WORLD TRADE
ORGANIZATIONWT/TPR/M/61
24 November 1999
(99-5092)
Trade Policy Review Body
25 and 27 October 1999
TRADE POLICY REVIEW
NICARAGUA
Minutes of Meeting
Chairperson:  H.E. Mr. Jean-Marie Noirfalisse (Belgium)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3II. OPENING STATEMENT BY THE REPRESENTATIVE OF NICARAGUA 4III. STATEMENT BY THE DISCUSSANT 5
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 6
V. REPLIES BY THE REPRESENTATIVE OF NICARAGUA AND
ADDITIONAL COMMENTS 8
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 12ANNEX I GENERAL REPLIES BY THE DELEGATION OF NICARAGUA 14ANNEX II RESPONSES BY NICARAGUA TO SPECIFIC QUESTIONS 21WT/TPR/M/61
Page 3
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The Trade Policy Review of Nicaragua was held on 25 and 27 October 1999.  The
Chairperson welcomed the delegation of Nicaragua, led by the Honourable Minister Noel Sacasa, and
the discussant, Mr. Tomasz Jodko (Poland).  As usual, the discussant spoke in his personal capacity,
not as representative of his country.  In accordance with the established procedures, the discussant hadmade available, in advance, the outline of the main issues he intended to raise.
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures for the meeting.  The report by the Government of Nicaragua was contained in
document WT/TPR/G/61 and that of the WTO Secretariat in document WT/TPR/S/61;  the main
issues to be raised by the discussant were contained in document WT/TPR/D/41.  Copies of advance
written questions, submitted by five delegations (Canada; Hong Kong, China; Japan; the European
Union; and, the United States) (Annex I) had been transmitted to the delegation of Nicaragua.  Repliesprovided by the delegation of Nicaragua are in Annex II.WT/TPR/M/61
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II. OPENING STATEMENT BY THE REPRESENTATIVE OF NICARAGUA
3. The representative of Nicaragua, Minister Sacasa, explained that in the 1960s and 1970s
Nicaragua's trade deficits with the region and its high production costs, had been offset by large trade
surpluses with the rest of the world, major leaps forward in productivity and favourable international
prices.  The socialist experiment and civil war of the 1980s had had a devastating effect on exports,external indebtedness and GDP per capita.
4. Efforts to regain lost ground had been the focus of Nicaragua policy since 1990.  Nicaragua
had to attract foreign investment, technology and managerial skills within a favourable andcompetitive business environment.  Trade policy priorities included unilateral market opening through
tariff cuts and the elimination of non-tariff barriers, as well as the negotiation of secure access to
major export markets.
5. Since 1990 Nicaragua's strategy had achieved: a considerable decline in inflation (single digit
as from the year 2000); a 50% reduction of the annual rate of depreciation of the exchange rate (6% as
from October 1999); a fiscal deficit decline (4 % of the GDP in 1998) ; the implementation of
autonomous tariff cuts;  the elimination of discrimination between national and imported goods under
the specific consumption tax; the suppression of export taxes; the prohibition of non-tariff barriers to
imports; the elimination of import deposits; the simplification of documentation and customs
clearance requirements; the elimination of state part icipation in marketing activities; the elimination
of press controls (except for pharmaceuticals and hydrocarbons); the reinforcement of the legal
framework for and signing of agreements on the protection of intellectual property rights
(e.g. copyrights; new plant varieties) and investment guarantees; the signing of a Free TradeAgreement with Mexico and CACM Framework Agreements with the Dominican Republic and
Chile;  privatization in most sectors  (except for electricity, basic telecommunications, port and airport
services, and grain marketing); and, the adoption of new framework laws in several areas
(e.g. technical standards, quality and metrology, consumer defense, hydrocarbons, electricity banking,
telecommunication, postal services).  As a result import and export growth had resumed but had beennegatively affected by the El Niño, hurricane Mitch and the Asian crisis.
6. Since the mid-1990s, CACM members had made efforts to increase openness to the world
economy by means of tariff cuts, joint negotiations of trade agreements with third parties, WTO-based
modernization of trade regulations and the improvement of free trade conditions within the region.
To cope with its rapidly growing trade deficit with its CACM partners and boost export recovery,
Nicaragua had been authorized to unilaterally reduce the ceiling rate from the commonly agreed tariff
level of 15% to 10%; this extraordinary measure was to increase Nicaraguan purchasing power thus
contributing to the improved stability in the region.
7. Nicaragua was aware of the benefits of liberal trade and considered that protectionism was a
luxury it could not afford.  Despite financial, institutional and human resource limitations, Nicaragua
had complied with its WTO commitments.  Since the adoption of legislation implementing the
WTO Agreement, work had been initiated to adapt the domestic and regional regulatory framework to
the new undertakings; apart from comprehensive binding and recently extended GATS commitments,
preparations were under way for the implementation of the Customs Valuation Agreement.  However,the results of the Uruguay Round had not satisfied Nicaragua's market access interests with respect to
agricultural products; further improvements were required in this area, as well as in transparency, in
subsidies and countervailing duties, and in access to the dispute settlement mechanism.
8. While expressing gratitude to the supporters of Nicaragua's eligibility for the Heavily-
Indebted Poor Countries (HIPC) Initiative, the representative underlined that the link between externaldebt servicing, overcoming poverty, ensuring sustainable development and export opportunities called
for a substantive and rapid reduction of the market access barriers affecting exports of
HIPC countries, to be achieved preferably in the context of the future round of trade negotiations.WT/TPR/M/61
Page 5
III. STATEMENT BY THE DISCUSSANT
9. The discussant (Mr. Tomasz Jodko) noted that Nicaragua was recovering from a deep
economic recession, with devastating effects on GDP per capita, external indebtedness, inflation and
current account deficit, as well as from the damage of recent natural disasters.  Foreign assistance had
been essential in supporting efforts for the establishment of a market economy as well as formaintaining the level of international reserves.  Ch allenges remained in areas like poverty alleviation
and social progress, debt servicing and trade diversification.  The authorities intended to take any
additional debt on highly concessional terms only and to allow access of foreign direct investors to all
sectors.
10. While examining trends in regional trade, un ilateral tariff reduction, binding commitments
and other measures leading to a more effective integration in the world economy, he sought
information from the Nicaraguan delegation on the components of average tariff rates and theprospects for convergence toward a common CACM external tariff.  The discrepancy between the
average applied rates and the general binding level could be justified by the virtual non-recourse to
contingency measures; nevertheless, he asked about the rationale for this policy and prospects for
narrowing this gap in the context of the possible new multilateral trade negotiations.  In the light of
the recent regulations with respect to the elimination or prohibition of all WTO-inconsistent non-tariffbarriers, he requested more information on the legal nature and form of the import prohibitions in
force.WT/TPR/M/61
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IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
11. Members congratulated Nicaragua on its ongoing economic recovery stemming from the
implementation of macro-economic stabilization and structural reforms.
12. The representative of Canada commended Nicaragua's openness, economic discipline,
continuous trade liberalization and institutional reforms as well as the WTO consistency of its trade
regime.  Canada actively supported Nicaragua's reconstruction and development efforts as well as its
qualification as a HIPC Initiative beneficiary.  Canada maintained stable commercial relations with
and pursued market opportunities in Nicaragua.  A Foreign Investment Protection Agreement was
being negotiated between the two countries.  At th e regional level, Canada had signed a Memorandum
on Trade and Investment with CACM countries and worked closely with Nicaragua in the context of
the Free-Trade Area of the Americas (FTAA).
13. The representative of Japan appreciated Nicaragua's initiatives on macroeconomic
stabilization and structural reform.  He also praised Nicaragua's legislative reforms, particularly with
respect to copyrights, and encouraged further progress in this area as well as in external debt
reduction, basic infrastructure development and privatization.  While commending progress in tariff
reductions and binding commitments, he requested Nicaragua to lower its bound rates.  He welcomed
the completion of domestic legislative procedures for the entry in force of the Fifth Protocol to theGeneral Agreement on Trade in Services (GATS).  The Agreement between the CACM and the
Dominican Republic, as well as those bilateral trade agreements involving Nicaragua and other
countries (i.e. Mexico, Panama) had to be notified to the WTO.
14. The representative of the European Union underlined Nicaragua's successful efforts to restore
peace, establish a market-oriented economy and consolidate democracy.  In the medium term, the
damage caused by the hurricane Mitch were having an impact to the economy.  In the light of a
persistent and rising trade deficit increased external debt and covered partly by foreign aid, he sought
the authorities' views on the possibility of introducing protectionist policies and the sustainability of
this deficit in the long-run.
15. Multilateral financial assistance to heavily indebted countries was now conditioned on the
adoption of good governance-related policies directly linked to the attraction of foreign investment; in
this context, he wondered whether Nicaragua considered it necessary to implement promptly
legislation on property rights and government c ontracts.  In addition to increased GSP treatment
granted to Nicaragua lately, a Co-operation Agreem ent, signed in February 1999 between the EU and
CACM countries and Panama was intended to strengthen and diversify co-operation in several areas.
16. The representative of the United States noted that Nicaragua's economic growth had been
agriculture- and export-led.  Unilateral trade preferences and technical assistance provided by the U.S.
had complemented development and export diversification efforts.  The sharp rise in the current
account deficit was noticeable as exports declined due to the devastation of the hurricane Mitch, but
flows of assistance had resulted in a net increase in international reserves.  Nicaragua was expected to
become eligible for HIPC relief and meet good governance and poverty reduction requirements; the
U.S. President was seeking to forgive all debt of HIPC countries, where needed, to help them finance
basic human needs.  The United States was committed to reduce Nicaragua's eligible debt by 67% and
had deferred debt service payments for three years in the aftermath of hurricane Mitch.
