RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/108
30 October 2002
(02-5914)
Trade Policy Review Body
TRADE POLICY REVIEW
VENEZUELA
Report by the Secretariat
This report, prepared for the  Trade Policy Review of Venezuela, has been drawn
up by the WTO Secretariat on its own responsibility.  The Secretariat has, as
required by the Agreement establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), sought clarification from  the Government of Venezuela on its
trade policies and practices.
Any technical questions arising from this report may be addressed to Mr. Angelo
Silvy (739 5249) and Mr. Raymundo Valdés (739 5346).
Document WT/TPR/G/108 contains the policy statement submitted by the
Government of Venezuela.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Venezuela.Venezuela WT/TPR/S/108
Page iii
CONTENTS
Page
SUMMARY OBSE RVATI ONS........................................................................................................... ..ix
(1) INTRODUCTION ................................................................................................................ix
(2) ECONOMIC ENVIRONMENT ..............................................................................................ix
(3) TRADE AND INVESTMENT POLICY ;  INSTITUTIONAL FRAMEWORK ................................... X
(4) MARKET ACCESS ..............................................................................................................xi
(5) OTHER MEASURES AFFECTING TRADE AND INVESTMENT ...............................................xii
(6) SECTORAL POLICIES ........................................................................................................xii
I. THE ECONOMIC EN VIRONMENT ........................................................................................1
(1) I NTRODUCTION ...............................................................................................................1
(2) R ECENT ECONOMIC TRENDS ..........................................................................................1
(i) Structure of  the economy..................................................................................1
(ii) Economic growth and employment ..................................................................3
(iii) Pri ces.................................................................................................................6
(iv) Monetary  policy................................................................................................6
(v) Exchange-ra te policy ........................................................................................7
(vi) Fiscal policy......................................................................................................9
(vii) Balance of  payments.......................................................................................11
(3) D EVELOPMENTS IN TRADE ..........................................................................................12
(i) Direction of  trade............................................................................................14
(4) T RENDS AND PATTERNS IN FOREIGN DIRECT INVESTMENT (FDI) .............................14
(5) O UTLOOK ......................................................................................................................16
II. TRADE AND INVEST MENT REGIME.................................................................................18
(1) INTRODUCTION ...........................................................................................................18
(2) CONSTITUTIONAL AND GENERAL LEGAL FRAMEWORK ...........................................19
(3) TRADE POLICY FORMULATION AND IMPLEMENTATION ...........................................21
(i) Trade policy objectiv es and form ulation ........................................................21
(ii) Main trade laws  and regu lations .....................................................................21
(iii) Trade policy ex ecuting ag encies.....................................................................22
(iv) World Trade Organization..............................................................................23
(4) PREFERENTIAL AGREEMENTS .......................................................................................24
(i) Andean Community........................................................................................25
(ii) LAIA...............................................................................................................26
(iii) Group of Three ...............................................................................................26
(iv) Other partial-scope regional agr eements ........................................................27WT/TPR/S/108 Trade Policy Review
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(v) Association of Ca ribbean States .....................................................................27
(vi) Free Trade Area of the Am ericas....................................................................27
(vii) Other internatio nal agreem ents.......................................................................28
(5) PETROLEUM SUPPLY AGREEMENTS ..............................................................................28
(6) INVESTMENT REGIME ....................................................................................................29
(i) Legal and instit utional framework..................................................................29
(ii) Privatiz ation....................................................................................................31
(iii) The investme nt tax regime..............................................................................31
(iv) Bilateral investment and tax arrangements.....................................................32
III. TRADE POLICY BY MEASURE ...........................................................................................33
(1) G ENERAL OVERVIEW ....................................................................................................33
