Volume 6, Number 9, Page 4
RECENT DEVELOPMENTS
Agriculture, Mines, & Cattle Industry
Regional
Mercosur and the U.S. United in WTO Negotiations to Eliminate Agricultural Subsidies
Member countries of Mercosur and the United States intend to present a united front against agricultural subsidies in the latest round of WTO negotiations, set to take place on November 30 in Seattle, Washington.
The U.S. has enlisted the Mercosur nations of Argentina, Brazil, Paraguay, and Uruguay to form a strong alliance in their campaign to force the European Union to reduce its agricultural subsidies. In return, Mercosur expects to receive better access to US markets, specifically in beef and citrus exports.
Representatives of Mercosur and the United States agree on the necessity of eliminating subsidies, lowering tariffs and reducing quotas in order to increase access to agricultural markets. The U.S. also insisted on the need to eliminate state corporations whose mission is the marketing of agricultural products. Mercosur has affirmed it will not subsidize its own agricultural products and believes that subsidies in the past have only served to lower prices. Diario El País, www.diarioelpais.com, 4/12/99
Antitrust/Antidumping
Mexico
Appeal Resolved
The Department of Commerce and Industrial Development (SECOFI) has announced its resolution of an antidumping investigation appeal. On November 18, 1994 SECOFI published its final decision on an antidumping investigation imposing antidumping duties of up to 129 percent on imports of electrical parts from China. After the decision, Singer Mexicana, S.A. de C.V. asked SECOFI if certain tariff categories would be subject to the payment of antidumping duties according to the previous resolution. SECOFI stated that some of the tariff categories questioned by Singer were subject to the tariffs, but others were not.
Singer then appealed the decision, contending that it was missing several legal arguments. On December 11, 1995 SECOFI published its decision which dismissed Singer’s appeal. Singer then brought suit in fiscal court, demanding the annulment of the dismissal from SECOFI. The fiscal court resolved in favor of Singer, ordering SECOFI to review the appeal. SECOFI appealed the fiscal court’s decision, but was dismissed by the appellate court; after which SECOFI then reviewed the appeal from Singer and affirmed its original decision. Diario Oficial, 4/8/99.
Steel Antidumping Case Still Debated
Following a long legal battle in several courts, SECOFI announced its compliance with an amparo protection granted to a company involved in an antidumping investigation. The case dates back from August 2, 1994, when SECOFI imposed antidumping duties of up to 78.46 percent to steel imported from the U.S. Two of the companies assessed with the duties later requested a revision of the case. After a binational panel reviewed the case, it requested that SECOFI issue a new resolution revoking the antidumping duties imposed on the two companies. SECOFI then published a new resolution revoking the antidumping duties.
In 1995, other companies originally assessed with antidumping duties requested SECOFI to grant the same benefit to them, revoking the antidumping duties. SECOFI rejected the request. One of the companies then applied for an amparo protection, and after being granted it was appealed by SECOFI. Upon affirmance of the amparo grant, SECOFI revoked the antidumping duties assessed to the company. Diario Oficial, 4/8/99.
Antidumping Duties to be Eliminated
SECOFI has announced it will eliminate several antidumping duties. A list of the different products subject to antidumping duties, its tariff category, the country of origin, the date of publication of the final decision and the date the tariff will be eliminated was published by SECOFI. Diario Oficial, 4/13/99.
Banking & Credit
Brazil
World Bank Recommends the Privatization of Brazilian Banks
Brazil, currently attempting to overcome a monetary crisis with rigorous fiscal reforms, should now privatize its state banks, according to the World Bank and the International Monetary Fund (IMF). The World Bank maintains that Brazil possesses an excellent financial system in contrast to less efficient public banks.
According to sources within the organization, Latin America still faces a state of economic volatility that shows no signs of diminishing in the immediate future, and should take preventative measures, including the reform of its financial system. El Comercío Peru, www.elcomercioperu.com.pe, 4/29/99
Central Bank Issues First Bonds Since Currency Devaluation
In another sign of recovery from Brazil’s currency devaluation, the Central Bank of Brazil (BACEN) issued their first sovereign bond since last year’s crisis. Set at a minimum price of US$1.0 Billion, the bonds could be bought for cash or exchanged for existing Brazilian debt, with sales completed April 23. Previous massive outflows of dollars had forced BACEN to abandon strict controls on foreign exchange policy January 13, allowing the real to float against the dollar two days later. Since, investor confidence in Brazil has increased due to a more stable real, declining interest rates, and controlled inflation. Reuters News Service, 4/19/99
Mexico
Capital Requirements Amended
The Department of the Treasury (SHCP) has announced new amendments to the capital requirements for bond institutions. The rules originally published in 1997 include several formulas for calculating capital requirements. Diario Oficial, 4/12/99.