17. Recent unilateral trade liberalization steps, including the phase-out of the temporary
protection tariff, as well as substantial progress made by Nicaragua in establishing the legal
framework for the protection of intellectual property rights and the fulfilment of its financial servicescommitments under the GATS were greatly appreciated.  The U.S. continued by encouraging
Nicaragua to redouble its efforts in areas such as customs valuation (where the September 2000
deadline should be met), sanitary and phytosanitary measures, and intellectual property rights, as wellWT/TPR/M/61
Page 7
as to ensure compliance with the recently adopted seven ILO core labour standards.  The
United States supported Nicaragua's interest in joining the Government Procurement Agreement and,
in this context, the representative requested an update on the status of the new procurement
legislation.  She wondered whether Nicaragua was considering expanding the scope of its
GATS schedule of commitments so as to attract investment in job-creating sectors.
18. The representative of Argentina praised the magnitude of trade reforms by highlighting the
non-recourse to exceptional protection measures, th e prohibition of all WTO-inconsistent non-tariff
barriers, the elimination of direct export assistance to non-traditional exports.  Despite natural
disasters, a sometimes-unfavourable external economic environment for small economies and high
external indebtedness, the pace of reforms had been maintained.  Argentina supported Nicaragua's
ongoing efforts in accelerating integration to the wo rld trading system and raising its competitiveness.WT/TPR/M/61
Page 8
V. REPLIES BY THE REPRESENTATIVE OF NICARAGUA AND ADDITIONAL
COMMENTS
(i) Economic environment
19. In response the representative of Nicaragua explained that the negative balance of trade in
services, which was a major component of the current account deficit, was mainly due to the servicing
of debt interest.  Despite high export growth rates, productivity improvements and increased
competitiveness, the trade deficit had persisted mainly because of relatively similar import and export
growth in value terms.  In the aftermath of hurricane Mitch the trade deficit had deteriorated as a
result of damage to production and the road network, as well as of a rise in reconstruction-related
imports and adverse terms of trade. While noting that no sector-specific incentives had been granted,
non-traditional items had recorded faster export growth.  Import structure reflected a response to
market forces trends. While the adoption of protection measures was considered harmful (except forthose on rice, dried beans, maize, milk), to further alleviate balance-of-payments pressure action could
be taken by introducing an exchange rate depreciation band (as from the year 2000) and improving
access conditions to main export markets.
20. A sustainable solution to the problem of external debt was linked to a strong export expansion
based on agreement-guaranteed access conditions to major export markets.  The impact of free orpreferential trade agreements on fiscal revenue was to be offset by stricter control on tax evasion and
fiscal exemptions as well as by preserving a broad tax base. The availability of foreign assistance had
allowed for an increase in social expenditure, t hus permitting for macroeconomic adjustment without
any social cost.
21. Increasing confidence in macroeconomic stability, the enforcement of recently passed
legislation, the cost reduction and improvements in basic public utilities would inter alia  have a
positive influence in investment trends.  While recognizing that enforcement of property rights
legislation (Law 239 of December 1997) were a highly sensitive and priority investment-related issue,
he stated that 96% out of 16,259 cases (as of September 1999) had been resolved and resulting
indemnities (now via standardized indemnificati on bonds admitted in international stock exchanges)
had been accepted in 50% of these cases.  Although the new framework laws on electricity,
telecommunications and water supply promoted competition, a first draft of a Law on the Promotion
of Competition had been elaborated and a bill was to be submitted to the National Assembly by the
year 2000.
22. Differences in national economic structures and development and openness levels of CACM
members were reflected in difficulties to set a date for a customs union, converge to a common
external tariff, and adopt common WTO binding commitments, as well as the continuous use of theregional safeguards clause to modify applied tariffs; poor countries with a small market and primary
industry like Nicaragua, required open trade regimes and transitional protection for agricultural
products.
23. Concerning the issue of narrowing the gap be tween applied and bound rates, he considered
that the future round of trade negotiations provided an opportunity for all participants to reconsidertheir tariff peaks on sensitive items, tariff escalation and tariff quota administration.  In the context of
the institutional re-organization of the Executive, a new entity was to be entrusted with ensuring
compliance with WTO notifications.
24. With respect to the external environment, Nicaragua greatly appreciated the economic
cooperation (including preferential treatment) provid ed by other trading partners and was grateful to
the European Union's willingness to take further action in Seattle with a view to contributing to
Nicaragua's integration in the world trade system.WT/TPR/M/61
Page 9
25. The discussant noted the clarifications on foreign trade developments as well as on the
difference between growth in percentage a nd nominal terms.  Export and foreign exchange
liberalization had contributed to trade growth; the authorities seemed to have identified import items
that contributed to economic growth.  He wondered about the expected duration of the trade deficit.
While noting the increased importance of non-traditional items in total exports and market accessproblems, he wondered whether these items were concentrated on sensitive goods in foreign markets.
The improvement of infrastructure was to bring more foreign investment, which would contribute to
improving progressively the macroeconomic situation, including balance-of-payments.
26. He sought more information on the impact of CACM integration process on foreign direct
investment inflows into Nicaragua, as well as on the regional group's policy on applied and bound
rates.
27. While expressing appreciation of the growing budgetary assistance in social work, he
indicated that social costs and their political aspects could not be neglected by the countries in
transition; if the situation was to remain under control for a longer period, this had to be considered as
a satisfactory achievement.
28. The representative of the European Union drew attention to delays in the completion of the
CACM and the explanations provided by Nicaragu a.  The integration process was good neither for
internal operators nor foreign investment inflows.  While recalling the EU's experience in the path to
economic integration, he indicated that the adoption of a common external tariff had been the
cornerstone for progress toward moving toward the establishment of the customs union that was
followed by the single market and the economic advantages flowing therefrom.
29. The representative of Japan noted the investment concentration in a few sectors (e.g. tourism)
and, while seeking the authorities' views on this ma tter, he suggested further diversification.  He
sought information on ways for overcoming difficulties and moving forward with privatization in
certain areas.  The development of basic infrastructure (e.g. electricity supply) and the strengthening
of the financial sector were important for attracting foreign investment and promoting trade.  In the
light of the high temperatures prevailing in Nicaragua, he sought information on how the authoritiesintended to deal with electricity tariffs that discouraged investment in factories requiring air-
conditioning systems.
30. The representative of Nicaragua recalled that the transition towards a more sustainable current
account deficit and towards a more dynamic investment activity required increased confidence.  In the
next six or twelve months the main thrust of the whole reforms (e.g. legal framework, privatization of
infrastructure activities) would be accomplished; these reforms coupled with political stability were to
convince investors that Nicaragua was a safe place to invest. Privatization in telecommunications wasto be terminated this year (1999) or early next year, while that in electricity was to be concluded
within the first or second quarter of next year; action was geared at investment to expand services and
to increase competition, so as to lower costs for users.  High electricity production costs were to be
lowered by opening the market to private investors by the year 2000.
31. If CACM was to compete successfully in the rest of the world, its integration process had to
move forward, thus promoting inter alia  specialization and rational use of existing facilities
(e.g. ports).  Nicaragua had proposed a schedule for establishing a full customs union eliminating the
border restrictions for the movement of goods and persons; the current integration status was very
hybrid and unstable, and further discussions had to be undertaken to examine CACM objectives and
strategic issues.  Nicaragua had never attracted much CACM-oriented investment because of itsnational market size and little factor endowments as compared with other partners (e.g. Guatemala,
El Salvador).WT/TPR/M/61
Page 10
32. The production pattern had not diversified sufficiently and the Government had not directed
investment to specific activities, other than for tourism.  Non-traditional items (e.g. textiles and
apparel) were sensitive items in major export markets (e.g. the United States) while traditional
products consisted of commodities that had been traditionally traded without any problem.  New and
modern legislation allowed for the unrestricted operation of foreign banks, including in taking updeposit savings; the supervisory authority and prudential norms had been strengthened by raising the
capital adequacy ratio from 8% to 10% on 30 June 2000 at the latest, with a few exceptions allowing
for longer implementation period.
(ii) Trade and sectoral policies and measures
33. The representative of Nicaragua indicated that the necessary steps were being taken to enforce
the WTO Agreement on Customs Valuation at national and CACM level in a timely fashion.  The
process of the elimination of import restrictions had been initiated in 1991 and consolidated in 1997when the use of this border measure to protect against violations of exclusive distribution rights was
abolished; nevertheless, a few restrictions on this ground remained in force.  A bill on government
procurement (now at the National Assembly) was expected to be passed by early 2000 and,
subsequently, Nicaragua would evaluate its accession to Agreements on Government Procurement or
Transparency, provided this issue formed part of the agenda of the future round of negotiations.
34. Nicaragua had been the first country in the region to sign a bilateral agreement on intellectual
property rights with the United States, and amend or expand its legislation and commitments in this
area (e.g. authors rights and protection of plant varieties (1999)) so as to meet its TRIPs
implementation deadline (January 2000); in this context additional technical assistance had been
requested to the WTO Secretariat and the United States.  He indicated progress with respect tofostering sustainable development through the signing of environmental protection treaties, regulatory
and institutional adjustments.
35. Nicaragua's commitments under the GATS were exte nsive, particularly in financial services,
and the Fifth Protocol had been ratified; the new banking and finance legislation, which was to be
notified to the WTO, had eliminated the domestic deposit-related restrictions for foreign banks andhad enforced national treatment in this area.  In this way, Nicaragua confirmed its interest in
services-related issues and in fully participa ting in the future negotiations in this area.
36. The discussant recalled that more information had been sought on the domestic legal system
used for the implementation of multilateral undertakings, in particular the need for national legislation
to prohibit import restrictions.  He asked for clarifications on import restrictions on commercial
grounds affecting motor vehicles of a specific make and alcoholic beverages.
