Volume 5, Number 14, Page 5
Recent Developments in Brief
Agriculture, Mines & Cattle Industry
MEXICO
Standards Published
SAGADAR (Department of Agriculture, Livestock and Rural Development) published several new standards, including one proposed standard. NOM-054-ZOO-1996 contains rules for the establishment of quarantines for animals and animal products. The standard seeks to prevent the entry of diseases into Mexico from foreign countries.
NOM-057-ZOO-1997 establishes testing methods and parameters for the biological effectiveness of products used to diagnose and control bee diseases. At the same time, SAGADAR proposed standard
NOM-076-FITO-1997 which, if adopted, would regulate the control of fruit flies. Diario Oficial, 6/8/98.
Antitrust/Antidumping Cases
MEXICO
Antitrust Investigation Starts
The Federal Competition Commission announced the beginning of an antitrust investigation into an airline route. The Commission will investigate alleged monopolistic practices on the Mexico City-San Luis Potosí route. The Commission also announced that it will initiate an antitrust investigation into packaging materials sold in Mexico. Diario Oficial, 6/4/98 and 6/15/98.
Banking & Credit
ARGENTINA
Three Arroyos Commercial Bank acquired by Lloyds
Argentina’s Central Bank has authorized a transaction through which Lloyds Bank, Ltd. (B.L.S.A.) will acquire the assets and liabilities of Three Arroyos Commercial Bank, S.A. Boletín Oficial, Comunicación “B” 6319-24/4/98, 5/12/98.
MEXICO
Fobaproa To Sell Real Estate Assets
The real estate department of the Bank Savings Protection Fund (Fobaproa), the Mexican government’s fund for the protection of private banks, has 14,000 properties on its list of assets. Most of the properties are residential. The value of the properties is estimated at approximately US$ 770 million, some 1.34 percent of the cost of Mexico’s 65 billion dollar banking crisis. Ten thousand Fobaproa properties are being managed by commercial banks, while the rest are under Fobaproa’s direct control. None are being advertised and only half are ready to be sold.
Fobaproa is expected to announce the sale of two ultra-modern high-rise office buildings next month: Chapultepec Tower in Guadalajara, Jalisco, and the Capital Tower in Mexico City. Preliminary estimates from Century 21 México have estimated the market price of the buildings at approximately US$ 22.5 million each. El Financiero, 6/13/98.
Rules for Bond Institutions Published
The SHCP (Department of the Treasury) has published new rules for bond institutions. The rules establish liability limits for bonded persons or corporations. The rules take into consideration the amount, quality and liquidity of the collateral involved. Diario Oficial, 6/4/98.
Rules for IRA Managers Published
The SHCP has published new rules for managers of IRAs. Circular Consar 31-1 establishes rules for IRA managers with regard to account transfers and withdrawals. Diario Oficial, 6/8/98.
Communications
MEXICO
Local Phone Service Rules Amended
The Federal Telecommunications Commission has amended the rules governing local phone services. The new rules for local phone services were published on Jan. 5, 1996. The amendments regulate cable TV service providers that request permission to offer local phone services. Several years ago, the government passed rules permitting competition in both long distance and local phone services. Diario Oficial, 6/4/98.
TELMEX Recovers 40 Percent of Long Distance Market
Teléfonos de México (TELMEX) has recovered more than 40 percent of the business market that it lost a year ago when the market was opened up to competitors seeking to provide long distance services. With business clients returning to Telmex, the company now has 75 percent of the market and hopes to have an 80 percent market share by the end of the year.
REGIONAL
Telecommunications Advancements in Mercosur
The Mercosur region is rapidly closing the gap with developed nations, keeping pace with technological innovations in the areas of telecommunications, satellites, and computers. By 2002, Mercosur will have over 50 million telephone lines, well over double the current amount. The number of cellular phone lines in the area should jump from 7.3 million to approximately 21 million during the same time period. BrazilTradeMiami, 6/16-30/98.
Consumer Law
MEXICO
Arbitrator List Published
SECOFI approved a list of arbitrators to adjudicate disputes between providers and consumers. The list was published in the Diario Oficial. Diario Oficial, 6/1/98.
SECOFI Standards Approved
SECOFI has published a series of new standards. The standards recently approved by the Department include different products related to the plastics industry, such as PVC connectors and pipelines. Diario Oficial, 6/2/98.
REGIONAL
Mercosur Signs Arbitration Protocol
The Mercosur countries entered into an Arbitration Protocol during the Ninth Meeting of Mercosur Justice Ministers. The agreement is intended to facilitate the resolution of trade conflicts that arise among member countries, notably Brazil and Argentina. BrazilTradeMiami, 6/16-30/98.
