Volume 6, Number 21, Page 3
Recent Developments
AGRICULTURE, MINES & CATTLE INDUSTRY
Mexico
States Declared Free of Agricultural Diseases
In two different publications, the Department of Agriculture, Livestock and Rural Development (SAGAR) announced that several states have been declared free of various agricultural diseases. In a first publication, the northern states of Coahuila, Nuevo Leon and Tamaulipas were declared free of avian influenza. SAGAR also announced various municipalities in Duarngo and Coahuila as free of the classic porcine fever. Diario Oficial, 10/7/99.
ANTITRUST/ANTIDUMPING
Peru
ADEX Pursues Equal Treatment in U.S. Market for Andean Textiles
Due largely to tariff preferences given to countries such as Mexico and many Caribbean nations, Peruvian textile exports are unable to compete at the same level in the U.S. market as these other countries, according to Peru’s Association of Exporters (ADEX).
Almost all other Andean exports to the U.S. besides textiles are performed under preferential tariff agreements, but the exclusion of textiles represents a large portion of exports, as 30% of Peruvian textile exportation is directed to the U.S. Although the U.S. officials claim it would be difficult to incorporate textiles under the list of tariff preferences, the ADEX Textile Committee has stated that including textiles under this category should be a priority due to present growth and export potential within the industry. Gestion 10-7-99;
BANKING & CREDIT
Argentina
Global Credit Program Regulations for SBE’s Established
Argentina’s Central Bank (BCRA) has published regulations for their new Global Credit Program for Small and Micro Business Enterprises (SBE’s). The new norms were circulated to all financial institutions operating in Argentina, which establish lending procedures and eligibility requirements for prospective businesses. Model Loan Agreements for the program were also approved and instituted by the Executive Branch’s Department of Small and Medium Business, in line with Inter-American Development Bank standards. Foremost among the goals of the program is to expand productivity, income and employment within Argentine SBE’s through superior access to credit, as well as to support increased lending from financial institutions. Boletín Oficial, Comunicación “A” 2977, 9/10/99; Decreto 993/99, 9/17/99
Brazil
Investments of Funds Raised Abroad
On July 22, 1999, the Central Bank of Brazil (BACEN) issued Circular No. 2913, providing for the allocation of amounts raised abroad for (i) financing of and/or loans related to agribusiness; (ii) financing for the construction and/or purchase of real estate; and (iii) onlending of funds to Brazilian exporting companies. Circular 2913/99 also establishes procedures for registration and appraisal of securities acquired with such funds (DOU-I, July 22, 1999). Pinheiro Neto Advogados, http://www.pinheironeto.com.br
New BACEN Measures Target Foreign Investment, Financing for Exports
On July 29, 1999, the Central Bank of Brazil (BACEN) published three resolutions emanating from the National Monetary Council (Conselho Monetário Nacional – CMN) (DOU-I, July 30, 1999). Resolution 2622/99 establishes rules related to the trading by nonresidents of futures contracts referring to agricultural or stock-raising commodities. Resolution 2624/99 consolidates the rules applying to the incorporation and functioning of investment banks and private financial institutions specializing in (a) private-equity transactions; (b) financing of production activities for the supply of fixed and working capital needs; and/or (c) administration of third-party funds. Such organizations shall be established as corporations (Sociedades Anônimas) under this resolution, and their names must include the expression "Banco de Investimento" (Investment Bank).
Resolution 2625/99 allows financial institutions to raise funds abroad for free investment on the Brazilian domestic market. However, such freedom of investment is subject to fulfillment of the following conditions: (i) the funds must have been obtained from public issues abroad; (ii) there must be a contractual commitment to keep such funds in Brazil for more than five years; and (iii) there cannot be a clause as to early maturity before completion of this five-year (or greater) term.
Earlier, BACEN issued Resolution No. 2621 on July 26, 1999, establishing that financing of exports of goods and services in general - which is carried out by BNDES-EXIM under the aegis of the Export Financing Program (Programa de Financiamento a Exportações – PROEX) - will be implemented in accordance with the regulatory acts applying to PROEX. The same rules will be valid for the financing of software exports, as dealt with in Law 9609/98 (DOU-I, July 27, 1999). Pinheiro Neto Advogados, www.pinheironeto.com.br
Mexico
IPAB Bylaws Published
The Institute for the Protection of Bank Savings (IPAB) has published its own bylaws, setting forth the basis for the organization, functions and attributions of the IPAB’s different agents and administrative units. The IPAB was created to replace the former entity named FOBAPROA, which was dissolved after the Mexican Congress investigated alleged illegal practices. Diario Oficial, 10/4/99.