(2) IMPORT REGIME ............................................................................................................33
(i) Customs procedures  and documentation ........................................................33
(ii) Customs va luation ..........................................................................................34
(iii) Rules of  origin ................................................................................................36
(iv) Tari ffs .............................................................................................................37
(v) Other charge s and levies.................................................................................44
(vi) Import licences, prohibit ions and restrictions.................................................45
(vii) Contingenc y measures ....................................................................................48
(viii) Government procurement ...............................................................................53
(ix) Technical regulati ons and standards ...............................................................58
(x) Sanitary and phytos anitary m easures..............................................................61
(3) MEASURES DIRECTLY AFFECTING EXPORTS ................................................................63
(i) Registration, do cumentation ...........................................................................63
(ii) Export taxes, charges and levies; refere nce prices..........................................64
(iii) Export rest rictions...........................................................................................64
(iv) Export subsidies, tax co ncessions and free zones...........................................65
(v) Export financing, insu rance and guarantees ...................................................67
(vi) Export pr omotion............................................................................................68
(4) MEASURES AFFECTING PRODUCTION AND TRADE .......................................................69
(i) Legal framework for pr oduction and investment............................................69
(ii) Incen tives ........................................................................................................70
(iii) State trading, public ente rprises and priv atizatio n..........................................75
(iv) Competitio n policy .........................................................................................76
(v) Enforcement of intellectual and industrial pr operty rights .............................78
IV. TRADE POLICY  BY SE CTOR...............................................................................................84
(1) I NTRODUCTION ..............................................................................................................84
(2) A GRICULTURAL SECTOR ...............................................................................................85
(i) Featur es...........................................................................................................85
(ii) Institutional and legal fram ework ...................................................................85
(iii) Measures at  the border....................................................................................87
(iv) Domestic sup port measures ............................................................................87
(v) Export subs idies..............................................................................................90Venezuela WT/TPR/S/108
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(3) F ISHERIES ......................................................................................................................91
(4) M INING (OTHER THAN HYDROCARBONS )....................................................................92
(i) Features and ma rket ac cess.............................................................................92
(ii) Institutional and legal fram ework ...................................................................93
(5) H YDROCARBONS ............................................................................................................94
(i) Featur es...........................................................................................................94
(ii) Institutional and legal fram ework ...................................................................97
(iii) Activities related to  the petroleum sector .....................................................100
(6) N ON-PETROLEUM MANUFACTURING ACTIVITIES .....................................................101
(i) Features and ma rket ac cess...........................................................................101
(ii) General poli cy framework ............................................................................102
(iii) Main manufactu ring activ ities ......................................................................103
(7) E LECTRICITY ...............................................................................................................105
(8) S ERVICES ......................................................................................................................107
(i) Introduc tion...................................................................................................107
(ii) GATS commitments .....................................................................................107
(iii) Financial  services..........................................................................................108
(iv) Telecomm unications.....................................................................................116
(v) Transport.......................................................................................................120
REFERE NCES ..................................................................................................................... ...............127
APPENDIX TABLES................................................................................................................ ..........129WT/TPR/S/108 Trade Policy Review