Financial Statements Subject to New Rules
New rules for financial statements that must be presented by bond institutions were published by the SHCP. Circular F-11.1.1 establishes the content that must be included in the financial statements and other financial notes from bond institutions. Diario Oficial, 4/12/99.
Consumer Law
Mexico
Standardization Program Published
The national standardization program for this year has been published by SECOFI. The program includes a list of the different standards that are being elaborated in several departments and offices of the federal government. Diario Oficial, 4/14/99.
List of Arbitrators Amended
A list of authorized arbitrators has been published by SECOFI. Under the list the arbitrators are authorized to act in controversies between suppliers and consumers. Diario Oficial, 4/21/99
Ventures Approved
The Federal Competition Commission issued its opinion in ventures between different companies. The Commission did not object or condition a venture between Empresas La Moderna, S.A. de C.V.; Conglomerado CAI, S.A. de C.V.; Conglomerado Pulsar, S.A. de C.V. and Seguros Comercial América, S.A. de C.V. The group of companies recently sold their Mexican cigarette division to the BTC. Currently the companies are involved primarily in agribusiness and insurance. Diario Oficial, 4/21/99.
Customs
Mexico
Annexes to Tax Rules Published
Several annexes to the tax rules for foreign trade for 1999 have been published by the SHCP. The annexes include a list of the fees to be paid for customs inspections and hours of operation from customs facilities. Annexes 3-12 have been published, with Annexes 13-21, 23, and 25 to follow. Diario Oficial, 4/14/99, 4/15/99 and 4/16/99
Trade Agreement Rules Set
Rules for the application of the Economic Complementation Agreement Number Six (No. 6) have been set by SECOFI. The agreement was signed on October 13, 1993 between Mexico and Argentina and as part as the ALADI treaty. Tariff categories for Mexican and Argentine products that will be traded under the agreement are included in the rules. Diario Oficial, 4/19/99.
Energy
Venezuela
Investors Uneasy as Gasoline Price Status in Flux
Venezuela’s Ministry of Energy & Mines has decided not to raise the price of gasoline, a move that would have increased profit margins for foreign investors. Investors, including Shell, Mobil and BP Amoco, claim that the refusal to raise prices violates the new gasoline law passed in November 1997. Although the intention of the law was to eliminate the state-run monopoly by opening the market for competition, the State retained price control, forgoing the effect of market forces on gasoline prices.
However, the recent explosion of the Carito-Muscar pipeline may force Venezuela to raise the prices of its crude oil and related byproducts to compensate for lost revenues. The government currently estimates revenues of $1.35 per barrel for national budget calculations. Gasoline prices have been a sensitive political issue since riots in February 1989 over a rumored increase in public transportation prices. El Universal, www.eluniversal.com, 4/23/99, 4/24/99; Miami Herald, www.herald.com, 4/13/99
Insurance
Mexico
Capital Requirements Set
The SHCP has published amendments to the capital requirements for insurance companies. The rules were originally published on April 30, 1997 and amended later on in 1998. On the same date, the SHCP published the rules for insurance companies backing up bonds. Diario Oficial, 4/12/99
Taxes
Mexico
Tax Benefits Amended
The SHCP announced amendments to the rules of those paying taxes under the simplified regime. The original rules were published on March 30, 1998 granting special benefits, among others, to taxpayers in agriculture, livestock and fishing industries. Diario Oficial, 4/9/99.
Various
Mexico
Negotiations with EU on Hold
Although partial agreements have been reached on agricultural products, Mexico’s trade negotiations with the European Union have stalled over what may be significant differences in other key areas. Disagreement over when to phase out agricultural tariffs might place the next scheduled round of talks in jeopardy, set for May in Brussels. Results of negotiations on trade of industrial goods, rules of origin, and trade conflict resolution mechanisms have been mixed, with Mexican officials attempting to reduce vulnerability to subsidized exports and to effect a gradual opening of industrial & agricultural markets.
While the EU has also held initial free-trade negotiations with other Latin American countries and blocs, including Mercosur, the talks with Mexico are most advanced. Europe’s Common Agricultural Policy, which promotes agricultural subsidies for European farmers, has also been a major block in negotiaitons with South American countries. Reuters News Service, 4/19/99
