Volume 5, Number 22, Page 5
Recent Developments
Antitrust/Antidumping Cases
Mexico
Cattle, Meat Under Investigation
The Department of Commerce and Industrial Development (SECOFI) announced the initiation of an antidumping investigation concerning U.S. cattle and meat products. On June 30, several organizations requested that SECOFI initiate the investigation. SECOFI has accepted the request and announced the investigation. Any importer or exporter that wishes to participate may do so by submitting a form available at the Unidad de Prácticas Comerciales Internacionales, Insurgentes Sur 1940, planta baja, Col. Florida, México, D.F. 01070; Tel. (52-5) 229-6100 ext. 3105 and 3106; Fax 229-6502 and 229-6503.
On the same day, SECOFI announced the initiation of an antidumping investigation on pork products imported from the U.S. Diario Oficial, 10/21/98.
Decision on U.S. Bond Paper Investigation Published
A decision on an antidumping investigation involving U.S. bond paper was published by SECOFI. On December 12, 1996 a request to initiate an antidumping investigation on the imports of U.S. bond paper was presented. SECOFI imposed antidumping duties of up to 17.69 percent on only a few very specific types of bond paper. Diario Oficial, 10/28/98.
Banking & Credit
VENEZUELA
Venezuelan Credit Bank will enter American Banking Network/Connection
The Venezuelan Credit Bank has been made a member of the American banking network/connection. This network of American financial institutions is formed by the banks of Galicia and Buenos Aires of Argentina, Unibanco of Brazil, Credit Investments bank of Chile, Bancocolombia of Colombia, Banco Mercantil of Mexico, Banco Credito of Peru and Bank of America of the United States.
The president of the Venezuelan Credit Bank said that this extension of the American banking network represents a unique opportunity to companies in the United States, Asia, Europe and Latin America who already have a Latin America presence or those who plan to expand their business in the continent.
The American Connection has more than 7 thousand agencies and branches, and 26,000 ATM’s in the region. Services that the network will provide includes network information about local accounts, transfer of funds, payable accounts, administration of payrolls and investments.
The network will be launched in December of 1998. Plans to incorporate new Latin American countries are presently being contemplated. Establishment of the network will allow corporate clients to issue payments electronically between the member banks.
Consumer Law
Mexico
Civil Code, Code of Civil Procedure, Consumer Law Amended
Amendments to the Federal Civil Code, the Code of Civil Procedure for Mexico City and the Federal Consumer Protection Law were announced by the Department of the Interior (SG). Amended were the transitory articles of a list of previous amendments announced in 1993. According to the new transitory articles, the 1993 amendments will be effective as of April 19, 1999, with only a few exceptions. Diario Oficial, 10/19/98.
Standards Published
SECOFI published several technical standards during the past few days. Among the new standards published by SECOFI are the following:
- NMX-D-226-1998-SCFI: Testing and specifications for bullet-proof materials;
- NMX-E-179-1998-SCFI: Temperature testing for plastic pipelines and connections;
- NMX-F-552-1998-SCFI: Testing methods for decaffeinated coffee beans;
- NOM-014-SCFI-1997: L.P. or natural gas valves;
- NOM-126-SCFI-1998: Information requirements for photographic service providers;
- NOM-125-SCFI-1998: Information requirements for transportation providers. Diario Oficial, 10/19/98 and 10/23/98.
Customs
BRAZIL
Exception to be Extended
The Brazilian Central Bank announced to the Mercosur members its extension of the exception to restrictions on financing imports until February 28, 1999. This exception was supposed to expire October 26, 1998.
The Brazilian government hopes to reduce its commercial deficit, which will reach US$6 billion by the end of the year, according to the Brazilian National Confederation of Industries (Confederación Nacional de Industrias de Brazil).
With this decision, Brazilian importers will be able to continue financing their purchases from Mercosur up to 89 days, with the condition that the shipment be below US$40,000.
Brazilian exporters turn to Europe and US
After southeast Asian economies collapsed under intense recession, Brazilian exporters are turning their attention to reinforcing sales to markets which are still undergoing reasonable expansion, such as developed countries, especially European countries and the US. Weg, an electric engine manufacturer, for example, wants to increase sales to the US, Canada and Argentina to make up for losses accrued from reduced orders to Asian countries and Australia. Company sales to Asia this year are expected to drop by half, according to superintendent Dougals Stange. Exports to Australia, which would reach $10 million, according to market sources, fell by exactly 50%. Stange blames the devaluation of the Australian dollar, a consequence of the Asian crisis. 'We are trying other markets,' said Stange. 'Our focus is the US. We decided that at the end of last year,' concluded the executive. Nelson Rocco, Gazeta Mercantil, 10/27/98.
Andean Community agreement extended
The nations of Mercosur agreed to extend the current bilateral trade agreements with the members of the Andean Community, Colombia, Perú, Ecuador and Venezuela, for an additional six months, until March 31, 1999. The decision was made to keep the current agreement because a new plan to cover fixed tariffs between the two blocks failed to comply with the September 30th deadline. Consulate General, Trade Bureau of Miami.