37. The representative of Nicaragua noted that the CACM was working collectively to meet
WTO provisions in areas such as customs valuation and sanitary and phytosanitary measures.
38. The representative of the European Union referred to customs valuation matters, the advance
implementation of WTO provisions on the protection of intellectual property rights, efforts in
government procurement, import licensing and import prohibitions (probably relating to parallel
imports).  His understanding from the response of th e authorities was that Nicaragua agreed implicitly
that the future round of trade negotiations could cover non-agricultural tariffs, and that this was an
opportunity for dealing with the gap between Nicaragua's applied and bound tariffs.
39. The representative of Nicaragua explained that the law that had been repealed in 1997 had
protected the interests of national distributors or representatives of foreign companies by allowing
judicial resolutions to prohibit parallel imports carried out prior to the conclusion of an agreementbetween the parallel importer and the foreign company to the satisfaction of the local official
distributor.  In this context, there had been prohibitions of shipments of a parallel importer rather thanWT/TPR/M/61
Page 11
product-specific prohibitions.  Since the repeal there had been no new prohibitions of this type;
although two judicial decisions adopted under the previous regime were still in force, any interested
party was free to contest them in court and have them repealed or changed.
40. He reiterated that the spread between bound and applied tariffs could be discussed in the next
round of trade negotiation.  New legislation was being prepared in government procurement.
41. No export restrictions, other than those required to protect the environment or public health,
were in force.  With respect to restrictions affecting endangered tree species, he indicated that,
although these measures were legal, a more flexible and rational regulatory system was under
preparation.  Export licenses had been eliminated and no fees were levied on importing or exporting
activities.WT/TPR/M/61
Page 12
VI. CONCLUDING REMARKS BY THE CHAIRPERSON
42. We have had very open and informative discussions on Nicaragua's trade regime, aided by the
very constructive engagement of Minister Sacasa and his delegation.  To me this has been emblematic
of Nicaragua's belief in open trade, with the WTO as its pillar.  Nicaragua is rebuilding its economy,
toward a market-oriented system and a liberal trad ing environment, with an updated legal framework,
including, in particular, modern, clear and stable rules for economic operators and private investors.
This transformation has adjustment costs: there is  also a need for poverty alleviation and social
progress.  I think we have come to see that sustained effort in all these respects would be greatly
assisted by access to markets, a point made clearly by Minister Sacasa.
43. Our discussions have allowed Members to appreciate both the scale of Nicaragua's economic
recovery and the contribution to that recovery of trade policy reforms to date.  Nicaragua undertook
unilateral tariff reductions and its tariff commitments in the Uruguay Round were comprehensive.These were followed by the ratification of expanded WTO commitments on financial services.
Nicaragua has eliminated import restrictions and not taken trade defence measures under the
multilateral trade agreements.  Members have also heard that implementation of commitments is not
always obvious and that technical assistance would be useful.  More generally, I think we have all
taken note of the difficulties caused by natural disasters, notably El Niño  and hurricane Mitch, and ofNicaragua's very high level of external indebtedness, which have compounded the adjustment
difficulties.
44. Members also acknowledge that foreign assistance has been, and continues to be, essential to
the ongoing process of economic and social recovery as well as to meeting public and current account
financing requirements.  The results of the macroeconomic stabilization and structural reforms weregreatly appreciated by Members, while support was expressed for Nicaragua's qualification as a
beneficiary of the HIPC initiative.  Sound governance and transparency were prerequisites for
attracting foreign investment.
45. In addition to these general points, Members were grateful for the comprehensive and well
structured explanation given by the Nicaraguan  delegation on many specific points, including:
- measures to cope with the current account deficit;
- privatization process, in particular in the telecommunications, electricity and transport
sectors, and progress in resolving property rights/claims;
- strategy for attracting private investment;
- WTO notification of regional trade agreements, the convergence to a common
external tariff within the CACM and the vision toward further regional integration;
- the gap between average applied and bound tariff rates;
- elimination of import prohibitions;
- status of new legislation on customs valuation, SPS measures, and government
procurement;
- re-introduction of price bands;
- consular fees;
- elaboration of domestic standards;WT/TPR/M/61
Page 13
- timing of compliance with customs valuation and TRIPs obligations;
- competition policy and consumer defense;
- plans on support to agriculture (subsidies, marketing);
- fishery conservation policies;
- limitations of GATS commitments;
- MFN exemptions, the ratification of the Fifth Protocol in the financial services sector,
absence of foreign banks and insurance companies;  and
- new legislation on pilotage in national ports.
46. Nicaragua was also encouraged to further improve protection of intellectual property rights,
join the Government Procurement Agreement and broaden its GATS commitments.
47. In conclusion, I am struck by Nicaragua's attachment to trade liberalization together with its
appreciation of the benefits from freer trade and open regionalism, and the high costs of protection tosmall economies like Nicaragua.  Members complimented Nicaragua on its strong commitment to the
WTO, reflected both in the conduct of its trade policy  and in its participation in the preparations for
Seattle.  Members welcomed Nicaragua's intent ion to participate actively in the forthcoming
negotiations, noting in particular its interest in the opening of markets to exports of poor countries and
the prospect of narrowing the gap between applied and bound rates.  They also encouraged Nicaraguato continue with its reform effort, based on continued adherence to an open trade regime.  Noting the
difficult external environment for Nicaragua of recen t years, it is my feeling that Members recognize
the need for support from the multilateral system.WT/TPR/M/61
Page 14
ANNEX I
GENERAL REPLIES BY THE DELEGATION OF NICARAGUA
I should like to thank the discussant, Mr. Tomasz Jodko, describing the background to
Nicaragua's economy and the challenges we are facing in the course of integration in the international
context.  I should also like to thank the representatives of Canada, Japan, the European Union, theUnited States and Argentina for their recognition of Nicaragua's efforts and achievements during the
process of opening up and in fulfilment of commitments within the WTO, and for their common
concern at the challenges faced by Nicaragua in the macroeconomic, social and production sectors,
which call into question the sustainability of our trade policy in the medium and long term.
The issues that emerged from the various statements on Monday, and the questions sent to us
by delegations can be grouped into three areas, namely, the economic environment, trade policies, and
sectoral policies, which the Government has been promoting as part of its openness strategy forsustainable development.
We have prepared detailed replies to these questions separately and have requested the
Secretariat to circulate them to each country.  Nevertheless, I should now like to explain briefly some
of the more strategic aspects and reply to some of the more substantive questions put by delegations.
I. ECONOMIC ENVIRONMENT
A. M
ACROECONOMIC SITUATION
1. Balance of trade
As this issue is closely linked to the sustainability of Nicaragua's trade liberalization policy, I
should first like to refer to the question of the deficit in the current account balance.  Its services
component has mainly been affected by interest on the external debt, a problem which could beresolved if the debt is reduced.  I shall re fer below to the deficit in the trade balance.
This has remained high since 1990 (an average of 20% of GDP in 1994-1996) and has
deteriorated as a result of hurricane Mitch, which has had the following effects:
- direct damage to exportable and importable agricultural production, both in 1998 and 1999;
- damage to the highway network, affecting transport costs and the capacity to collect harvests;
- greater demand for imports needed for reconstruction, at least during the period 1999-2001;
and
- negative impact on the terms of trade as a result of global trends (higher petroleum prices,
lower prices for our exportable and importable products).
Regarding the continued deficit in the balance of trade, irrespective of natural disasters and
international crises, the following comments are relevant:
- both traditional and non-traditional exports showed  a highly satisfactory rate of growth up to
and including 1997 (an annual average rate of 26% over the period 1992-1997);
- the growth in exports was boosted by improved  competitiveness and productivity as a result
of:WT/TPR/M/61
Page 15
- trade and foreign exchange liberalization;
- production on land that had been under-utilized;
- large-scale private investment in non-traditional agricultural and industrial sectors,
attracted by an increasingly favourable environment;  and
- real depreciation in the rate of exchange du e to the combined effect of a more flexible
exchange rate and monetary and fiscal discipline.
- even though the rate of growth in imports was substantially less than the growth in exports
(an annual average rate of 12% between 1990-1998), in absolute terms the increase was
similar.  Moreover, the recovery in production and investment increased the demand for
imported intermediate and capital goods (concerning the latter, there was a cumulative
demand for the purposes of replacement and modernization).
Concerning the future trends in the balance of trade, apart from the impact of possible
fluctuations in international prices, it is hoped that the following factors will have a more marked
positive effect than in previous years on investment in the production of exportable and importable
goods and services:
- growing confidence in political and macroeconomic stability, particularly as steps are taken to
reduce the debt to a sustainable level;
- the strengthening and implementation of the entire legal and regulatory framework, which has
recently been revised (including international conventions and treaties on trade and
investment), giving the private sector modern, clear and stable rules;
- the positive impact which the two preceding factors will have on the cost and availability of
financial resources;
- lower costs and better quality for electricity, telecommunications and transport services
following their privatization in the context of competitive markets for such services;
- more rapid improvement of the highway infrastructure, which will lead to a substantial
reduction in transport costs, as a result of the reconstruction taking place after hurricane
Mitch.
As regards additional measures that might be taken to improve the trade balance, the
following should be noted:
- with the possible exception of importable goods  for basic consumption produced by small
farmers (rice, beans, maize, milk), it would be seriously prejudicial to Nicaragua's economic
recovery to slow down trade liberalization and adopt protectionist measures, even if the rest
of the world does so;
- rapid modification of the exchange rate would also be counterproductive.  Consideration is
being given to introducing a band within which the exchange rate could fluctuate in the
year 2000;
- nevertheless, one important factor in ensuring that the progress made in macroeconomic
stabilization, structural reform and debt reduction yields tangible, rapid and sustainable results
is broader and more secure access to major export markets in the context of reciprocalinternational treaties at both the bilateral and multilateral levels.WT/TPR/M/61
Page 16
2. Diversification of trade
The policy environment created in 1990 has resulted in better incentives for the production of
exportable and importable goods and services without in troducing any bias in favour of or against any
particular sector.  In fact, non-traditional exports have shown the most dynamic trend.  It is to be
hoped that in the next few years private investors will take greater advantage of the manyopportunities offered by Nicaragua and of the new markets opened up by trade negotiations, leading
to greater diversification.