Customs
ARGENTINA
Duty-Exempt Status Granted to Imation S.A.C.I.F.I. y A.
The Department of Industry, Commerce, and Mining passed a resolution authorizing Imation, S.A.C.I.F.I. y A. to participate in Argentina’s Industrial Specialization Program, which grants duty exemption for exports from Argentine companies. This status was extended to Imation, S.A.C.I.F.I. y A. as a result of its separation from former parent company 3M Argentina, S.A.C.I.F.I. y A., which also enjoys duty-exempt status under the Industrial Specialization Program. Boletín Oficial, Resolución 295/98, 5/7/98.
MEXICO
Issuing of Export Certificates by SSA
SSA (Department of Health) has entered into an agreement with the state of Yucatán to issue export certificates for fish products. The agreement will allow the Yucatán state government to participate with the SSA in issuing such permits. Diario Oficial, 6/4/98.
Textile Export Rules Published
SECOFI has published restrictions applicable to the export of textile products from Mexico to the United States. The announcement contains quotas for textile exports as well as the procedure an exporter must follow in order to be assigned an export quota. SECOFI also published quotas for exporting textiles into Costa Rica. Diario Oficial, 6/10/98 and 6/16/98.
Auto Industry Decree Amended
SECOFI announced amendments to the decree to promote and modernize the auto industry. The new amendments require certain auto industries to register annually with SECOFI and submit frequent reports. Diario Oficial, 6/16/98.
Quotas Set
SECOFI published quotas for the export of sugar and sugar products into the United States. The 1998 export quota for sugar receiving preferential treatment is 28 thousand tons. The process required for obtaining a quota certificate is contained in the same publication. SECOFI also published export quotas to the United States for peanuts and orange juice. Diario Oficial, 6/16/98.
Environment
MEXICO
Environmental Commission Releases Report
The Secretariat of the Commission for Environmental Cooperation (CEC) has released a draft expert report on “Sustaining and Enhancing the Riparian Migratory Bird Habitat on the Upper San Pedro River.” The San Pedro is a river that crosses the U.S.-Mexico border. It serves as a corridor for millions of migratory songbirds that winter in Mexico and breed in the U.S. and Canada during the summer months.
The CEC report is open for public comment for a sixty-day period, ending on August 14, 1998. Anyone wishing to obtain a copy of the report or submit comments should contact the CEC Secretariat at the following address: Upper San Pedro Initiative, Commission for Environmental Cooperation, 393 rue St. Jacques Ouest, Bureau 200, Montreal (Québec) H2Y 1N9, Canada.
ECUADOR
Ecuador Enacts Protection for Galapagos Isles
Through Law No. 67, effective March 18, 1998, Ecuador enacted a special law for the conservation and sustainable development of the Galapagos Islands, a major attraction for tourists from around the world. The new law seeks to preserve the eco-systems and biodiversity that exist in the Galapagos, allowing those systems to continue to evolve with a minimum of human interference. The law permits sustainable and controlled development necessary to support the Galapagos eco-systems and reduce the risk of introducing foreign diseases, plants and animals to the Galapagos Islands. In addition, the law creates the Galapagos National Institute (INGALA), which will be responsible for the planning and coordination of all activities pertaining to the Galapagos. Izurieta Mora Bowen Estudio Jurídico Ecuador, 6/17/98.
MEXICO
Standards on Wastewater Discharge Published
SEMARNAP published new limits related to wastewater discharges. NOM-002-ECOL-1996 establishes maximum levels of pollutants that may be contained in wastewater discharged in urban or municipal sewage. Diario Oficial, 6/3/98.
Foreign Investment
BRAZIL
U.S. Direct Investment In Brazil Soars
U.S. Ambassador to Brazil Melvyn Levitsky recently commented on the increase in commercial relations between the United States and Brazil. In 1993, U.S. direct investment in Brazil totaled US$ 16 billion. By the end of 1997, that figure had increased to US$ 26 billion. BrazilTradeMiami, 6/16-30/98.
HONDURAS
Honduras Enacts Law Changing Taxes and Tariffs
The Honduran Congress recently enacted the Law for the Promotion of Human Production and Competitiveness (Ley para la Promoción de la Producción y Competitividad Humana), extending the free zone regime throughout the territory of Honduras. The new law reduces the corporate income tax rate to 30 percent for 1998. The rate will fall to 25 percent in 1999. To encourage already-increasing investments in banana production, the new law gradually reduces the applicable banana export tax so that, by the year 2000, the tax will be only US$ .04 cents per exported box. All export taxes previously applicable to shrimp, lobster, poultry, and sugar cane have also been abolished.