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CHARTS
Page
I. THE ECONOMIC ENVIRONMENT
I.I Sectoral composition of gross domes tic product, at curr ent prices, 2001...................................3
I.2 Nominal and real effective exch ange rate, 1989 – September 2002...........................................8
III. TRADE POLICY BY MEASUREIII.1 Distribution of appl ied MFN tariff, 2001 .................................................................................3 9
III.2 Percentage of tariff lines subject to technical regulations, by HS Section, 2001......................61
TABLES
I. THE ECONOMIC ENVIRONMENT
I.1 Sectoral composition of gr oss domestic product, 1996-2001 .....................................................2
I.2 Basic macroeconomic  indicators, 1996-2002 .............................................................................4
I.3 Balance-of-payments, 1995-2002 .............................................................................................1 1
I.4 Exports and imports of co mmercial serv ices, 1996-2000.........................................................13
I.5 Trade within the And ean Community, 1999-2001 ...................................................................14
I.6 New foreign direct  investment, 1997-2001...............................................................................15
I.7 Foreign direct investment by country of origin, 1997-2001 .....................................................16
III. TRADE POLICY BY MEASURE
III.1 Summary analysis of Venezuelan ta riffs, 2001 ........................................................................39
III.2 Prior impor t permits , 2002................................................................................................ ........46
III.3 Anti-dumping and countervailing measures in force, definitive duties in force.......................49
III.4 Commercial safeguard investigat ions carried out by CASS, 1999-01......................................53
III.5 Economic importance of government procurement..................................................................54
III.6 Government procurem ent procedures, 2002.............................................................................55
III.7 Statistics on patents, utility models and industrial design registrations, 1995-2002.................81
III.8 Statistics on copyri ght protectio n, 1996-2001 ..........................................................................82
IV. TRADE POLICY BY SECTORIV.1 Producer subsidy equivalent, 1995-1998..................................................................................88
IV.2 Export subsidies, outlay by major product and annual commitments under the WTO
Agreement on Agriculture, 1996-1998 .....................................................................................90
IV.3 Mining (excluding hydrocarbons), 1996-2001 .........................................................................92
IV.4 Petroleum act ivities,  1995-2000 ............................................................................................ ...94
IV.5 Foreign direct investment in the hydroc arbons and petrochemicals sector, 1993-2000 ...........96
IV.6 Main indicators in the tel ecommunications sector, 1996-2001 ..............................................117Venezuela WT/TPR/S/108
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APPENDIX TABLES
Page
I. THE ECONOMIC ENVIRONMENT
AI.1 Exports (f.o.b.) by product, 1996-2001...................................................................................13 1
AI.2 Imports (f.o.b.) by product, 1996-2000...................................................................................13 2
AI.3 Exports (f.o.b.) by country, 1996-2001...................................................................................13 3
AI.4 Imports (f.o.b.) by country, 1996-2001...................................................................................13 4
II. TRADE AND INVESTMENT REGIME
AII.1 Status of notification requir ements to the WTO, 1996-2002..................................................135
AII.2 Terms of participation of Venezu ela in regional agr eements in 2002 ....................................138
III. TRADE POLICY BY MEASURE
AIII.1 Preferential tariff by trad ing partner and HS chapter..............................................................140
AIII.2 Imports of products to which Venezuela has th e right to apply tariff quotas .........................144
AIII.3 Anti-dumpi ng and countervailing duty actions, 1993-2001 ...................................................146
AIII.4 Main sanitary and phyt osanitary measures, 2001 ...................................................................148
AIII.5 Intellectual property rights en forcement regime in Venezuela...............................................150
AIII.6 Overview of the protection of intellectua l property rights in Venezuela, 2001......................152
IV. TRADE POLICY BY SECTORAIV.1 Manufacturing sector:  ta riff protection and trade ..................................................................155
AIV.2 Summary of Venezuela's commitments under the GATS ......................................................158Venezuela WT/TPR/S/108
Page ix
SUMMARY OBSERVATIONS
(1) INTRODUCTION
1. Since Venezuela's first Review in
1996, trade policy formulation and
implementation have taken place against thebackground of major changes to the
institutional and legal framework.  Venezuela
has continued to consolidate the process of
implementation of its commitments under the
multilateral trading system, which has resultedin market opening and liberalization in some
areas.  While tariffs have remained at an
average of some 12 per cent, there has been
an increase in the use of non-tariff measures,
including contingency measures, the active useof local preferences in government
procurement, preferential credit schemes,
technical regulations, and minimum local
requirements.  This points to a policy of
protection for selected sectors, which is
probably no more than a second-best solution
to longstanding structural distortions.