Regarding the origin of imports and the dest ination of exports, trade has been freely
readjusted since 1990 on the basis of a trade structure defined at the political level in the 1980s.  The
new structure takes greater account of the economic opportunities and market forces.
3. Debt
With regard to the problem of the external debt, it is not possible to reach a sustainable
solution without reducing the deficit in the trade balance through strong and sustained expansion of
exports.  One essential condition for this is better access to export markets.  In order to make the most
positive impact on investments to increase exportable production, access should be guaranteed
through reciprocal international treaties, without being restricted to unilateral concessions that can be
annulled at any time.
4. Fiscal impact of tariff reductions
Tariff reduction and the conclusion of free trade treaties has had a negative impact on fiscal
income and this has been taken into account in  the programmes agreed with the International
Monetary Fund.  It will mainly be offset by closely monitoring exemptions and maintaining a wide
tax base, while at the same time strictly controlling evasion.
5. Social costs of adjustment
As macroeconomic adjustment has been accompanied by external aid to the poorest and most
vulnerable groups, it has not yet had any social costs.  Social spending both in absolute real terms and
in relation to GDP increased significantly between 1993 (11% of GDP) and 1999 (15%).  For
Nicaragua, the alternative was not to refrain from implementing the adjustment but to adjust moreradically but with fewer resources and a much higher social cost.
B. P
RIVATIZATION AND COMPETITION POLICIES
Both my presentation on Monday and the reports prepared for this review have explained the
privatization policies of the Government of Nicaragua.  Regarding competition policies, the new legal
framework for electricity, telecommunications and drinking water establishes the corresponding
regulatory bodies which will be responsible for promoting competition or, in the case of natural
monopolies, for the corresponding price regulation.  A first draft law on the promotion of competitionhas also been drawn up in order to prevent or punish the abuse of market power through cartels,
collusion and other practices which restrict competiti on.  It is expected that the draft law will be put
before the National Assembly in 2000.
C. I
NVESTMENT
Concerning investment, mention has already been made of the importance of ensuring
transparency and security as regards property, indicating the existence of uncertainties relating to
application of Law No. 239 on Urban and Agricultural Property Reform of December 1997.WT/TPR/M/61
Page 17
I should like to inform you that the question of property is a highly sensitive and priority issue
for the Government, which is making great efforts and has so far made progress, achieving
satisfactory results.  On 30 September 1999, 96% of the 16,259 claims submitted to the National
Commission for the Review of Confiscation had been resolved, compensation being granted in the
form of bonds or refunds, and only 610 cases are currently pending before the Commission.  Fiftyper cent of the compensation orders were accepted by the claimants, while the remaining 50% were
not accepted and the claimants decided to use the legal channels specially set up for this purpose, so in
accordance with the Law they will go to arbitration tribunals.  It should be noted that the bonds have
been standardized so as to make them more acceptabl e in international exchange markets and this is a
more attractive form of compensation for claimants.
D. M
ULTILATERAL SYSTEM AND REGIONAL INITIATIVES
1. Central American Common Market
A question has been raised concerning Nicaragua's participation in the Central American
Common Market relating to the difficulties of convergence towards a common tariff.  As the five
member countries have different economic structures, their development and openness strategies are
not compatible either.  The governments of countries with larger domestic markets and more
developed industry protected by the Central American external tariff (notably Guatemala andEl Salvador) are subject to greater pressure from their private sectors to maintain protectionist policies
for industry in conjunction with lower tariffs for agricultural products.  Countries with smaller
domestic markets, greater poverty and a more basic production structure (such as Nicaragua), on the
other hand, have an export sector that is more open to the rest of the world and therefore give higher
priority to boosting the sector and making it more competitive through policies on greater tradeopenness, although at the same time they seek more temporary protection for products of the farming
sector.
These divergent interests can be seen in the ta riffs bound in the WTO;  in the varying levels
imposed on agricultural products;  in the constant and arbitrary recourse to the safeguard clause in
order to modify tariffs;  in Nicaragua's request for approval of a tariff ceiling of 10%, compared to the15% ceiling previously agreed by the five countries;  and, lastly, in the difficulty of reaching
agreement on the definitive timetable for achieving full customs union.
2. Bound versus applied tariffs
Regarding the disparity between the bound tariff rates and those applied, Nicaragua believes
that the forthcoming Millennium Round will provide an excellent opportunity for countries to revise
these and other aspects of access and so give the opening process greater predictability and
transparency.  These aspects include tariff peaks which affect sensitive products, the tariff escalationapplicable to products with higher value added, minimum volumes and the administration of tariff
quotas, as well as other policies that affect international market prices to the detriment of developing
countries.
3. Notifications to the WTO
Nicaragua is examining the question of notifications to the WTO.  As part of the
administrative reorganization of the Executive, the internal process is being reorganized and a new
competent authority is being appo inted to fulfil this commitment.WT/TPR/M/61
Page 18
E. E XTERNAL ENVIRONMENT
We welcome the fact that delegations have reaffirmed the existing links of cooperation and
economic relations under agreements and programmes on cooperation and trade preferences, which
Nicaragua values greatly.
Nicaragua warmly welcomes the European Community's willingness to be attentive, at the
forthcoming WTO meeting in Seattle, to the need to take action to bring about Nicaragua's effective
integration in the multilateral trading system so as to obtain a larger share of international markets.
As the Community has stated, market access is the cornerstone of any effective policy to integrate the
poorest countries in the global trading system, taking advantage of opportunities to share in the
positive results of liberalization in a way that will allow us to achieve genuinely sustainable
development.
II. TRADE POLICIES
A. C USTOMS VALUATION AND PROCEDURES
Nicaragua is taking the necessary steps to put into effect the Customs Valuation Agreement
by the date of September 2000, in fulfilment of its commitments in the WTO.  Moreover, on
17 September this year, the Central American Ministers for the Economy approved a draft protocol
amending the Convention on the Central American Tariff and Customs Regime in order to adoptintegrally the GATT Customs Valuation Code.
B. I
MPORT RESTRICTIONS
Since 1991 Nicaragua has eliminated import restrictions, a process that has been reinforced
through the Law on Fair Taxation and Trade, which prohibits the application of any non-tariff
restrictions on imports other than those imposed for phytosanitary reasons, to protect public health orthe population's security, for environmental safety reasons or national emergencies.  This Law
abrogates the Law on Representative or Distribution Agents of Foreign Firms, which allowed the
imposition of such restrictions in cases of alleged violation of the rights of the representative or
distributor by the person represented.
C. T
ECHNICAL STANDARDS AND SANITARY AND PHYTOSANITARY MEASURES
As far as sanitary measures are concerned, the modernization of Nicaragua's regulations
began in 1996.  Notification of the rules adopted will be regularized following the administrative
reorganization of the Executive.  On 17 September 1999, in Resolution 37-99, the Central American
Ministers for the Economy approved the Central American Regulations on Sanitary and Phytosanitary
Measures and Procedures with the aim of harmonizing the sanitary and phytosanitary measures under
the Central American Integration Agreement that might directly or indirectly affect trade.
D. G OVERNMENT PROCUREMENT
The National Assembly is considering a draft law on Government procurement which
respects the principle of national treatment and gives the State a modern, clear and efficient legal
framework for Government procurement.  It is hoped that this will enter into force at the beginning
of 2000.  Once it has been approved, Nicaragua will consider acceding to the Agreement on
Government Procurement or the Agreement on Transparency once this subject has been incorporatedinto the agenda of the new round of negotiations within the WTO.WT/TPR/M/61
Page 19
E. I NTELLECTUAL PROPERTY
Nicaragua was the first Central American country to sign a Convention on the Protection of
Intellectual Property with the United States, which goes beyond the obligations in the TRIPS
Agreement, reforms the present legal framework and establishes new laws to bring domestic
legislation into line with international commitments.
In the meantime, Nicaragua, has Law No. 312, Law on Copyright and Related Rights, of
26 August 1999, and the National Assembly recently approved the Law on the Protection of New
Plant Varieties.  Nicaragua also became a Member of the International Union for the Protection of
New Varieties of Plants (UPOV) under the 1978 Act.  The following laws are before Parliament this
year:  the Law on Patents, Utility Models and Industrial Designs;  the Law on the Protection of
Programme-Carrying Telecommunications Signals;  the Law on the Protection of Layout Designs of
Integrated Circuits;  the Law on Trademarks and other Distinctive Signs.  Nicaragua has also accededto the Bern Convention and is in the process of acceding to the Rome and Geneva Conventions, so by
January 2000 it is expected that its domestic legislation will be in conformity with the TRIPS
provisions.
Regarding Nicaragua's capacity to implement these commitments, it is relying on the support
of the WTO and the cooperation of some countries in the international community in order tomodernize its customs administration.  In addition, Nicaragua is requesting and hopes to obtain more
technical assistance from the WTO and the United States.
F. S
USTAINABLE DEVELOPMENT
Nicaragua has signed the Convention on Biological  Diversity, as well as the Convention for
the Conservation of Biodiversity and the Protection of Priority Forest Areas in Central America, andis a member of the Sustainable Development Alliance (ALIDES), established by the Central
American countries and Belize in October 1994.
