Venezuela WT/TPR/S/108
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III. TRADE POLICY BY MEASURE
(1) GENERAL OVERVIEW
1. Since its last Trade Policy Review in 1996, Venezuela has overhauled many of its laws and
regulations, in a process involving alterations to it s trade policy and administrative reforms.  A new
customs law has been passed, and procedures have been simplified.  In March 2001, Venezuela
introduced a new customs valuation regime to implement the WTO Agreement on Customs
Valuation.  It is difficult to analyse the impact of  these reforms, firstly because they are so numerous,
far-reaching and recent (most of them have been introduced since 1999), and also because they arebeing reviewed and amended.
2. Venezuela applies the Common External Tariff of the Andean Community, with some
exceptions.  In 2001, the simple average MFN tariff was 12 per cent, the same level as recorded in the
previous 1996 Trade Policy Review, the average for agricultural products (WTO definition) was
14.6 per cent, and for other goods 11.6 per cent.  Venezuela has bound in the WTO its entire tariff at ageneral level of 35 per cent for non-agricultural products and of between 10 per cent and 135 per cent
for agricultural goods.  Under the Andean Price Band System, Venezuela can apply duties that vary
with agricultural prices.  Tariff quotas are applied on 17 tariff lines corresponding to agricultural
products; these have been administered through import licences since 2000.
3. Venezuela grants tariff preferences on imports from other Latin American and Caribbean
countries, while imports from its Andean Community partners enter the country duty-free.
4. Venezuela has made active use of contingency measures in recent years.  As at 30 June 2002,
there were 19 definitive anti-dumping duty orders in place on a variety of products, mainly steel,
chemicals and footwear.  Three countervailing duty orders have also been imposed on cheese from the
European Union.  Venezuela introduced safeguards legislation in 1999, and by mid-2002 had
conducted five investigations, although duties have not been applied.
5. Venezuela is not a party to the WTO Plurilateral Agreement on Government Procurement.  In
public procurement it grants a 5 per cent margin of preference to local suppliers.  The standards and
technical regulations it applies are generally based on international standards.  Venezuela has adopted
some 300 technical regulations, but, as at September 2002, had only notified 24 of these to the WTO
Committee on Technical Barriers to Trade.  Although Venezuela applies several sanitary and
phytosanitary measures, as at June 2002 it had not made any notification to the WTO Committee onSanitary and Phytosanitary Measures.
(2) 
IMPORT REGIME
(i) Customs procedures and documentation
6. Since 1996, Venezuela has introduced a new customs law in order to simplify import
procedures and required documentation.  The General Customs Law of 25 May 1999 establishescriteria for the organization, functioning and oversight of the customs regime;  it requires the rates and
amounts to be paid by the users of customs services  to be determined, within certain limits, according
to the value of the Tax Unit (U.T.), or as an ad-valorem percentage of the value of the imports inWT/TPR/S/108 Trade Policy Review
Page 34
question.  The value of the U.T. is determined annually; in 2001, it was worth 13,200 bolivares, or
about US$18.60.1
7. The Ministry of Finance is responsible for organizing oversight, inspection and safeguard
services for the customs administration, and for drafting, proposing and issuing customs regulations,
including those relating to the Customs Tariff, customs valuation, decontrol and exemption from
duties, operations to determine the origin of merchandise, establishment of reference prices,
application of import restrictions, and for carrying out customs operations in general.  Administration
of the customs service is the responsibility of the National Customs Intendency, which is part of theIntegrated National Tax Administration Service (SENIAT).  The latter, attached to the Ministry of
Finance, is responsible for the administration of all domestic taxes and customs duties.  The structure
of the Venezuelan customs service is divided into principal, subordinate (subalternas)  and specially
authorized (habilitadas)  customs offices.  There are 17 principal customs offices, each with their
respective subordinate offices.
8. The documents needed for customs clearance include the customs declaration, a definitive
commercial invoice and the bill of lading.  Imports eligible for preferential regimes require a
certificate of origin.  In the case of products subject to sanitary, security or other controls, a sanitary
certificate or authorization of sale has to be pres ented.  Customs procedures must be carried out by a
customs agent of Venezuelan nationality.  Where a legal entity acts as customs agent, the individualson its staff should be Venezuelan nationals.
9. The Customs Law requires imported merchandise to be held in warehouses while customs
procedures are completed.  The cost of warehous ing is between 0.005 U.T. and 0.1 U.T. per cubic
metre or per ton, or between 1 per cent and 5 per cent of the f.o.b. or c.i.f. value of the merchandise.
The authorities state that customs clearance takes two days on average, depending on the customs
office involved.  To simplify procedures and reduce the time taken to clear merchandise through
customs, an automation system is being implemented.  As at September 2002, only the La Guairacustoms office was clearing imports through automated customs procedures; although the Mérida
customs had been automated, the system was not yet functioning.  In the other customs offices import
clearance procedures are completed manually, although automation is expected shortly in Maracaibo,
Puerto Cabello, San Antonio Táchira and Valencia.  Exports are processed manually in all customs
offices.
10. Decisions taken by customs can be challenged, by appealing in writing to the official who
took the decision, within 25 working days following notification thereof.  A ruling must be given
within four months of the date on which the appeal was lodged.  Customs decisions can also be
appealed, simultaneously or otherwise, in the courts.
11. To deal with the problem of smuggling, the authorities have set up an Anti-Contraband
Commission presided by SENIAT.  Sub-commissions have also been created in each customs office,
and anti-contraband legislation is currently being drafted.
(ii) Customs valuation
12. Since 1996, Venezuela has revamped its customs valuation regime in order to implement the
WTO Agreement on Customs Valuation and the And ean Declaration of Value.  Since March 2001,
the determination of customs value has been governed by the WTO Agreement on Customs
                                                     
1 The U.T. was worth 2,700 bolivares in 1996; 5,400 bolivares in 1997; 7,400 bolivares in 1998; 9,600
bolivares in 1999; and 11,600 bolivares in 2000.Venezuela WT/TPR/S/108
Page 35
Valuation; Decisions 378 and 379 of the Cartagena Agreement Commission; Decree 655 published in
Extraordinary Official Gazette No. 5.436 of 4 February 2000, containing Decisions 378 and 379;
Finance Ministry Resolution No. 668 of 11 December 2000, published in Official Gazette No. 37.100of 15 December 2000, adopting the Andean Declaration of Value (DAV) form; and SENIAT internal
circular No. INA/DV/I-019 of 30 Ma y 2000, containing detailed instructions and working procedures
for implementing the WTO Agreement on Customs Valuation.
2
13. The new customs valuation regime was notified to the WTO on January 2002 and reviewed
on 6 May 2002.3  The authorities have pointed out that the review was completed without follow-up
questions.  Alongside the new customs valuation regime, new forms came into use, namely the DAV
and DAV-A (additional form).4  Presentation of the new DAV form, which replaced the previous
customs declaration form A, became compulsory as of 16 March 2001, as the official document for
determining the customs value of merchandise imported into Venezuela.  In mid-2002, the authorities
were considering introducing a single customs declaration form (DUA).  Until this is authorized,FORM B and FORM C-80 constitute the customs import declaration and have to be submitted
together with the DAV.
14. Since 16 March 2001, customs officials have been required to comply with Decisions 378 and
379 and the WTO Agreement on Customs Valuation.  The Andean legislation, based on that WTO
Agreement, makes transaction value the primary valuation method; other methods become applicableonly on an exceptional basis and in strict sequential order when transaction value requirements are not
complied with.  Determination of the transaction value is the responsibility of the importer, acting
through the customs agent, and is governed by the provisions of the WTO Agreement on Customs
Valuation.  SENIAT is responsible for verifying th e transaction value declared by the importer.  This
task is carried out directly by its Customs Operation Divisions.
15. Decision 378 allows member countries to use reference prices for valuing merchandise on a
limited and transitional basis only.  SENIAT internal circular INA/DV/I-019, of 30 May 2000,
establishes that reference prices shall be used only when the successive valuation methods have been
exhausted, and when there are sufficient discrepancies and abnormalities in the value to warrant
further verification and a request for supporting documentation from the importers concerned.
16. Venezuelan legislation allows reference prices to be established to help verify the truth or
accuracy of any information, document or declaration submitted for customs valuation purposes.  TheMinistry of Finance has the power to determine reference prices.  Resolution 4.068, of
2 September 1998, establishes reference import prices for a number of textile and apparel products,
classified in NANDINA chapters 51-55 and 56, 58, 59, 60 and 62.  Prices are quoted in US dollars,
per kilo of gross weight and are valid for 180 days following their publication in the Official Gazette.
Reference prices for the first semester of 2002 were established by Joint Resolution 682 of theMinistry of Finance and 004 of the Ministry of Production and Trade (MPC) of 7 January 2002
(Official Gazette No. 37.372 of 25 January 2002).
                                                     
2 Decision 378 adopts the Andean rules on customs valuation. Decision 379 adopts the Andean
Declaration of Value, which is the official form used for establishing the customs value of merchandise
imported into national territory.
3 WTO document G/VAL/N/1/VEN/1 of 22 January 2002.
4 This form is of compulsory use only when the number of items needed to describe the imported
merchandise exceeds those available in the main DAV form, and to enter information from several commercialinvoices issued by the supplier without sequential numbering.WT/TPR/S/108 Trade Policy Review
Page 36
(iii) Rules of origin
17. Venezuela applies both preferential and non-preferential rules of origin.  Special rules of
origin are applied on imports covered by trade agreements or international conventions that imposesuch requirements, namely: the Andean Community; tr eaties signed as part of the Andean Community
(i.e. with Argentina and Brazil); the Latin American Integration Association (LAIA); the bilateral
Venezuela-CARICOM agreement; the Chile-Venezuela Economic Complementation Agreement; the
partial-scope agreements with Costa Rica, C uba, El Salvador, Guatemala, Guyana, Honduras,
Nicaragua, Paraguay, Trinidad and Tobago, and Uruguay; and the Group of Three Agreement (G-3).Venezuela participates in the WTO Committee on Rules of Origin, and has notified the WTO of non-
preferential rules, as well as preferential rules of origin applied by the Andean Community and LAIA.
18. Venezuela applies the Andean common rules of origin regime, as defined in Decisions 416
and 417 of 30 July 1997.  Decision 416 confers Andean origin on the following products: those
entirely produced and wholly prepared using materials originating in the territory of membercountries; those that incorporat e non-Andean raw materials and und ergo a change of NANDINA tariff
classification; and products assembled in a member country, subject to limits on the proportion of
non-originating materials used.  In the latter case, the c.i.f. value of non-originating materials may not
exceed 50 per cent of the f.o.b. export value of the final product (60 per cent in the case of Bolivia and
Ecuador).  Compliance with rules of origin results in the issuance of a certificate of origin.
19. Decision 417 of the Andean Community Commi ssion lays down criteria and procedures for
setting specific origin requirements.  Its purpose is to establish different conditions than the general
criteria for determining origin in certain sectors or products.  Specific origin requirements may be
more flexible or more stringent than the general rule.  In the Venezuelan case, specific origin
requirements are applied mainly to a variety of sectors such as oil, chemicals, textiles and
automobiles.  Specific origin requirements are established by the Secretariat General of the Andean
Community, acting on its own initiative or in response to a request from a member country.  Anexample of a specific origin requirement requested by Venezuela is the one applied to fuels.  The
authorities have reported that these requirements grant Andean origin to goods produced by
Venezuelan refineries in Curaçao using crude oil obtained from within the subregion.
20. The LAIA general rules of origin regime, consolidated in Resolution 252 of 4 August 1999,
apply to trade between Venezuela and other LAIA members, although most of the agreements containspecific provisions.
21. Venezuela applies non-preferential rules of origin only to imports of goods that are similar to
products subject to anti-dumping duties or countervailing measures.  Joint Resolution 3141 of the
Ministry of Development and 2511 of the Ministry of Finance makes it compulsory to certify the
origin of products, classified under any tariff heading subject to anti-dumping or contervailingmeasures.
5
22. In the framework of the WTO Committee on Rules of Origin, Venezuela has argued against
using the substantial-transformation principle in determining the origin of petroleum products.
Instead, it recommends consideration of criteria such as ownership of productive inputs and value-
added.  Venezuela argues that refining operations, whether on a commission or on a contract basis,should be considered as services, and as such, origin should be determined on the basis of ownership
of the inputs used.  This criterion is recognized as a key element in the Central Product Classification,
which is the nomenclature used in negotiations on trade in services.  Venezuela’s position falls within
                                                     
5 WTO document G/RO/N/14 of 2 December 1996.Venezuela WT/TPR/S/108
Page 37
the guidelines set down in Andean Community Decision 417, which offers a series of possibilities for
determining origin, including the use of subregional materials.
(iv) Tariffs
23. The Tariff Division of the National Customs Intendency, of the Integrated National Tax
Administration Service (SENIAT) attached to the Ministry of Finance, is responsible for the
administration of the Customs Tariff.  Amendmen ts thereto are published through ministerial
resolutions issued by the Ministry of Finance, subject to prior approval by the Council of Ministers, as
provided for under the General Customs Law.  The Tariff is promulgated by a decree issued by thePresident acting through the Council of Ministers, and published in the Official Gazette.  The
authorities stressed that, as a member of the Andean Community, Venezuela has decided to exercise
its power of amendment over its Customs Tariff, in accordance with Andean Community rules on this
subject.
(a) Structure24. The Venezuelan Customs Tariff contains 6,692 subheadings at the eight-digit level, of which
86 are defined to 10 digits.  Since 1990, the tariff has been expressed using the Tariff Nomenclature
of the member countries of the Cartagena Agreement (NANDINA), which is based on the
Harmonized Commodity Descripti on and Coding System (HS).
25. All subheadings of the Venezuelan tariff are subject to ad-valorem duties levied on the c.i.f.
value of the imports in question.  The Customs Law provides that tariff duties may be specific, ad-
valorem or mixed, but may not exceed 500 per cent of the value of the imported merchandise.
Although a total of 48 tariff subheadings at the ten-digit level (classified in NANDINA chapter 27)
are specified as “mixed taxes”, the authorities have made clear that these duties only serve as a basis
for calculating domestic taxes and are not specific duties levied on imports.
26. Venezuela applies the Common External Tariff (CET) of the Andean Community on imports
from third-party countries, with a limited number of exceptions.  The CET came into force on1 February 1995, and has a four-tier structure: 5 per cent, 10 per cent, 15 per cent and 20 per cent, as
set out in Annex 1 of Decision 370.
27. Cases relevant to Venezuela that receive special treatment (i.e. departures from what is
stipulated in the CET) are included in Annexes 3 and 4 of Decision 370, updated by Decision 465 of
25 May 1999.  Annex 3 contains a list of 38 tariff subheadings which differ from the CET at the 0 percent level (the zero list).  These subheadings receive special treatment since they contain products
relating to health, education and mass communication, and they are subject either to international
agreements or social policies in member countries .  There is also a List of Non-Produced Goods –
subheadings for which Venezuela and other Andean Community countries may lower the tariff to
zero in the case of raw materials or capital goods (General Secretariat Resolutions 492, 520 and 620of 17 May 2002 – the latest revision of the list of goods not produced in the Andean Community).
28. Annex 4 contains a list of exceptions to the CET specific to each country.  Initially,
Venezuela put 230 tariff subheadings on this list.  Decision 370 provided for the gradual removal of
Annex 4 exceptions, for inclusion in Annex 1 of the CET.  Subsequently, Decision 466 postponed
until June 2000 the final deadline established in Decision 370 for the removal of CET exceptions.  Bymid-2002, however, Venezuela still had 33 subheadings to eliminate from Annex 4.WT/TPR/S/108 Trade Policy Review
Page 38
29. Under Andean regulations, Venezuela is entitled to apply variable duties that raise or lower
the applied tariff for a group of agricultural products whose international prices the authorities deem
to be subject to marked fluctuations (see infra ).
30. Venezuela levies a customs service charge of 1 per cent on the value of imported
merchandise.  Between 1998 and 2000, the rate charged was 2 per cent.  This is levied on all imports,
including those from other Andean Community count ries.  Revenue obtained from the service charge
amounted to 0.28 per cent of GDP in 2000, or 1.76 pe r cent of total import value.  The customs
service charge is classified by the Ministry of Finance as a non-tax income.  This charge has not beenincluded by Venezuela in its WTO Schedule of Concessions.
6
(b) Tariff levels
31. The average tariff in 2001 was 12 per cent, or 13 per cent with the customs service charge.
Including average variable duties applied during the course of the year, the average tariff was 12.4 per
cent.  The Venezuelan tariff was applied at four basic levels in 2001, namely 5 per cent, 10 per cent,15 per cent and 20 per cent, with exceptions at 0 per cent and 35 per cent.  The most common rate is
5 per cent, which is applied to 33.5 per cent of all tariff lines (see figure III.1).
32. In 2002, the average tariff edged up to 12.2 per cent, because of higher rates charged on a
number of steel products.  In addition, two extra levels were introduced, with duties of between 25 per
cent and 30 per cent applied to some of these products.
7
33. In 2001, agricultural products (WTO definition) were subject to an average applied tariff
(including the customs handling charge) of 15.6 per cent, whereas for non-agricultural products the
equivalent figure was 12.6 per cent, and for petroleum products, 11 per cent.  When average variable
duties applied throughout the year are included, the average applied tariff for agricultural products
rises to 18.4 per cent.  Product categories with relatively higher levels of protection include cereals,
live animals, and dairy products, beverages (including alcoholic ones), and fishing products (see
table III.1).
34. The CET applied by Venezuela is subject to tariff escalation, since the average tariff rates
applied to final products are higher than on semi-processed goods, which in turn are higher on average
than the rates for raw materials.  This escalation ex ists in all the main branches of the manufacturing
sector, but is more pronounced in the metal (particularly steel), non-metallic minerals, wood and
petroleum industries.  The authorities have pointed out that this is consistent with the patternsestablished in Andean Community Decision 370.
                                                     