2. Economic performance has been
erratic since 1996, reflecting both long-term
problems and the complex interaction of
domestic and external developments.  The
economy has grown ever more dependent onthe oil sector, the fiscal deficit and public debt
are large, and the net foreign capital account
is negative.  Low investment is an entrenched
problem, which should have been partially
alleviated by the steps taken in recent years torelax foreign direct investment restrictions and
generally grant national treatment to foreign
investment.  However, little additional
investment has been attracted so far.  This
suggests the need to address the perception ofinsufficient predictability in Venezuela's
institutional and legal framework, which could
be done in part by following stricter practices
on the use of trade instruments, binding
multilaterally the liberalization measures
already adopted, and taking on new
commitments.(2) E
CONOMIC ENVIRONMENT
3. The hydrocarbons sector, particularly
petroleum, continues to be the backbone of the
Venezuelan economy.  Despite efforts to
diversify economic activity, the sector's share
of GDP increased during the 1996-2002period, while the shares of manufacturing and
agriculture declined.  Changes in domestic
petroleum output and world prices have been
reflected in the relatively large GDP
fluctuations.  After two years of moderategrowth in 2000 and 2001, real GDP shrank by
7 per cent in the first half of 2002 compared
with the same period the previous year.
4. Linked to its high dependency on
petroleum, Venezuela's economy shows clearsymptoms of an anti-export bias, and "Dutch
disease" appears present.  The international
competitiveness of its non-oil tradeable sector
was reduced by a real currency appreciation
up to February 2002.  Reflecting the above,
exports show little diversification.
Hydrocarbons exports account for over 80 percent of total merchandise exports;  almost
60 per cent of total exports (mostly petroleum
products) are directed to the United States.
Imports consist of a wide range of
manufactured goods, which account for over80 per cent of the total, as well as of primary
goods.
5. GDP changes have been largely the
result of inventory and investment swings,
particularly in the petroleum sector.Venezuela has a low investment/GDP ratio,
which seems to be a structural trait of the
economy, reflecting low private investment.
The latter is in turn the result of the
considerable State involvement in theeconomy, in particular in such vital sectors as
hydrocarbons, mining, electricity and other
activities, implying that the bulk of investment
is in public sector hands.  To succeed in
diversifying its economy, Venezuela needs to
attract more private investment.WT/TPR/S/108 Trade Policy Review
Page x
6. Venezuela adopted a floating
exchange rate system in February 2002 to
replace the previous regime based on
fluctuation bands.  Although the latter was
instrumental in reducing inflation, it led to a
significant real appreciation of the bolivar.The introduction of a flexible exchange rate
led to a 90 per cent depreciation of the
bolivar.   The new system is, however, an
important step towards regaining
competitiveness and stimulating productionwhile, by abandoning the use of the exchange
rate as an instrument against inflation,
enhancing monetary policy effectiveness.
7. Monetary policy is geared at
achieving price stability, with the CentralBank of Venezuela setting annual inflation
targets.  Inflation declined considerably
between 1996 and 2001, but the cumulative
CPI reached some 20 per cent in the first eight
months of 2002 in the wake of the currency
depreciation.
8. The Central Government accounts
have shown a deficit since 1998, countered, in
1999 and 2000, by a surplus in the rest of the
public sector, due mainly to the operational
surplus of the state petroleum company.  As of
2001, however, partly due to lower revenuefrom oil and partly to a substantial increase in
expenditure, this surplus has been insufficient
to offset the Central Government's deficit.  The
fiscal deficit has led to a substantial increase
in internal debt, which reached US$13.8billion or 11 per cent of GDP in 2001.  The
reliance on internal debt has been putting
further pressure on the fiscal accounts, since
this debt is at a high cost and short maturity,
and increased the internal debt service from3.2 per cent of GDP in 1996 to 5.5 per cent in
2001.
9. Venezuela traditionally runs a current
account surplus in the balance-of-payments,
due to a significant merchandise trade surplus.
The current account surplus peaked at
10.8 per cent of GDP in 2000, but fell to3.2 per cent of GDP in 2001, due mainly to a
reduction in oil prices and an increase in
imports partly fed by the real appreciation ofthe bolivar.  The services balance traditionally
shows a deficit, which was between 2.5 per
cent and 4.6 per cent of GDP in 1996-2001.
The capital account generally shows a deficit.