In 1997, an Executive Decree established the National Sustainable Development Council
(CONADES).  The Ministry of the Environment and Natural Resources (MARENA) regulates and
defines policies on the sustainability of natural resources.  In 1998, the National Forest Institute(INAFOR), was set up by law with the main aim of administering forest resources situated on private
land, leaving the Ministry of Development, Industr y and Trade to administer forests situated on
State-owned land.
The General Law on the Environment and Natural Resources (Law No. 217 of March 1996)
defines the basic legal framework for the protectio n of the environment and sustainable development.
There is also a Law on the Conservation, Protection and Development of Nicaragua's forestry
resources (Decree No. 1381).
III. SECTORAL POLICIES
A. S
ERVICES
Regarding the scope of the services offer which Nicaragua has bound within GATT, we
believe that it provides broad cover, above all in the financial sector, where the Fifth Protocol has
been ratified.  I should also like to state in this connection that Nicaragua will shortly notify the newGeneral Law on Banks, Non-Banking Financial Institutions and Financial Groups, which will allow
implementation of the commitments in the Fifth Prot ocol by eliminating the restrictions on receiving
savings which applied to foreign banks, thus fully complying with the principle of national treatment.WT/TPR/M/61
Page 20
We should also like to express Nicaragua's interest in the issue of services and state that we
are ready to participate fully in the forthcoming negotiations.
In conclusion, I should like to stress that Nicaragua is more than willing to make a positive
contribution to the preparatory process for the forthcoming Ministerial Meeting in Seattle, as well as
to the future negotiations within the WTO, so as  to create international market conditions that
facilitate the achievement of well-being and prosperity for our peoples.WT/TPR/M/61
Page 21
ANNEX II
RESPONSES BY NICARAGUA TO SPECIFIC QUESTIONS
QUESTIONS BY CANADA
(WT/TPR/S/61)
II. Trade Policy Regime:  Framework and Objectives, (8) Foreign Investment Regime
With reference to para 62:  We would like to obtain more information on the initiative to establish a
single-office for investment within MIFIC.  To what extent would this initiative reduce the existing
procedural delays currently faced by foreign investors who want to register and have their investment
approved by the appropriate Nicaraguan authorities in order to benefit  from certain governmental
guarantees?
The Ministry of Development, Industry and Trade (MIFIC) has prepared a draft Foreign
Investment Law which abolishes the Foreign Inve stment Committee and consequently any risk of
discretionality that might have existed previously.  It also provides transparency and gives investors
all the necessary guarantees.  The Law also envisages a single window for investment, which should
resolve the procedural problems and considerably shorten the time required for registration of foreign
investment.
With reference to para 65:  Could you provide an update on the current situation of property claims
relating to confiscated urban and rural properties in the past decade?  In particular, what other forms
of compensation, in addition to 15-year government bonds, are being provided to, or being
considered for, original owners?
On 30 September 1999, 6,635 people had submitted claims to the National Commission on
the Review of Confiscated Property (CNRC), relating to 16,259 rural and urban properties.  Of thetotal, 15,649 cases (96.25%) have been resolved, involving 13,193 compensation orders, the return of
844 properties, and the rejection of 1,612 claims, while 610 claims remain pending before the CNRC.
Fifty per cent of the orders issued by the CNRC have been put into effect.  Law No. 239 on
Urban and Agricultural Property Reform of December 1997 provides for the creation of arbitration
tribunals for those cases in which the claimant does not wish to accept compensation bonds.  Thesearbitration tribunals will come into eff ect next year with support from the IDB.
With the exception of bonds, no other form of compensation is envisaged.  The bonds have,
however, been standardized in order to make them more acceptable on international exchange markets
and thus a more attractive form of compensation for claimants.
III. Trade Policies and Practices by Measure, (2) Measures Directly Affecting Imports,
(viii) Government procurement:
When does Nicaragua intend to accede to the WTO Agreement on Government Procurement?
Nicaragua will consider acceding to the Agreement once this subject has been incorporated
into the agenda of the new round of negotiations within the WTO.  In the meantime, Nicaragua is in
the process of adopting a Government Procurement Law, which incorporates the principles of
transparency and national treatment.WT/TPR/M/61
Page 22
With regard to para 57:  What is the intended time frame for implementing the revisions to the
procurement law and its implementing regulations?
The Law is before the National Assembly for adoption, and once adopted the Executive has
two months to issue the regulations.  At the beginning of 2000, therefore, there will be a modern legal
framework.
III. Trade Policies and Practices by Measure, (4) Measures Affecting Production and Trade,
(ii) Competition policy and regulatory issues, para 111:
What is the current status of Nicaragua’s bills on promotion of competition and consumer protection?
A draft Law on the Promotion of Competition is ready to be transmitted to the Executive.
The Consumer Law and Regulations have already been approved and will enter into force on
3 December 1999.
Is Nicaragua considering the establishment of a legal framework for competition policy? If yes,
when?
The draft Law on the Promotion of Competition has been drawn up to establish a legal
framework that promotes transparent markets and regulates restrictive practices (anti-trust).
QUESTIONS BY HONG KONG, CHINA
(WT/TPR/S/61)Financial Services
(p. 88, para. 101)
It is mentioned that the main reason for the absence of foreign banks in the market is due to a
1979 provision which impeded foreign banks from receiving domestic deposits.  The provision,
however, will be eliminated shortly by legislation.  We would like to know the progress of the
elimination of the 1979 provision.
The new Law on Banks, Non-Banking Fina ncial Institutions and Financial Groups
(Law No. 314) abolished the restrictions on receiving savings, which previously applied to operations
by foreign banks.
(p. 89, para. 104)It is noted that although state monopoly of the insurance market has been terminated since 1996 and
private companies are expanding quickly in the market, the insurance market is still dominated by the
state-owned insurer INISER.  Would the Nicaraguan authorities share with us its plan, if any, to
privatize INISER?
Following the reform of Nicaragua's Political Constitution in 1996, private companies have
been allowed to compete in the insurance market.  The Government is currently modernizing INISER
and its future privatization is planned.WT/TPR/M/61
Page 23
Telecommunications
(p. 90, para. 108)
It is mentioned that the privatization process of the state monopoly basic telecom services supplier
(ENITEL) was interrupted in May 1999 and no decision had been made on future developments as at
July 1999.  We are interested to know whether there is any plan to resume the privatization process.
The Government has given priority to the privatization of ENITEL.  The pre-qualification
notification phase took place from 20-22 September 1999.  According to the timetable, it is expected
that the receipt of bids will be completed in March 2000.
QUESTIONS BY JAPAN
(WT/TPR/S/61)
Regional agreements  (pp. 24-25, paras. 39 & 44)
It is reported that a Free Trade Agreement was signed between the CACM (Central American
Common Market) countries and the Dominican Republic.  It is also reported that Nicaragua has
bilateral free-trade agreements with Panama and M exico.  However, these free-trade agreements are
not notified to the WTO in accordance with Article XXIV:7(a) of the GATT, which provides for
prompt notification.  Please explain why these free-trade agreements are not notified.
Nicaragua is in the process of ratifying the Free Trade Agreement between the CACM
countries and the Dominican Republic, therefore it is not yet in force.
The Agreement with Panama is a Partial Scope Agreement under the enabling clause of the
1979 Tokyo Round and covers around 900 tariff headings for which the parties grant preferential
tariffs.  The Free Trade Agreement with Mexico is being notified by the two countries.
Standards (p. 51, paras. 71 & 72)
Japan appreciates that Nicaraguan standards do not distinguish between foreign and domestic goods
and that Nicaragua undertook to use international standards as a basis for the preparation of
domestic norms.  On the other hand, it is reporte d that no standards are in place for manufactured
and processed products at present.
- Please explain how the conditions with which imported goods must comply are determined in
cases where there do not exist any standards by the ISO, Codex Alimentarius and the Central
American Institute of Industrial Research and Technology to take as a reference.  Are the
conditions determined on a case by base basis?
There are standards for made-up and processed products, foodstuffs, building materials and
hydrocarbons.  Where there are no ISO-type standards, Nicaragua uses regional standards such as
those of COPAN and ICAITI.  If these do not exist either, standards of countries of repute are used,
for example the United States ASTM, the German DIN, the Spanish AENOR and, in certain specialcases, the European Union standards, in order to ha ve a reference to determine specifications for a
product, service or process that is not regulated in Nicaragua.  The conditions are not determined on a
case-by-case basis.WT/TPR/M/61
Page 24
- Are those conditions made public to ensure transparency?
Law No. 219 on Standardization and Quality allows the MIFIC to draw up regulations for
imported products.  Where there is no Nicaraguan standard, compliance with standards in the country
of origin is verified.  In order to comply w ith the WTO's TBT Agreement, Nicaragua is setting
standards for all products and services produced or marketed in Nicaragua.
Law No. 219 does indeed ensure transparency by ordering the publication of Nicaraguan
standards in the Official Journal .  Nicaragua is also notifying its trade partners through the WTO.
In order to comply with the TBT Agreement, Nicaragua has set up an information centre on
technical barriers to trade, which can be consulted at the following site:  www.mific.gob.ni/ditenm.
SPS (p. 77, para. 75)
It is reported that, in 1996, Nicaragua notified the WTO that its SPS norms had been amended
because the previous legislation had become outdated and that, although ratified by the NationalAssembly in 1998, the notification of these measures was still under way as at July 1999.  Why are the
notification of these measures still under way?
Nicaragua started modernizing its regulations on sanitary and phytosanitary measures in 1996
and they have just been approved.  The administrative and institutional reorganization under Law
No. 290 (Reorganization of the State) means that in ternal processes and the authority responsible for
making prompt and efficient notification to the WTO are still being redefined.  This stage was
recently completed and the WTO will shortly receive the respective notifications.