6 Nonetheless, according to the memorandum of understanding relating to the interpretation of
paragraph 1 (b) of GATT 1994, other duties and charges are bound at their 15 April 1994 levels. In the case ofthe customs users' fee, the level would be 1 per cent.
7 In late September 2002, it was impossible to make a complete analysis of the 2002 Tariff, including
the effect of average variable duties, since these can only be calculated once the year has ended.Venezuela WT/TPR/S/108
Page 39
05001,0001,5002,0002,500
Tariff
frequency5 1 01 52 02 53 03 5
Note:  This analysis uses only ad valorem rates.   Figures in parentheses represent the average of all tariff lines.
Source:  WTO Secretariat estimates based on data provided b y the Venezuelan authorities.Figure III.1
Distribution of applied MFN tariff, 2001
Number of tariff lines
(0.6)(33.5)
(16.3)(24.1)
(0.2)(25.3)
(0.0) (0.0)
Table III.1
Summary analysis of Venezuelan tariffs, 2001
Category
Number of
linesAverage
applied tariffIncluding
variable
dutiesIncluding
variable duties
and customs
service chargesRangeCoefficient of
variation
(%) (%) (%) (%)
Total 6,692 12.0 12.4 13.4 0-81.3 0.6
By WTO category
Agricultural products 871 14.6 17.4 18.4 5-81.3 0.6
Live animals and products thereof 91 16.8 20.2 21.2 5-40 0.5
Dairy products 34 19.6 21.5 22.5 18-23 0.1
Coffee, tea, cocoa, sugar, etc. 157 17.0 19.8 20.8 5-40 0.4
Fruit and vegetables 196 15.8 15.8 16.8 5-20 0.2
Cereals 29 12.4 27.1 28.1 5-40 0.7
Beverages and spirits 45 19.2 19.2 20.2 10-20 0.1
Tobacco 12 16.7 16.7 17.7 10-20 0.3
Non-agricultural products (excluding oil) 5,799 11.6 11.6 12.6 0-42 0.5
Fish and fishing products 129 18.2 18.4 19.4 5-42 0.3
Textiles and apparel 912 18.3 18.3 19.3 5-20 0.2
Leather, rubber, footwear and travel
articles190 12.9 12.9 13.9 0-20 0.4
Transport equipment 174 13.4 13.4 14.4 0-35 0.6WT/TPR/S/108 Trade Policy Review
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Category
Number of
linesAverage
applied tariffIncluding
variable
dutiesIncluding
variable duties
and customs
service chargesRangeCoefficient of
variation
(%) (%) (%) (%)
Oil 21 10.0 10.0 11.0 5-15 0.3
By ISIC categorya
Agriculture and fishing 372 11.6 12.4 13.4 5-40 0.5
Mining 114 5.5 5.5 6.5 5-15 0.3
Manufacturing industry 6,205 12.1 12.5 13.5 0-81.3 0.6
By HS section
01 Live animals and animal products 248 17.0 18.3 19.3 5-40 0.4
02 Vegetable products 348 12.9 14.3 15.2 5-40 0.5
03 Fats and oils 62 16.9 29.9 30.9 5-81.3 0.6
04 Prepared foodstuffs, etc. 249 18.3 21.1 22.1 5-42.2 0.4
05 Minerals 191 6.1 6.1 7.1 0-15 0.4
06 Chemical products 1,279 7.2 7.4 8.4 0-40 0.6
07 Plastic and rubber articles 271 13.1 13.1 14.1 0-20 0.4
08 Hides and skins 80 11.8 11.8 12.8 5-20 0.5
09 Wood and articles of wood 97 12.4 12.4 13.4 5-20 0.4
10 Pulp, paper, etc. 196 13.1 13.1 14.1 0-20 0.4
11 Textiles and textile articles 897 18.1 18.1 19.1 5-20 0.2
12 Footwear and headgear 57 18.8 18.8 19.8 15-20 0.1
13 Articles of stone 161 14.1 14.1 15.1 5-20 0.2
14 Precious stones, etc. 56 12.4 12.4 13.4 5-20 0.3
15 Base metals and articles thereof 666 10.8 10.8 11.8 0-20 0.5
16 Machinery 1,153 10.2 10.2 11.2 0-20 0.5
17 Transport equipment 185 13.2 13.2 14.2 0-35 0.6
18 Precision instruments 310 7.5 7.5 8.5 5-20 0.6
19 Arms and ammunition 25 17.0 17.0 18.0 5-20 0.3
20 Miscellaneous manufactured articles 153 17.9 17.9 18.9 5-20 0.2
21 Works of art, etc. 8 10.0 10.0 11.0 0-20 1.1
a ISIC (Rev.2) classification, except electricity (1 line).
Source: WTO Secretariat estimates, on the basis of data supplied by the Venezuelan authorities.
35. The average tariff actually received (fiscal revenue at the border divided by the value of
imports) amounted to 8.1 per cent in 2000, compared to the 10 per cent recorded in the previous Trade
Policy Review in 1996.  Import duties represented 4.7 per cent of central government revenues and1.2 per cent of GDP.
(c) Tariff bindings
36. Venezuela has bound all its tariff lines at ad valorem  rates in the WTO.  As a result of the
Uruguay Round, manufactured products were bound at a general level of 35 per cent, which was
attained in five stages of reduction.  The only exceptions are products in the automotive sector, whichwere bound at 40 per cent, and products subject to lower bound rates under commitments made when
Venezuela joined the GATT in 1990.
37. Agricultural products were bound at rates between 10 per cent and 135 per cent (in force as
from 2004).  Most were bound from 1995 onwards; bound rates in the framework of theVenezuela WT/TPR/S/108
Page 41
“tariffication” process have a period of application that runs until 2004.8  The simple average bound
tariff on agricultural products in 2004 will be 80.7 per cent.
(d) Tariff preferences38. Imports from the Andean Community (except Peru), across the entire tariff universe, enter
Venezuela duty-free.  Venezuela also grants preferential treatment to imports from Mexico under the
G-3 Agreement.  When G-3 tariff reductions are fully implemented in 2004, most imports from
Mexico will enter the country at a zero rate.  Venezuela also grants preferences through agreements
made within LAIA, to Central American and CA RICOM countries, and also through the agreement
with Cuba and under the Global System of Trade Preferences (GSTP).  Preferences reduce the MFN
tariff by between 10 per cent and 100 per cent, resulting in an average applied tariff ranging from near
zero for Peru and Chile (under the Economic Complementarity Agreement) to 10.4 per cent in the
case of Argentina (see Table AIII.1).
(e) Tariff concessions39. Venezuela has suspended application of the CET, as allowed by Decision 370 in the case of
temporary supply shortages, for a group of products mostly falling in HS chapters 28, 29, 30 and 72.
In 2001, this suspension was only applied to nine tariff subheadings.  Also under Decision 370,
Venezuela maintained a zero rate for products in NANDINA chapter 27 until 31 December 1995,
since when it has raised the tariff on such products to 5 per cent.
40. Under the Customs Law, the personal effects of the President of the Republic are exempt
from customs duties, as are goods entering duty-free zones, ports, free warehouses or bonded
warehouses.  The Ministry of Finance can grant total or partial exemption from customs levies for,
among other things, items destined for national, state and municipal public administration, items
needed for the public service, and items destined for industry, livestock breeding, transport, mining,
fishing, manufacturing, and products classified as prime necessities.
9  In the latter case, exemption
does not apply when there is sufficient domestic production; the MPC has to certify in writingwhether such is the case, in response to requests from interested parties.
41. Suspension of duties on items destined for industry, agriculture, livestock breeding, transport,
mining, fishing, manufacturing and other cases of products classified as prime necessities, is
applicable if the requirements established in the Regulations to the Customs Law on decontrol,
suspension and other special regimes are complied with.  Imports under th e Temporary Admission for
Inward Processing regime is one such case.  Under this regime, inputs, raw materials or parts of
foreign origin, enter Venezuelan territory, with import duties suspended, for subsequent re-export
following their processing, combination, mixture, re furbishment, repair or assembly.  The deadline for
re-exportation is one year after the date of arrival of the final shipment, in cases where the
merchandise arrives in a number of separate shipments.  In the event that the merchandise has to becleared for home use, the interested party must request the corresponding authorization from the
principal customs office in the locality where the goods entered the country.  The latter will assess
import duties, together with additional surcharges and overdue interest, as appropriate.
                                                     
8 Schedule LXXXVI, Corrigendum, part I, section I-A, 25 March 1994.
9 Customs Law of 1999, Title V, on Liberation and Suspension Regimes. Chapter I, on Liberation from
Duties.WT/TPR/S/108 Trade Policy Review
Page 42
(f) Tariff quotas
42. Based on the minimum access commitment the WTO Agreement on Agriculture, in 1995
Venezuela is entitled to administer tariff quotas for 62 headings at the NANDINA four-, six- or ten-digit level.  The final bound rates are 15 per cent, 20 per cent, 30 per cent and 40 per cent for in-quota
imports and range between 10 per cent and 135 per cent for imports outside the quota.  The authorities
reported that, in practice, the duties applied to both in- and out-of-quota imports correspond to the in-
quota bound rates.  The quotas for most products were established at their final levels in 1995; the
remainder will be implemented in 2005, with final levels about 67 per cent above the initial ones.Imports of goods for which Venezuela is entitled to apply quotas behaved erratically during 1995-98
(see Table AIII.2).
43. Venezuela did not administer tariff quotas until 1997, when it adopted a quota mechanism for
imports of yellow corn (1005.90.11) and sorghum (1007).
10 Prior to 1997, Venezuela admitted
products subject to quotas without any restriction other than a tariff no higher than the in-quota boundrate.  In 2000, Venezuela began to administer tariff quotas through import licences for 15 additional
products.
11  Licenses now cover a total of 70 subheadings.  Imports of other products for which
Venezuela is entitled to apply quotas under the WTO Agriculture Agreement are subject to a tariff-
only regime at a rate equal to or below the bound rates for in-quota imports.
44. Import licences for products subject to tariff quotas are administered by the Directorate
General of Agricultural Marketing of the Ministry of Agriculture and Land (MAT).12  Quota volumes
are determined annually, except in the case of dairy products and sugar, which are set on a quarterly
basis.  Quotas are allocated in accordance with historical import volumes, applying an adjustment
factor reflecting the share of each applicant during the last two years.  In addition, 10 per cent of the
quota is reserved for new importers.  Quota volumes are published and distributed without
discrimination as to the origin of the merchandise.  Quotas can be extended to imports from other
Andean Community countries, but this involves  a special safeguard contained in the Andean
legislation.  The authorities state that Venezuela has invoked this clause for sugar and a number of
oleaginous products.
(g) Variable import duties
45. Under the Andean Price Band System (SAFP) , which has been in place since July 1995,
Venezuela applies variable levies on imports of a number of products from non-Andean Communitycountries.  The system consists of two key product categories: “markers”, which are agricultural
products whose international prices are used for calculating the bands; and associated or “linked”
products, obtained from the processing or combination of marker products, or substitutes for them.
The marker products are: rice, barley, yellow and white maize (corn), soybeans, wheat, raw soybean
oil, raw palm oil, raw and refined sugar, milk, poultry meat and pork meat.  Venezuela has beenapplying the price band for yellow maize (corn) si nce 1997.  Although there is no formal link between
the SAFP and tariff quotas, products included under the SAFP have generally also been subject to
tariff quotas since 2000.
                                                     
10 WTO document G/AG/N/VEN/20 of 6 June 2001.
11 Cane sugar (NANDINA 17.01); milk and cream, not concentrated (04.01); milk in powder, of a fat
content not exceeding 1.5 per cent (0402.10); milk and cream, concentrated, in solid form, of a fat content
exceeding 1.5 per cent (0402.21); cheeses (04.06); soybeans (12.01); palm nuts and kernels (12.07); soybean oil
(15.07); other oils (15.10); palm oil (15.11); sunflower or safflower oil (15.12); coconut oil (copra) (15.13);other vegetable fats and oils (15.15); animal or vegetable fats and oils (15.18); soybean oilcake (23.04).
12 Since the entry into force of Decree 1.475  of 17 October 2001, published in Official Gazette
No. 37.305 of that date.Venezuela WT/TPR/S/108
Page 43
46. The parameters used to calculate variable import duties in the SAFP include ceiling, floor and
reference prices.  Duties are ad-valorem.  The duty level is inversely related to the international
reference price of the marker product.  Additional variable duties are applied to marker and linkedproducts whenever the international c.i.f. reference price falls below the c.i.f. floor price.  If the
reference price is equal to the floor or ceiling pric e, or is between the two, no additional variable duty
or reduction is applied.  If the reference price is above the ceiling price, the tariff is reduced or
suspended.  Calculation of the duty on a linked product is based on the value established for its
specified marker product (Table IV.1 in WTO, 1996).
47. Under Decision 430, members of the Andean Community are required to restrict variable
duties in the SAFP to the level needed for comp liance with their WTO tariff binding commitments.
Although the formula for calculating variable duties ma y result in very high rates if the international
reference price falls steeply, the maximum applied level is limited in practice to the WTO bound rate.
In the case of products that are also subject to both variable duties and tariff quotas, Venezuela inpractice applies the in-quota bound rate (Schedule I-B), with a maximum of 40 per cent.  For some
products not subject to tariff quotas, applied tariffs run as high as 81.3 per cent.
48. In the event of a significant increase in prices, above the ceiling, variable duties may be
negative and the overall tariff may fall to zero.  The authorities have noted that duties were negative in
the case of yellow maize (corn) (September 1995-November 1996, and March 1997); white maize(corn), wheat and barley (June-August 1995, February and March 1997); soybeans in the husk
(December 1995-December 1997); soybean oil (April 1995-March 1997, and February 1998-February
1999); and palm oil (April 1995-March 1996, June 1996, October 1996-March 1997, and February
1998-February 1999).
49. Since 1995, the SAFP has used both indicative and reference prices to determine the band.
The reference price is used as the basis for calculating variable import duties on marker products, and
for tariff reductions or elimination.  Reference prices are determined on a fortnightly basis, through aresolution issued by the Secretariat General of the Andean Community.  They consist of average
international prices (daily, weekly or fortnightly) on a reference international market, expressed in
US$ per metric ton.  The reference price applied to imports reaching port between the 1st and 15th of
each month is the average of observed prices during the first 15 days of the previous month; in the
case of goods arriving in port as from the 16th day of each month, the reference price is the average ofdaily prices observed during the second fortnight of the previous month.  The limits of the band
(ceiling and floor prices) are calculated for each marker product, using average monthly prices on the
international reference market during the 60 months preceding October of the current year, rejecting
any outlier values occurring during that period.
50. The floor and ceiling prices applied by Venezuela for yellow corn and pork meat, up to
March 1997, and for whole milk up to March 1998, differ from those of the SAFP under a temporary
exception authorized for Venezuela in Article 15(c) of Decision 371.  Harmonization of floor and
ceiling prices among Andean countries was achieved through Decisions 402 (January 1997), 403
(April 1997) and 410 (July 1997).  The width of the bands varies between products and according to
the period.
(h) Tariff surcharges
51. Through Decree 2.484 of 15 April 1998, Venezuela imposed a 15 per cent surcharge or
additional tax on merchandise imports encompassing 934 tariff subheadings, excepting imports from
countries party to the Cartagena Agreement and exemptions negotiated under the partial- and
regional-scope agreements signed under the LAIA.  The Secretariat General of the AndeanWT/TPR/S/108 Trade Policy Review
Page 44
Community, in conjunction with the Andean Court of Justice, ruled that this surcharge constituted a
levy other than the CET, and thus contravened Decision 370.13  Venezuela then repealed the
additional surcharge through Decree 860 of 14 June 2000, published in Official Gazette No. 36.974on 16 June 2000.
52. In November 2001 a 1 per cent tariff surcharge was imposed on the f.o.b. value of imports for
a five-year period.  This surcharge was created by an amendment introduced by legal decree partially
reforming the Banco de Comercio Exterior Law, Decree 1.455 of 20 September 2001 (Official
Gazette, 22 November 2001).  The decree converted the transfer made by the National Treasury in theform of a special contribution to BANCOEX, equiva lent to 1 per cent ad-valorem on imports of goods
and services, into a tariff surcharge of 1 per cent to be paid directly by the importer when paying
import duties.  As of September 2002, however, the surcharge had still not been applied since no
regulation had been issued for its implementation.
(v) Other charges and levies
(a) Value-added tax
53. The use of value-added tax (VAT) was established through Decree Law 126 of 5 May 1999.
The tax is levied on both imported and domestically produced goods and services.  The law
establishes that the tax shall be levied at a rate of between 8 per cent and 16.5 per cent, to be set in the
budget each year.  From 1 August 2000 to the end of August 2002, the rate was 14.5 per cent.
14 On
30 May 2002, the Government announced an increase in the VAT rate to 16 per cent, to take effect on
1 September that year.  Value-added tax replaced the 16.5 per cent tax on luxury consumption and
wholesale trade applied between 1994 and 1999.  In 2000, revenue from VAT represented 3.23 per
cent of GDP and provided 17 per cent of total government income.
54. The VAT tax base for locally produced goods consists of the invoiced price of the good in
question, provided this is not lower than the current market price.  For alcoholic beverages, spirits and
cigarettes, and other tobacco products, the tax base consists of the sale price of the product less otherdomestic taxes paid.  For imported goods, the tax base is the customs value of the goods, plus duty
and customs service charge, together with any surcharges, countervailing or anti-dumping duties and
overdue interest.  In the case of services, including imported ones, the tax base is the total invoiced
value including physical goods supplied, if any.
55. Temporary imports, along with sales made in areas of Venezuelan territory that are subject to
special customs regimes, including duty-free zones and free ports, are VAT-exempt.  The one
exception is the Free Port of the state of Nueva Esparta, which is not exempt from VAT but taxed at a
reduced 8 per cent rate.  Imports that are essential for the functioning of the public administration,
armed forces or forces of law and order, were VAT-exempt up to 31 December 1999.  Operations and
services provided by the financial system, savings funds, pension and retirement funds, socialsecurity, cooperatives, stock markets, and saving and loan institutions, along with insurance and
reinsurance activities, are not liable for VAT.
56. Exporters are entitled to draw back the ta x paid on inputs embodied in goods and services
acquired or received as part of their export activity (section (3)(IV)(b)).  SENIAT is responsible for
reimbursing import taxes.  In addition, VAT payments can be postponed on imported or domestically
                                                     
13 Observation Note SG/AJF 533-98 of 29 May 1998, and Process 16-AI-99, available at
http://www.comunidadandina.org/ .
14 Partial Reform of the Decree Law on Value Added Law, published in Official Gazette No. 37.002 of
28 July 2000, lowered the rate from 15.5 per cent to 14.5 per cent.Venezuela WT/TPR/S/108
Page 45
purchased goods and services during the pre-operational phase of industrial projects aimed at export
or generation of foreign exchange in the hydrocar bons, mining and tourism sectors (construction of
accommodation establishments and related services).
(b) Other taxes on imports
57. In addition, specific taxes are levied on alcoholic products, and ad-valorem taxes are charged
on beer and alcoholic beverages with a maximum alcohol content of 50º.  There is also a specific tax
on tobacco.  Revenue from taxes on alcohol amounted to 0.13 per cent of GDP in 2000, while taxes
on cigarettes raised a sum equivalent to 0.27 per cent of GDP in that year.  The authorities stated thatnational treatment is applied when charging these taxes.
(vi) Import licences, prohibitions and restrictions
(a) Import prohibitions and non-tariff restrictions
58. Venezuela prohibits certain imports in order to protect the life and health of people and
animals, to preserve plant life, and to protect public morals, the environment or the country’s essentialsecurity interests.  In this context, importation of a number of agricultural products from countries
where certain pests and diseases are prevalent is also restricted or prohibited.  Venezuela also bans the
import of used vehicles or obsolete models for private use, along with worn clothing and second-hand
tyres.
15
59. The ban on importing automobiles with used engines and chassis (except for public transport
vehicles or taxis), is covered by Resolution 0001 of 2 January 1995, which has been in force since
4 January of that year, and was included in Complementary Note 1 of Chapter 87 of the Customs
Tariff.  The resolution states that the prohibition is intended to lay regulatory foundations for the
functioning and development of the national automotive industry.
60. Matches (NANDINA 3605.00.00) may not be impor ted, except from certain Andean
Community countries, in which case which they are subject to Legal Regime 2 (imports defined as
reserved for the national executive).  The ban on importing retreaded or used tyres and worn clothingis covered by Decree 989 of 28 December 1995 and its amendments.
16  An exception is made in the
case of tyres imported from Andean Community countries, subject to Legal Regime 2; this does not
cover imports of apparel articles, for which the ban extends also to imports from other Andean
Community countries.
(b) Import licences61. Products subject to import restriction require import licences.  Currently, these take the form
of permits or prior authorization for environmental, health and safety reasons, regardless of the
country of origin (see Table III.2).  Licences are granted by the Ministry responsible for the product in
question.
                                                     
