WORLD TRADE G/TRIMS/N/1/ARG/1/Add.1
26May 1997
ORGANIZATION(97-2187)
Original: Spanish Committee onTrade-Related Investment Measures
NOTIFICATION UNDER ARTICLE 5.1OFTHE AGREEMENT
ONTRADE-RELATED INVESTMENT MEASURES
Argentina
Addendum
Thefollowing communication, dated 21March 1997, hasbeen received from thePermanent
Mission ofArgentina.
_______________
Introduction
Theregime governing theArgentine automotive industry islaiddown inLaw No.21,932,
of26January 1979, theregulations towhich arecontained inDecree No.2677 of20December 1991,
asamended byDecrees Nos. 683of6May 1994, 1179 of15July 1994, 1830 of14October 1994,
2278 of23December 1994 and33of15January 1996. Apart from thelastoftheabove-mentioned
decrees, allofthese have already been notified totheWorld Trade Organization inWTO
document G/TRIMS/N/1/ARG/1.
Summary ofthechanges introduced bydecree No.33/96
Decree No.33/961,notified herewith, introduces anumber ofchanges inthecurrent regulations.
These areasfollows.
1. Proportion ofdomestic content
Two changes have been made inthisregard, maintaining andtosome extent increasing the
flexibility oftheregional content requirement thatvehicles must fulfil.
Firstly, theform ofmeasurement ofcontent ismodified, passing from customs values tof.o.b.
values. This change inthecriterion used formeasurement does notinpractice introduce anygreater
domestic content requirement.
Thefollowing formula isused forthecalculation ofcontent:
value ofimported parts incorporated inthevehicle x100
Pre-tax salevalue ofthevehicle when sold totheconcessionaire
1SeeAnnex.G/TRIMS/N/1/ARG/1/Add.1
Page 2
Inaddition, while thedomestic content requirement isinitially 60percent, aproportion of
50percentofregional components isallowed intheformula inthecaseofnewmodels. Thisproportion
must bemetinaperiod ofthree years from thestart ofproduction.
2. Trade balance
While therequirement ofoff-setting with exports theimports carried outatreduced import
duties ismaintained, thefollowing may beconsidered exports forthepurposes ofthecalculations:
- Exports ofnew andunused finished orunfinished vehicles, autoparts anddies for
automotive production exported byassemblers ortheir associated firms, orby
international marketing firms which distribute thegoods produced bytheformer,
computed atarateofUS$1.20 foreach actual export dollar.
- Exports ofnewandunused autoparts produced byindependent autoparts manufacturers
whohave transferred their export credits totheassembler computed atarateofUS$1.20
foreach actual export dollar, inaccordance with themethod established bythe
implementing authority forthispurpose.
- Theamounts ofinvestments innew andunused capital goods manufactured inthe
country andintended foruseinmanufacturing inthecountry onapermanent basis,
carried outbyassemblers orbyautopart companies which transfer them toassemblers,
inaccordance with thefollowing schedule:
1996 One andforty hundredths (1.40)
1997 One andtwenty hundredths (1.20)
1998 Ninety-five hundredths (0.95)
1999 Seventy hundredths (0.70)
- Increments inexports ofcapital goods manufacturers incomparison with 1993. This
means thattheabove-mentioned enterprises may transfer toautomotive assemblers
theright tocompute such increments astheir own exports under theconditions
established bytheimplementing authority.
- Onehundred percent(100%) ofpurchases ofdiesorpresses foruseintheproduction
ofmotor vehicles either bythemselves orbyother autopart manufacturers whotransfer
them toassemblers inaccordance with themethod established bytheimplementing
authority forthispurpose.
- The increment inthecontent oflocally-produced autoparts compared with the
immediately preceding year. Theimplementing authority shall establish theregulations
governing thescope andmethods ofthisoperation.
Asacorollarytotheabovepoints,theconclusionmaybedrawnthattheDecreenotifiedherewith
allows anincrease inimports originating outside MERCOSUR bymodifying thepercentage included
inthecalculation ofexports made andbyincluding various investment items thatcanbecomputed
asexports.
3. Autopart manufacturers
TheDecree alsoincludes asystem forautopart manufacturers along thesame lines asthose
which theregime laysdown forvehicle assemblers.G/TRIMS/N/1/ARG/1/Add.1
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ANNEX
Buenos Aires, 15January 1996
Having regard toFileNo.060-000009/96 oftheRegistry oftheMinistry oftheEconomy and
Public Works andServices, Law 21,932, Decrees Nos. 2,677 dated 20December 1991, 683of
6May 1994, 1,179 dated 15July1994, 1,830 of14October 1994, 2,278 of23December 1994, 523
of22September 1995 and595of18October 1995, andDecision No.29of17December 1994 of
theCouncil oftheSouthern Common Market, and
Whereas:
Theprovisions cited inthepreceding paragraph established theconditions forreorganizing
andregulating theautomotive industry.