Peru
SBS Starts Interest Rate Disclosure Rule
According to Peru’s Bank & Securities Superintendence (SBS) new regulations were introduced on October 1 requiring banks and financial institutions to disclose interest rate information on a regular basis. Originally the requirement was set to start September 1, but was later postponed to October 1 due to Y2K considerations.
Under the new scheme, banks will be required to provide the SBS with commercial transaction interest rates on a weekly basis, and consumer and mortgage transactions interest rate information on a weekly basis. In turn the SBS will disclose the information to the public in order to make interest rates more transparent and the banking system more efficient. http://www.bnamericas.com/banking.html, 10/6/99
COMMUNICATIONS
Honduras
Hondutel Seeks to Speed Sale
Honduras’ state-owned telecommunications operator Hondutel is working with government ministers and sale advisor NM Rothschild Mexico to streamline its privatization process. The company believes negotiations must conclude before December of this year or face postponement until early next year, as Y2K fears and the traditional holiday period may hinder the sale.
Hondutel management is currently seeking to tie up internal affairs and hopes to finalize negotiations with the trade union Sitratel by the end of this week. One aspect under negotiation is the future of all employees. The current plan suggests Hondutel employees would effectively be dismissed - with their respective severance pay - and then be hired again by the new operator, in effect leaving the state to assume the company’s US$39.1 million labor liabilities. However, workers would not be taken back on under an existing collective contract, but rather as individuals under the Honduran Work Code. This would allow the new operator to evaluate workers’ individually for a period of two months, then decide whether to retain them or lay them off definitively. Sitratel previously demanded rights to 50 percent of the sale proceeds to cover the labor liabilities. http://www.bnamericas.com/telecom.html, 10/7/99
CUSTOMS
Argentina
New Import Restrictions Imposed on non-WTO Countries
In August, Argentina implemented a new policy imposing tougher proof-of-origin requirements for goods originating in countries not belonging to the World Trade Organization, such as Taiwan and China. Resolution 305/99 requires such countries to submit original certificates of origin, or copies certified by Argentine consular officials in non-WTO countries, to Argentina’s Customs Office. The certificate must specify the Argentine importer’s name, plus the date and number of commercial invoice from exporting country. If a shipment is going elsewhere first, the exporter must note what quantity is destined for Argentina.
In addition, exporters in a non-WTO country must seek recognition by the Argentine consulate, verify location of every manufacturer which contributed to the finished good, and detail what is manufactured by each company. Goods destined for the Tierra del Fuego special customs area, duty-free and foreign-trade zones, and accessories and components classified in Chapters 84 and 85 of the Harmonized Tariff Code are exempt.
This measure was the result of internal pressures in Argentina to keep trade balanced and to stem the tide of cheaper imports from Asia. Supply chains of global computer and electronics manufacturers have already been severely affected by the resolution. U.S.-led lobbying efforts are underway to amend the measure and reduce the hardship placed on exporters, as the resolution effectively bars finished goods with components from Taiwanese and Chinese suppliers.
More recently, Argentina’s Ministry of Economy issued a resolution that reduced the applicable tariff rates to technology based capital goods produced outside the MERCOSUR region. This measure targets computer and telecommunication products, which may mitigate some of the damages to exporters inherent in the new restrictions. The Journal of Commerce, 10/4/99; Boletín Oficial, Resoluciones 305/99, 5/14/99; 1030/99, 9/2/99
Mexico
SECOFI Permit Amendments Clarified
SECOFI has published clarifications to an amendment of the resolution that subject certain imported goods to special permits issued by SECOFI. The clarification deals with tariff category title of a product subject to this special permit. Also published was a clarification to amendments to a similar document establishing the goods whose import is subject to permit by SAGAR. Diario Oficial, 9/27/99 and 10/8/99.
Foreign Trade Tax Rules Changed, Clarified
The SHCP announced amendments and a clarification to the tax rules related to foreign trade for 1999. First, a clarification to the fourth set of amendments to such rules was published by the SHCP. On the following day, the same department published the fifth and sixth set of amendments. Diario Oficial, 9/29/99 and 9/30/99.