15 These prohibitions have been notified to the WTO as quantitative restrictions. WTO document
G/MA/NTM/QR/1/Add.1 of 6 June 1996.
16 Products covered by the prohibition are: retr eaded tyres (NANDINA 4012.10.00); used pneumatic
tyres (4012.20.00); worn clothing (6309.00.00); rags, scrap twine, cordage, and worn out articles of textilematerials: sorted (6310.10.00) and other (6310.90.00).WT/TPR/S/108 Trade Policy Review
Page 46
Table III.2
Prior import permits, 2002
Product Body responsible for the permit
Marine shrimp;  inputs prepared therefrom. Ministry of Agriculture and Land (MAT).
Wild animals and products thereof. PROFAUNA - autonomous service of the Ministry of the
Environment and Renewable Natural Resources (MARNR).
Products of animal origin and agricultural inputs. Autonomous Agriculture and Livestock Health Service
(SASA), of the MAT.  Permits valid for 60 days.  Health
certificate required.
Crustaceans and shrimp (Pnaeus). MAT.  Sanitary certificate required.
European queen bees bred in the United States. SASA (MAT).  International animal health  certificate required
Live animals. SASA (MAT)  permits have a ninety-day duration.
Ostriches. MARNR, SASA (MAT).
Natural products for therapeutic purposes. Ministry of Health and Social Development. (MSDS).
Poultry and poultry products from countries where bird flu is
prevalent.SASA (MAT).
Asbestos (except blue asbestos). MSDS, for industrial processes only; validity four months.
Certain petroleum products, chemical substances, metal carbonates,
and matches from the Andean Community.MPC, subject to prior consultation with the competent Ministry.
Aquatic species. MAT.
Chemical products subject to control:  Hydrochloric acid
(NANDINA 2806.10.00);  sulphuric acid (2807.00.10); anhydrous
ammonia (2814.10.00);  ammonia in aqueous solution.(2814.20.00);  disodium carbonate. (2836.20.00);  sodium
bicarbonate (2836.30.00);  calcium carbonate (2836.50.00);  lithium
carbonates (2836.91.00);  strontium carbonates (2836.92.00);  zinccarbonate (2836.99.20); cobalt carbonate (2836.99.30);  nickel
carbonate (2836.99.40);  magnesium carbonate (2836.99.50);
sodium sesquicarbonate (2836.99.60);  potassium permanganate(2841.61.00);  toluene (2902.30.00);  diethyl ether 2909.11.00);
acetone. (2914.11.00);  butanone (2914.12.00); methyl isobutyl
ketone (2914.13.00);  acetic anhydride (2915.24.00);  ethyl acetate
(2915.31.00); phenylacetic acid and its salts (2916.34.00).MPC.
Homeopathic products MSDS.
Agro-toxic substances  (HS 2903 etc.) MSDS and MPC.
Disinfectants (3808.40.10 and 3808.40.90) MSDS.
Fireworks Ministry of the Interior.
Toxic or hazardous residues and wastes MARNR.
Radioactive substances (2844.40.00.10) MARNR.
Materials or apparatus that generate ionizing radiation Ministry of Energy and Mines.
Merchandise bearing the national emblem or flag Ministry of Foreign Relations.
Registration requirements
Medications and pharmaceutical products. “Rafael Rangel” National Hygiene Institute (MSAS).
Narcotic drugs and psychotropic substances. MSDS. Valid for 180 days from date of issue.
Ozone-layer depleting substances (except aerosols). MARNR.
Wild fauna and flora and their products. MARNR, SASA (MAT).
Pesticides. SASA (MAT).
Source :Information obtained from the Venezuelan authorities and the LAIA database, at
http://www.aladi.org/NSFALADI/SITIO.NSF/INICIO.
62. In order to control the importation of ozone-layer-depleting substances, the Ministry of the
Environment and Natural Renewable Resources  (MARNR) maintains an import permit regime
applicable to a total of 57 tariff subheadings.  The volume to be imported up to the end of 2004 wasVenezuela WT/TPR/S/108
Page 47
determined on the basis of average import levels between 1995 and 1997; this volume will be reduced
by 50 per cent in 2005, 80 per cent in 2007 and 100 per cent in 2010.  Permits are valid for six months.
Only firms included in the registry of importers of  ozone-layer-depleting substances can apply for these
licences.
63. Imports of certain foodstuffs, medicines and active ingredients, require a permit from the
Ministry of Health and Social Development (M SDS), pursuant to Decree 989 of 28 December 1995 and
subsequent amendments.  This import regime covers a total of 301 tariff subheadings.  Import permits
are valid for four months.  An MSDS permit is requi red to import narcotic substances, along with their
by-products and salts, covering a total of 23 subheadings.  A prior permit from the MPC is also required
to import a number of chemical products that co uld be used as precursors for drug manufacture.
64. In April 2002, Venezuela notified the WTO Committee on Import Licensing that it was
introducing import licences for scrap material from the clothing industry (national subheadings
6310.10.00.10).  The procedure for obtaining licences is set out in Joint Resolution 855 of theMinistry of Finance and 977 of the Ministry of Production and Trade, published in Official Gazette,
Ordinary edition No. 37.376 of 31 January 2002.  Licences are granted by the MPC within
21 working days from the date of application; they are valid for six months and are neither renewable
nor transferable.  They can only be used to import the authorized volume, which must arrive in a
single shipment and pass through a single customs office.  The measure is designed to ensure thatimports of scrap material from the clothing industry, meeting specified characteristics, are used
exclusively for the manufacture of yarn.
17
65. Apart from licences and permits, there are also registration requirements (see Table III.2).
For example, importers of ozone-layer-depleting substances (except aerosols), and of wild fauna and
flora, must be registered with the MARNR.
66. In addition to the permits mentioned above, certain agricultural products subject to import
quotas under the WTO Agreement on Agriculture require non-automatic import licences, for in-quotaimports only.  Venezuela notified the WTO of products subject to import licences through documents
G/LIC/N/2/VE N/1 of 7 March 2000, G/LIC/ N/2/VEN/2 of 27 February  2001, and G/LIC/N/2/VEN/3
of 12 March 2002.  The restrictions maintained by Venezuela for health, safety and other reasons
were also notified through document G/LIC/N/ 3/VEN/1 of 27 May 2002.  Some members of the
Committee on Import Licensing have noted that the communications submitted by Venezuela thus farrelate exclusively to tariff quotas negotiated on agriculture and livestock products during the Uruguay
Round, and that the licensing requirements maintain ed by Venezuela for health, safety and other
purposes have not been notified.
18
67. Until late 2001, the Directorate General for Agricultural Marketing of the MPC was
responsible for granting non-automatic import licences on products subject to tariff quotas; but thisfunction has now been transferred to the Ministry of Agriculture and Land (MAT).
19  The current
licensing system has been in place since November 1999.20  Import licences are valid for three
months, and can only be renewed if, on expiry, they have not been used for reasons outside the
importer’s control.  The authorities have pointed out that the regime has been administered in a
                                                     
17 WTO document G/LIC/N/2/VEN/4 of 15 April 2002.
18 WTO document G/LIC/Q/VEN/2 of 19 June 2001.
19 Information on the licensing process can be found on the Internet at www.mpc.gov.ve.
20 It was published in Official Gazette No. 36.831 on 17 November 1999. Additional information on
licensing procedures is contained in the following: Official Gazette No. 37.082 of 21 November 2000; OfficialNotice of 2 January 2001; Official Gazette No. 37. 329 of 21 November 2001; and Official Notice of
29 January 2002.WT/TPR/S/108 Trade Policy Review
Page 48
flexible manner, with licences being extended to guarantee supply to the domestic market and
fulfilment of Venezuela’s minimum access commitments in the WTO.  Applications for licences must
be made within 21 working days from the date when the government issues an official public noticeinviting them to apply for them.
68. Licences are granted to established importers with a record of two years’ previous imports,
and also to new importers.  The tariff subheading, beneficiary and quota volume are specified in each
case.  Established importers receive 90 per cent of the tariff quota, with the remaining 10 per cent
being reserved for new importers.  When applying for a licence, established importers have to submitto the MAT a monthly list of imports actually realiz ed, indicating volume and value, together with the
invoice on the most recent import, also indicating the volume and value of the merchandise in
question.  The importer must indicate the amount of the allocated quota that remains unused, which is
then reincorporated into the quota to be reassigned.  There are no restrictions in terms of minimum or
maximum import volumes for the award of licences.  Information on the allocation of licences can befound on the MPC website.
21
(vii) Contingency measures
(a) Anti-dumping and countervailing measures
National regulations
69. The current regulations on anti-dumping practices and subsidization is contained in the Law
on Unfair International Trade Practices (LSPDCI) of 1992, together with its regulations; the Enabling
Law for the Marrakesh Agreement Establishing the WTO; the Agreement on Application of
Article VI of the GATT 1994; the Agreement on Subsidies and Countervailing Measures; and
Decision 283 of the Cartagena Agreement Commission, as notified by Venezuela to WTO.22  Since
the last Trade Policy Review in 1996, two new Decisions (Nos. 456 and 457) on anti-dumping and
countervailing practices have been issued by the Andean Community and now form part ofVenezuelan law.
70. For anti-dumping investigations or countervailing measures that involve imports from WTO
Members, WTO regulations take precedence over LSPDCI and its regulations.  The latter are fully
applicable to investigations relating to imports from non-WTO Members.  Andean Community
Decision 456, of 4 May 1999, is applicable when dumping practices originating in the territory ofanother member country cause or threaten to cause injury to local production destined for the
domestic market of the affected country, and when dumping practices originating in the territory of a
member country cause or threaten to cause injury to a branch of national production destined for
export to another member country.  Decision 457, also of 4 May 1999, is applicable in the case of
subsidies.  Decision 283 is applicable when dumping or subsidization originating in a country outsidethe region causes or threatens to cause significant injury to national production destined for export to
another member country, and when dumping or subsidization originating in a country outside the
subregion causes or threatens to cause significant injury to national production.  The law makes clear
that no product can be the subject of both anti-dumping duties and countervailing measures at the
same time.  Nonetheless, investigations for anti-dumping and countervailing duties can be initiatedsimultaneously for the same product.  In the event of dumping and subsidization both being
confirmed, along with the corresponding injury, the larger of the two duties will be applied.  A single
                                                     
21 www.mpc.gov.ve .
22 WTO documents G/ADP/N/1/VEN/1 and G/SCM/N/1/VEN/1 of 6 April 1995, and
G/ADP/N/1/VEN/1/Suppl.2 and G/SCM/N/1/VEN/1/Suppl.2 of 4 July 1996.Venezuela WT/TPR/S/108
Page 49
good may be subject to an anti-dumping/countervailing duty and a safeguard measure simultaneously,
although this possibility is not expressly established in Venezuelan law.
71. The Regulation to the Law on Unfair International Trade Practices, Decree 2.883 of
5 April 1993, implements and regulates application of  the LSPDCI.  In general terms, the regulation
upholds the GATT/WTO practice for investigations relating to anti-dumping and countervailing
measures.
Administrative procedures
72. Anti-dumping and subsidy investigations are the responsibility of the Anti-Dumping and
Subsidies Commission (CASS), under the Ministry of  Production and Trade (MPT).  An investigation
to determine dumping or subsidies and injury to the domestic industry producing like goods may be
initiated at the request of the interested party or by CASS acting ex officio.  If an investigation is
initiated ex officio, CASS must have sufficient evidence of dumping or subsidy and injury to thedomestic industry.  So far, CASS has not initiated any investigation ex officio.
73. CASS can impose provisional anti-dumping or countervailing duties 60 working days after
the initiation of the investigation, provided it has made a preliminary affirmative determination of
dumping or subsidy and injury and such measures are considered necessary to prevent further injury
to the domestic industry during the investigation.
23  Provisional duties can be applied for a maximum
period of four months and may be paid in cash or secured with a bank or insurance company
guarantee.  CASS may suspend an investigation if undertakings to revise prices are given, if the use of
subsidies is stopped or limited, or the margin of dumping is reduced or eliminated.  The acceptance of
an undertaking does not necessarily imply the end of the investigation of injury, which may be
continued if CASS so decides, or if requested by exporters representing a significant percentage of the
commercial transactions concerned or by the government of the country of exportation, as the case
may be.
74. All CASS's decisions may be appealed to the Fi rst Administrative Court.  Definitive anti-
dumping and countervailing duties and undertakings expire five years after entering into force and
may be extended once only, before they expire, for a period of not more than five years from the date
on which they were originally due to expire, if it is considered that their expiry would lead to further
injury or threat of injury.
Table III.3
Anti-dumping and countervailing measures in force, definitive duties in forcea
Country/Customs territory Product (number of orders)Entered into
force
Anti-dumping duties
China, P. Rep. of Padlocks (1) 26.9.97
China. P. Rep. of Locks;  bolts (1) 26.9.97
Italy, Thailand Syringes, with or without needles (2) 14.5.99
Russian Federation, Ukraine, Kazakstan Flat-rolled iron and steel products, hot-rolled (3) 29.6.99
Russian Federation, Ukraine, Kazakstan Flat-rolled iron and steel products, cold-rolled (3) 22.9.99
United States Polyvinyl chloride in emulsion and in suspension (2) 25.4.00
China, P. Rep. of Footwear (4) 29.5.00
Japan Steel bars (1) 9.6.00
                                                     
23 http://www.cass.com.ve/  and WTO document G/SCM/N/1/VEN/1/Suppl.2 of 4 July 1996.WT/TPR/S/108 Trade Policy Review
Page 50
Country/Customs territory Product (number of orders)Entered into
force
Japan Pipes, whether or not seamless, for carrying fluids under
pressure (2)13.7.00
Countervailing duties
European Union Blue-veined cheese 24.5.94
European Union Medium-hard cheese 24.5.94
European Union Hard cheese, Gruyere type 24.5.94
a As of  30 June 2002 .
Source: WTO Secretariat and CASS.
75. During the period under review, Venezuela submitted biannual reports on the measures
adopted to the WTO Committees on Anti-Dumping Practices and on Subsidies and CountervailingMeasures.  In the second half of the 1990s, Venezuela increased its use of anti-dumping measures.
This increase is apparent from the number of investigations initiated and the number of provisional
and definitive duties applied.  Since the last Trade Policy Review in 1996, CASS has initiated 12 anti-
dumping investigations (17 since it was set up in 1992) involving a total of 12 (15 since it was set up)
countries, eight of which are WTO Members.  The investigations have mainly concerned iron andsteel products, together with textiles and footwear, padlocks, wines, chemicals and paper
(Table AIII.3).  As of 30 June 2002, provisional measures had been applied in 9 of the 12 cases
initiated since 1996; in all these cases definitive duties were also applied.  This contrasts with the
experience prior to 1996 when most investigations terminated without the application of duties.
76. As of 30 June 2002, there were 19 definitive anti-dumping duty orders in force affecting
China, United States, Italy, Japan, Kazakstan, Russia, Thailand and Ukraine.  The products affected
included iron and steel products, padlocks, syringes , footwear and chemicals.  Three countervailing
duty orders were in force: all three involved cheese from the European Union (Table III.3).
Anti-dumping and countervailing measures within the context of the Andean Community
77. Venezuela has requested the General Secretariat of the Andean Community to initiate four
anti-dumping investigations.  These investigations concern fibreboard, plastic syringes and steelproducts (two investigations).  The first two invest igations involved Venezuelan imports from another
country in the Andean area; the other two related to imports into the Andean area from third countries.
In the investigation relating to Venezuelan fibreboard imports (NANDINA 44.10 and 44.11) from
Colombia, it was found that the margin of dumping was below the de minimis  level and neither
provisional nor definitive duties were applied.  The investigation was terminated in November 1997.In the investigation into disposable plastic syringes (NANDINA 9018.31.20) from Colombia, initiated
in parallel with a CASS investigation of imports from Italy, Thailand and South Korea, the application
of provisional and definitive duties was refused; the investigation was terminated in August 1998.
78. In the investigation relating to Andean imports of steel billets (NANDINA 7207.11.00 and
7207.20.00) originating in or imported from the Commonwealth of Independent States (CIS),especially Russia, Kazakstan and Ukraine, and requested by Siderúrgica del Turbio, S.A. of
Venezuela, definitive duties were applied in Colombia, Ecuador and Peru for three years from
June 1999.
24  The fourth case, initiated at the request  of Siderúrgica del Orinoco (SIDOR), C.A.,
related to Ecuadorian imports of flat-rolled steel products of a width greater than or equal to 600 mm,
hot- or cold-rolled (NANDINA 72.08 and 72.09), originating in Russia, Kazakstan and Ukraine, and
                                                     
24 These duties were, per tonne and by country: Colombia US$40 (imports from Russia) and US$65
(Ukraine); Ecuador US$55 (Russia); Peru US$40 (Russia) and US$50 (Ukraine).Venezuela WT/TPR/S/108
Page 51
ended in October 1999 with the application of definitive duties for one year, on Russia only, at levels
ranging from US$8.88 to US$33.72 per tonne.
(b) Safeguard measures
National legislation
79. Venezuela introduced safeguards legislation in 1999.  Decree Law No. 250 of
10 August 1999 on Safeguard Measures was base d on the WTO Agreement on Safeguards (SA).25
The Ministry of Production and Trade has delegated responsibility for initiating and conducting
safeguards investigations to the CASS Technical Secretariat, while the President of the Republic is
responsible for deciding on the imposition of the corresponding measures, in the light of
recommendations from the Ministries of Production and Trade and Finance.
80. Safeguard measures are applied without discrimination, unless the international trade or
integration agreement or treaty under which they are applied provides for differential treatment.Definitive safeguard measures may take the form of increases in import duties, ad valorem  tariff
surcharges, specific or mixed, or quantitative restrictions.  If the safeguard measures consist of
quantitative restrictions, they may not reduce the quantity of imports below the average level in the
last three representative years.  Definitive safeguard measures may remain in force for not more than
three years from the date of entry into force.  This period may be extended once only.  The totalduration of a definitive safeguard measure, including the period of application of any provisional
measure, the period of initial application and any extension thereof, may not exceed six years.
Extensions must be preceded by an investigation by the CASS Technical Secretariat.
81. A CASS investigation may be initiated at the request of producers representing a substantial
proportion of the domestic industry (at least 40 per cent of total domestic production of such goods,
except those associated with exporters or importers of the good under investigation).
26  T h e
investigation must be completed within three months of its initiation, unless the circumstances areexceptional, in which case it may be extended for one month.  CASS must prepare a report within this
period and send it to the Ministries of Production and Trade and Finance and to the other ministries
involved in the activity concerned, in order that they may assess it and make recommendations to the
President of the Republic within 10 days.  From that moment, the President has 20 days to make a
final decision.  Decisions relating to the initiation and imposition of provisional or definitivesafeguard measures are published in the Official Gazette.
82. Venezuela excludes members of regional agreements in which it participates from the
application of safeguards.  The other countries of the Andean Community are excluded unless one of
them is the principal supplier of the product investigated, in which case the safeguard is applied to
that country.  As a consequence of the commitments undertaken as part of the G-3 free tradeagreement, Mexico is excluded from the application of the safeguard measure unless it is one of the
first five suppliers of the product investigated and, moreover, the rate of increase of imports from
Mexico is higher than average.
83. The adoption of a definitive safeguard measure is conditional upon the implementation of a
predetermined programme of competitive readjustme nt approved by the Ministry of Production and
Trade.  If the adjustment programme is not impl emented, the President of the Republic may revoke
                                                     