InaccordancewithDecisionof29/94oftheCommonMarketCouncil,MemberStatesundertook
tointroduce changes intheir respective regimes forthesole purpose ofmaking progress inthe
establishment ofacommon policy forthesector.
Thescope ofArticle 2ofDecree 2,278 of23December 1994 must bebroadened inorder
tocomply fully with thecommitments entered intointhecontext oftheSouthern Common Market
(MERCOSUR).
Thepurpose ofthismeasure istoimplement theagreements reached within MERCOSUR and
tosome extent tomodify theguidelines laiddown forthesector.
TheLegal Department oftheMinistry oftheEconomy andPublic Works andServices has
fulfilled itsfunctions inthisregard.
This Decree isenacted pursuant tothepowers conferred under Article 99paragraph 1,ofthe
National Constitution andLaw No.21,932.
ThePresident oftheArgentine Nation
DECREES:
Article 1. Replace thetextofArticle 4ofDecree No.2,677/91 bythefollowing:
"Article 4. Until 31December 1995 theautomotive assemblers covered bythisproduction
regime may incorporate inthemotor vehicles they produce imported autoparts only uptoa
limit offorty percent (40%) andforty-two percent (42%) ofthevalue ofthevehicles in
Categories AandB,respectively."
Asfrom 1996, assemblers mayincorporate inthemotor vehicles ofCategories Aand
Bwhich they produce amaximum ofimported autoparts inaccordance with thefollowing
schedule:
Category A:
1996 Forty percent (40%)
1997 Thirty-seven point fivepercent (37.50%)
1998 Thirty-five percent (35%)
1999 Thirty-two point fivepercent (32.50%)G/TRIMS/N/1/ARG/1/Add.1
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Category B:
1996 Forty-two percent (42%)
1997 Thirty-seven point fivepercent (37.50%)
1998 Thirty-five percent (35%)
1999 Thirty-two point fivepercent (32.50%).
Article 2. Asfrom 1996, themaximum imported content within themeaning ofArticle 4of
Decree 2,677/91 willbecalculated using thefollowing methodology:
value ofimported parts incorporated inthevehicle x100
Pre-tax salevalue ofthevehicle when sold totheconcessionaire
Article 3. ThetextofArticle 5ofDecree 2,677/91, asamended byArticle 1ofDecree 523/95,
isamended asfollows:
"Article 5. Until 31December 1995, assemblers mayaverage theimported content among
thevehicles theyproduce within thesame category. Asfrom 1996 anduntil 31December 1999,
theimported content rates willapply foreach specific model.
Inthecaseofthelaunch ofnewmodels, athree-year period willbeallowed fortheir
gradual inclusion under theregime, with amaximum percentage offifty percent (50%) on
average over thatperiod, attheendofwhich theymust comply with thepercentage laiddown
inArticle 4ofDecree No.2,677/91."
Article 4. Asfrom 1996 theexports tobeincluded inthecalculation ofthetrade balance within
themeaning ofArticle 8ofDecree No.2,677/91 may consist of:
(a) Exports ofnewandunused finished orunfinished vehicles, autoparts anddiesformotor
vehicle production exported byassemblers, ortheir associated firms, orbyinternational
marketing companies thatdistribute thegoods produced bytheformer, atarateof
oneUnited States dollar andtwenty cents (US$1.20) foreach dollar ofactual exports.
(b) Exports ofnewandunused autoparts byindependent autopart manufacturers whohave
transferred their export credits toanassembler, calculated atarateofoneUnited States
dollar andtwenty cents (US$1.20) foreach dollar ofactual exports, inaccordance with
themethod established bytheimplementing authority forthispurpose.
(c) Theamounts ofinvestments innew andunused capital goods manufactured inthe
country intended foruseinmanufacturing inthecountry onapermanent basis, carried
outbyassemblers orbyautopart manufacturers which transfer them toassemblers,
inaccordance with thefollowing schedule:
During 1996 One andforty hundredths (1.40)
During 1997 One andtwenty hundredths (1.20)
During 1998 Ninety-five hundredths (0.95)
During 1999 Seventy hundredths (0.70)
(d) Increments inexports ofcapital goods manufacturers, incomparison with 1993. This
means thattheabove-mentioned enterprises may transfer toautomotive assemblers
theright tocompute such increments astheir own exports under theconditions
established bytheimplementing authorities.G/TRIMS/N/1/ARG/1/Add.1
Page 5
(e) Onehundred percent(100%) ofpurchases ofdiesorpresses foruseintheproduction
ofmotor vehicles either bythemselves orbyother autopart manufacturers whotransfer
them toassemblers inaccordance with themethod established bytheimplementing
authority forthispurpose.