Mexico wants trade agreement with Mercosur
Mexico insists Mexico is serious about working out a free trade agreement with Mercosur, similar to the one Chile has with the trading bloc. Discussions between Mexico and Mercosur nations have hit a roadblock because of differences regarding the computer industry. Brazil fears that US software and computer manufacturers could flood the region by going through Mexico. If Mexico were to succeed in joining Mercosur, the block would represent 82% of the Latin American Gross Domestic Product and a market of 300 million consumers. Consulate General, Trade Bureau of Miami.
CHILE
FTA To Be Signed with Mexico
On April 17, 1998 the Chilean government endorsed a free trade agreement between Chile and Mexico and has now sent it to its House of Deputies for approval.
The detailed treaty will increase commercial exchange arising from a 1991 agreement. It incorporates areas not negotiated in Chile's treaty with Canada, such as health measures and intellectual property. Also, it promotes and protects foreign investment, and addresses the issues of resolving disputes and prohibiting monopolistic practices.
Mexico is regarded by Chile as an attractive trading partner with a potential market of almost 100 million consumer and a GNP of about US$404 billion. In the last eight years, Chile's exports to Mexico increased by more than 700%, while in the same time period overall trade grew to a 1997 level of US$1.45 billion (an increase of over 900%). Estrategia - Chile, 10/26/98.
Chile announces new law to reduce tariffs
The Chilean President Eduardo Frei, announced a new law that will lower tariffs. The objective of this law is to decrease the general tariff rate from 11% to 6%.
The Law No. 19.589, will begin a gradual reduction of tariffs starting next year, while a gradual increase in taxes on tobacco, gasoline and postage will simultaneously take place.
The new law includes a series of safeguards to protect and promote sensitive sectors of the economy, such as agriculture and medium and small industry, in order to allow them to better adapt to globalization.
EL SALVADOR
New Duty Free Zone does not offer fiscal incentives to foreign investors
After reforms to the new Duty Free Law were made, the Vice-Minister of Economy said that there would be no new legislation offering fiscal incentives to foreign investors to invest in El Salvador. The newly approved law does not include substantial changes concerning fiscal incentives to attract foreign investments. The only substantial change is that fiscal benefits will be granted to companies who export within the Central American Area (the previous law benefited those exporting only outside Central America).
The new law offers Salvadoran companies who export within Central America the possibility, to save on taxes, transfer of goods and duties.
PERU
Lowering of tariffs between Ecuador and Peru.
The Vice President of the Republic Ricardo Marquez, stated that after the recent global peace agreement between Peru and Ecuador, commercial exchange between the two countries could triple in the next four years.
According to the Vice President, due to the peace agreement and the new Navigation and Commercial Treaty between the two South American countries there will be a reduction in the level of tariffs between the two countries.
The process of tariff reduction will occur more rapidly with Ecuador than with Chile or any other of the Andean Pact countires. Accordingly, business opportunities should increase in Peru and Ecuador. The process for tariff reductions may soon be completed due to the negotiations taking place between the private sector and the government in both countries.
Energy
ARGENTINA
YPF Seeks to Expand its Brazilian Holdings
YPF (Yacimientos Petrolíferos Fiscales) will invest $1.5 billion during three years
YPF, the Argentine petroleum company, plans to spend US$1.5 billion during the next five years to buy oil fields and for retail sales. Half of that money will go to buy at least two chains of gas stations.
Petrobrás, the Brazilian petroleum company, will be doing business in a partnership with YPF. They will share gas stations with a total of 1,500 pumps. 1,000 of these pumps will be in Brazil and 500 from Petrobrás (under the initials BR) in the river valley routes that connect both countries.
BRAZIL
Petrobrás closes deals with Coastal, of the US
Coastal, a United States petroleum and gas company, intends to invest in Brazil in projects along the whole chain of natural gas production such as exploration and production, construction of gas pipelines and the thermoelectric generation of gas. The company signed a partnership contract with Petrobrás Friday for two projects (one for exploration and the other for production development), budgeted at $100 million, that are to have initial investments of $30.4 million. Eliane Velloso, Gazeta Mercantil, 10/26/98.
URUGUAY
Gas to be Imported
The Uruguayan Minister of Energy, Julio Herrera, said that the natural gas pipeline that connects Uruguay with Argentina, opened at the end of October, will change completely the Uruguayan energy system, lowering its cost up to 80%.
Herrera said that the Uruguayan industry primarily utilizes fuel oil; accordingly the substitution of natural gas will help lower production costs by 20%. ANCAP (National Administration of Fuel, Alcohol, and Cement) will use the gas for the operation of portland cement plants. UTE (government electric energy company) will use the gas to built a power plant with a combined cycle between 130 and 180 megawatts per hour; the construction and exploitation of the power plant will be in partnership with an international company (which has yet to be identified). This electric energy project, based on natural gas, was created to export energy to other countries of Mercosur.