25 Published in Official Gazette, Special Edition, No. 5.372 of 11 August 1999 and notified to the WTO
in WTO document G/SG/N/1/VEN/2 of 19 October 1999.
26 If the domestic industry is highly fragmented, which presupposes an exceptionally large number of
producers, the Law on Safeguard Measures allows this percentage to be reduced to 30 per cent.WT/TPR/S/108 Trade Policy Review
Page 52
the application of the definitive safeguard measure or bring forward its liberalization.  The provisions
relating to the non-discriminatory application of safeguard measures and to their form, duration and
extension do not apply to imports from countries that are not Members of the WTO.
Multilateral and regional arrangements
84. Venezuela has availed itself of the special safeguard provisions of the WTO Agreement on
Agriculture, which permit the imposition of an additional duty on top of the bound tariff rate at a
specified trigger volume or price level.  Special safeguards are being applied to 76 four-, eight- or ten-digit NANDINA tariff headings covered by the "tariffication" commitment.
27
85. Venezuela has also reserved the right to re sort to the transitional safeguard mechanism
provided for in the WTO Agreement on Textiles and Clothing; however, this mechanism has not been
used.  Moreover, it has submitted lists of textiles and clothing included in the first, second and third
phases of integration into the GATT 1994, which represent 16, 17 and 18 per cent, respectively, of thevolume imported in 1990.
28  These lists comprise 323 Harmonized System six-digit headings, mainly
relating to yarn, fabrics, clothing and made-up textile articles; among the items of clothing included in
the list are cardigans and pullovers, ski suits and gloves.
86. Decision 452 of the Commission of the Andean Community, adopted in April 1999, lays
down rules for the adoption of safeguard measures against imports from countries that are notmembers of the Andean Community.  The safeguard measures decided upon apply in all the Andean
countries if the investigation finds that there has been a substantial increase in imports into the
territory of the Andean Community and that this increase has caused or is threatening to cause serious
injury to the domestic industry in the Andean Community.  As of mid-2002, no use had been made of
the safeguards mechanism for which Decision 452 provides.  Safeguard provisions are also contained
in several of the partial-scope agreements signed by Venezuela within LAIA.
Safeguard investigations
87. Since the entry into force of the Law on Safeguards and up to the middle of 2002, a total of
five cases has been investigated by the Anti-Dumping Commission’s Technical Secretariat
(Table III.4), all of which have been notified to the WTO.
88. During the period under review, the only investigation in which the adoption of a safeguard
measure was recommended is that relating to pneumatic tyres, which was notified to the WTO
Committee on Safeguards.
29  As a result of that investigation, the CASS Technical Secretariat
recommended, as a definitive safeguard measure, a tariff increase of 20.45 percentage points for the
first year with reductions in the second and third years (Table III.4).30  As the tariff currently in force
in Venezuela for the imports concerned is 15 per cent, if the measure were implemented the tariffapplied would rise to 35.45 per cent.  The measure was recommended for a period of three years, but
in mid-2002 it had not yet entered into force.
                                                     
27 See Part 1, Section I-A of Schedule LXXXVI (Corrigendum), 25 March 1994.
28 WTO documents G/TMB/N/54, G/TMB/N/233, G/TMB/N/431 and G/TMB/N/431/Add.1 of
28 April 1995, 6 February 1997, 6 March 2002 and 4 July 2002, respectively.
29 WTO document G/SG/N/6/VEN/3 of 27 March 2000.
30 WTO document G/SG/N/8/VEN/2 of 14 September 2001.  A first notification, recommending a
surcharge of 16.16 per cent, was submitted in WTO document G/SG/N/8/VEN/1 of 2 April 2001.Venezuela WT/TPR/S/108
Page 53
Table III.4
Commercial safeguard investigations carried out by CASS, 1999-01
Product Initiated/
ApplicantWTO notification Countries investigated Decision
Flat-rolled products, hot-
rolled (NANDINA 72.08)28.1.00
SIDORG/SG/N/6/VEN/2,
10.3.00Brazil, Romania, Japan,
Ukraine, Russia, Mexico,United States, Taipei
China, South Korea,
United Kingdom, Poland,Germany, Yugoslavia,
Belgium, Netherlands,
Hungary, Lithuania,Austria, Spain, Italy and
SwitzerlandInvestigation closed
without measures
being applied
Flat-rolled products, cold-rolled (NANDINA 72.09)28.1.00
SIDORG/SG/N/6/VEN/1,
17.2.00Mexico, South Korea,
Ukraine, Brazil, Indonesia,
Germany, Russia,
Lithuania, United States,Switzerland, Belgium,
Argentina, France, Italy,
Canada and NetherlandsInvestigation closed
without measures
being applied as a
result of formalabandonment of
application by
domestic producer
Pneumatic tyres
(NANDINA 4011.10.00)8.3.00
National
Association of
Rubber
ManufacturersG/SG/N/6/VEN/3,
27.3.00All, except members of the
Andean Community and
MexicoCASS recommended
a 20.45% ad valorem
surcharge for the first
year;  13.63% for thesecond and 6.82% for
the third.
Recommendation byMPT and MF
pending.
Paper and paperboard, in
rolls or sheets (4802.10.00,30.00, 51.00, .52.90 and
53.00);  other paper and
articles of  paper pulp, paperand paperboard (4823.51.10,
51.90, 59.00);  boxes, sacks,
etc.  (4819.30.10, 30.90,
40.00)16/10/2001
VenezuelanAssociation of
Pulp and Paper
ProducersG/SG/N/6/VEN/4,
30.10.01All, except members of
the Andean Community
under considerationInvestigation in
progress
Angles, shapes and sections
of iron or steel, hot-extruded
(7216.31.00, 7216.32.00)1.11.01
Siderúrgica del
Turbio, SIDETURG/SG/N/6/VEN/5,
20.11.01All, except members of
the Andean Community
under consideration.Investigation in
progress
Source: CASS.
89. Moreover, during 2001 several requests for the application of safeguard measures were
submitted, but no action was taken.
(viii) Government procurement
90. Given the significant participation of the State in the Venezuelan economy, government
procurement is particularly important and in 2000 reached a value of US$10,857 billion, equivalent to
9.4 per cent of GDP.  Within the public sector, the largest purchaser was Petróleos de Venezuela, S.A.
(PDVSA) (Table III.5). Corporación Venezolana de Guayana (CVG) also made major purchases.  The
authorities estimate that between 15 and 20 per cent of public sector purchases are made fromVenezuelan enterprises and that between 80 and 85 per cent are imports.  This is due to the heavy
contribution made by PDVSA, CVG and other public enterprises that import significant quantities of
capital goods to total government procurement.WT/TPR/S/108 Trade Policy Review
Page 54
Table III.5
Economic importance of government procurement
Description Valuea% of total % of GDP
Non-personal servicesb604 5.6 0.5
Materials and suppliesb660 6.1 0.6
Real assetsb466 4.3 0.4
Petróleos de Venezuela, S.A. (PDVSA) 3.020 27.8 2.6
Corporación Venezolana de Guayana (CVG) 1,200 11.6 1.1
Internal Capital Transferc1,882 17.3 1.6
Intergovernmental Decentralization Fund (FIDES) 1,137 10.5 1.0
Investment under the Situado Constitucional  (revenue sharing system) 1,833 16.9 1.6
Total 10,857 100 9.4
a In millions of US dollars, value calculated at an exchange rate of VEB 697/US$.
b Excluding purchases by PDVSA and CVG.
c Under the Law on Special Appropriations for the States Derived from Mines and Hydrocarbons.
Source: Ministry of Production and Trade.
91. Venezuela is not among the signatories to the WTO Agreement on Government Procurement.
Chapter XV of the G-3 free trade agreement provides  for the granting of national treatment to local
enterprises of member countries that participate in a government procurement procedure in another
member, subject to certain conditions of coverage and transitional reservations, permanent
reservations and exceptions.  One express exception to the national treatment commitment is that
relating to import duties and other levies on imports.  Within the framework of the AndeanCommunity, since 1 January 2002 national treatment has been applied to the purchase of services by
governmental agencies and entities.  With a view to establishing a Customs Union in 2005, the
governments of the member countries have undertaken to establish transparent government
procurement procedures and to grant national treatment to member country suppliers of both goods
and services.
92. The Law on the Partial Reform of the Tender Procedures Law, Decree Law No. 1.555 of
3 November 2001 (Official Gazette, Special Edition, No. 5.556 of 13 November 2001) amended the
Tender Procedures Law (2000), Decree No. 1.121 of 6 December 2000, and regulated the government
procurement regime.
31  Other pieces of legislation regulating State purchasing include: the Organic
Law on the Financial Administration of the Public Sector (Official Gazette No. 37.029 of5 September 2000); the Organic Law on Decentraliz ed Administration and Transfer of Government
Powers (Official Gazette No. 4.153 of 28 December 1989); the Law on the Simplification of
Administrative Procedures (Official Gazette No. 36.845 of 7 December 1999); the Law on the
Promotion and Development of Medium-Sized and Small Industry of 9 November 2000; the Organic
Law on the Promotion of Private Investment under the Concession Regime (Official Gazette, SpecialEdition, No. 5.394 of 25 October 1999; the Law on Elec tronic Signatures of 10 February 2001; and
the General Tender Regulations of 17 October 1991.
93. The current Tender Procedures Law explicitly excludes from its application the leasing of
immovable property, insurance policies and the financial services provided by entities governed by
the General Law on Banks and Other Financial Institutions.  The new Law maintains the exclusion
                                                     
31 Published in Official Gazette No. 37.097 of  12 December 2000.  The 2000 Law replaced the 1990
Tender Procedures Law and the Law Amending the Tender Procedures Law, Decree No. 296 of5 September 1999.Venezuela WT/TPR/S/108
Page 55
from the application of the Law in the case of professional services, stipulating that, wherever
appropriate, in selecting professional services preference should be given to professionals and
consulting firms based in Venezuela.
94. The provisions of the Tender Procedures Law apply to: government bodies; the autonomous
institutions; the entities that make up the Federal Capital District; the public universities; the states,
municipalities and state and municipal autonomous in stitutions; partnerships and companies in which
the above-mentioned federal, state or municipal entities hold at least 50 per cent of the assets or
capital; partnerships and companies in which 50 per cent or more of the assets or capital is held bypartnerships and companies in which a federal government entity has a holding of at least 50 per cent;
and foundations set up by any of the above-mentioned entities or in whose administration such entities
have powers of decision, if the contracts are paid for with contributions from those entities; and
entities that receive subsidies or grants from the State or public or private enterprises.  The procedures
for selecting a contractor for the construction of works, the purchase of goods or the hiring of servicespart or all of whose cost is defrayed with resources from cooperation agreements between Venezuela
and other States are excluded from the application of the Decree Law.
95. In Venezuela, government procurement is decentralized.  Each agency covered by the Tender
Procedures Law has a bidding office responsible for procurement.  The purchase of ADP equipment
and services must be notified to the Central Statistics and Information Technology Office (OCEI).There is no central government purchasing agency.  However, in 2002, the Presidential Government
Purchasing Commission, presided over by the Mi nistry of Production and Trade and composed of
representatives of other ministries and some public enterprises, was set up to coordinate, monitor and
supervise the programmes of the various government agencies for the purchase of goods, services and
works.
32
96. Under the legislation on tendering, three pr ocedures may be followed for government
procurement purposes: public or open tendering, selective tendering and direct purchase orcontracting.  Open invitations to tender may be published internationally or internally.  The procedure
to be followed depends on the value of the contract or purchase in terms of tax units (Table III.6).
Table III.6
Government procurement procedures, 2002
Procedure Purchase of goods and servicesaPublic works contractsa
Open bidding More than 11,000 More than 25,000
Selective tendering More than 1,100, up to 11,000 More than 11,500, up to 25,000
Direct purchase or contract Up to 1,000 Up to 11,500
a      Tax units, in 2002, their value was VEB14,800.
Source: Government of Venezuela.
97. In certain circumstances, the direct purchase procedure may be followed, regardless of the
value of the contract, for example if it is a question of supplies for a process that could be seriously
affected by a delay in the initiation of a tender procedure or if the goods to be purchased are produced
or sold by five or fewer manufacturers or suppliers.
                                                     
32 Decree No. 1.891 of 25 July 2002, published in Official Gazette No. 37.494 of 30 July 2002, which
repealed Decree No. 1.247 of 13 March 2001, publishe d in Official Gazette No. 37.167 of 27 March 2001.WT/TPR/S/108 Trade Policy Review
Page 56
98. Open invitations to tender are published in the Official Gazette and are open to any natural or
legal person, subject to the particular conditions of each tender procedure.  In principle, the
participation of foreign bidders is not excluded but may be limited by the specific conditions oftender.  In the case of an international invitation to tender Venezuelan and foreign natural and legal
persons may participate without restriction.
99. As part of the evaluation criteria, the procuring entity must take the necessary steps to
incorporate as many bids as possible from small and medium-sized enterprises.  The Law specifies
that in choosing between bids that fall within a range of not more than 5 per cent of the estimatedprice with respect to the best evaluated bid, pref erence must be given, in purchasing goods, to the bid
with the most local value added, and, in contracting for works and services, to the bid submitted by an
enterprise based in Venezuela that incorporates most local parts and inputs and involves most local
human resources, including at managerial level.  In both cases, where there are two or more bids with
the same evaluated price, preference is given to the bidder with the most local participation in itscapital.  In evaluating bids to supply imported goods the tariffs applicable, value added tax, the
customs service charge and any other importation-related payments are taken into account.
100. There is no official system for the electronic communication of information concerning the
tender procedures covered by the Law, although the Ministry of Production and Trade displays some
information on government purchase requests electronically.
33  Selective information about tenders is
available electronically at the Internet address of the Sistema de Información sobre Licitaciones y
Contratos  (Tenders and Contracts Information System), a private entity.34  According to information
available on the System, since 1996 the percentage of open tenders has increased from less than
10 per cent of the total in 1996 to almost 84 per cent in 2001.  The authorities point out that the
information provided by the System is unofficial.
101. Under the government procurement procedure, national treatment is not excluded in principle;
however, it is not guaranteed.  The  Law  requires that there be no discrimination against bidssubmitted by bidders based in Venezuela or against goods produced in or supplied from Venezuela,
but does not extend this treatment to bids from abroad. It explicitly stipulates that conditions may be
laid down establishing different treatment for bids submitted by bidders based outside Venezuela and
goods that are imported or supplied from abroad, as compared with  bids submitted by bidders based
inside Venezuela and goods produced in or supplied from Venezuela. Local contractors have theoption to avail themselves of these conditions if they so wish. This ensures that there is no
discrimination against local bidders or goods or services, since if a preference is granted to a foreign
supplier it is extended to the local supplier. However, the reverse does not apply.
102. The Tender Procedures Law (2000) established the National Procurement Service (SNC), an
entity with budgetary, financial and functional aut onomy  within its  sphere of competence, placed
under the Ministry of Production and Trade. The SNC is in the process of being implemented and its
principal functions include seeking, systematizing, circulating and supplying information on the
purchasing programmes and records of the entities governed by the Tender Procedures Law. The
system was partially functioning in September 2002. Once implemented,  the authorities hope that it
will help to standardize the procedures for procuring and purchasing goods, works and services for theentire public sector.
103. The SNC will be responsible for the administration and operation of the  National Register of
Contractors, as well as for approving the tariffs payable by the entities governed by the Tender
                                                     
33 Information available at the Internet address: http://www.mpc.gov.ve/portalmpc.htm.
34 http://www.licitaciones.com.ve/dedlic/owa/homepage.Venezuela WT/TPR/S/108
Page 57
Procedures Law for its services, publications and the supply of information at its disposal.35  I n
September 2002, the National Register of Contractors was still being managed by the National
Statistics Institute (INE). In order to tender on any contract valued at more than 500 t.u., in the case ofthe purchase of goods or services, or 1500 t.u., in the case of building works, it is necessary to be
enrolled in the National Register of Contractors, the aim of which is to centralize, organize and supply
basic information on the legal and financial qualification of contractors and their classification by
specialty. Apart from the National Register of Contractors, there is a series of auxiliary registers
which, together with the former, make up the national contractor registration system.  The auxiliaryregisters are responsible for accepting and processing applications from those interested in enrolment
in the National Register.  In 2001, there were 33 auxiliary registers, 15 of which were located in
ministries and the rest in other State agencies.  Of the 33 existing registers 25 were active.  The
registers are open to Venezuelan enterprises and subsidiaries of foreign enterprises, which, once all
the necessary formalities have been completed, receive a certificate of enrolment in the NationalRegister valid for one year.  Enrolment in the National Register of Contractors is not necessary in the
case of an international invitation to tender.
104. The tender legislation includes an economic development clause authorizing the President of
the Republic, in the light of economic development plans and in exceptional  circumstances, to take
temporary measures to offset possible adverse conditions, especially in small and medium-sizedenterprises and cooperatives. The measures that may be taken for this purpose include the
establishment of preference margins or reserved contract categories or values, the incorporation of
local value added requirements, technology transfer , the incorporation of human resources, delivery
scheduling, and the development and strengthening of goods producers and service providers at
national or regional level, together with small and medium-sized enterprises.  Thus, legislation was
introduced for temporarily applying preferences in government procurement in favour of Venezuelan
enterprises or consortia, especially those invo lving small and medium-sized enterprises (Decrees
Nos. 833 and 834 of 23 May 2000).  This legislation lapsed without being implemented.
105. More recently, in order to apply the economic development clause of the Tender Procedures
Law, Decree No. 1.892 of 29 July 2002 (Temporary Measures for the Promotion and Development of
Small and Medium-Sized Industry and Cooperatives, Goods Producers and Service Providers
established in Venezuela) was approved and published in Official Gazette No. 37.494 of30 July 2002.  The Decree provides for preferences to be granted in accordance with the local value
added under a special formula
36 and also grants an additional preference of 5 per cent for small and
medium-sized enterprises. The preference is granted only if one of the  bids has at least 20 per cent of
local value added and applies to all the other bids with local value added, which receive a preference
of up to 15 per cent, to which is added the general preference of 5 per cent under the TenderProcedures Law and, in the case of small and medium-sized enterprises, the above-mentioned
additional 5 per cent.  The Decree provides for the possibility of limiting the preferences in cases in
which Colombian and Mexican providers, in contracts which exceed the limits specified in the G-3
FTA, would have been the successful bidders in a tender procedure if the preferences had not been
applied to the local value added.  In this case a Resolution of the Ministry of Production and Trade isrequired to limit the application of the Decree.
106. In addition, Decree No. 1.892 of 29 July 2002 empowers the Ministry of Production and
Trade to declare reserved certain categories of contracts to be determined by means of a Resolution of
the Ministry of Production and Trade within three months of the entry into force of the Decree.
                                                     