The importation of equipment and raw materials is subject to a one percent import tax. In addition, the new law contains a staggered reduction of the import tax levied on semi-finished and finished goods so that, by the year 2000, the tariff applicable to such goods will be only 15 percent. The law also increases the sales tax from seven percent to 12 percent. Sales tax is not, however, applied to medicines and certain essential food products. Bufete Mejía & Asociados, 6/24/98.
MEXICO
Mexico To Surpass Japan as Second U.S. Trade Partner
During the first four months of 1998, Mexico consolidated its position as the second largest market for U.S. exports.
The Department of Commerce (DOC) announced that, between January and April, Mexico spent US$ 26.1 billion for goods from the United States. This figure is 31.1 percent above the US$ 19.9 billion spent by Japan in the same period.
The DOC reported that trade between Mexico and the United States during the first four months of 1998 totaled US $56.2 billion, only US $4.3 billion below the total amount of bilateral trade between the United States and Japan.
The United States sold US$ 26.1 billion worth of goods to Mexico in the first four months of 1998, which reflects an increase of 22.1 percent from last year.
Government Administration
MEXICO
Public Defender Law Published
The SG (Secretaría de Gobernación) published a new federal law related to public defenders. The law creates the Federal Institute of Public Defense. This will be an entity under control of the judicial branch, which will monitor the work of public defenders. At the same time, the SG published several amendments to the bylaws of the Federal Judicial Branch. Diario Oficial, 5/28/98.
SHCP Bylaws Amended
The SHCP has amended its Bylaws. The amendments include changes to Art. 2, which lists the different divisions of the SHCP. At the same time, the SHCP announced amendments to the Bylaws of the Tax Administration Service. Diario Oficial, 6/10/98.
Mexico May Undergo Third Budget Cut
SECOFI Secretary Herminio Blanco said that a third budget cut may still be needed, depending on how oil markets react in the wake of the latest OPEC crude oil cuts. The Mexican government’s budgetary measures have so far insulated Mexico from global turbulence. Blanco stated that the Mexican economy remains on track and has grown approximately five percent this year, while inflation has declined. El Universal, 6/24/98.
Insurance
ECUADOR
New Ecuadorian Insurance Law
On April 3, 1998, Ecuador enacted a new General Insurance Law, which regulates the organization and operation of all insurance companies, reinsurance companies, reinsurance intermediaries, insurance experts and insurance salespeople.
Foreign insurance or reinsurance companies must receive authorization from the Department of Banks before setting up business in Ecuador. In order to set up operations in Ecuador, a company must designate an agent that is vested with ample and sufficient authority to represent the foreign company in all judicial, extra-judicial and administrative matters. Said agent must have authority to receive insurance applications, issue policies, pay out on claims and carry out all types of operations related to the activity of the business. The company headquarters abroad must also agree to be bound by obligations undertaken by its agent in Ecuador. Izurieta Mora Bowen Estudio Jurídico, 6/17/98.
MEXICO
Rules for Insurance Companies Amended
The SHCP published several changes to rules regulating insurance companies. The first set of amendments involves capital requirements and a second one involves rules about reserves. Diario Oficial, 6/4/98.
Labor Law
MEXICO
New Labor Agreement Published
A new industry-wide labor agreement (Contrato Ley) for the silk textile industry was published by the Department of Labor and Social Services (STPS). The contract sets minimum requirements for the silk and synthetic textile industries and establishes, among other things, rules regarding lunch breaks, vacations and working hours. The minimum wage for the industry will be $58.95 pesos per day (approx. US$ 6.50). Diario Oficial, 6/8/98.
Medicine & Health
BRAZIL
Brazilian Pharmaceutical Sales On the Rise
Brazil’s pharmaceutical industry is expected to sell US$ 11 billion in 1998, a six percent rise from 1997, according to the Brazilian Association of Pharmaceutical Manufacturers. O Globo, 6/24/98.
Taxes
COLOMBIA
New Colombian President Promises Tax Reform
On June 21, 1998, conservative party candidate Andrés Pastrana was elected President of Colombia. Pastrana will serve a four year term commencing on August 7, 1998. Pastrana successfully ran on a platform promising a tax reform plan which would gradually reduce the sales tax rate from the current 16 percent to 12 percent over the next four years. Lewin & Wills, 6/23/98.
Colombia Halves Foreign Income Withholding Rate
On May 8, 1998, the Colombian government published Decree No. 858, repealing Decree 515 (1997). The new decree lowers the withholding at source rate for foreign income from six percent to three percent. Lewin & Wills, 6/18/98.