Notice on Textile Exports Published
SECOFI published a notice to textile and clothing manufacturers regarding quota assignations for export to the U.S. According to several regulations, including NAFTA, textile and clothing exports to the U.S. are assigned specific quotas per year. SECOFI has previously assigned the quotas by procurement, but has since announced that there is still some remaining quota to be filled. According to the notice a quota of 130,413 dozens of cotton and artificial fiber pants has not yet been assigned. The product is classified under textile category 347/8/647/8. Any interested party must present a request known as “solicitud de asignación de cupo para exportar bienes textiles y prendas de vestir no originarios a los Estados Unidos de América" (SECOFI-03-011-2). The form may be obtained at the “ventanilla de cupos TLC” located at Insurgentes Sur 1940, planta baja, Col. Florida, México, D.F. 01030. Diario Oficial, 9/30/99.
ENERGY
Argentina
Norms Established for Safe Home Appliance Utilization of Natural Gas
Argentina’s Department of Industry, Commerce, and Mining (S.I.C.y M.) has issues new safety regulations for the utilization by household appliances of natural gas and other combustible liquids. In addition, ENARGAS, the national Natural Gas Regulation Agency, has established norms for warning and safety devices required in conjunction with natural gas usage. Manufactures, importers, and distributors must certify their compliance with the new regulations to ENARGAS, the Department of Energy, or both as stipulated by S.I.C. y M. Resolutions 123/99, 431/99 and 640/99. Sanctions for non- compliance with the new regulations are set forth in Law Nos. 22.802 and 24.240.
Boletín Oficial, Resoluciones 676/99 & 1188/99, 9/21/99
Mexico
Liquid Petroleum Gas Standards Extended
The Department of Energy (SE) announced the extension on the time allotted for the application of two different technical standards. NOM-EM-011-SEDG-1999, relating to the manufacture of portable containers of Liquid Petroleum Gas (L.P.G) will continue in effect for an additional six months as of October 14. NOM-EM-011/1-SEDG-1999 which establishes security conditions for portable L.P.G. containers will remain in effect for the same period of time as the above mentioned standard. Both technical standards were originally published on February 12. Diario Oficial, 9/30/99.
ENVIRONMENT
Brazil
New Disposal Requirements for Batteries
On June 30, 1999, the National Council of the Environment ("Conselho Nacional do Meio Ambiente – CONAMA) issued Resolution No. 257, determining that batteries containing lead, cadmium, mercury or their derivatives must be turned over to the establishments that market such products or, alternatively, to technical assistance providers authorized by their manufacturers or importers, after depletion, for adoption of proceedings for the reutilization, recycling, treatment or the environmentally adequate final disposal of such devices. These provisions are also valid for devices that contain such batteries on a non-replaceable basis (DOU-I, July 22, 1999). Pinheiro Neto Advogados, http://www.pinheironeto.com.br
Chile
Environmental Industry Launches AEPA
With the goal of encouraging sustainable development in Chile’s environmental industry, eighteen Chilean companies formed an industry alliance on October 7, 1999 in Santiago. Entitled the Association of Business and Professionals for the Environment (Asociación de Empresas y Profesionales para el Medio Ambiente – AEPA), their mandate is to promote waste prevention, control and remediation in productive processes and to bridge the gap between the private and public sectors. As companies have to comply with increasing environmental laws, the demand for environment equipment and service providers in Chile will grow. An increase in waste treatment companies will also raise competitiveness by boosting quality and lowering costs.
The AEPA brings together some of the country’s preeminent waste management companies, environmental consulting firms and equipment providers such as Bravo Energy, Hidronor, Huber Technology and Procesan. The Chilean government’s industry development body Corfo is sponsoring 70% of AEPA’s US$94,000 first-year budget.
El Mercurio.
Mexico
Organic Compost Standards Clarified
The Department of the Environment, Natural Resources and Fisheries (SEMARNAP) has published a clarification to technical standards related to volatile organic composts. NOM-123-ECOL-1998 establishes the limits of such composts in the manufacture of certain types of paints. The technical standard was first published on June 14. Diario Oficial, 9/29/99.
GOVERNMENT ADMINISTRATION
Mexico
Treaty to Avoid Corruption Practices Ratified
The Department of Foreign Relations (SRE) announced it has ratified a treaty aimed to avoid corruption by public servants in international transactions. The treaty was adopted in Paris on December 17, 1997. Diario Oficial, 9/27/99.
IMMIGRATION
Mexico
Business People Entrance Process Simplified
In efforts to ease entrance into Mexico for business people, the Department of the Interior (SG) has published a circular simplifying the entrance process for such persons. Circular 017/99 establishes the different types of visas for businesspeople entering Mexico. Among the criteria established by the Circular, board members from the United States or Canada entering Mexico to attend board of directors meetings, may enter as non-immigrant visitors, using a FMN or FM3 visa, depending on the specifics of their entry. Diario Oficial, 10/5/99.