35 http://www.mpc.gov.ve/cg003.htm.
36 The formula is:  0.15 (VAN/May), where VAN is the local value added of the bid and May is the
highest percentage of local value added among all the bids.WT/TPR/S/108 Trade Policy Review
Page 58
Within these categories, only bids which have, at least, the local value added specified as the
minimum in the corresponding Resolution may be submitted. Moreover, professional services
contracts concluded by public sector bodies and entities are declared reserved for Venezuelanprofessionals and enterprises based in Venezuela wh ose staff is at least 80 per cent Venezuelan and
whose Venezuelan employees receive at least 80 per cent of the total remuneration.
(ix) Technical regulations and standards
107. The main legislation on technical regulations and standards is contained in the Law on
Technical Standards and Quality Control of 30 December 1979; Decree No. 989 of29 December 1995 and amendments; and Resolution of the Ministry of Industry and Trade No. 044 of
24 March 1998.  In March 2002, the Organic Law on the Venezuelan Quality System was approved;
this Law was notified to the WTO in September 2001; however, in August 2002 it had not yet been
published in the Official Gazette and therefore was not yet in force.
37   This Law contains provisions
relating to standardization, certification, testing, accreditation, metrology, standards, technicalregulations and quality control in the areas of manufacturing and trade in goods, the provision of
services, the introduction, distribution and marketing of imported goods, and the exportation of
Venezuelan goods and services.
108. In Venezuela, technical standards policy is the responsibility of the Ministry of Production
and Trade which implements it through the National Autonomous Standardization, Quality,Metrology and Technical Regulations Service (SENCAMER).
38  SENCAMER concerns itself, under
delegation from the Ministry of Production and Trade, with technical standardization, quality control
and certification programs and maintains the register of mandatory technical regulations, as well as
having national responsibility for metrology.  SENCAMER accredits certification and inspection
agencies and testing laboratories. In Venezuela, the Fund for Standardization and Quality
Certification (FONDONORMA), BUREAU VERITAS, AQSR and FUNSEIN are the organizations
accredited by SENCAMER for certifying products a nd quality systems.  SENCAMER is responsible
for applying mandatory technical standards and also acts as the contact point under the
WTO Agreement on Technical Barriers to Trad e, in accordance with State guidelines and
requirements, and the regional and international treaties to which Venezuela is a signatory.
109. FONDONORMA is a partnership with legal personality and its own assets whose task is to
develop technical standards and promote and carry out certification activities.  FONDONORMA alsoparticipates in the framing of policies and strategies in the field of standardization and quality
certification and advises the State on their impl ementation.  FONDONORMA is the enquiry point for
technical barriers to trade.  In 1996, Venezuela accepted the Code of Good Practice for the
Preparation, Adoption and Application of Standards.
110. FONDONORMA draws up COVENIN standards (Venezuelan technical standards).  Its
standardization activities are carried on through various strategic technical committees and technical
commissions in specific fields.   Participation in the technical committees is open to the public sector,
the private sector, the research institutes, the universities, consumers and users, traders and, in
general, to anyone interested in the process of drafting standards.  FONDONORMA also has a Higher
Council, composed of 21 members drawn from the public and private sectors, which is responsible forgiving opinions on standardization projects submitted to it for consideration.  If the Higher Council
decides to make comments, they must be examined and dealt with by the corresponding Technical
Committee. If it makes no comments, the drafts are approved as Venezuelan COVENIN standards.
                                                     
37 WTO document G/TBT/N/VEN/1 of 17 September 2001.
38 Previously the Autonomous Office for Standardization and Quality Certification (SENORCA).Venezuela WT/TPR/S/108
Page 59
111. A Venezuelan COVENIN standard can be converted into a Technical Regulation if during the
process the draft standard is accompanied by a document which makes a consistent case for its being
made mandatory, based on the protection of the environment or the health, safety and life of users.  Ifthis supporting document is accepted,  the F ONDONORMA Techni cal Committee which prepared the
draft submits the adoption of the standard as a technical regulation for consideration by the Higher
Council.  If the Council approves, it is returned  to SENCAMER, which revises it and notifies the
WTO.  Then SENCAMER sends it to the Legal Service of the Ministry of Production and Trade
which publishes it in the Official Gazette under a Joint MPT/SENCAMER Resolution.  In Venezuela,technical regulations issued under this procedure are called mandatory standards.  In addition to
COVENIN standards, regulations prepared by other public entities and designated resolutions or
decrees may acquire the status of technical regulations.
112. The preparation of standards and technical regulations is generally based on international
standards or standards of other countries.  Only a small percentage of COVENIN standards aremandatory.
113. Resolution of the Ministry of Industry and Trade No. 044 of 24 March 1998, which has been
in force since 9 August 1998, requires Venezuelan and imported products for which mandatory
Venezuelan COVENIN standards (technical regulations) have been issued to be entered in the
Register of domestic and imported products subject to the mandatory Venezuelan COVENINstandards regime.  In this case, products marketed in the country, whether imported or of domestic
manufacture, must comply with the mandatory CO VENIN standards in force, which the marketers
must demonstrate by submitting to SENCAMER certificates of conformity, laboratory test reports or
seals of quality or conformity issued by an accredited entity in the country of origin of the goods or by
SENCAMER in Venezuela.
114. Certification is based on COVENIN standards or on international or regional standards, as the
case may be.  The Venezuelan Quality Certificate (CERTIVEN) certifies conformity with a standardor technical regulation in force and is granted by the State and FONDONORMA.  Certificates are
valid for one year.  Venezuelan producers who comply with COVENIN standards can obtain a
declaration of conformity.  The bodies accredited by SENCAMER for certifying quality and
environmental systems under the ISO 9000 and ISO 14000 series are FONDONORMA, BUREAU
VERITAS, AQSR and FUNSEIN.  Altogether, there are 35 testing laboratories and one calibrationlaboratory, accredited under International Standard COVENIN-ISO 17025, that carry out quality
controls in the food, chemical, pharmaceutical, oil,  automotive, textile, metallurgical and engineering,
calibration, building materials and industrial safety sectors.
115. FONDONORMA holds a series of meetings with the private sector and various ministries for
the purpose of drafting standards.  In September 2001, there was a total of 17 active meetings withproducers’ associations and other similar groups representing the food, chemical, glass, iron and steel,
etc. industries.  Some of these standards may result in technical regulations.  On the basis of
conformity with COVENIN standards, FONDONORMA, BUREAU VERITAS, AQSR and
FUNSEIN issued 367 COVENIN-ISO product and sy stem certificates between 1996 and 2001.  At
international level, FONDONORMA is an active member of the Pan American StandardsCommission (COPANT) and represents Venezuela in the International Organization for
Standardization (ISO).
116. Between 1994 and the end of August 2001, the nu mber of COVENIN standards in force rose
from 3,142 to 3,727, i.e. by approximately 19 per cent .   In recent years, most approvals have
corresponded to amendments of existing standards.   As already noted, most  COVENIN standards are
voluntary; in August 2001 there were only 386 technical regulations (mandatory standards accordingWT/TPR/S/108 Trade Policy Review
Page 60
to the nomenclature used by COVENIN), applicable to a total of 294 NANDINA subheadings.  In
September 2002, only 24 of these technical regulations had been notified to the WTO.  The list of
products subject to mandatory COVENIN standards covers a broad range of goods such as somefoodstuffs (chicken, fish, rice, flour, oils, sugar, cocoa), petroleum products, cement, toys, pneumatic
tyres, some textile and leather products, pipes, storage batteries, and car parts.  Grouped by
HS Section, the greatest concentration of technical standards is in Sections 03 (Fats and oils) and
17 Means of transport) (Chart III.2).  Some products are subject to more than one mandatory
Venezuelan COVENIN standard at the same time.
117. Through the Autonomous Agricultural Health Service (SASA), the Ministry of Production
and Trade is responsible for quality control and inspection in respect of everything relating to the
manufacture, processing, importation, exportation, storage, distribution and marketing of food,
biological products, medicaments and animal feed, as well as for the laboratories that control the
quality of these products. The quality control laboratories must be duly accredited by SENCAMER orthe correspondingly authorized government entity (ministry, autonomous service or autonomous
institute). Products not manufactured in Venezuela must also be accompanied by a certificate of free
sale and use issued in the country of origin, with a period of validity of 12 months from the date of the
application.
118. At the subregional level, Venezuela participates in the Andean System of Standardization,
Accreditation, Testing, Certification, Techni cal Regulations and Metrology of the Andean
Community, approved by Decision 376 in April 1995 and strengthened by Decision  419 of
30 July 1997.  The Andean System covers every aspect of the quality infrastructure for all the
subregion’s products and services, except in the phytosanitary and zoosanitary areas.  Resolution 502
of the Andean Community approves the Regula tions of the Andean standardization, national
accreditation body, testing, certification and metrology networks.  In the field of standardization, the
Andean Standardization Network (RAN) prepares Andean standards for products marketed in the
subregion; these are the result of harmonizing the standards in force in each country or adopting
international standards.  FONDONORMA is one of the members of the RAN.  There is also an
Andean National Accreditation Body Network, an Andean Testing Laboratory Network and an
Andean Metrology Network.  Altogether, 50 Andean standards have been adopted (Andean
Community Resolution 503).
119. Andean Community Decision 506 of 22 June 2001 (on the recognition and acceptance of
certificates for products marketed in the Andean  Community) provides for the recognition and
automatic acceptance by Member countries of certificates of product conformity with a technical
regulation or mandatory technical standard of the country of destination issued by accredited or
recognized certification bodies included in the register maintained by the General Secretariat of theAndean Community.  Decision 506 does not apply to  the sanitary, phytosanitary and zoosanitary
aspects.  The Decision was notified to the WTO Committee on Technical Barriers to Trade by
Colombia in September 2001.
39
                                                     
39 WTO document G/TBT/10.7/N/33 of 4 September 2001.Venezuela WT/TPR/S/108
Page 61
6.0
3.221.0
3.212.0
0.57.0
3.8
2.12.68.8
7.5
0.07.2
5.515.1
1.6
0.012.4
0.00.9
0510152025
123456789 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1Chart III.2
Percentage of tariff lines subject to technical regulations, by HS Section, 2001a 
Per cent
a
Source:Tariff lines subject to at least one COVENIN standard.
Information provided by the Venezuelan authoritiesHS Sections  01 Live animals; animal products
  02 Vegetable products  03 Fats and oils
  04 Prepared foodstuffs, etc.
  05 Mineral products
  06 Chemical products
  07 Plastics and rubber
  08 Hides and leather
  09 Wood and articles of wood
  10 Wood pulp, paper, etc.
  11 Textiles and textile articles12 Footwear and headgear
13 Articles of stone14 Precious stones, etc.
15 Base metals and articles thereof
16 Machinery
17 Means of transport
18 Precision instruments
19 Arms and ammunition
20 Miscellaneous manufactured articles
21 Works of art, etc.
(x) Sanitary and phytosanitary measures
120. As of mid-2002, Venezuela had not made any notification to the WTO Committee on
Sanitary and Phytosanitary Measures.  The authorities point out that notifications are being prepared,
through the Autonomous Agricultural Health Service (SASA) of the Ministry of Agriculture and Land
(MAL), and that the technical assistance of the WTO Secretariat has been requested for this purpose.
Animal products and livestock-farming inputs require a sanitary health permit issued by the MALwith a non-renewable period of validity of 60 calendar days from the date of issue.  Imports of plant
products require a phytosanitary certificate from the country of origin, prior inspection and the
production of a phytosanitary permit as indicated in the customs tariff.  The importation of
agricultural inputs also requires an import permit which, as for agricultural products, has a non-
renewable period of validity of 90 days.  Betw een October 1999 and August 2000, every importer of
products of animal origin and livestock-farming inputs had to be enrolled in the SASA's Single
Register of Importers.  This register was abolished on 31 August 2000 (Official Gazette, Special
Edition, No. 5.486).
121. Another requirement for the importation of animal s and animal products or by-products is that
they also be registered with the SASA by the producer, exporter or importer.  The products must enterthe country accompanied by an official sanitary certificate issued by the competent officials of theWT/TPR/S/108 Trade Policy Review
Page 62
country of origin.40  Since November 1998, these sanitary certificates may be submitted directly to the
Venezuelan authorities, without having to be legalized by the Venezuelan consular authority in the
country of origin.41  The importation of a  certain group of food products (HS 03, 04, 05, 16, 19, 20
and 21) is also subject to the obtaining of an import licence from the Ministry of Health and Social
Development (MSDS), in accordance with the prov isions of Decree No. 989 of 28 November 1995
and subsequent amendments (Table AIII.4).  The customs tariff makes a series of food products,
medicaments and active principles of Chapters HS 02, 03, 04, 05, 12, 13, 17, 25, 28, 29, 30, 38 and 56
subject to legal regime 3, which requires a sanitary permit to be obtained from the MSDS.
122. SASA is authorized to restrict or prohibit the importation, marketing or use of a product,
provided there are no sanitary reasons preventing  it from doing so.  SASA's Standing Technical
Advisory Body will recommend and indicate the appropriate course of action on the basis of a risk
analysis.  In 2001, the Codex Alimentarius Committee was established to review the standards and
coordinate the mechanisms relating to the protection of consumer health, to facilitate trade in foodsand to ensure the application of "fair" commercial practices in respect of foods.
42  The Committee will
also have to act as coordinator of the work of the MAL, MSDS and MPT.  As of September 2002, the
Committee had not yet begun to function.
123. The sanitary and phytosanitary control of fishery and aquaculture products and by-products is
the responsibility of the MAL's National Fisheries and Aquaculture Institute (INAPESCA), incoordination with the MSDS .  INAPESCA was set up under the Fisheries and Aquaculture Law
promulgated in November 2001, but actually bega n to function in March 2002.  Wild animals and
their products can only be imported under cover of a licence issued by  PROFAUNA, an autonomous
service of the MARNR.  To obtain this licence it is necessary to submit documentation issued by the
competent authority of the country of origin to s how that the specimens were lawfully obtained or
trapped.
43
124. Alongside its national sanitary regulations and as part of the coordination in sanitary matters
between member countries, Venezuela also applies Andean sanitary standards.  Decision 328 of the
Commission of the Council of the Cartagena Agreement of 22 October 1992 established the Andean
Agricultural Health System which serves as a framework for the coordination of member country
policies and as a legal instrument for ensuring that sanitary and phytosanitary measures do not
constitute barriers to trade in agricultural products.44  As part of the System, there is an Andean
Subregional Register containing approximately 600 na tional standards.  A standard must be entered in
this Register in order to be invoked for purposes of trade between member countries.
125. Decisions 436 and 438 were approved as part of  the policy of coordination in agricultural
health between member states of the Andean Community.  These decisions establish the requirements
and harmonized procedures for the registration and control of agricultural pesticides and standards forthe registration, control, marketing and use of veterinary products, respectively.  With respect to the
harmonization of phytosanitary policies, common importation requirements applicable to the intra-
subregional and third-country trade in 31 agricultural products were laid down under Resolutions 431
and 451 of the Council of the Cartagena Agreement.  These requirements include phytosanitary
certificates, controls, quarantine, etc.
45  The harmonization of zoosanitary policies is even more
                                                     
40 MPT Resolution No. 571 of 22 October 1999, in force since 28 October 1999.
41 Joint Resolution No. 4148, 449 and 650 of 10 November 1998.
42 Decree No. 1.343 of 13 June 2001, published in Official Gazette No. 37.237 of 11 July 2001.
43 MARNR Resolution No. 48 of 23 March 1990.
44 For the full text of Decision 328 visit:  http ://www.comunidadandina.org/normativa/dec/D328.htm.
45 Resolution 431 of 12 September 1996 establishes common phytosanitary requirements for the
importation of: garlic, cotton, rice, bananas, onions, citrus fruits, mangos, melons, potatoes, rosebushes,Venezuela WT/TPR/S/108
Page 63
advanced, since Resolutions 347 and 449 establish common requirements for all domestic animal
species and animal products and by-products in  the current NANDINA nomenclature.  Decisions have
also been adopted in other areas.
(3) MEASURES DIRECTLY AFFECTING EXPORTS
(i) Registration, documentation
126. The documentation required for exports consists of the customs declaration, the transport
document and the final commercial invoice.  Exports that benefit from preferences also require a
certificate of origin.  Exports of plants, animals and their products and by-products requirephytosanitary and zoosanitary certificates which are issued by the SASA before shipment.  Exports of
fishery products require an ichthyosanitary certificate previously issued by the Autonomous Fishery
and Marine Resources Service (SARPA) but now, since March 2002, being issued by INAPESCA.
The authorities point out that the requirements fo r obtaining these certificates reflect the need to
maintain trade in agricultural and fishery products within the sanitary parameters laid down by the
external markets in order to ensure the quality and safety of products intended for human
consumption.
127. The customs declaration must be made out and submitted by a customs broker registered with
the Ministry of Finance.  The transport document is the freight contract between the carrier and the
exporter.  Depending on the mode of transport agreed with the buyer for carrying out the exportoperation it may be: a bill of lading, an air way bill, a land bill of lading or a consignment note.  The
final commercial invoice must contain information relating to the customs office of exit in the country
of origin and the port of entry in the country of destination, together with a detailed description of the
goods, price, currency and terms of sale.
128. The customs declaration sometimes includes the tariff classification, if there is any doubt.
The tariff classification is a document issued by SE NIAT certifying that the tariff heading in which
the goods are classified is in fact the correct one under the Harmonized System.  Depending on thedestination, some exports require a quality certificate showing that the goods in question comply with
a specification or technical standard, supplied by the interested party; these certificates are issued by
FONDONORMA.  Exports of proce ssed products intended for human consumption, such as
processed foods, beverages, medicaments and cosmetics, must be entered in the Health Register of the
MSDS.
129. For those exports in connection with which financing is requested or it is desired to take
advantage of the motor vehicles policy and/or the Law on Free Zones, it is necessary to obtain a Local
Value Added Certificate specifying the percentage of local inputs in the product to be exported.  This
document can be obtained from the Ministry of Production and Trade.
130. The qualification of origin is a document issued by the Ministry of Production and Trade
indicating the rules of origin observed and the markets for which a certificate of origin can be
obtained.  The qualification of origin is valid for two years except in the case of vehicles and vehicle
parts and assemblies, for which the period of validity is one year.  In order to obtain this qualification
the exporter must provide the Ministry of Production and Trade with a profile of the product to be
exported for analysis.  The profile must include a list of domestic raw materials, the tariff code and
                                                                                                                                                                    
watermelons, soya, tomatoes and grapes/vines.  Resolution 451 of 23 January 1997 extends the list to include:
sweet potatoes, cocoa, coffee, barley, carnations, chry santhemums, peaches, asparagus, strawberries, kidney
beans, chickpeas, lentils, maize (corn), pea nuts, apples, pineapples, and wheat.  See
http://www.comunidadandina.org/normativa/RES/R449.htm.WT/TPR/S/108 Trade Policy Review
Page 64
the name of the suppliers, a list of imported raw materials, indicating the tariff code and country of
origin, and the cost structure of the product when it is being exported to the United States, Puerto Rica
or Canada, if the goods are the product of an assembly operation or if the product has a specific ruleof origin with a minimum regional content established by the European Union, the Group of Three or
Japan.
46  The qualification of origin is needed to obtain a certificate of origin, except in the case of
unprocessed animal, plant and mineral products and craft products.
131. Certificates of origin, issued by the Foreign Trade Bank (BANCOEX), accredit the origin and
provenance of the goods on the basis of the rules of origin established under the various preferenceschemes and conventions or agreements to which Venezuela is party.  To enable products which
comply with the rules of origin to benefit from th e tariff preferences negotiated, certificates of origin
are required to use the LAIA Credits and Reciprocal Payments Agreement and, on some occasions, to
execute letters of credit.  Certificates of origin cost VEB 15,000 each and are usually issued within
24 hours.
(ii) Export taxes, charges and levies; reference prices
132. No export duties are applied.
133. In 2000, Venezuela introduced reference prices for LPG exports to neighbouring countries,
calculated on the basis of a formula established by the Ministry of Energy and Mines.
47  T h e
authorities point out that the purpose of these prices is to establish the conditions for the sale inVenezuelan territory of LPG to be transported to neighbouring countries for consumption as fuel by
invoicing the export opportunity cost of the product plus the operational and administrative costs
incurred by the seller in transporting, handling, storing and marketing the LPG.  As of June 2002,
there had been no sales of this type in which LPG was exported to neighbouring countries by land.
(iii) Export restrictions
134. Prior authorization and verification of the destination are required for exports of products
listed in the Montreal Protocol on Substances that Deplete the Ozone Layer, in the Convention onInternational Trade in Endangered Species of Wild Fauna and Flora (CITES) and in the Basel
Convention on the Control of Transboundary Move ments of Hazardous Wastes and their Disposal.
135. In May 2000, as a member of the Associat ion of Coffee-Producing Countries (ACPC),
Venezuela agreed, under an ACPC retention plan, to withhold from the market 20 per cent by volume
of its coffee exports from October of the same year for a minimum period of two years in order toengineer a rise in the price.
48  In October 2001, the ACPC abandoned the plan as prices had not
responded in the way it had expected.49  The authorities point out that this is not of major significance
as far as Venezuela is concerned since it has only a very small share of the international coffee
market.
                                                     