(3) T
RADE AND INVESTMENT POLICY ;
INSTITUTIONAL FRAMEWORK
10. Venezuela adopted a new Constitution
in 1999.  Since then, a large number of laws
have been passed under the umbrella of
Enabling Laws that granted the President the
right to legislate in economic areas.  In 2001,49 new laws, involving a wide range of
economic activities, were adopted under the
Enabling Law of November 2000.  The
numerous legislative changes introduced since
1999 have generally aimed to modernize thelegal framework, but there has been strong
opposition to a number of those changes.
Following an attempted coup d'état in
April 2002, the Government has embarked on
a process of consultation and dialogue which
includes the revision by the National Assembly
of laws passed under the Enabling Law ofNovember 2000.
11. Venezuela is an original Member of
the WTO and participated in the multilateral
negotiations on financial services and basic
telecommunications.  The implementation ofWTO Agreements has not led to major
changes in legislation;  these Agreements
prevail in case of conflict or discrepancy with
national legislation.  Venezuela has been
directly involved in two disputes in the WTO,once as a plaintiff and once as a defendant.
12. Venezuela participates in several
regional integration agreements.  It is a
member of the Andean Community and of the
Free Trade Agreement of the Group of Three(G-3), in which Colombia and Mexico also
participate.  As a member of the Latin
American Integration Association (LAIA),
Venezuela participates in a number of
preferential trade agreements with countries
in the region.Venezuela WT/TPR/S/108
Page xi
13. Since its last Review, Venezuela has
sought to adopt policies to attract larger
inflows of foreign direct investment.  To this
end, it has liberalized its investment regime, by
relaxing restrictions.  Foreign investors are
granted national treatment, except in somespecific areas.
(4) M
ARKET ACCESS
14. Venezuela passed a new Customs Law
in 1999 and has started to automate its
customs procedures.  A new customs valuationregime was introduced in March 2001 to
implement the provisions of the WTO
Agreement on Customs Valuation.  The new
regime was notified to and examined by, the
WTO Committee on Customs Valuation in2002.
15. Venezuela applies the Andean
Community Common External Tariff, with
some exceptions.  The average applied MFN
tariff in 2001 was 12 per cent, the same level
as in 1996.  Including variable levies, the
average tariff was 12.4 per cent in 2001.  Theapplied MFN average for non-agricultural
goods was 11.6 per cent, while the average for
agricultural goods (WTO definition) was
14.6 per cent.  Preliminary calculations for
2002 show that the average MFN tariffincreased marginally, to 12.2 per cent, due to
higher tariffs on a number of steel products,
some of which were raised up to their WTO
bound levels.  The tariff shows moderate
dispersion and is characterized by escalation.Venezuela has bound in the WTO its entire
tariff at a general level of 35 per cent for non-
agricultural products, and of between 10 per
cent and 135 per cent for agricultural goods.
16. Venezuela grants tariff preferences on
imports from other Latin American and
Caribbean countries.  Imports from other
Andean Community members enter Venezuela
duty-free, while imports from Mexico, Chile,
Brazil and Argentina benefit, in this order,
from preferences on a wide range of their
exports.  Apart from the tariff, Venezuelaapplies a customs service charge of 1 per cent
on all imports, including those from otherAndean Community countries. In
November 2001, an additional tariff surcharge
of 1 per cent of the f.o.b. value of imports was
introduced but had not been implemented up
to September 2002.
17. Under the Andean System of Price
Bands, Venezuela can apply variable levies on
imports of a number of agricultural products
other than from Andean Community countries.
The resulting applied tariff levels can be high
in case of a sharp decline in internationalprices;  however, applied rates may not exceed
WTO bound rates.  For products that are also
subject to tariff quotas under the WTO
Agreement on Agriculture, Venezuela applies
the in-quota bound rate (with maximum rate is40 per cent).
18. Tariff quotas are applied on
17 products corresponding to 70 HS
subheadings.  Most of these quotas have been
administered since 2000 through the use of
non-automatic import licences.  Venezuela also
maintains import-licensing requirements forhealth, safety, and environmental reasons.