Transportation
ECUADOR
Ecuador Approves Highway Concessions
The Ecuadorian government has approved a national policy of highway concessions that will permit domestic and foreign private sector businesses to manage and operate the Ecuadorian highway system under license. This measure is expected to provide more efficient highway services and promote private investment in the financing and development of the Ecuadorian highway infrastructure. The Ministry of Public Works will be responsible for developing and implementing the new policy. Izurieta Mora Bowen Estudio Jurídico, 6/17/98.
MEXICO
Standards on Petrochemical Transportation Published
The Department of Communications and Transportation (SCT) published a technical standard regulating the transportation of petrochemical products. NOM-021-SCT4-1995 sets the conditions for ships transporting petrochemical products considered to be potentially flammable, toxic, pollutant, corrosive or explosive. Diario Oficial, 6/15/98.
Mexico-Costa Rica Transportation Agreement
The Costa Rican government and private sector business will ask Mexican authorities to enter into a transportation agreement in order to avoid the losses that Costa Rican exporters suffer when they move their products across the Mexican southern border region.
The President of the Mexico-Costa Rica Chamber of Commerce has stated that moving merchandise between the two countries is becoming more costly every day because the goods must be moved from one container to another. The losses total several million dollars because the merchandise is being damaged during container changes. Costa Rican President Miguel Angel Rodriguez will ask Mexican President Ernesto Zedillo to negotiate an agreement to solve the problem and to establish adequate mechanisms to avoid delays in transporting merchandise from Costa Rica.
Various
BRAZIL
Fiberoptics Cable Sold to Brazil
U.S.-based Eximbank provided a direct loan of US$ 69 million to Telebrás subsidiary Embratel to fund its purchase of fiberoptics cable from Tyco Submarine. Wall Street Journal Americas, 6/23/98.
Brazilian Industrial Production Drops
The São Paulo Federation of Industries indicated that industrial production in the state of São Paulo dropped by 5.8 percent in May. It was the first month of 1998 where output declined. Researchers cited high levels of retail inventory and lack of consumer confidence. Folha de São Paulo, 6/24/98.
Brazil’s GDP On the Rise
The gross domestic product of Brazil is expected to close out 1998 at approximately two percent over 1997. The growth rate for the second half of the year is expected to be accelerated in comparison with the first half and may reach a growth rate which would represent an annual rate of four percent. Brazil TradeMiami, 6/16-30/98.
MEXICO
Televisa Sells Controlling Shares in Vendor
Grupo Televisa has announced that it will sell its stake in Vendor, Mexico’s largest billboard company, to US-based Outdoor Systems, Inc., for US$ 215 million. Vendor has some 6,000 outdoor advertisements, with approximately 22 percent of those in Mexico City, and is the only nationwide billboard firm. Televisa has a controlling 44 percent interest in the company. The sale is part of Televisa’s ongoing restructuring efforts. El Universal, 6/9/98.
GTEL to Acquire Wireless System
Swedish telecommunications group Ericsson successfully bid for a contract with GTEL to sell its local wireless closed circuit system Airline. This will permit the Mexican telecommunications company to offer a range of services that require wireless access. Wall Street Journal Americas, 6/23/98.
New Chile-Peru Tariff Agreement
Peru and Chile signed an accord eliminating tariffs on 60 percent of Peruvian exports to Chile and on 40 percent of Chilean exports to Peru. The accord will go into effect on July 1, 1998. Wall Street Journal Americas, 6/23/98.
REGIONAL
Third Toyota Plant in Mercosur
Toyota will be building a plant in Argentina or Brazil. The majority of the automobiles manufactured in the new plant will be destined for export. Wall Street Journal Americas, 6/23/98.
Honduras Receives Japanese Aid
Japan is expected to provide Honduras with US$ 22.6 million in assistance. The funds are to be used to implement flood control projects, improve the Toncontin airport south of the nation’s capital, and boost agricultural production. Miami Herald, 6/17/98.
CHILE
Chile will Compensate MERCOSUR for Commercial Trade with Canada
Chile will compensate MERCOSUR for preferential tariffs granted to Canada under a bilateral commercial agreement which became effective in July 1997. The agreement was reached during side negotiations which took place during a meeting of the Negotiating Committee of the FTAA, which met this week in Buenos Aires. The Chile-Mercosur agreement requires Chile to review the preferential tariffs Chile granted to Canada under the 1997 agreement which provided Canada with better economic conditions for accessing the Chilean market.
The possibility of export displacement was discussed during the negotiations. Chile agreed to compensate Mercosur with regard to 174 items exported into Chile from the Mercosur countries and representing a trade volume of US$ 359 million.