46 The cost structure must include information on the costs of domestic and imported raw materials,
depreciation, other direct and indirect costs, profit margin, factory gate price, and f.o.b. export price.
47 Regulations of the Organic Law on Gaseous Hydrocarbons, Decree No. 840 Caracas, 31 May 2000.
48 It was decided that the retention would continue until the five-year average composite price of the
International Coffee Organisation reached US$0.95 per pound.  Internet address:http://www.acpc.org/html/about-frames.html.
49 Association of Coffee-Producing Countries, Resolution No. 02/2001, 27 September 2001.  Internet
address: http://www.acpc.org/reports/45.pdf.Venezuela WT/TPR/S/108
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136. As Venezuela is a member of OPEC, its oil production is determined by the Government.
This applies to production for both the domestic market and the international market.  The authorities
point out that the aim of this policy is to preserve a non-renewable natural resource and stabilize amarket notable for its volatility.
(iv) Export subsidies, tax concessions and free zones
(a) Export subsidies
137. Venezuela does not grant export subsidies properly so called, except in the case of
agricultural products.  With respect to these latter subsidies Venezuela has undertaken, within theframework of the WTO Agreement on Agriculture, progressively to reduce budgetary outlays for
export tax credits by a total of 24 per cent and the quantities that attract these subsidies by a total of
15 per cent over a period of 10 years starting in 1995.  Venezuela has notified its agricultural
subsidies to the WTO, together with its annual commitments.  The last notification was for 1998 (see
Section on agriculture).
138. Venezuela has a tax credit programme for domestically produced exports of goods and
services, notified to the WTO in 1996, which currently applies only to primary agricultural products.
50
Since 1997, this programme, originally administered by the Export Finance Fund (FINEXPO), hasbeen administered by the Foreign Trade Bank (BANCOEX).
51
139. The credit is provided by paying a percentage of the net f.o.b. export value.  Exports of
agricultural products corresponding to 72 six-digit NANDINA subheadings qualify for tax credit at
the rate of 10 per cent of the f.o.b. value.  The products concerned include animal products, bulbs, live
plants, vegetables, salad greens, nuts, fruit, coffee, spices, seeds, yellow maize (corn), rice, oilseeds,
cocoa, tobacco, raw cotton and sisal.  Barely 5 per cent of exports are covered by the tax credit.
(b) Tax concessions
140. In 1991, when the tax credit incentive for exports of manufactured goods was abolished, a
refund system was introduced.  In 1994, this was extended to include the reimbursement ofconsumption tax and wholesale tax.  The system for refunding customs duties and other taxes was
modified in 1999 with the introduction of VAT.  At present, a system of reliefs under special customs
procedures, including temporary admission for inwa rd processing, drawback, replacement of goods,
customs warehousing and recovery of VAT, is in force.
141. The Venezuelan temporary admission procedure involves suspending the payment of customs
duties and VAT where goods and inputs are impor ted for incorporation in products for export.
142. The duty-free replacement of goods procedure permits the once-only importation, with relief
from import duties and other taxes, of goods equivalent in quantity, description, quality and technical
characteristics to those in respect of which import duties and taxes have been paid and which have
been used in the production of previously exported goods.  Goods to be imported under this proceduremust enter the country within 180 days of the date of authorization.
                                                     
50 WTO document G/SCM/N/3/VEN/Suppl.1 of 20 November 1996.  Decree No. 1.597 of
13 June 1991 amended the Regulations of the Law on Export Incentives.
51 The programme has its legal basis in the Law on Export Incentives, Decree No. 881 of
29 April 1975, in the Regulations of the Law on Export Incentives, Decree No. 3.054 of 25 November 1978, andin Resolution No. 512 of 21 July 2000.WT/TPR/S/108 Trade Policy Review
Page 66
143. The drawback procedure provides for the refund of duties paid on imported goods  used in the
process of producing goods for export, whether the exporter paid the duties directly or bore the cost as
part of the purchase price of the goods, in accordance with the Regulations of the Organic CustomsLaw and Ministry of Finance Resolution No. 722 of 6 March 2001.  Drawback may be requested by
exporters established as legal persons domiciled in Venezuela within 30 working days of the date of
registration of the corresponding customs export declar ation.  To qualify for drawback the c.i.f. value
of the imported inputs granted exemption or total or partial relief from import duties and taxes must
not exceed 10 per cent of the f.o.b. value of the goods exported.  The drawback procedure does notapply to motor vehicles assembled using inputs imported under the vehicle assembly inputs (MEIV)
regime or to agricultural products eligible under the Export Incentives Law or to imports that have
been the subject of mere handling or cleaning, painting or trimming operations.
144. Under the special customs warehousing (in bond) procedure, goods are stored under customs
control in a designated place, without payment of import duties and taxes, for sale on the domestic orinternational market.
145. Exporters of goods and services may qualify for the recovery of VAT.  Upon application to
SENIAT, the exporter is entitled to recover all taxes paid on inputs represented in imported goods
purchased and services received in connection with his export activities.
52  In his application to
SENIAT the exporter must provide a list of domestic purchases of goods, domestic services receivedand services provided in Venezuela by non-resident natural or non-domiciled legal persons, indicating
the amount invoiced and the VAT.
146. Under cover of Partial Regulations No. 2 of the Law on VAT, in force since 26 August 1999,
exporters of goods and services may also recover the tax paid on domestic and imported purchases of
capital goods and on services that increase the value of such goods or are necessary for them to
perform the functions for which they are intended, made during the pre-operational phase of
implementation of industrial projects essentially intended to produce goods for export or to generatehard currency.
53  To qualify for the tax credit the volume of exports of goods or services must
represent at least 50 per cent of the enterprise's operations, or 25 per cent if the goods produced are
exempt from VAT.  In the case of tourism projects, foreigners must account, on average, for not less
than 40 per cent of the stays each year.  The recovery regime has a maximum period of validity of five
years from the commencement of the pre-operational phase.  If on the expiry of this period theapplicant can show that the pre-operational phase has not yet ended, the duration of the recovery
regime may be extended for a further period of not more than five years.
(c) Free zones and other special territorial regimes
147. Venezuela has three kinds of special territorial regimes: puertos libres  (free ports), zonas
libres  (free areas) and zonas francas  (free zones).
54  At the end of 2001, two free ports (Santa Elena de
Uairén and Nueva Esparta); two free areas (Estado de Mérida and Paraguaná); and two free zones
(Paraguaná and ATUJA) were operating.
                                                     
52 The legal basis for the refunding of taxes is Resolution No. 454 of 8 June 2000 and Decree No. 596
of 21 December 1999 (Partial Regulations No. 1 of the VAT Law concerning the Recovery of Tax Credits for
Exporter Taxpayers).
53 Decree No. 236 of 2 August 1999 adopting Partial Regulations No. 2 of the VAT Law on the
Recovery of Tax Credits, published in Official Gazette No. 36.772 of 25 August 1999.
54 The free zone regime has been notified to the WTO Committee on Subsidies and Countervailing
Measures, WTO documents G/SCM/N/3/VEN and L/7611/Add.4 of 7 July 1995.Venezuela WT/TPR/S/108
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148. The authorities regard the free zone regime as a means of promoting economic and regional
development and transferring technology through foreign trade.  The activities of the free zones are
regulated by the Law on Venezuelan Free Zones,  Official Gazette No. 34.772 of 8 August 1991.  In
the free zones, industrial  and exporting or re-exporting activities may be carried on, together with
activities involving the provision of commercial serv ices or services linked with international trade.
In principle, the corresponding customs authority is responsible for supervising free zone activities.
The Ministry of Finance is responsible for the tax and customs regime in the free zones and is also
required to examine, accept and process applications for the promotion and installation of enterprisesin them, subject to the favourable opinion of the Ministry of Production and Trade.
149. Imports destined for free zones and the construction of infrastructure in them are exempt from
customs duties and taxes, VAT and other internal taxes, as well as from any possible tariff or para-
tariff restrictions, with the exception of those imposed for sanitary or defence purposes.  Profits
resulting from free zone activities are exempt from income tax for a period of ten years, which can beextended.  Enterprises installed in free zones may qualify for any other export incentive in force in
Venezuela, such as the Andean Community relief programme, after obtaining a BANCOEX
certificate of origin.  In order to qualify for the concessions granted to free zone operations a specific
percentage (80 per cent in the fourth year of activity) of all the goods produced, assembled or
otherwise processed in the zone must be exported.
150. In the free ports, all the customs operations provided for in the Organic Customs Law and its
regulations may be carried out.  Goods entering under the free port regime are not subject to import
duties but must pay the charge for customs services; similarly, they are not subject to internal taxes,
provided that they are consumed in the free port.
151. Free area activities are restricted to specific sectors or types of goods and services.  For
example, the Free Area for the Promotion of Tourism Investment in the Paraguaná Peninsula was
established under the Law on the Establishment and Regime of the Free Area for the Promotion ofTourism Investment in the Paraguaná Peninsula, Falcón State, of 6 August 1998 for promoting the
provision of tourism services and commercial services related to tourism.  The Cultural, Scientific and
Technological Free Area of Mérida State (ZOLCCYT), established under the Law on the Cultural,
Scientific and Technological Free Area of Mérida State of 14 July 1995 and regulated by Decree
No. 2.714 of 9 September 1998, operates under a preferential tax regime set up for the purpose ofencouraging the production, dissemination and distribution of cultural, scientific and technological
goods and activities in the region.  Activities relating to the production, distribution, marketing and
promotion of goods subject to the regime carried out within ZOLCCYT are exempt from income tax.
(v) Export financing, insurance and guarantees
(a) Export financing
152. The financing and promotion of exports, both goods and services, is the responsibility of the
Foreign Trade Bank (BANCOEX), which is a State financial institution established in July 1996
following the approval of the Foreign Trade Bank Law and has been operating since October 1997
with a capital of US$200 million.  BANCOEX's two shareholders are the Economic and Social
Development Bank of Venezuela (BANDES) and the Ministry of Finance.  Under the Law on the
Partial Reform of the Foreign Trade Bank of 22 November 2001, BANCOEX was converted into a
development bank under the Ministry of Production and Trade and authorized to finance production
projects for the export of goods and services.  BANCOEX deals not only with export financing but
also with technical assistance, training and promotion of the export sector, being able to act as a
second-tier bank.WT/TPR/S/108 Trade Policy Review
Page 68
153. In the area of export financing, BANCOEX grants credits and guarantees, for a term of up to
12 years, to exporters of goods and services of domestic origin and to importers in other countries
who request financing from the Bank for purchasing goods and services of Venezuelan origin.Likewise, it grants credits to banks and other financial institutions for financing foreign trade
operations or developing production projects.  BANCOEX programmes cannot be used for financing
oil exports.  BANCOEX is authorized to participate for a period of up to five years in the capital of
new enterprises producing and marketing Venezuelan  non-petroleum goods or services, provided its
holding does not exceed 30 per cent of the capital.
154. BANCOEX offers exporters financing in foreign currencies on preferential terms, including:
credits for working capital; discounts for prompt  payment; and buyer credit.  BANCOEX provides
loans of up to 100 per cent of the cost of production for export for a period of up to 360 days,
depending on the cycle of the good or service to be financed, at LIBOR plus a margin.  The terms and
conditions, like the guarantee and other requirements, depend on the type of financing.  The marginsover LIBOR are determined by assigning an approximate percentage profit plus a percentage
associated with the risk attached to the recipien t of the BANCOEX funds; in addition, consideration is
given to market conditions, liquidity and the funding costs accruing to the institution, on the basic
assumption that the bank's active rate must cover the processing costs.
(b) Export insurance and guarantees155. The use of an insurance policy is not compulsory but is fairly common in export transactions
since the financing operations must be covered by export insurance policies or other guarantees.  In
Venezuela, there are two types of insurance for exports: (a) export credit insurance for protecting the
Venezuelan exporter from the commercial and non-commercial risks that may arise during the export
operation; (b) ordinary insurance provided by some private insurer.  Export credit insurance covers
the commercial risks up to a maximum of 85 per cent and is offered exclusively by La Mundial C.A.
Venzolana de Seguros de Credito ; the authorities point out that this exclusivity is not based on any
legal provision.  La Mundial C.A. Venzolana de Seguros de Credito  is a private enterprise established
in 1974 for the specific purpose of providing export credit insurance and currently has 30 shareholders
representing various enterprises in the Venezuelan and foreign insurance sectors.
156. Since Venezuela's last TPR in 1996, the Fund for the Payment of Political and Extraordinary
Export Claims, administered by BANCOEX, has ente red into operation for paying claims relating to
the insurance of non-petroleum exports of goods and services of Venezuelan origin against political
and extraordinary risks.  The Fund was set up w ith contributions from BANCOEX, the Venezuelan
Investment Fund and the Ministry of Production and Trade and has a Committee consisting of the
president of BANCOEX and representatives of the Ministry of Finance, the Ministry of Production
and Trade, the Chamber of Insurers and the Insurance Superintendency.  The Committee isresponsible for approving the payment of claims.  BANCOEX is also authorized to set up export
credit insurance or reinsurance enterprises.  The authorities point out that so far BANCOEX has not
set up any enterprises in this specialized sector; however, it has asked certain insurance companies to
include export credit insurance in their product portfolio.  In mid-2002, several insurers were
examining this possibility and consulting with their reinsurers.
(vi) Export promotion
157. The entities responsible for export promotion are the Ministry of Production and Trade, the
Ministry of Foreign Affairs and BANCOEX.  The latter manages the Fund for the Promotion of
Exports and Investment, which is financed with contributions from BANCOEX and the government,
as well as from the profits generated by its operations.  In 2001, a special contribution equivalent toVenezuela WT/TPR/S/108
Page 69
1 per cent of f.o.b. imports was created but, as of Se ptember 2002, it had not been put into effect due
to the lack of implementing regulations.  The Fund for the Promotion of Exports and Investment has a
Committee consisting of the president and vice-president of BANCOEX and representatives (one perinstitution) of the Ministry of Production and Trade, the Ministry of Foreign Affairs, BANDES, the
Venezuelan Exporters Association and the Venezuelan Confederation of Manufacturers.  The Fund is
responsible for the implementation of export promotion policy; policy formulation is the
responsibility of the Ministry of Production and Trade and the Ministry of Foreign Affairs.
158. In February 2001, BANCOEX, the Ministry of Production and Trade and the Ministry of
Foreign Affairs signed an agreement to establish Venezuelan trade offices abroad.  The aim of the
agreement is to promote non-petroleum exports and investment by establishing a foreign network of
representative trade offices which currently consists of offices in Bogota, Madrid and Mexico City.
Since the Agreement entered into force, the trade of fices and their staff have been functionally and
administratively dependent on BANCOEX.  The funds for operating the trade offices come from the
Fund for the Promotion of Exports and Investment.
159. Under its export promotion mandate, at the end of 2001, BANCOEX was preparing an export
plan based on guidelines proposed by the National Plan 2001-2007, which seeks to promote non-
traditional exports.  This plan is to be given concrete expression in an Integrated Export Promotion
System (SIFE).  SIFE comprises the Territorial and Entrepreneurial Export Development Programme(PRODETEX), the International Markets Programme (PROMI) and the Strategic Export
Development Programme (PRODEX).  PRODETEX is a programme to expand and diversify the
exportable supply and increase the number of exporters.  PROMI is a programme to generate demand
for Venezuelan exporters and identify, explore and develop international markets.  PRODEX is the
SIFE master programme and is intended to establish the strategic direction of the plans and policies.
(4) 
MEASURES AFFECTING PRODUCTION AND TRADE
(i) Legal framework for production and investment
160. To establish an enterprise in Venezuela it is necessary to register it in the Commercial
Register ( Registro Mercantil ).  Foreign enterprises can operate by setting up a company with its own
legal personality independent of the parent company; through a subsidiary, a branch or a
representative office; or through technology transfer, franchising or patent and trademark licensing
agreements.  The Commercial Code treats companies domiciled abroad as foreign whether or not the
principal object of their operation, trade or industry is in Venezuela.  The Superintendency for Foreign
Investments (SIEX), an official body answering to the Ministry of Production and Trade, has
supervisory and other responsibilities relating to foreign investment.
161. The investor must register his investment with SIEX within 60 calendar days of making the
investment; registration with SIEX is not compulsory, except in the oil and gas, mining, banking andinsurance sectors which have other specific registration requirements.  SIEX issues national investor
certificates.  In the case of oil and gas, mining and petrochemicals, foreign investments must be
registered with the Sectoral Directorate Genera l of Technology and Investment Promotion of the
Ministry of Energy and Mines.  Foreign investment in insurance must be registered with the Insurance
Superintendency; investments in the rest of the financial system must be registered with the BankSuperintendency.
162. According to SIEX, three working days are required to register a foreign investment in the
Commercial Register; acquiring legal personality as a limited liability company takes three additional
working days (in both cases under the special registration procedure this period can be reduced to oneWT/TPR/S/108 Trade Policy Review
Page 70
working day).  After that, approximately five working days are needed to register the new foreign
investment with SIEX.  Registration in the Commercial Register costs approximately VEB 80,000
plus 1 per cent of the company capital, it costs VEB 15,000 to remove a name, and the cost ofregistering with SIEX is approximately VEB 200,000 (US$148 in August 2002).
163. As regards the tax framework, the maximum rate of income tax is 34 per cent, with reductions
for new investments in agriculture, manufacturi ng, tourism, and hydrocarbons.  The tax on the
revaluation of assets is 1 per cent while dividends are free of tax.  Foreign investors can use the
mechanism of conversion of Venezuelan external debt purchased at a discount in secondary marketsto make capital contributions in cash to investments in enterprises established in Venezuela.
(ii) Incentives
164. Venezuela has aid programmes which include tax incentives in the form of exemptions or
relief from income tax, VAT and customs duties.  There are also a series of preferential credit
programmes, a guarantee system, and technical assistance and training programmes.
(a) Investment incentives
165. In September 1993, within the Andean Community context, Venezuela signed, together with
Colombia and Ecuador, an Automotive Sector Complementarity Agreement with a view to adopting a
common policy on promoting specialization in the sector.  In December 1993, Venezuela issued the
Rules for the Development of the Automotive Industr y which require vehicle assembly enterprises to
incorporate a percentage of local content of the signatories to the Agreement in domestically
assembled vehicles.  Compliance with the measure by the assembler entitles him to use the special
import regime (CKD regime) which reduces the duty on imported vehicle assembly inputs to 3 per
cent.  This measure was notified to the WTO as a trade-related investment measure (TRIM).
55  The
local and regional content requirements were abolished on 1 January 2000 upon the entry into force of
a new Automotive Sector Complementarity Agreement with a duration of 10 years, subject to
extension (Chapter IV(6)(iii)(b)).
166. Since the end of 1999, the automotive industry has benefited from the Family Vehicle
Programme 2000 intended to revitalize the automotive sector by granting vehicles purchased at
reduced prices and on easy terms exemption from VAT (Chapter IV(6)(iii)(b)).
(b) Tax incentives
167. Venezuela applies a series of national tax incentives which include reductions in income tax
and VAT.  The 1999 Law on Income Tax (ISLR) (Official Gazette No. 5.390 of 22 October 1999)
grants a tax reduction of between 8 and 80 per cent for new investments in certain sectors made
during the five years following the entry into force of the Law.  The Law also empowers the President
of the Republic to grant total or partial relief from ISLR to those sectors which are deemed to be of
special importance for regional or national economic development and job creation.
168. Up to 31 December 2000, by hiring new workers enterprises qualified for a tax reduction of
10 per cent on the increase in the wage bill for Venezuelan personnel.  Enterprises granted
concessions for public works or services, governed by the Law on the Promotion of Private
Investment under the Concession Regime (Official Gazette No. 5.394 of 25 October 1999), can take
                                                     