Fisheries  (p. 77, para. 51)
It is reported that, since the early 1990s, fishery has become one of Nicaragua's most promising
sources of non-traditional exports and employment and that, by December 1998, the total catch hadrisen nine-fold.  In this regard, please explain what measures Nicaragua has taken to conserve the
exhaustible natural resources.
Fishing is one of the most dynamic sectors.  Nicaragua's Atlantic coast extends for 552 km. of
the continental shelf, the largest in Central America and one of the richest on the whole continent.
The industry is not working at full capacity and has focused on shrimps and spiny lobsters,
leaving almost intact stocks of the main types of commercial fish.
There are 410 km. of Pacific coast with potential for shrimp farming, accounting for one third
of the potential of Central America and Panama.
The conservation and exploitation of fisheries resources is administered by the Ministry of the
Environment and Natural Resources and by MIFIC, pursuant to Law No. 290.
The Government has taken a series of measures through Ministerial Decrees published in the
Official Journal  with a view to protecting species at risk.WT/TPR/M/61
Page 25
Services (p. 85, para. 92)
Nicaragua listed the GATS Article II (MFN) exempt ions in the financial services sector.  Do the
conditions which created the need for the exemption still prevail?  If so, please explain such
conditions in detail.
The exemptions were introduced in accordance with the General Central American Economic
Integration Treaty, under which the States agree to harmonize legislation in the banking, financial,
stock market and insurance sectors.
(p. 92, para. 114)
Pilotage in national ports is reserved to Nicaraguan nationals.  With a view to fostering sectoral
liberalization and eliminating any discriminatory provisions, new legislation under preparation was
to be passed before October 1999;  it is expected to abolish the nationality requirements for pilotage
and adopt the principle of port of origin or destination with respect to Central American cabotage.
- Has the legislation process already been completed?
- When does the new legislation take effect?
Cabotage is restricted to Nicaraguan nationals.  In order to liberalize the sector and eliminate
any discriminatory provisions, a new law is being drawn up for submission to the National Assembly.
It is expected to enter into force during the first quarter of 2000.  This law abolishes the nationalityrequirement for foreign investors in the shipping i ndustry and so eliminates the current condition that
60% of Nicaraguan shareholders are required in order to set up a national shipping firm.
QUESTIONS BY THE EUROPEAN UNION
Trade diversification
Given the important reforms undertaken by Nicaragu a to diversify its trade structure, how does it
explain the fact, mentioned in para. 19 of the Secretariat Report and illustrated in Table I.3, that the
composition of trade has only changed "slightly" since 1993 with exports still dominated to the same
extent by primary products?
In Nicaragua, a decade of erroneous policies and a centralized model led to the collapse of the
economy and set Nicaragua's production structure back to the 1940s.  The weakening of privateenterprise, the scarcity of capital for investment and the restrictions imposed by stabilization
programmes and structural adjustment in order to restore a favourable macroeconomic environment
have had an impact on the speed of recovery.  The Government has now ensured that Nicaragua meets
the conditionalities for highly indebted poor countries eligible for cancellation of 85% of their
external debt.
Together with the investment plan approved by the international community in Stockholm
following the disaster caused by hurricane Mitch, this will mobilize resources for social andproduction investment projects that will help the recovery and diversification of production.
Economic policy has made primary sectors a priority because 67% of Nicaragua's population
is in urban areas where there is the highest level of poverty.  Nevertheless, the openness policy is
aimed at attracting foreign investment so as to give renewed impetus to industrial activity, supporting
the competitiveness of various sectors based on the Law on Fair Taxation and Trade, a series of lawsto protect intellectual property, and international trade agreements.WT/TPR/M/61
Page 26
EC/Central America framework cooperation agreement
We note that under "Regional" and "Bilateral agreements" (pp. 22-26), there is no reference to the
conclusion of a framework Cooperation Agreement between the European Economic Community and
the Republics of Costa Rica, El  Salvador, Guatemala, Honduras, Nicaragua and Panama, that took
place on 22 February 1999 (Council Decision 99/ 194/EC, OJEC L 063 of 12/03/99).  The
fundamental objective of this agreement (including "investment" - article 8 - and "co-operation in
standards" - article 11) is to strengthen and diversify cooperation between the two parties in all areas
of common interest, particularly the economic, financial, commercial, social, science and technology,
and environmental sectors, bearing in mind the less er degree of development of the Central American
countries.
Nicaragua values the assistance and cooperation given by the European Union at both the
regional and bilateral levels.  The reason it is not mentioned in the report is that, at the time it wasdrafted, the technical team had not yet received notice of ratification.  We shall update the report and
request the WTO to mention this in the minutes of the meeting.
Regional and bilateral agreements
Could Nicaragua provide further explanations in re lation to the statement in para. 6 of the Summary
Observations of the Secretariat Report that "(r)egional and bilateral trade agreements are seen by theauthorities ... as a means to balance the effect of si milar third-party agreements (e.g. NAFTA)"?  In
which manner and to what extent is this objective being achieved by the agreements hitherto
concluded by Nicaragua?
The only agreement currently in effect is that with Mexico, which had only been in operation
for one year at July 1999, therefore, it is prematur e to make any quantitative evaluation of its impact.
The agreement gives Nicaragua preferential treatment with 0% tariffs for the majority of its
production, thus making exports more competitive in such a big market as that of Mexico.
CCAM Common External Tariff
Could Nicaragua explain, in relation to paras. 35 and 36 of the Secretariat Report, what are the main
reasons for CACM’s difficulties in securing convergence towards a genuine Common External Tariff?
The interests of countries whose industry is more developed are subject to pressure from their
private sectors to implement protectionist policies.  This is more apparent in the tariffs bound within
the WTO.
Given that the five countries have varying economies, their openness and development
strategies are not compatible.  The natural disasters that have affected some countries, such as
Nicaragua, and other trends in the country lead to more aggressive openness policies that promote
investment and competitive exports.
Foreign investment
Foreign investors in Nicaragua have mentioned problems associated to procedural delays in
obtaining registration and approval from the Fore ign Investment Committee of MIFIC (which has
apparently not met for almost two years).  The Secretariat Report (p. 29, para. 62) indicates that
measures are under way in Nicaragua to solve that problem.  Can Nicaragua provide furtherinformation on these measures and indi cate when they will be implemented?WT/TPR/M/61
Page 27
The MIFIC has prepared a draft Foreign Investment Law which abolishes the Foreign
Investment Committee, doing away with any discretionality, providing greater transparency and
giving investors all the necessary guarantees.  The Law envisages a single window for investment,
which should resolve the procedural problems and considerably shorten the time required for
registration of foreign investment (see question 1 from Canada on the Foreign Investment Regime).
We note that foreign investment in Nicaragua is hindered by uncertainty surrounding the
implementation of property law (p. 30, para. 65 of the Secretariat Report) and contractual law.  Does
the Nicaraguan Government recognize the need to ensure a faster and more transparent application
of these laws, and if so, could it explain how it intends to proceed to achieve that objective?
The question of property is a highly sensitive issue in Nicaragua.  The Government has been
seeking a solution through Law No. 239, which compensates persons whose property has been
confiscated and who wish to receive State bonds or pursue their claims through legal channels.  TheLaw sets up arbitration tribunals to accelerate the claims process (see reply No. 2 to Canada on the
current situation regarding confiscated property).
It is expected that the arbitration tribunals will come into effect in 2000 with the support of
the IDB and will resolve pending cases.
Regarding Government procurement, the relevant Law will resolve the transparency aspects
(see question No. 4 from Canada on Government procurement).
Level of tariff bindings
While the very comprehensive scope of Nicaragua’s tariff bindings is obviously welcome, the
Secretariat’s report (para. 11 of the Summary Observations) mentions an average gap of about
36 percentage points between bound and applied rates.  Would Nicaragua consider reducing the levelof its bindings with a view to creating a more predictable marketplace?
This question will be the subject of negotiation in the forthcoming round.
Customs valuation
Can Nicaragua, which has received technical assistance to  that effect, confirm that it will fully apply
the provisions of the WTO Agreement on Customs Valuation at the end of the transition period on3 September 2000?
Nicaragua is working to this end and has drawn up a draft law in order to comply with the
Agreement.
Taxation of imported spirits
We understand that Nicaragua’s taxes and duties on  imported spirits discriminate against whisky
(15% compared to 10% for other spirits). What pl ans are there to bring this into line with GATT
Article III?
The tariff situation regarding whisky and other alcoholic beverages is the following:
Whisky, rum, gin DAI (import duty) 5% AT P (temporary protection tariff) 20% Total 25%
Vodka and other spirits DAI 10% ATP 15% Total 25%WT/TPR/M/61
Page 28
This shows that all imported spirits are subjec t to the same tariff treatment.  The specific
consumption tax (IEC) ranges from 40 to 49% for alcoholic beverages.  Nicaragua applies this both to
imported and domestically produced alcoholic beverages, thus complying with Article III of the
GATT.  (The IEC on rum is 49% while that on whisky is 45%.)
Import prohibitions
The Secretariat Report (p. 45, para. 44) states that prohibition against imports of alcoholic beverages
has been ordered since 1995.  Is such prohibition still in force?  If so with what justification?  How
did/does such prohibition affect domestic produc ers such as Industrial Cervecera SA (ICSA-TO ŇA)
and Compañía Licorera Nicaragua SA?  If the effect  is different, how can this be justified under
GATT Article III?
The prohibitions mentioned are covered by the Law on Representative or Distribution Agents
of Foreign Firms, which was abolished on 1 July 1998.
Some prohibitions still existing are the result of legal decisions taken when the Law was
repealed and are currently the subject of proceedings before the Courts in the context of contracts
signed between the parties.
Domestic manufacturers are not party to these lawsuits, which are purely of a bilateral nature
between the representative in Nicaragua and the foreign supplier.  There is therefore no effect that hasto be justified to the WTO.