19. Venezuela's legislation on anti-
dumping and countervailing measures
predates the WTO, but the Anti-Dumping
Agreement is used in investigations involvingWTO Members.  Since 1996, 12 anti-dumping
investigations have been initiated by
Venezuela, resulting in most cases in the
application of provisional and definitive anti-
dumping duties.  In mid 2002, there were19 definitive antidumping duty orders in place,
affecting products from a range of industries,
including steel, chemicals and footwear.
Three countervailing duty orders are in place,
all on cheese from the European Union.Venezuela introduced legislation on
safeguards in 1999.  Up to mid-2002, five
investigations had been conducted, and the
application of measures had been
recommended in one case, although not yet
applied.
20. Venezuela does not participate in the
WTO Plurilateral Agreement on Government
Procurement. Venezuela's governmentWT/TPR/S/108 Trade Policy Review
Page xii
procurement exceeds US$10 billion annually.
Despite a margin of preference of 5 per cent
granted to domestic suppliers, and due to the
substantial weight of inputs and capital goods,
the share of purchases to foreign suppliers is
large, some 80-85 per cent of the total.  TheGovernment is thus trying to increase the
share of domestic suppliers through temporary
measures such as those introduced in July
2002, which grant additional preferences of up
to 20 per cent depending on domestic valueadded and the type of enterprise.
21. Standards and technical regulations
are generally adapted from international
norms.  Venezuela has adopted some 300
technical regulations but, as at late September2002, had notified only 24 to the WTO
Committee on Technical Barriers to Trade.
Current legislation on technical regulations
and standards dates from 1979;  a new law
was drafted and notified to the WTO for
comments in 2001, but by mid 2002 had not
been yet implemented.  Venezuela applies arelatively large number of sanitary and
phytosanitary measures, but up to
September 2002 no notifications had been
made to the WTO Committee on Sanitary and
Phytosanitary Measures.
(5) O
THER MEASURES AFFECTING TRADE
AND INVESTMENT
22. Venezuela has a number of fiscal
incentive programmes in place that grant tariff
and tax reductions and exemptions.  There arealso a number of preferential credit and
guarantee schemes, and technical assistance
and training programmes.  Some of these
schemes and programmes are geared towards
supporting higher value added or exportactivities and are financed through the
resources of state funds or development banks.
A programme is also in place, through
agreements with private banks, for a certain
percentage of credit to be channelled for
agricultural activities at preferential
conditions.
23. Venezuela is an advocate of
multilateral rules for competition policy.Competition policy is regulated both at the
national and the subregional levels.  The
Constitution forbids conduct or agreements
geared at establishing a monopoly or a cartel,
or which may lead to an abuse of dominant
position.   A bill is under examination by the
National Assembly to create a body with
stronger enforcement and supervisory power
than the current supervisory entity, Pro-
competencia.  Most of the cases taken up by
Pro-competencia between 1997 and 2001dealt with abuse of dominant position and
other discriminatory practices in services.
Pro-competencia must submit an opinion in
safeguard investigations.
24. The TRIPS Agreement came into force
for Venezuela as from 1 January 2000.
Although Venezuela did not modify its
legislation on intellectual property after the
Uruguay Round, the TRIPS Agreement is part
of national legislation.  It also applies the
Andean Community's legislation on
intellectual property rights protection.Parallel imports are generally allowed.
Compulsory licensing is envisaged in certain
cases but, up to mid 2002, had not been used.
(6) S
ECTORAL POLICIES
25. The Venezuelan economy is strongly
reliant on the hydrocarbons sector, which
generated about a quarter of GDP and over
80 per cent of merchandise exports earnings in
2001.  This reliance has increased since 1996.
The hydrocarbons sector is largely in thehands of the State, which in recent years has
found it difficult to sustain the high level of
investment required to implement petroleum
projects.  With this in mind, a new
Hydrocarbons Law was passed in 2001,enhancing investment opportunities for the
private sector and introducing changes in
taxation.  Although private investment and
control are allowed in new refineries, existing
refineries and primary activities are reserved
for the State or must be under State control.