55 WTO document G/TRIMS/N/1/VEN/1 of 12 April 1995.Venezuela WT/TPR/S/108
Page 71
advantage of ISLR exemptions proportional to the financial effort of investment required by the
works or services forming the subject of the concession.
169. There is also a series of VAT exemptions for the importation and domestic purchase of capital
goods for industrial projects, as well as services that enhance the asset value of those goods, available
during the pre-operational phase (Section (2)(v)(a)), as well as for export and currency-generating
activities and imports of goods from abroad under the free zone regime (with the exception of the Free
Port of Nueva Esparta).
(c) Credit and guarantee programmesAid for investment and industrial rationalization
170. The Industrial Credit Fund (FONCREI) grants loans on easy terms for the purchase of
tangible and intangible assets and for working capital.  FONCREI  is an autonomous institution under
the Ministry of Production and Trade whose purpose is to support industrial development by grantingloans through the banks at below market rates.  These loans must be used to finance investment
projects for establishing, expanding or modernizing manufacturing enterprises.  The Fund also
provides technical, managerial, technological and commercial aid.
171. Manufacturers in the petroleum, petrochemical, base metal, mining, mechanical engineering,
wood (including pulp, paper and cellulose) and agro industrial sectors can qualify for FONCREI loans,
as can all those who implement productivity and quality plans or whose output generates high value
added or who export on a regular basis, without any discrimination by sector, region or size.
Excluded from these loans are the distillation, rectification and mixing of alcoholic beverages and
related industries; the tobacco industry; publishers of commercial newspapers and magazines; and
aircraft manufacturing, modification and repair .  In the fiscal year 2001, FONCREI received an
appropriation of VEB 6,500 million for its capital.
56
172. The maximum amount of financing is VEB 2 billion per enterprise or group of enterprises, or
70 per cent of the total investment in the project.  The loans have a term of up to 15 years including a
three-year grace period.  The interest rate is 75 or 90 per cent of the weighted average active rate
applied by the country's six main banks.  The specific conditions depend upon the type of loan.
173. FONCREI funds are made available only to Venezuelan private enterprises (certified by
SIEX); they are not available to foreign enterprises or to enterprises in which the State holds 20 percent or more of the capital.  Nor are they available to non-manufacturing enterprises.  The funds
cannot be used for refinancing debts with FONCREI but they can be used for refinancing bank debt.
The loans are provided through financial intermediaries (general, commercial or investment banks,
regional development funds, or finance companies) that sign up with FONCREI.  Financial
institutions holding more than 20 per cent of the capital of the applicant enterprise may not befinancial intermediaries.
57  Between 1999 and 2001, according to  preliminary information, FONCREI
approved loans worth almost US$74 million.
174. In 2002, apart from regular FONCREI loans, there are three financial intermediation
agreements in place: the Banco Industrial de Venezuela -FONCREI agreement; the Financial
Intermediaries-FONCREI agreement; and the Non-Banking Financial Institutions-FONCREIagreement, which offer an element of preference in the rates of interest payable.  A fourth agreement,
                                                     
56 See budget for the fiscal year 2001.  In ternet address: http://www.ocepre.gov.ve/.
57 http://www.foncrei.org.ve/.WT/TPR/S/108 Trade Policy Review
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the support and maintenance programme for small and medium-sized operating manufacturing
enterprises (the Asociacion Bancaria de Venezuela -FONCREI agreement) was in force in 2001.
175. Under the industrial restructuring plan, and to promote decentralization, the Venezuela
Investment Fund (FIV) was converted into the Venezuelan Economic and Social Development Bank
(BANDES).  BANDES is an autonomous institution unde r the Ministry of Planning and Development
supervised by the Superintendency for Banks and Other Financial Institutions under Decree Law
No. 1.274 of 10 April 2001.  BANDES's objectives are to provide technical and financial support for
the expansion, diversification, modernization and competitiveness of the productive structure, tofinance public and private infrastructure and technological innovation, transfer and development
projects, and to act as a trustee for public sector agencies, by carrying out short- and long-term
financing operations.  BANDES also channels res ources from multilateral institutions such as the IDB
and the World Bank and is responsible for financing and supporting regional development by making
global loans to regional funds for the implementation of development programmes and projects.BANDES is also responsible for the privatization programme.
176. BANDES is authorized to provide soft loans or grants from its own resources in an annually
determined amount of up to 5 per cent of the profits made in the immediately preceding financial
year.  The General Assembly fixes the amount of these resources in each annual budget.  BANDES
may also participate in enterprises being set up to produce and market domestic goods or services, bycontributing not more than 20 per cent of the company capital for a period of not more than five years.
In its first year of operation (2001-2002), BANDES expects to allocate US$100 million for setting up
autonomous funds destined for specific purposes and operations on concessionary terms.
177. In 2001, BANDES in itiated the Productive Investment and Social Development Programme
to assist the financing of projects neglected by the traditional banks but considered necessary to
promote socio-economic development in the industrial, agricultural commerce services and
productive micro-enterprise sectors (productive investment projects), as well as in the areas oftraining and employment, technical assistance with project design, and municipal and state economic
and social profile studies (social and regional development projects).
178. Up to 1999, when it was dismantled, the Small and Medium-Sized Industry Development
Corporation (CORPOINDUSTRIA) provided assistance with restructuring in order to promote and
strengthen the competitive development of small and medium-sized industry.  This assistancegenerally took the form of a debt refinancing and working capital financing programme.
Guarantee system
179. Venezuelan small and medium-sized enterprises can obtain guarantees from the National
Mutual Guarantee Association for Medium-Sized and Small Industry (SOGAMPI).
58  SOGAMPI is a
mutual benefit association set up by the State, the banks, the trade unions and the beneficiary
members which, by means of bonds and references, guarantees the repayment of loans granted to
associated enterprises.  In order to belong to SOGAMPI an enterprise must have annual sales and
capital that do not exceed certain limits (VEB 1,880 and 250 million, respectively) and may not
employ more than 200 workers.  Members of SOGAMPI are also eligible for technical assistance.
                                                     
58 On the basis of the Decree with the status and force of Law regulating the National System of Mutual
Guarantees for Small and Medium-Sized Enterprises, published in Official Gazette No. 38.824 of8 November 1999, and the Rules for the Promotion, Establishment and Operation of National Mutual GuaranteeFunds and Mutual Guarantee Associations, published in Official Gazette No. 36.969 of 9 June 2000.Venezuela WT/TPR/S/108
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180. The National Mutual Guarantee Fund for Small and Medium-Sized Enterprises (FONPYME)
was set up in 2001.  The Fund’s capital is VEB 50.025 billion, with contributions of VEB 10 billion
each from the Ministry of Production and Trade, the Ministry of Finance, BANDES, BANCOEX,FONCREI and SOGAMPI.  FONPYME’s objective is to facilitate the channeling of financial
resources to small and medium-sized enterprises by performing the functions of a second-tier surety
for the guarantees provided by the enterprises par ticipating in the small and medium-sized enterprise
guarantee associations.  FONPYME also acts as a direct guarantor in sectors regarded as government
priorities or in which there are no guarantee associations.  The target of the authorities for 2002-2003is to establish 8 new guarantee associations at the national level, which will make it possible to
guarantee 1,250 loans with an average value of VEB 5 million each.
59  In 2001, councils for
promoting guarantee associations were set up in Falcón, Lara, Zulia, Aragua, Monagas, Cojeres and
Táchira States.
Aid for research and development (R&D)
181. The Ministry of Science and Technology (MST) is responsible for research and development
and the application of the knowledge acquired to the productive sector.  The MST lays down policies
and guidelines to be followed by all its functionally decentralized subordinate entities.
182. Up to September 2001, the National Scientific and Technological Research Council
(CONICIT), an MST institution, subsidized and financed the research activities of the universities and
research and development centres.  CONICIT’s programmes included the subsidizing of scientific
research, technological development and training projects (grants, loans, scientific events, etc.) by
offering loans on easy terms, with preferential interest rates, financing for up to 80 per cent of the cost
of the project and a maximum term of five years.
183. In 2001, CONICIT’s last year of operation, the scientific research project subsidy programme
had a budget of almost VEB 2 billion for projects of 1, 2 or 3 years’ duration with financing limits ofVEB 36, 72 and 108 million, respectively.  Altogether, 70 per cent of the resources available were
allocated to areas such as agrifood, health, biotechnology, mechanical engineering, oil, gas and
alternative energy, education, etc.  A total of VEB 1.392 billion was used to finance research projects
submitted by groups of researchers (duration three to four years); and VEB 790 million was set aside
for equipping research centres (60 per cent of the cost of the equipment up to VEB 79 million).Finally, VEB 580 million was made available for equipping laboratories (four-year loans with a
maximum of VEB 145 million per year).
184. CONICIT was converted into the National Science, Technology and Innovation Fund
(FONACIT) by Decree No. 1.290 of 30 August 2001, which has the status and force of an organic law
for science technology and innovation.
60  FONACIT is an autonomous institution under the MCT
whose aim is to propose and establish the procedures for allocating financial resources for the
development of science and technology.  In mid-2002, FONACIT was in its initial phase and was
continuing to carry out programmes of support for scientific research projects by financing projects in
such areas as agrifood, health and biotechnology that fitted within the guidelines laid down by the
MST and were previously funded by CONICIT.  FONACIT also has a programme for the petroleumsector and manages a telecommunications research fund.
185. The National Technology Information Centre (CNTI) was established by Decree No. 737 of
16 March 2000, published in Official Gazette No. 36.916 of 22 March 2000, to develop, in
                                                     
59 Statements by Agustín Pérez, President of FONYPME, El Universal, Caracas, 26 April 2001.
60 Official Gazette No. 37.291 of 26 September 2001.WT/TPR/S/108 Trade Policy Review
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coordination with government agencies, strategies, policies, plans, programmes and standards
designed to promote investment and the development and consolidation of the information technology
sector.
Sectoral aid
186. The Government has recently issued a series  of decrees with a view to reforming the
regulatory framework of support for economic activity.  The reforms are aimed at strengthening the
activities of the entities that provide aid through second-tier banks capitalized with State funds whoseaim is to channel credit to those producers who need it, especially small and medium-sized enterprises
and small farmers.  Thus, Decree No. 420 of 21 October 1999, established the National Agricultural,
Fishery, Forest and Related Development Fund (FONDAPFA); farmers also receive preferential
credit and qualify for tax exemptions (Chapter IV.2).
187. The Industrial Bank of Venezuela (BIV) is an exclusively first-tier universal bank that
provides short- and medium-term financing for pr oduction, marketing, transport, storage and other
operations in the industrial, agroindustrial, crafts, tourism, oil and gas, and mining sectors.
61  To this
end, it provides enterprises with financial assistance to expand and diversify their industrial
production, to supplement long-term loans from othe r institutions, and to promote and finance the
exportation of industrial products of Venezuelan orig in.  The authorities point out that, despite this,
BIV’s activities are mainly focused on the domestic market.
188. Likewise, BIV provides technical assistance for enterprises linked with oil, gas and mining
activities.  BIV finances the operations of small and medium-sized enterprises from its own resources
and arranges financing based on the resources of other public entities.  It grants loans in VEB for
working capital in the form of 90-day promissory notes that can be extended for up to one year, loans
for up to two years, bill discounts for up to 180 days, credit facilities for up to one year, and letters of
credit (domestic, import, export).  Loans are also granted for fixed investment, with terms of up tofive years including a grace period of up to one year.
189. The Micro-Finance Law of 15 March 2001, which entered into force on 15 March 2001, is
designed to facilitate the channeling of credit to the rural and urban sectors, especially to small
users.
62  Thus, the Law is designed to promote th e development of the micro-financing system,
defined as that which grants loans to micro-entrepreneurs (with annual sales of up to 4,500 t.u.) or toassociations and micro-enterprises (legal persons with a maximum of 20 employees and annual sales
of up to 9,000 t.u.), for any productive or marketing activity.  Loans under the programme are granted
by a second-tier bank set up with funds from the Ministries of Finance and Social Development and
Health and from the Ministry of Production and Trade.
190. The entity responsible for tourism grants incentiv es in the form of exemptions from customs
duties on the importation of vessels, aircraft, vehicles and parts used for transporting tourists.
Regional assistance
191. A number of tax incentives are granted at State and municipal government level.
192. Under the Law on Special Economic Appropriations for States Derived from Mines or
Hydrocarbons (Official Gazette No. 36.110 of 18 December 1996), a percentage of the revenue from
                                                     
61 http://www.biv.com.ve/.
62 Published in Official Gazette No. 37.076 of 13 November 2000.Venezuela WT/TPR/S/108
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taxes on mining and hydrocarbons is earmarked for the states.  In order to calculate this percentage, a
percentage corresponding to the Situado Constitucional  (revenue sharing system) which generates this
income is deducted from the tax revenue collected.  From the resulting sum an amount equivalent to20 per cent for 1998, 25 per cent for 1999 and 30 per cent for 2000 and subsequent years is set aside
as a special appropriation for the states.  The special economic appropriations for the states can only
be used to cover the cost of investing in proj ects in the following areas: exploration for and
exploitation of mineral and hydrocarbon deposits; environmental protection; financing of applied
research for the development of agriculture and small and medium-sized industry; infrastructure andequipment in the healthcare, educational, cultural and public transport sectors; housing and
agricultural infrastructure improvement programmes.
193. In addition, the state governments have financing and promotion funds.  Examples include the
Fund for the Financing of Crafts and Micro-, Small and Medium-Sized Businesses of Mérida State
(FONFIMER) and the Revolving Fund for the Fina ncing and Development of Small and Medium-
Sized Industry of Zulia State (FONFIDEZ).  These f unds seek to promote the establishment of small
and medium-sized enterprises through the granting of soft loans at preferential rates of interest.  In the
case of FONFIMER, an active policy has been fo llowed with 1,672 loans granted between 1996 and
1999 for a total of VEB 3.641 billion.
(iii) State trading, public enterprises and privatization
194. Venezuela has notified the WTO Working Group on State Trading Enterprises that the
activities of Petróleos de Venezuela, S.A. (P DVSA) correspond to those of a State trading
enterprise.
63  Since 1996, Venezuela has dismantled the Foreign Exchange Administration Council
(JAC) responsible for approving all Venezuelan imports for the purpose of administering the
exchange controls in force between 1994 and 1996.
195. The intervention of the State in the Venezuelan  economy continues to be substantial, despite
the privatization efforts of recent years.  There are still decentralized State-owned or State-controlledpublic enterprises.  The State-owned businesses include enterprises in, for example, the petroleum,
energy and mines, transport, trade and agricultural sectors.  The activities of PDVSA and private
petroleum-sector operators are described in Chapter IV.
196. The 1997 Privatization Law (Official Gazette, Special Edition, No. 5.199 of
30 December 1997) regulates the process of privatization of public-sector goods and services.  TheLaw considers public enterprises to be those in which the State holds 50 per cent or more of the
capital.  The partial or total privatization of enterprises considered basic or strategic must first be
approved by the Congress, whatever the percentage of State participation.  Privatization operations
must be carried out by public tender or under the procedures laid down in the Capital Market Law.  In
the case of the privatization of public enterprises or enterprises in which the public sector holdingamounts to more than 10 but less than 50 per cent of the capital, the workers are given the option to
buy up to 20 per cent of the shares at market prices.
197. Apart from the general objectives of promoting free competition and extending share
ownership, Venezuelan privatization policy is aimed at encouraging news forms of business
organization, such as cooperatives, worker participation and worker control.  The net proceeds ofprivatization are channelled into the assets of the Fund for the Redemption of Venezuelan Public
Debt.
                                                     
