presently engaged in a price war. Consumers are benefiting from the war and are taking advantage of fares reduced by as much as 60%. The airline industry has been privatized. The elimination of pricing restrictions and consolidation of the industry have fostered this price war. Increased competition has also prompted vigorous efforts towards modernization. An increase in the amount of foreign participation in private Brazilian airline companies is also expected to take place soon. El Universal, 5/5/98.
MEXICO
Transportation Insurance Requirements Set
The Department of Communication and Transportation (SCT) published insurance requirements for federal passenger, tourism and cargo transportation. The SCT established a minimum coverage per vehicle of approximately U.S.$ 69,000 for civil liability. Each year, transportation companies must present proof of insurance to the SCT.
Airport Privatizations to Begin in July
The Mexican government will open bidding for its airports this July, according to Secretary of Communication and Transportation, Carlos Ruiz Sacristán. Airports in the country’s southeastern region will be auctioned first, while Mexico’s City’s airport will be the last of the 35 airports to be auctioned. 20% of total shares will be reserved for current airport administrators and operators. The remaining shares will be placed on the Mexican stock market. El Universal, 5/7/98.
Various
BRAZIL
Mexican Hotel Conglomerate Expands to Brazil
Mexico’s Posadas Group has announced a US$ 122.7 million deal to buy the Brazilian hotel chain, Caesar Park. The chain is owned by Japanese construction firm, Aoki. The Posadas Group is Latin America’s largest hotel chain, with 51 hotels in five countries. Prensalibre, 5/5/98.
Share Prices for Newly Privatized Companies May be Reduced
The Brazilian Government admitted the possibility of lowering the minimum price set for companies in the process of privatization.
This change is due to new analyses of the market indicating a lack of liquidity. However, the Brazilian Finance Minister asserted that the government is concerned about the Asian crisis, which they think will weaken investor interest.
The Finance Minister believes that interest in privatizations will continue.
He also expects that for the next five years there will be projects worth $200 million in infrastructure involving private investment, especially in railway sectors (already privatized), electric sectors (in the process) and telecommunications sectors.
COLOMBIA
Inflation Nearly Doubles
The inflation rate for the month of April has registered at 11%, a figure almost double the rate for this time last year, according to the National Department of Statistics. The main reason for the high figure is a substantial increase in food prices. Certain foodstuffs rose by as much as 53%. The present inflation rate will prevent Colombia from reaching its goal of a rate of 16%, and will likely exceed 19% for 1998. El Tiempo, 5/2/98.
REGIONAL
Trade Pact with Peru to Take Effect in July
Tariffs will be eliminated on approximately one-third of Chile’s exports to Peru as of July 1 when a free trade agreement between the two countries is set to take effect. Chile’s primary exports to Peru will be the first to be affected by the agreement, including copper products, newsprint, barley and cellulose.
The remaining two-thirds of Chile’s exports to Peru will remain on tariff reduction lists of 10, 15 and 18 years. Diario Estrategia, 5/7/98.
Latin America Extends Trade Negotiations
Mercosur is set to take another step to strengthen its hand in negotiations with the U.S. by having free trade talks with the Andean Community.
This comes as a result of meetings in Santiago de Chile. Bolivia, which already has a free trade agreement with Mercosur, will take part in the negotiations as an observer.
Mercosur strategy is to form trade alliances with other nations in the region ahead of the planned established Free Trade Area of the Americas (FTAA) in the year 2005.
Under the framework agreement, Mercosur and the Andean Community will work to replace previous bilateral agreements between member countries of the two groups. Negotiations are expected to be concluded in September.
After agreements with the Andean Community and Central America, the only major Latin American country not included will be Mexico.
NAFTA Countries Eliminate Textile and Chemical Tariffs
NAFTA members Canada, Mexico and the U.S. announced April 29 that they will eliminate tariffs on textile and chemical products, as well as on several other goods that together annually account for US$ 1 billion in trade within the bloc.
The new agreement, which will take effect August 1, eliminates tariffs that would otherwise have been in place for up to 10 years, including those on antibiotics, watches, toys, and steel and wire products. Estrategia, 04/30/98.
CEPAL Estimates 3% Growth for Latin America in ‘98
CEPAL, the economic commission for Latin America and the Caribbean, estimates economic growth in all of Latin America at just over 3% this year.
This growth is expected despite an economic slowdown in the region resulting from the recent collapse in Asian markets. The region saw an overall growth of 5.5% in 1997, according to ECLA. El Día, 05/01/98.
VENEZUELA
Cabinet Approves Budget Cuts
The Venezuelan President approved what will be the second largest budget cut in the last four months, reducing the GNP by an additional 156.3 billion bolivares.
The announcement was made by the Planning Minister, who said that the government’s intention is to improve tax collection and cut spending in order to reduce the national deficit. The government used an estimate of $13 for each barrel of exported oil for the basis of its revenue projection in the budget.
The National Tax Authority (SENIAT) announced measures to improve its tax collection methods and apply a wholesale tax. The measures must be approved by Congress.