The gas industry has its own legislation and isopen to the private sector.Venezuela WT/TPR/S/108
Page xiii
26. The existence of a leader sector such
as the extraction and refining of petroleum has
affected considerably the development of all
other economic activities in Venezuela.  Input
and service costs for activities geared to the
domestic market have been pushed up andactivities producing tradeable goods or
services have been adversely affected by the
real currency appreciation triggered by
foreign exchange revenues from oil.  The
effects of the anti-export bias have been feltparticularly by the manufacturing sector, but
have also spread to agriculture and
agroindustry.
27. Agriculture accounts for a small share
of GDP.  Tariffs are higher than for othersectors and variable levies can be applied on a
number of products when prices fall.  Much of
the support granted to agriculture takes the
form of implicit transfers.  The Producer
Subsidy Equivalent (PSE) for 1998, the last
year available (as calculated by the Andean
Community) was 24.8 per cent of total output,with aid taking mainly the form of price
support.  The effective PSE, which takes into
account the effect of exchange rate distortions
on transfers was, however, negative in the
same year, suggesting real transfers to the restof the economy.  Agricultural activities are
exempt from income tax and have access to
subsidized credits.  In 2001, new legislation
was passed that introduced changes in the use
and tenure of land for agricultural production,and penalized the non- or sub-utilization of
productive land.  The new law is currently
been revised by the National Assembly.
28. Venezuela has experienced a process
of de-industrialization since its last Review.Manufacturing production (excluding oil
refining) fell by 12.7 per cent in real terms
between 1995 and 2000, losing share in GDP,
partly as a result of reduced competitveness
and strong import competition.  Although the
average tariff applied on manufactured
products was about 12 per cent in 2001,higher tariff rates were applied for motor
vehicles, textiles and clothing, footwear, steel
products and electrical appliances.  In 2002
tariffs on a number of steel products wereincreased up to their WTO bound rate of
35 per cent.  A number of steel products also
face antidumping duties:  imports of these and
any other similar products from any source
must be accompanied by a certificate of
origin.
29. The automotive sector benefits, until
2010, from protection stemming from a 35 per
cent Andean Community's Common External
Tariff.  Since late 1999, the Venezuelan auto
industry has also benefitted from the FamilyVehicle Programme, which grants tax
concessions and access to preferential credit
for the purchase of some small vehicles with a
certain domestic or Andean subregional
content.
30. Since 1996, Venezuela has made
considerable progress with respect to the
liberalization of service, in particular
telecommunications and financial services,
where liberalization has gone well beyond
Venezuela's WTO commitments.  In 2001,
62 out of 72 banks in operation were private;15 of these, accounting for over 60 per cent of
total assets were foreign banks.  There has
also been an increase in mergers and
acquisitions in the banking sector and a
resulting reduction of the number of banks.New laws with respect to banking and
insurance were introduced in 2001;  these
laws enforced more stringent capital
requirements and strengthened supervision.
This was followed by a rise in the degree ofcoverage.  However, following an increase in
interest rates in the first months of 2002, there
has been an increase in badly performing
loans.
31. A substantial unilateral liberalization
of the telecommunications market has taken
place since the last Review.  In 2000 a new
telecommunications law was introduced and
the monopoly on basic telephony granted to
the privatized company CANTV, was
terminated.  Since then the market has been
open to competition and measures to reformthe regulatory environment have also been
introduced.WT/TPR/S/108 Trade Policy Review
Page xiv
32. New laws with respect to maritime
and air transport were passed in 2001.
Although both activities are now more open to
foreign participation, some limitations remain.
In maritime transport, cabotage is not open to
foreign operators, but is subject to reciprocity.In air transport, domestic service is reserved
for Venezuelan enterprises.