Environment
MEXICO
Energy Industry Standards Published
The Department of Environment, Natural Resources and Fisheries (SEMARNAP) published technical standards applicable to electrical distribution plants and substations. NOM-113-ECOL-1998 establishes environmental protection requirements for the design, construction, operation and maintenance of electrical distribution plants and substations. Diario Oficial, 10/26/98.
Medicine & Health
Mexico
Standards Published
The Department of Health (SSA) published a new standard for endotracheal tubes. NOM-SSA1-1995 sets sanitary requirements for endotracheal tubes of the Murphy and Magil type. The standard also establishes testing procedures for the tubes. Diario Oficial, 10/16/98.
Taxes
MEXICO
Annex to Tax Rules Published
The SHCP published Annex 19 to the fiscal rules for 1998. Annex 19 includes tables to calculate income tax for what are considered minor or small contributors. Diario Oficial, 10/26/98.
Transportation
BRAZIL
Rail Industry Continues to Grow
The railway sector is going ahead at full speed, despite the recessionary climate. The industry, that grew 333% last year, turning over $600 million, should close the year with revenues of $1 billion, informed the Interstate Union of the Rail and Road Materials and Equipment Industry (Simefre). Rosana Hessel, Gazeta Mercantil, 10/27/98.
Various
ARGENTINA
Privatization of Hierro Patagónico Rionegrino S.A. (Hiparsa)
The Government of Rio Negro (a Province of South Argentina) and the National Department of Mining have created an Executive Technical Union to analyze the basic specifications and conditions for incorporating private national and international investment in Hiparsa, a Patagonian mining company. The iron mines and the steel plant have been inactive since 1990. Its possible reactivation, with the partial or total incorporation of private capital and the installation of a free trade zone near the Punta Colorada docks will open up possibilities for growth in the region.
BRAZIL
Recently-privatized companies continue to invest
Owners of recently-privatized Brazilian companies, in the telecommunications and energy sectors, have turned to consultants in order to learn how to make their enterprises more profitable, said Sérgio Lozinsky, director of PriceWaterhouse Coopers. 'Despite the crisis, those sectors still have a great, though repressed, demand for services,' Lozinsky added.
The companies which the international crisis hit the hardest, such as producers of electric and electronic goods and autoparts, as well as the ones whose main client is the government, are cutting down on pending. But some companies are going in the other direction. The brewery Kaiser has just closed a new contract for training in administration of processes. Patrícia Campos Mello, Gazeta Mercantil, 10/29/98.
Privatization leads Deloitte Touche business
Deloitte Touche Tohmatsu, a consulting firm, expanded its activities in Brazil this year, after the government pushed ahead with its privatization schedule. The number of company employees rose from 650 in 1997, to the current 1,000. The expansion targetted the corporate sector, taking into account privatizations in the electric sector, Telebrás, state banks and in the services sector, said partner Luiz Alberto Fiore. Revenues, though not officially revealed, increased 35%. At this point of time, Deloitte Touche is appraising the São Paulo state bank Banespa, for the São Paulo government. It may also take part in the appraisal of the Baneb bank, and intends to include Datamec and BB-DTVM privatizations in its portfolio. Thaís Costa, Gazeta Mercantil, 10/30/98.
REGIONAL
CAN Meeting Develops New Strategy to Help Stabilize Economy
The five members of the Andean Community of Nations (CAN) Venezuela, Ecuador, Colombia, Bolivia and Peru, recently met in Bogotá. The focus of the CAN Meeting was to move beyond a simple commercial accord, towards a true economic, political and monetary union. The union is designed to help member nations better confront the world's financial turbulence and promote the lowering of interest rates and inflation.
This second meeting of the Advisory Council of CAN establishes a blueprint for coordinating future policy by creating a work group which will present its recommendations by March 30, 1999. Additionally, representatives from member nations agreed to strengthen and harmonize banking regulation in order to stimulate the financial sector.
Teodoro Petkoff, Venezuela's Minister of Planning, emphasized that study groups were looking into political, monetary and fiscal matters to modernize the process of integration. The idea was to adopt measures for the middle term such as were done by the European Union.
Also, it was felt that foreign trade could be enhanced by establishing a common system of monetary exchange. If transactions with dollars could be avoided through a better conversion mechanism, for example “peso-sucre” (like the “Euro” of the European Union), a more direct and reasonable exchange rate could be obtained.
Officials admitted that it is difficult to determine the impact and duration of the international financial crisis brought about in recent weeks by the drop in value of the Russian ruble. However, spokesmen from the various delegations emphasized several encouraging facts: the White House's financial contribution to the IMF in order to deal with the problem of liquidity present in various countries; the lowering of interest rates by the US Federal Reserve; Brazil's announcement of its new fiscal policy; the Japanese government's intention to strengthen its financial system.
Finally, meeting participants agreed that Andean countries will have to strengthen measures to insure fiscal discipline in order to guarantee macroeconomic equilibrium. El País - Colombia, 10/29/98.
