Volume 6, Number 8, Page 4
Recent Developments
Agriculture, Mines & Cattle Industry
Colombia
Rice Imports to Comply with Andean Community
In a mandamus handed down by the Andean Community of Nations (CAN) tribunal, Colombian authorities will be required to lift tariff restrictions on rice imports from within the Andean trading block, previously sanctioned by Resolution 431 of the Cartagena Agreement. Sanitation restrictions in conjunction with the tariff, imposed by the Colombian Agricultural Institute to prevent the entry of the Thrips Palmi Karni plague, were also struck down despite the fact that the grain disease is not indigenous to Colombia. These restrictions will now apply only to rice cultivated in areas previously unaffected by the plague. El Tiempo, 4/13/99
Regional
WTO Decision Halts Banana Wars
Ending decades of discriminatory banana trade practices by the European Union, the World Trade Organization on April 7, 1999 ruled in favor of the unfair trade practices claim brought by United States and five Latin American nations - Ecuador, Mexico, Guatemala, Panama and Honduras - against the EU. The WTO ruling upheld the U.S. decision to impose $191.4 million in punitive tariffs on European imports, concluding that subsidization of Caribbean banana exportation was discriminatory to the U.S. and the Latin American nations.
In effect, the decision nullifies current EU banana import policies instituted last January, which were claimed to violate global trading rules by favoring Caribbean producers over Latin American producers and European distributors over those from the U.S. through the implementation of banana quotas. Free trade standards had been set by the WTO in 1996 to outline fair international trading policies. However, the EU had allowed former colonies in Africa and the Caribbean to export bananas tariff-free since 1993, in violation of these standards.
Negotiations have begun between the U.S., Central American, and CARICOM nations, including Mexico, Venezuela, Columbia, Cuba, the Dominican Republic and several smaller Caribbean nations, to find a resolution that will not harm the Caribbean banana industry, and to allay fears that the WTO ruling will have a debilitating impact on their economy. www.elcomercio.com, 4/8/99; www.elherald.com, 4/8/99; www.eluniverso.com, 4/8/99; www.cnn.com, 4/8/99
Antitrust/Antidumping
Argentina
Investigation of German Cardboard Products Closed
Argentina’s Department of Industry, Commerce, and Mining closed their investigation into the alleged dumping of encapsulated cardboard products originating from the Federal Republic of Germany, under MERCOSUR tariff categories 4810.12.90, 4810.29.00, 4810.39.00, 4810.91.00, and 4810.99.00.
Revisions to current paper trade operations will include a new minimum FOB export value of U$S 630/ton on all paper and cardboard products coated with one (1) or two (2) layers of inorganic substance (such as Kaolin) and shipped in rolled or sheet form, with a weight surpassing two hundred grams per square meter (200 gr/m2.). Importation of such products that do not meet the minimum FOB value will be assessed an antidumping duty for the difference between the declared export value and the minimum. Boletín Oficial, Resolución 214/99, 2/26/99
Mexico
Clarification Denied
The Department of Commerce and Industrial Development (SECOFI) declined a clarification requested on an antidumping investigation. On April 28, 1993, SECOFI published its final decision on an antidumping investigation on hot rolled steel imported from the U.S. According to the decision, antidumping duties of 28.73 percent were assessed on the imports of the above mentioned product from the company LTV Steel Company, Inc.
On June 26, 1998, LTV Steel Company, Inc. requested SECOFI clarify whether hot rolled steel of more than 60 inches thick was considered exempt from antidumping duties. SECOFI declined the clarification request, applying the duties to the product mentioned by LTV. Diario Oficial, 4/5/99.
Banking & Credit
Brazil
Declaration of Federal Debits & Credits Program Initiated
New regulations set forth by the Secretary of Federal Revenue (SRF) require companies in Brazil to make a Declaration of Federal Tributary Debits and Credits (DCTF) before dissolution, incorporation, merger or split. The DCTF shall be delivered to the SRF office within that company's jurisdiction, on the last working day subsequent to the particular event, and shall include relative data regarding tributes and contributions whose taxable events occurred in the period between 1 January 1999 and the date of the event. Normative Instruction No. 15, 2/12/99; Federal Official Gazette, 2/24/99;
Peru
New Regulatory Scheme for Financial Derivative Products
Peru's Banking and Securities Commission approved measure B-2037-99, which permits the registration of financial derivative products, including futures, forwards, swaps and stock options into accounts receivable. The value of each derivative product is determined by the earned interest rates of the active assets of the funding bank. Each bank is required to identify and register the product in their own accounts and must begin a process of regulating and supervising the market coverage of the product to eliminate the risk of rate fluctuations. El Comercio Peru, www.elcomercioperu.com.pe
Consumer Law
Mexico
Venture Approved
The Federal Competition Commission decided not to object or impose conditions on a venture between Bayer of Mexico, S.A. de C.V. and Chiron, S.A. de C.V. The Commission reviews and may oppose ventures or takeovers between companies in order to avoid monopolistic practices. At the same time, the Commission did not object or impose conditions on a venture between Beiresdorf North America, Inc. and BDF Mexico, S.A. de C.V. Diario Oficial, 4/2/99.