INSURANCE
Brazil
Y2K Compliance for Insurance Companies
Brazil’s Private Insurance Bureau (Superintendência de Seguros Privados – SUSEP) issued Circular No. 98 on July 16, 1998, determining that all insurance and open-end private pension plan companies, as well as special savings (capitalização) companies, are obliged to deliver to SUSEP, no later than September 30, 1999, the Y2K Compliance question form, as set forth in the same circular (DOU-I, July 22, 1999). Pinheiro Neto Advogados, http://www.pinheironeto.com.br
LABOR LAW
Mexico
Standards for Fire Extinguishers Amended
The Department of Labor and Social Services (STyPS) published several amendments to technical standards applicable to fire extinguishers. Amended was technical standard NOM-104-STPS-1994, originally published on August 31. The standards establish safety and technical requirements for fire extinguishers of dried chemical powder type “ABC.” Diario Oficial, 9/28/99.
MEDICINE & HEALTH
Mexico
Standards Related to Haemodialysis Published
The Department of Health (SSA) published technical standards related to the practice of haemodialysis. NOM-171-SSA1-1998 establishes the minimum requirements for the personnel and medical establishments that apply haemodialysis, as well as the scientific and technological criteria that must be followed when applying haemodialysis. Diario Oficial, 9/29/99.
Standards Related to Medical Records Published
Mexico’s Department of Health (SSA) has published a technical standard relating to medical records. NOM-168-SSA1-1998 establishes the criteria for the elaboration, use and filing of medical records. The standards are effective throughout Mexico and are obligatory for all medial service providers, both public and private. Diario Oficial, 9/30/99.
REAL PROPERTY
Mexico
Regulations for Public Registry of Federal Property Published
The Department of the Comptroller and Administrative Development (SECODAM) has published the regulations for the Public Registry of Federal Property. The Registry is where all property of the federal government as well as any contract related to such property must be registered. Diario Oficial, 10/4/99.
TAXES
Brazil
Investment Funds Subject to Income, Financial Transaction Taxes
Brazil’s Secretary of the Federal Revenue Department issued Normative Ruling No. 93 on July 29, 1999, which extends assessment of the Tax on Financial Transactions (Imposto Sobre Operações Financeiras - IOF) and the Income Tax (Imposto de Renda – IR) to investment funds (DOU-I, July 30, 1999). Pinheiro Neto Advogados, http://www.pinheironeto.com.br
New Tax Benefits Extended to Public-Interest Civil Companies
On July 27, 1999, Brazil’s Ministry of Justice issued Ordinance No. 361, which establishes procedures for classification of nonprofit public legal entities as Organizations of Public-interest Civil Companies (Organização da Sociedade Civil de Interesse Público). Such entities are eligible for a series of tax benefits under the new ordinance, as provided for by existing laws and regulations (DOU-I, July 29, 1999). Pinhiero Neto Advogados, http://www.pinheironeto.com.br
Mexico
Seventh Amendment to 1999 Tax Rules Published
The SHCP published a clarification to the amendments of the tax rules for 1999. The clarification basically deals with a typo from the sixth set of amendments to the tax rules for 1999 published on September 8. The SHCP has also published the seventh set of amendments to the tax rules. Diario Oficial, 9/30/99 and 10/8/99.
TRANSPORTATION
Bolivia
INOXA to Conduct Road Concession Studies
Spanish consulting firm INOXA has signed a contract with Bolivia’s Department of Transportation to undertake a study of the concession model for the Central Highway Axis and Pacific Highway Network projects. INOXA won the four-month contract in September, which includes the definition of bidding rules and a concession model and is co-financed by the Inter-American Development Bank (IDB). Both highway concessions are to be launched in 2000, and will be 100% financed by private capital, with aid from the government through legal and tax exceptions.
The concession to maintain and operate the 1,000km Pacific Highway Network requires an initial investment of between US$15-20 million and will improve conditions on network routes to Chile and Peru, consisting of the La Paz-Cochabamba trunk route, and branch routes to Desaguadero, Tambo Quemado and Pisiga. The concession to upgrade, maintain and operate the 1,000km Central Highway Axis (Cochabamba-Chapare-Santa Cruz-Cochabamba) requires a US$60 million initial investment to resurface and resolve the Sillar section’s environmental problems. These concessions are Bolivia’s second and third in a four-highway program.