63 WTO documents G/STR/N/1/VEN, G/STR/N/1/VEN/Suppl.1 and G/STR/N/4/VEN of 13 August
1996, 3 March 1997 and 17 February 1999, respectively;  G/STR/N/5/VEN, G/STR/N/6/VEN of 18 July 2000.WT/TPR/S/108 Trade Policy Review
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198. The privatization programme begun in 1989 included a considerable number of State
enterprises in the shipbuilding, sugar processing, cement, banking, air and maritime transport,
aluminium, iron, electrical power, telecommunications and tourism sectors.  In recent years theprivatization process has slowed and few privatizations have been completed since the last trade
policy review in 1996.  One example is the delay in the privatization of the electrical power supply
enterprises (see Chapter IV).  In this connection, th e authorities point out that the privatization policy
laid down in the Economic Transition Programme for 1999-2000 provided for the continuation of the
privatization process in the electrical sector  (ENELVEN-ENELCO, ENELBAR and SEMDA), in the
aluminium sector (privatization of VENALUM and strategic associations with foreign capital for
ALCASA and CARBONORCA) and with respect to national racecourses.
(iv) Competition policy
199. Article 299 of the 1999 Constitution states that free competition is one of the principles on
which Venezuela’s socio-economic regime is founded.  Thus, the Constitution itself prohibits action,behaviour and agreements whose purpose is to establish a monopoly or which lead to the existence of
a monopoly, as well as the abuse of a dominant position, and requires cartelization and other related
offences to be punishable by law.  In order to ensure free competition the Venezuelan Constitution
calls for the promulgation of a law providing for the establishment of a supervisory, regulatory and
inspection body.  In June 2001, a preliminary draft of such a law was introduced and is currentlyreceiving a second reading in the National Assembly.
200. According to the authorities, Venezuela considers that there is a need for multilateral rules on
competition policy.  In the absence of such rules, competition policy in Venezuela is regulated at two
levels:  national and Andean subregional.  At national level, investigations are carried out into
restrictive business practices whose effects are internal.  The Venezuelan competition policy
legislation currently in force is the Law on the Promotion and Protection of Free Competition (Pro-
Competition Law), published in Official Gazette No. 34.880 of 13 January 1992.  The Pro-Competition Law imposes a general prohibition on behaviour that prevents or distorts free
competition, namely: horizontal agreements, vertical practices, abuse of dominant position, boycotts,
unfair competition and competition-restricting economic concentrations.  The provisions of the Pro-
Competition Law have been supplemented by Regulations Nos. 1 and 2 of the Law on the Promotion
and Protection of Free Competition (Official Gazette No. 35.202 of 3 May 1993 and No. 35.963 of21 May 1996, respectively).  If the restrictive practices affect two or more countries of the Andean
Region, the applicable measure for restoring free competition is Decision 285 of the Andean
Community.
201. At present, the agency responsible for supervising the application of this Law is the
Superintendency for the Promotion and Protection of Free Competition or Pro-Competencia.  Pro-
Competencia is an agency with functional autonomy th at is administratively part of the Ministry of
Production and Trade.  Its purpose is to supervise, monitor and oversee Venezuelan trade and
industrial practices and its main task is to identify and sanction anti-competitive practices and to
restore free competition in the market.  Pro-Competencia began operating in April 1992.  In the case
of natural monopolies, it monitors the deregulation processes to ensure that they generate efficienciesand more competition.
202. The administrative procedure for determining restrictive practices can be initiated ex officio
or by any natural or legal person who makes a complaint against one or more of the practices
prohibited by the Law, without it being necessary for the complainant to be directly affected thereby.
Once the administrative procedure has been initiated, the alleged infringer(s) is notified, Pro-Competencia having 90 working days from the date of notification of the procedure to issue a finalVenezuela WT/TPR/S/108
Page 77
resolution.  Final resolutions may contain orders and conditions for eliminating the restrictive effects
on the domestic market or recommendations for modifying the practice called into question.  If it is
found that an economic operator has engaged in a prohibited practice, Pro-Competencia may alsoimpose a penalty consisting of a fine of up to 20 per cent of the value of the infringer's sales.  Pro-
Competencia's decisions may be appealed to the First Administrative Court within 45 days of the date
of notification of the final resolution.
203. Article 18 of the Competition Law provides for activities which are, in principle, prohibited,
such as exclusive territories and franchises, to be permitted under certain conditions.  Thus, underResolution No. 004-93 of 18 June 1993, Pro-Competencia established an exceptional regime of
application of the Law in respect of the guidance on prices and marketing conditions which
agricultural producer cooperatives and associations give their members.  Likewise, Resolution
No. 005-93 of 18 June 1993 established a de minimis  rule according to which the market would not be
significantly affected by those agreements and concerted practices and decisions among competitorsrelating to goods or services which: (a) do not exceed 15 per cent of the total business volume; and
(b) where the participating enterprises have an annual turnover of not more than VEB 30 million.  In
2000, Pro-Competencia issued its Guidelines for the Evaluation of Franchising Contracts in the form
of Resolution No. SPPLC/038-99 of 9 June 1999 which establishes the criteria for evaluating the
appropriateness of authorizing such contracts.  A ccording to the guidelines , for the authorities the
justification is that franchises promote the entry of new competitors into the market, since they make
it possible to create a uniform distribution network with limited investment, thereby encouraging
competition with large distribution companies and preventing concentration.
204. In 1999, Pro-Competencia issued a series of  Guidelines for the Evaluation of Economic
Concentration Operations establishing the mechanisms to be used for estimating the effect of such
operations on the market.
64  The elements which have to be assessed include the following:  the
existence of current or potential competitors with the ability to respond;  whether the economicconcentration operations make it more likely that the resulting enterprise will engage in unilateral
anti-competitive practices and might displace competitors or prevent them from gaining access to the
market;  and whether, as a result of the operation, the enterprises that share the market may continue
colluding with greater success.  In its analysis, Pro-Competencia uses criteria which include the
identification of the relevant market in which the merging companies operate, the calculation of the
level of concentration in that market before and after the operation, the height of the barriers to market
entry, and the economic benefits that could result from the concentration operation.  It should be
pointed out that, under the legislation in force, the notification of economic concentration operations
is not mandatory.  However, Pro-Competencia may make a post facto  assessment if it suspects the
existence of restrictive effects and impose conditions to prevent such effects if they are deemed torestrain free competition.
205. Most of the cases dealt with by Pro-Competencia between 1997 and 2001 related to the
provision of services, including air and sea tran sport, telecommunications, tourism, professional
services, etc. Among the industrial sectors, Pro-Competencia has analyzed cases of anti-competitive
practices in such sectors as food and beverages (carbonated and alcoholic), iron and steel, andpharmaceutical products.  Pro-Competencia has frequently had to deal with abuses of dominant
position and concerted practices, such as price cartels and market sharing on a geographical basis.  It
has also examined cases relating to the manipulati on of production factors, false advertising, boycotts
and the violation of trade secrets.  With respect to mergers, only a few cases have been examined, the
most prominent being Coca-Cola-Embotelladoras Hit in 1996 and Pinco Pittsburg-Corimon in 1993.In the cases examined between 1997 and 2001, most were authorized on the basis of efficiency
                                                     
64 Official Gazette, Special Ed ition, No. 5.431 of 7 January 2000.WT/TPR/S/108 Trade Policy Review
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considerations and international market criteria.  Pro-Competencia has also had to rule on the effects
on competition of applying a safeguard measure when, within the framework of a safeguards
investigation, CASS requests its opinion.
(v) Enforcement of intellectual and industrial property rights
(a) Legal and institutional framework
Overview
206. Venezuela is a member of the World Intellectual Property Organization (WIPO) and a
signatory to various international intellectual property agreements.65  Since 1996, Venezuela has
signed, but not yet ratified, the WIPO Treaties on Copyright and on Performers and Phonograms
(these agreements are not yet in force).
207. The authorities point out that the legal system for the protection of intellectual property rights
is incorporated in the Constitution, the decisions of the Andean Community, the other international
treaties to which Venezuela is party, and the relevant national laws and regulations.66  T h e
1999 Constitution contains several provisions guaranteeing the freedom of cultural, scientific,
technological and humanistic creation and the recognition and protection of intellectual property by
the State and expressly recognizing the validity of th e relevant international treaties.  The Constitution
also includes articles relating to the protecti on of the traditional knowledge of the indigenous
communities.
208. Since 1 January 2000, the Agreement on Trade-Re lated Aspects of Intellectual Property
Rights (TRIPS) has applied to Venezuela.  Although the Venezuelan laws on intellectual property
have not been amended since the entry into force of the TRIPS Agreement, the ratification of the
Marrakesh Agreement incorporated the TRIPS into the national legislation.
209. Venezuela applies the Andean legislation on intellectual property which is based on the
TRIPS Agreement.  Moreover, Venezuela has entered into commitments on intellectual propertywithin the context of the Group of Three (G-3).  The G-3 Economic Complementarity Treaty contains
a chapter on industrial property.
210. In conformity with the TRIPS Agreement, Venezuela has notified WTO Members of its
principal laws and regulations devoted to intellectual property and has provided information on the
national system of enforcement of intellectual property rights (Table AIII.5).  On the basis of thesenotifications, the TRIPS Council reviewed the Venezuelan statutes on the protection of TRIPS in
2001.  The questions which Venezuela was asked within the context of this review and the
corresponding replies can be found in WTO document IP/Q/VEN/1 of 31 August 2001.  The
authorities note that, since then, there have been no follow-up questions.  The protection of
intellectual property rights covers every area of the TRIPS Agreement and is guaranteed by acombination of national and Andean regulations and international agreements (Table AIII.6).
                                                     
65 The Berne Convention for the Protection of Literary and Artistic Works; the Convention Establishing
WIPO; the Geneva Convention for the Protection of Producers of Phonograms Against Unauthorized
Duplication of their Phonograms; the Paris Convention for the Protection of Industrial Property (Stockholm) andthe Rome Convention for the Protection of  Performers, Producers of Phonograms and BroadcastingOrganizations.
66 WTO documents IP/Q/VEN/1, IP/Q2/VEN/1, IP/Q3/VEN/1, IP/Q4/VEN/1 of 31 August 2001.Venezuela WT/TPR/S/108
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211. The national intellectual property legislation consists of: the 1955 Industrial Property Law
(LPI) and the 1993 Copyright Law (LSDA) and its regulations; Decision 486 (Common Industrial
Property Regime) of the Andean Community, which entered into force on 1 December 2000;Decision 351 (Common Copyright and Neighbourin g Rights Regime); Decision 345 (Common
Regime for the Protection of the Rights of Breeders of New Plant Varieties); Decision 391 (Common
Regime for Access to Genetic Resources); and the 2000 Law on Biological Diversity.  Venezuela has
notified all these Decisions to the WTO.  In mi d-2002, a preliminary draft industrial property law
intended to complement Andean Community Decision 486 at the national level was being considered
by the National Assembly.
212. Parallel imports are permitted under Decision 486.  According to that Decision, holding a
patent or registering a trademark does not bestow the right to prevent parallel imports.  In general,
patents and the registration of trademarks and other industrial property rights do not entitle anyone to
prevent a third-party from making commercial use of a product protected by the right once thatproduct has been introduced into the commerce of some country by the right holder himself or by
some other person acting with his consent or economically related to him (Article 54).
213. The Venezuelan legislation, under cover of the legislation of the Andean Community, permits
the granting of compulsory licences if a patent, integrated circuit layout-design or utility model has
not been exploited within three years of the grant of the patent or within four years of the patentapplication, whichever is the greater.  The competent national authority is authorized, at the request of
an interested party, to grant a compulsory licence principally for the industrial production of the
product forming the subject-matter of the patent or the full use of the patented process.  Licences are
valid only in the member country in which they are sought and are only granted if the applicant has
previously made efforts to obtain a contractual licence from the patent holder on reasonable
commercial terms and conditions and such efforts have not been successful within a reasonable period
of time.  In Venezuela's case, the Autonomous Intellectual Property Service (SAPI) establishes thescope or coverage of the licence, specifying in particular the term for which it is granted, its subject-
matter, and the amount and conditions of remuneration.  The licensee must exploit the invention
within two years of the granting  of the licence.  Compulsory licences are non-exclusive.  The
Venezuelan legislation does not allow the granting of compulsory licences for industrial designs.
214. A patent may also be subjected to compulsory licensing for reasons of public interest, national
emergency or national security but only for as long as these justifying circumstances continue to
apply. The granting of a compulsory licence on public interest grounds does not impair the right of the
patent holder to continue exploiting it.  SAPI is also authorized, ex officio or at the request of an
interested party and subject to the approval of Pro-Competencia, to grant compulsory licences in the
case of anti-competitive practices, in particular if there is abuse of a dominant position in the marketby the patent holder. In these circumstances, in determining the amount of remuneration the need to
correct the anti-competitive practices must be taken into account.  As of mid-2002, no compulsory
licence had been requested or granted in Venezuela.
215. SAPI, under the Ministry of Production and Trade, is the body responsible for the
administration of intellectual property rights in Venezuela.
67  SAPI was created by Presidential Decree
No. 1.768 of 25 March 1997, published in Official Gazette No. 36.192 of 24 April 1997, and  began
operating on 1 May 1998.68   Venezuela has notified WTO Members that SAPI is the contact point
specified in Article 69 of the TRIPS Agreement.69 The creation of SAPI unified the administration of
                                                     
67 SAPI’s Internet address is http://www.sapi.gov.ve/.
68 Ministerial Resolution No. 054 of 7 April 1998, published in Official Gazette No. 36.433 of
15 April 1998.
69 WTO document IP/N/3/Rev.5 of 6 July 2001.WT/TPR/S/108 Trade Policy Review
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industrial property rights and copyright within a single organization.  Thus, SAPI has two main
operational directorates: the Industrial Property Registration Directorate (DRPI), responsible for
administering the granting of patents, utility models, industrial designs, breeder certificates (for plantvarieties) and integrated circuit certificates and the registration of trademarks, trade names,
commercial slogans and appellations of origin; and the National Copyright Directorate (DNDA), with
administrative responsibilities for registration, monitoring and inspection in connection with copyright
and related rights.
216. SAPI also provides a number of services, subjec t to the payment of fees fixed by the Service
itself, such as computerized data searches; the listing of trademarks, trade names and commercial
slogans granted; reports and patent information analyses by specific areas in accordance with the
International Patent Classification, etc.  All the documents relating to patents, designs, trademarks,
etc. are published in the Industrial Property Bulletin.
217. Venezuela attaches special importance to the proper recognition and protection of the
collective knowledge of the indigenous, rural and local populations.  In this respect, Venezuela
considers that the legal recognition of the collective knowledge of the indigenous peoples should be
treated on a par with that of other new intellectual property subject matter, such as plant varieties,
integrated circuit layout-designs, biological material, software and databases, and is promoting its
international recognition as a special element of intellectual property protection.  The authorities pointout that, with respect to traditional knowledge, th ey are seeking a form of protection that could be
sui generis  and not necessarily based on a system of registration but would ensure the fair distribution
of profits.
(b) Intellectual property rights and innovation
218. One of the primary objectives of intellectual property policy is to promote innovation and
scientific, technological, industrial and cultur al development and encourage the development of
Venezuelan inventiveness.  The authorities point out that Venezuela is committed to promotinginnovation and the creation of intangibles of economic and commercial value capable of strengthening
industry and contributing to the development of small and medium-sized enterprises.
70   It therefore
attaches the utmost importance to the protection of  intellectual property and its promotion through
information campaigns, which have focused more particularly on the dissemination of the rules on
appellations of origin and on the identification of products with high local value added.  SAPIprepares technology reports on specific areas, identifying those technologies which have been
patented and those which have not.
219. Venezuela is currently devoting 0.3 per cent of GDP to investment in science and technology
and is seeking to increase that percentage.  The importance attached to innovation in Venezuelan
industrial policy is evidenced by the promulgation in 2001 of the Organic Law on Science,Technology and Innovation (LOCTI), published in Official Gazette No. 37.291 of
26 September 2001.  The aim of the Law is to develop science, technology and innovation policy and
to organize the National Science, Technology and Innovation System by providing a structure for all
the players involved in scientific, technological and innovative activities, activities which the Law
characterizes as being in the public interest.  At the same time, this legal instrument is creating
institutional and operational mechanisms for the promotion and encouragement of research and the
social application of knowledge.  In the productive sector, the new legislation is continuing to
promote investment in R&D activities by encouraging processes of innovation that would make
Venezuelan products more competitive on domestic and world markets.
                                                     
70 WTO documents IP/Q/VEN/1, IP/Q2/VEN/1, IP/Q3/VEN/1, IP/Q4/VEN/1 of 31 August 2001.Venezuela WT/TPR/S/108
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220. LOCTI is drawing up a National Science, Technology and Innovation Plan and is having the
Ministry of Science and Technology promote and coordinate the financing necessary to implement the
activities for which the Plan provides through banking sector credit and incentive programmes for thefinancing of technological innovation.  Public and private enterprises that market intellectual property
developed with this financing must earmark between 0.5 and 5 per cent of the pre-tax profits resulting
from marketing that property for investment in training human resources and R&D-related activities.
221. LOCTI is also requiring every large public or private enterprise set up in Venezuela to invest,
for the same purposes, between 0.5 and 20 per cent of its gross profits earned inside or outsideVenezuela.   Enterprises set up abroad and domiciled in Venezuela must invest similar percentages of
the profits from their Venezuelan activities and activities carried out abroad that are attributable to
their permanent establishment in Venezuela.
71
222. During the period 1995-2001, the number of applications filed by category of intellectual
property protection followed an erratic trend, although there was a definite increase in the number ofpatent and trademark applications.  Most patent and industrial design applications filed were from
foreigners.  In the case of utility models, where the inventive level is generally lower and less
investment is required, Venezuelan applicants were in the majority (Table III.7).
223. The number of patents granted has fallen in recent years.  Most of the patent applications
granted are received from foreign applicants, which is typical of most countries, especially developingones.
Table III.7
Statistics on patents, utility models and industrial design registrations, 1995-2002a
1995 1996 1997 1998 1999 2000 2001 2002a
Applications filed
Patents 1,920 1,916 2,332 2,690 2,402 2,544 2,539 1,189
National 131 106 116 83 93 95 95 35
Foreign 1,789 1,810 2,216 2,607 2,309 2,449 2,444 1,154
Utility models 148 96 115 88 115 91 75 38
National 125 82 94 74 88 63 54 30
F o r e i g n 2 31 42 11 42 72 82 1 8
Industrial designs 308 348 220 246 210 261 208 111
National 139 132 132 106 100 76 82 21
Foreign 169 216 220 246 210 261 126 90
Trademarks 21,521 22,441 26,290 23,998 22,356 23,877 23,133 9,903
National 14,249 15,421 17,908 15,538 13,540 13,296 14,413 6,056
Foreign 7,272 7,020 8,382 8,460 8,816 10,581 8,720 3,847
Applications granted
Patents 2.128 1.238 516 794 668 886 442 372
National 132 53 30 27 21 21 14 9
Foreign 1,996 1,185 486 767 647 865 428 363
Utility models 8 26 38 46 29 23 9 11
National 8 18 32 35 23 22 6 9
Foreign 0 8 6 11 6 1 3 2
Industrial designs 267 290 222 155 376 277 134 105
                                                     
71 Large enterprises are those with gross annual receipts of more than 100,000 t.u.WT/TPR/S/108 Trade Policy Review
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1995 1996 1997 1998 1999 2000 2001 2002a
National 146 127 54 37 107 81 36 13
Foreign 121 163 168 118 269 196 98 92
Trademarks 18,170 20,835 20,162 15,307 17,567 26,785 11,380 12,186
National 12,867 13,764 13,266 10,093 11,219 16,757 .. ..
Foreign 5,303 7,071 6,896 5,214 6,348 10,028 .. ..
a For patents, January – 15 August 2002, for trademarks between 1 January and 30 June 2002.
.. Not available.
Source: Government of Venezuela.
224. In the case of patents and utility models, considerably fewer applications are granted than are
filed.  This is mainly a reflection of the number of objections to domestic applications, largely due toerrors in the definition of the various components of the specifications.  The authorities also point out
that the inventor’s ignorance of the patent granting process means that he fails to reply to formal and
substantive questions within the statutory time-limits.  To counteract these shortcomings, SAPI has
proposed that the domestic investor be provided with more effective guidance by offering him
technical advice on preparing the documents.
225. With regard to the statistics on copyright protection, between 1996, the year in which it was
set up, and 2001 a total of 3,699 applications was entered in the Intellectual Product Register, most of
them relating to literary works (Table III.8).  The average time taken to grant a patent is three years;
the corresponding times for utility models, industrial designs and trademarks are 18 months,
12 months and 8 months, respectively.
Table III.8
Statistics on copyright protection, 1996-2001
Type of work 1996 1997 1998 1999 2000 2001
Literary 349 633 552 256 251 116
Musical 206 212 146 76 77 29
Computer programs and databases 83 77 45 63 61 17
V i s u a l  a r t 4 86 24 14 56 4 1 4
A u d i o v i s u a l  a n d  r a d i o 1 81 31 01 22 2 8
Phonographic productions 3 12 5 5 7 1
Contracts or acts 7 8 7 14 18 5
S t a g e 00010 0
Total 714 1,017 806 472 500 190
Source: National Copyright Directorate, Coordinating Committee of the Intellectual Product Register.
(c) Enforcement system
226. Intellectual property right holders have administrative, civil and criminal remedies at their
disposal.  SAPI is the entity responsible for administrative proceedings.  Where civil procedures are
concerned, the competent courts are the civil courts of first instance or the municipal courts.  Criminal
proceedings must be initiated by the Department of Public Prosecution (Table AIII.5).
227. Another feature of the enforcement system is the establishment of a special unit for
preventing and repressing infringements of intellectual property rights (COMANPI), which operatesby agreement between public and private institutions to coordinate efforts to combat piracy,Venezuela WT/TPR/S/108
Page 83
counterfeiting and falsification.  There are also special investigators familiar with the national
intellectual property situation who order inspections and serve administrative summons which may
give rise to the imposition of penalties in the event of copyright infringements.  A prosecutor withnational competence for intellectual property offences is assigned to the Department of Public
Prosecution.
228. The authorities point out that there are no specific statistics relating to enforcement measures;
however, by way of example, where preventive and deterrent measures in the field of copyright are
concerned, 102 administrative summonses were issued in the first half of 2001.  As of mid-2002, mostcases had been settled by means of conciliation agreements between the parties.