The Secretariat Report (p. 45, para. 44) also states that prohibition against imports of Land Rover
vehicles has been ordered since 1995.  Is such a prohibition still in force?  If so, with what
justification?  It appears from the report that the pr ohibition does not cover similar vehicles of other
makers, why?
This case is similar to the one above and only concerns two private firms bound by a private
contract.  It does not affect or involve dealers or producers of similar goods.
Government Procurement
Nicaragua is not a signatory to the WTO Agreemen t on Government Procurement.  The EU considers
that it would be very useful if  Nicaragua would join this Agreement – with a transition period if
necessary. Is Nicaragua considering taking such a step?
See question 3 from Canada on government procurement.
Export licensing and restrictions
In the field of preserving natural resources, has Nicaragua considered any more efficient alternatives
than export restrictions?  Could Nicaragua consider whether the products listed can truly be
described as "natural resources" (e.g. milk powder, cheese, peanuts)?
The Law on Natural Resources and its Regulations entered into force on 6 June 1996 and
provide a legal framework for conservation and sust ainable development (Law  No. 217), laying down
rules for the conservation and preservation of the environment and natural resources.  The Law on the
Conservation, Protection and Development of Nicara gua's Forest Resources (Decree No. 1381), the
Special Law on Mining Prospection and Exploitation (1067) and Quarrying, the Special Law on
Exploitation of Fisheries (Decree No. 557) constitute a series of legal rules aimed at regulating theuse, exploitation and conservation of natural resources.WT/TPR/M/61
Page 29
The certificates mentioned in para. 80 of the Report by the Secretariat are certificates of
origin, which accompany exports of products subject to tariff quotas in the countries of destination.
We note from the Secretariat Report (p. 53, para. 80) that Nicaragua requires export licences for
iron, copper and aluminium scrap.  What is the rationale for such a requirement?  How is it
compatible with GATT Article XI?
These provisions were abolished on 1 July 1997 under the Law on Fair Taxation and Trade
(Article 23).
TRIPs
With reference to p. 61, paras. 119, 120 and 121 of the Secretariat Report, could Nicaragua confirm
that it will amend its copyright legislation, in all respects, so that it is compliant with the provisions of
the TRIPS Agreement by 1 January, 2000?
Nicaragua abolished the provisions of the 1904 Civil Code and has put into effect its new
legislation entitled "Law No. 312, Law on Copyri ght and Related Rights" of 26 August 1999, which
regulates copyright in literary, handicrafts, artistic or scientific works and the related rights of
performers, producers of phonograms and broadcasting organizations.
The aforementioned Law also provides for the protection of computer programs and
compilations of data, (which were not protected under the 1904 law).  As far as economic rights areconcerned, the Law gives broader protection than that in the TRIPS and states that economic rights
shall be for life plus 70 years after the death of the author.
Nicaragua protects sound and video recordings (rights of producers of phonograms) and these
are also protected for 70 years, calculated from 1 January of the year following the publication of the
fixed presentation or, where appropriate, the performance.  The author also has the right to see hisname appear on the performances and to oppose any deformation or mutilation of his works which are
harmful to his standing or reputation.
The new legislation therefore meets the provisions of the TRIPS and extends protection from
the 50 years in the TRIPS Agreement to 70 years under Nicaraguan legislation.
Conservation and sustainable development/exploitation of forest resources
The WTO report mentions the measures taken to protect precious woods in Nicaragua’s forest
reserves, and also suggests that the implementation of these measures has been difficult and only
partly effective (p. 79, para. 60).  Does the Government of Nicaragua foresee any additional measures
being taken in order to stop or reduce the exploit ation and exportation of precious woods from forest
reserves?
In 1999, in an Executive Decree, the Government of Nicaragua introduced the advanced
payment of income tax, which led to more efficient exploitation of forest resources by increasing thecost of logging.  Institutional adjustments have also been put into effect, under Law No. 290 of
1 June 1998, on the restructuring and modernization of the Nicaraguan State.  The National Forest
Institute (INAFOR) was set up with the main aim of administering forest resources situated on private
land, leaving the MIFIC to administer forests situated on State-owned land.  The Ministry of the
Environment and Natural Resources (MARENA) regulates and defines policies on the sustainabilityof natural resources.  INAFOR has collaboration agreements with the National Police and the Army in
order to exercise better control over procedures and action that violates the law.WT/TPR/M/61
Page 30
The legislation on protection and sustainable de velopment (Law No. 217)  lays down rules for
the conservation and preservation of the environment and natural resources.  Other legal texts are:  the
Law on the Conservation, Protection and Developmen t of Nicaragua's Forest Resources (Decree
No. 1381), the Special Law on Mining Prospection and Exploitation (1067) and Quarrying, the
Special Law on Exploitation of Fisheries (Decree No. 557).
QUESTIONS BY THE UNITED STATES
External debt burden and future challenges  (WT/TPR/G/61, section I)
We wish to note that we have found several errors in the information and statistics that are
featured in the Nicaraguan Government's chapter on external debt.  For example, the table of debt
statistics shows higher debt than the World Bank indicators.
With respect to the Government of Nicaragua's Report (section III, External debt burden and
future challenges, paragraph 25), there is no need to  ask for the most favorable terms.  The terms are
the same for all HIPCs.  Nicaragua will qualify for very deep relief under the HIPC initiative.  Also,
we wish to clarify that Nicaragua is classified as a heavily indebted poor country (HIPC) not highly
indebted.
In paragraph 26 of the same section, we regret that there is no mention of Nicaragua's need to
commit to a strategy of poverty reduction, economic reform and good governance.  We note that theHIPC relief will free up significant resources that will be channelled into programmes to reduce
poverty.
With respect to the Secretariat's Report (WT/TPR/S/61), we would like to clarify
section I(2)(vi), para. 17, regarding external debt, the United States asked its Congress for
appropriations to forgive up to 90% of Nicaragua's debt under HIPC, not unilaterally.  Morespecifically, the United States plans to forgive 97% of eligible Paris Club debt under HIPC.  President
Clinton is seeking to forgive the rest.  We have also pledged to forgive 100% of ODA.
Trade laws and regulations  (section II(5))
The United States notes that Nicaragua is in the process of implementing legislation to bring
its regulatory framework into accord with WTO provisions.
- We would appreciate an update on the status of this legislation.  Specifically, when does
Nicaragua anticipate the legislation concerning customs valuation and SPS measures to be
implemented?
Nicaragua will implement the Customs Valuation Agreement on 3 September 2000.  For this
purpose, on 17 September this year, the Central American Ministers for the Economy adopted a
Protocol to the Convention on the Central American  Tariff and Customs Regime abolishing Annex B
thereto, which contains the current Central American legislation on the customs value of goods, basedon the Brussels Definition of Value.  Consequently, the Government of Nicaragua has drawn up a
draft law ratifying the aforementioned Protocol so that it may enter into force on 3 September 2000,
integrally adopting the GATT Customs Valuation Code.
Concerning sanitary measures, on 17 September 1999, in Resolution 37-99, the Central
American Ministers for the Economy approved the Central American Regulations on Sanitary andPhytosanitary Measures and Procedures with the aim of regulating sanitary and phytosanitary
measures that might directly or indirectly affect trade, and providing the legal provisions for the
gradual and voluntary harmonization of sanitary and phytosanitary measures and procedures withWT/TPR/M/61
Page 31
Article VII.2 of the Guatemala Protocol and the relevant WTO Agreement.  These regulations entered
into force on 17 October last.
Customs valuation and price bands  (section III(2)(iii))
In 1997, Nicaragua eliminated its price band regime.  Recently, Nicaragua proposed
legislation reintroducing the price band mec hanism on grains, a move we would view as
re-implementing variable tariffs, which the customs valuation agreement clearly prohibits.
There is no legislation on the reintroduction of price bands.  A draft law has been prepared
and is still being discussed.
- Could Nicaragua please provide an update on the legislation to reintroduce price bands?
This measure is seen as a transparent and temporary mechanism so that, in the context of a
free market, domestic prices may be competitive by linking them to international prices.  Nicaragua
does not consider that this mechanism breaches the provisions of Article VII of the GATT nor theCustoms Valuation Agreement because the tariff applies to the actual price of the transaction.
- If the price bands are reintroduced, how does Nicaragua intend to phase out the protection
provided by price bands by the customs valuation deadline in September 2000?
In addition, the methodology to be used by Nicaragua will respect the ceilings already bound
and the maximum tariff will not exceed 45%, much less than the 60% bound for rice, maize, sorghumand soya, which are the products being considered for inclusion in the system.
Other levies and charges  (section III(2)(v))
We note that Nicaragua maintains consular fees at certain amounts.
- What is the purpose, other than for fiscal reasons, for maintaining these fees?
- What is being certified by the consulate;  the country of origin?
If so, the WTO rules of origin agreement should be adhered to.  That agreement does not
envision the need for consular certification.  We view this requirement as both a fiscal and procedural
restraint on trade.
Consulates do not certify documents.  What they do is authenticate the signatures shown on
invoices, bills of lading, airway bills, etc.  The consulates do not therefore certify the origin of goods.Nicaragua has a self-certification system for the origin of goods so certificates of origin do not have to
be authenticated by Nicaraguan embassies or consular bodies abroad.
- Does Nicaragua plan to eliminate this restriction?
The fee for customs services was introduced by Decree No. 886 of 26 November 1981, which
fixed a rate of US$1 per gross tonne imported without any discrimination as to origin or source.  The
Law on Fair Taxation and Trade lowered this amount to US$0.50 for each gross tonne or fraction
thereof.  The purpose of this fee is to obtain re sources to modernize the customs system in order to
facilitate and speed up procedures by putting in place an electronic clearance system at the national
level and rebuilding customs administrations.WT/TPR/M/61
Page 32
Government procurement
The United States commends Nicaragua for its efforts towards improving transparency in
government procurement.  We encourage Nicaragua to move forward with this agenda and in doing
so also consider supporting discussions in Geneva regarding transparency in government
procurement.