Forms Approved
A list of the procedures registered for requesting certain permits and for the application for licenses, have been published by SECOFI. The procedures and applications are registered in the Federal Registry for Business. Diario Oficial, 4/7/99.
Customs
Mexico
List of Products Subject to Standards Amended
A list of the products that must comply with certain technical standards when entering or leaving the country has been published by SECOFI. The original list was published on June 2, 1997. The list includes the tariff category of the product and the specific technical standard that will apply. Diario Oficial, 4/5/99.
Foreign Investment
Brazil
Petrobras Shareholders Confer Voting Rights to Foreign Investors
In a nearly unprecedented move for Brazilian state holdings, shareholders of the oil conglomerate Petrobras approved changes to the company’s charter which will allow international investors to have voting rights. This action, along with the decision to elect a non-native Brazilian as Pertrobras’ president, has fueled protests and calls for a renewed nationalism in energy policy. www.cnnfn.com, 3/24/99
Insurance
Mexico
Reforms Proposed for Bond, Insurance Firms
President Ernesto Zedillo presented the Mexican Congress earlier this month with two proposals to amend the Federal Bond Institutions Law and the Insurance Company Institutions Law.
Both proposals would broaden the authority of officials in charge of the regulation, supervision and oversight of bond and insurance companies. In addition, the bills would prohibit government officials with authority over these sectors from serving as board members for bond and insurance firms. This provision would block officials in the Banco de México, Bank Savings Protection Institute (IPAB), National Banking and Securities Commission (CNBV) and the National Retirement Savings Commission (Consar).
In addition, the initiatives would require that appointments of board members, examiners and presidents be approved by the Governing Board of the National Insurance and Bond Commission. The bills are now with the corresponding committees in Congress. Capín, Calderón, Ramírez y Gutiérrez-Azpe, S.C.
Taxes
Argentina
Capital Gains Tax Revised for Debt Interest
Modifications to Article 81 of the Argentina’s Capital Gains Tax Law have been promulgated by the Federal Administration of Public Revenues, extending the tax to debt interests earned on all negotiable liabilities in conformance with existing tax law. The tax will operate in a manner similar to income taxation, applied to every fiscal period upon which debt interests are calculated and collected, and computed at the time of total or partial interest payments. Also included in the measure are reporting procedures and exceptions to the new tax under existing Law Nos. 23.576 and 21.526 (including subsequent modifications). Boletín Oficial, Resolución General 500/99, 3/17/99
Chile
Luxury Tax Exemptions Allowed
Almost two years since initiating studies on possible modifications to the luxury tax, the Chilean government has announced its decision to send the Congress a law that would raise the price of vehicles subject to the luxury tax from US$10,004 to US$15,000, maintaining the tax imposed at 85 percent of the value.
In terms of the end price to be paid by consumers, authorities estimate that 90 percent of vehicles sold in Chile will not be subject to the luxury tax. Government sources emphasize that such changes will benefit the middle class as well as car dealers, foreign and domestic.
Additionally, within six months of the issuance of the new law, the Minister of Transportation and Telecommunications will release new minimum security requirements for the importation of automobiles into Chile. Studies will be conducted to verify which automobile safety devices are most appropriate for Chile, thereby determining those which will be required on imported vehicles imported. Among the safety devices most likely to be required include airbags and anti-lock brakes. El Mercurio, 4/6/99, www.elmercurio.cl
Transportation
Mexico
Airport Privatization Continues
Following the trend to privatize the airports in Mexico, The Department of Communications and Transportation (SCT) announced the desincorporation of the Grupo Aeroportuario del Pacifico. The desincorporation consists in breaking the holding group of the government into different companies so that those may be privatized.
The airports that comprise the Grupo Aeroportuario del Pacífico and that soon will be privatized are the ones in Aguascalientes, el Bajío (Guanajuato), Guadalajara, Hermosillo, Los Mochis, La Paz, Manzanillo, Mexicali, Morelia, Puerto Vallarta, San Jose del Cabo and Tijuana. Diario Oficial, 4/6/99.
Regional
Brazil, Venezuela Promulgate Highway Transportation Agreement
Venezuela and Brazil have begun enforcement of their Agreement on International Passenger and Cargo Highway Transportation, reached in 1995. Approved by Brazilian Legislative Decree No. 100, 10/23/96, the agreement establishes definitions, jurisdictions and means for controversy resolution, as well as detailing organizational and operational aspects, customs rates, rights, identification tags, and other areas of customs concern between the two nations. Decree No. 2.975, 3/1/99, Federal Official Gazette 3/2/99;
Various
Regional
Chile Appeals to Costa Rica for Open Trade Talks
Chilean trade negotiators have requested that Costa Rican authorities accelerate the development of ongoing trade talks, amid larger efforts to formulate a comprehensive commercial trade agreement with Central America with in the next five years. Current negotiations have been aimed at opening access to all sectors of Costa Rica’s commercial market as well as modifications of their existing trade and tariff law. Representatives of the Chilean President have emphasized that Costa Rica's cooperation could set an important precedent for other Central American countries, since Costa Rica’s position as a regional economic leader may expedite a free trade agreement between Chile and Central America. La Nación, 4/7/99,