- Please describe the current status of the government procurement legislation mentioned in
the Report.
The new draft law is before the Justice Commission of the National Assembly, which will
consult with the business sector and take a decision to be put before the plenary Assembly.  It is
expected that there will be a new law early next year providing greater transparency, more efficient
procedures, and adjustment to the international legal framework.
- When does Nicaragua expect to be able to join the Agreement on Government Procurement?
See the reply to question 3 from Canada.
Sanitary and phytosanitary (SPS) regulations :
Nicaragua began its WTO notification of new SP S norms in 1996 and has stated that this
process is still under way.
- When does Nicaragua anticipate the final notification of these SPS measures to occur?
See the reply to question 3 from Japan.
Agriculture, fisheries and forestry  (section IV(2))
During the 1990s, Nicaragua set several sectoral policy objectives in agriculture aimed at
raising output by improving competitiveness, profitability, reducing risks and expanding financial
resources while observing multilateral and regional commitments.  In 1998, Nicaragua put in place aplan for sustainable development, which addressed land tenure uncertainties, technology transfer,
agricultural marketing support and greater access to credit.
To achieve these goals, Nicaragua has stated that it needed higher border protection, more
efficient handling of food aid, lower costs for inputs and services, reduced taxation levels and better
infrastructure.
- The United States would appreciate an update on the steps Nicaragua's Ministry of
Agriculture, Livestock and Forestry is taking to bring its subsidy programmes into
compliance with the WTO, noting that such programmes should be eliminated.
- What fiscal incentives were made available to Nicaragua's agricultural sector to encourage
trading of agriculture on commodity exchange markets?
Nicaragua does not grant subsidies for exports, and domestic aid or production subsidies
applied, which are minimal, are not to be reduced because they meet the criteria laid down in Article 6of the Agreement on Agriculture and Annex 2 thereto.  It is hoped that during the next round of
negotiations on agriculture developing countries will obtain greater flexibility to apply policies to
promote development.WT/TPR/M/61
Page 33
Law No. 257 (Law on Fair Taxation and Trade)  exempts all exchange transactions in
agricultural exchanges from local and fiscal taxes.
Since 1990, Nicaragua has reduced the grain purchasing activities of the state agency
ENABAS.  As part of this change Nicaragua sold ENABAS, but we understand the sale has yet to be
completed.
In 1990, the Government approved a strategy to  transform ENABAS, with the aim of ending
the agency's trade in products that were not basic grains and set up two marketing systems by
establishing warehouses specializing in basic grains and setting up an agricultural exchange.
- We would appreciate an update regarding when Nicaragua expects the sale to be complete?
What outstanding issues rema in, which have delayed the sale for the last nine years?
The privatization of ENABAS assets has not been completed due to legal problems.
Nevertheless, ENABAS has been radically transformed and its activities are limited to maintainingminimum stocks of basic grains to respond to emergency situations and for reasons of food security.
A draft law has been drawn up to establish a food reserve fund that will replace ENABAS.
Services
We note that Nicaragua is party to a number of free-trade agreements, none of which, to our
knowledge, have been notified to the WTO Council on Trade in Services.
- Does Nicaragua intend to notify these agreements in the near future?
As part of the process of strengthening the Central American Common Market, these
agreements are aimed at the elimination of barriers to  intra-regional trade in services so as to achieve
significant liberalization of trade, and will form pa rt of the instrument being negotiated on Article V
of the GATS, which will be notified in due time.
Nicaragua has included a modest number of sectors in its GATS schedule, and in many cases
important modes of delivery have been left unbound, in particular modes 1, 2, and 4 relating to
telecommunications, distribution, professional, educational, environmental, and computer services.
Further, Nicaragua imposes an economic needs test that appears to effectively contradict bindings in
mode 3.  Additionally, Nicaragua impo ses local employment restrictions.
- Could Nicaragua explain whether these restrictions are still consistent with government
policies?
Nicaragua's commitments under the Uruguay Round were based on the country's
development situation.  Nicaragua believes that its offer is broad.  Modes of supply, 1, 2 and 4 will be
the subject of negotiation in the next round.  The proof of economic need required for a limited
number of services sectors is consistent with the specific commitments bound within the WTO.  All
these measures are consistent with government policy.
Intellectual Property Rights  (section III(4))
Paragraph 113 of the Secretariat Report notes a "five-year transition period (advanced by six
months)".  The general transitional period for developing countries to comply with all TRIPS
obligations is five years, i.e. until 1 January, 2000.
- Please clarify when Nicaragua intends to come into compliance with it TRIPS obligations.WT/TPR/M/61
Page 34
Nicaragua hopes that its domestic legislation will be in harmony with the provisions of the
TRIPS by January 2000.  At the moment, Nicaragua has copyright legislation and has recently
approved a law on the protection of new plant varieties.  The patent law and the law on satellite
signals are on the parliamentary agenda.  Acce ssion to the Berne Convention was approved by
National Assembly Decree No. 23-76 of 6 October 1999 and accession to the Rome and GenevaConventions is under way.
Paragraph 115 of the Secretariat Report states that the domestic legislation grants patent
protection for a non-renewable period of ten years.  This is inconsistent with Article 33 of TRIPS,
which stipulates that the term of protection for pat ents shall not end before the expiration of a period
of 20 years from the date of filing.  In addition, it is preferable that patent term extensions be
accommodated especially for those instances in wh ich the patent term is eroded due to regulatory
delays.
Paragraph 116 of the Secretariat Report notes  that under TRIPs Article 27, Nicaragua is
required to provide for the availability of patents for all inventions in all fields of technology.
However, under TRIPS Article 65(4) developing countries may delay protection by patents of product
inventions in "areas of technology not so protectable in its territory" for additional period of five
years, i.e. until 1 January, 2005, subject to other provisions of TRIPS.  These provisions wouldinclude the requirements of the "mail-box rule" provided by Article 70(8) and the "exclusive
marketing rights" provided for in Article 70(9).  Since Nicaragua has not established the necessary
procedures for filing patent applications under the TRIPS provisions, Nicaragua has not complied
with the Article 70(8) and 70(9) of TRIPS.
- When does Nicaragua intend to comply with Article 70(8) and Article 70(9) of TRIPS to
extend patent protection to pharmaceutical and agricultural chemical products?
Nicaragua gives patent protection to pharmaceutical products and agricultural chemicals
under the old Patent Law of 1899, so any person w ho invents a product, method or process may file
an application and the Government grants a pate nt guaranteeing ownership for a maximum period of
ten years.
For example, since 1985, Nicaragua has granted protection to chemical and pharmaceutical
products of Bayer Aktiengesellschaft, Ciba Geigy A.G., American Cyanamid Company, under patents
860, 880 and 892 respectively.
Nicaragua hopes to extend the term of protection to 20 years before the end of 1999 in order
to harmonize domestic legislation with the TRIPS provision that "the term of protection available
shall not end before the expiration of a period of 20 years counted from the filing date".
Paragraph 117 of the Secretariat Report indicates that the new plant varieties law is being
drafted according to the requirements of the 1978 Convention of UPOV, rather than the 1991
Convention.
- Does Nicaragua plan to introduce new legislation to meet the requirements of the 1991
Convention?
On 20 October this year, Nicaragua's Legislative Assembly adopted the Law on the Protection
of Plant Varieties, and expects to proceed with accession to the 1978 Act.  It should be noted that the
1978 Act closed in April 1998.  Like other countries, Nicaragua's case was examined by the UPOV
Council, which agreed that it could accede to the Act.  In addition, the bilateral Intellectual Property
Rights Agreement between the Government of Nicaragua and the Government of the United States
provides an option between Act 78 or Act 91.WT/TPR/M/61
Page 35
The preparation of draft legislation on patents, utility models, industrial design,
layout-designs of integrated circuits, and protection of plant variety are positive steps forward in
providing adequate and effective intellectual property right protection.
- Does Nicaragua plan to review these laws for TRIPs compliance?
Nicaragua is promoting the modernization of its intellectual property legislation so as to
guarantee the rights of owners, end piracy, improve the conditions for the respect of private property
and meet its international obligations.  The bilateral agreement with the United States, etc.
Consequently, compliance with the TRIPS Agreement is only the point of departure for the protection
of intellectual property.
Paragraph 119 of the Secretariat Report states that computer software is not explicitly
protected.  TRIPS Article 10(1) requires that computer programs be protected as literary works under
the Berne Convention (1971).
- Will this TRIPS protection be included in Nicaragua's new copyright law?  When does
Nicaragua expect the new copyright law to be passed and put into effect?
Nicaragua has raised protection for copyright and related rights to the level of the TRIPS.
The Law on Copyright and Related Rights has been approved and has been in force since
26 August 1999.
Regarding the Berne Convention, by Legislative Decree No. 23-76 of October 1999
Nicaragua decided to accede to the Convention, therefore, Nicaragua protects computer programs as
literary works.
Paragraph 121 of the Secretariat Report indicates that the new copyright law will cover only
protection periods, sanctions, and administrative guidance.
- Is this the extent of the intended coverage?  If so, does Nicaragua plan to introduce another
bill in order to bring its copyright regime up to TRIPS standards?
Law No. 312 does not only cover the term of protection, sanctions and administrative
guidelines, but contains a whole series of regulations guaranteeing protection of both the moral and
economic rights of the author, related rights, the rights of management firms, producers ofphonograms, broadcasting organizations, as well as the organizational regulations of the Nicaraguan
National Office of Copyright and Related Rights.
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