(f) The increment inthecontent oflocally-produced autoparts compared with the
immediately preceding year. Theimplementing authority shall establish theregulations
governing thescope andmethods ofthisoperation.
Exports mayinclude elements imported under theexisting temporary entry systems, inwhich
casethevalues relating tothetemporary imports shall notbeincluded inthecomputation oftheexports
foroffsetting purposes.
Article 5. The definition ofadomestic sub-assembly orassembly established inAnnex Iof
Decree No.2,677/91 isreplaced bythefollowing definition:
"Domestic sub-assembly orassembly: asub-assembly orassembly isconsidered entirely
domestic when thevalue ofimported components incorporated initdoes notexceed the
proportion indicated below foreach period:
1996 Forty percent (40%)
1997 Thirty-seven point fivepercent (37.50%)
1998 Thirty-five percent (35%)
1999 Thirty-two point fivepercent (32.50%)
Theimported content willbemeasured using thefollowing methodology:
value ofimported autoparts incorporated inthesub-assembly orassembly x100
Pre-tax value oftheautopart when sold totheassembler
Asub-assembly orassembly produced locally under anational manufacturing regime authorised
bytheimplementing authority willalsobeconsidered entirely domestic. Such regimes must
inanycase provide forcomplying with theabove-mentioned percentage within amaximum
period ofthree (3)years."
Article 6. Imports ofautoparts intended forproduction (excluding spare parts) imported by
independent autopart manufacturers having acountertrade programme approved bytheimplementing
authority, provided theyarenewgoods andareoffset bythesame amount ofexports ofnewandunused
domesticautopartsexportedbythemselvesorbyotherindependentautopartmanufacturerswhichtransfer
them totheformer, shall payanimport duty oftwopercent (2%) when coming from non-member
countries ofMERCOSUR orzero percent(0%) when coming from MERCOSUR member countries.
Article 7. Exports andimports within themeaning ofArticle 6ofthisDecree shall becalculated
atf.o.b. values.
Article 8. Exports ofautoparts, whether ornotforprocessing abroad, which re-enter thecountry
intheform ofafinished product orparts forconsumption andnotforproduction process purposes
shall notbetaken intoaccount forthepurposes ofthecountertrade provided forinArticle 6.Exports
may include elements imported under existing temporary entry systems, inwhich case thevalues
corresponding tothetemporary imports shall notbeincluded inthecalculation ofexports.
Article 9. Thefollowing may alsobeconsidered exports within themeaning ofArticle 6:G/TRIMS/N/1/ARG/1/Add.1
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(a) Theamounts ofinvestments carried outbyautopart manufacturers innewandunused
locally-produced capital goods intended foruseinmanufacturing within thecountry
onapermanent basis inaccordance with thefollowing schedule:
During 1996 One andforty hundredths (1.40)
During 1997 One andtwenty hundredths (1.20)
During 1998 Ninety-five hundredths (0.95)
During 1999 Seventy hundredths (0.70)
(b) Onehundred percent(100%) ofpurchases ofdiesorpresses foruseintheproduction
ofautoparts.
Article 10. Forthepurposes ofArticle 6,exports ofautoparts shall becalculated bymultiplying
their f.o.b. value byafactor ofonepoint twenty (1.20).
Article 11. Imports ofautoparts shall beconsidered offset byexports forthepurposes ofArticle 6
providedthelatterarepartofthenormalproductionlineoftheapplicantcompany,whethermanufactured
bythatcompany orbyitssuppliers, andalsomeet theminimum local content requirements laiddown
inAnnex IofDecree 2,677/91 asamended byArticle 5ofthepresent Decree.
Article 12. Asfrom 1January 1995, autoparts originating inMERCOSUR member countries
imported byautopart manufacturers andintended fortheir production orthatofmotor vehicle assemblers
(excluding spare parts), provided they arenew goods andareoffset inaccordance with Article 6of
thisDecree, andnotsubject toanybilateral countertrade trade requirement, shall beconsidered domestic
forthepurposes ofthemeasurement ofmaximum imported content provided forinAnnex Iof
Decree 2,677/91 asamended byArticle 5ofthisDecree.
Article 13. Theamount oftheimports ofindependent autopart manufacturers which adopt the
countertrade system provided forinArticle 6ofthisDecree shall notbeincluded inthecalculation
ofthetrade balance oftheautomotive assemblers based inthecountry asprovided forinArticle 12
ofDecree 2,677/91, asamended byArticle 2ofDecree 1,179/94.
Article 14. Enterprises interested inbeing included inthecountertrade programme provided for
inArticle 6shall submit anapplication tothiseffect inaccordance with therequirements laiddown
bytheimplementing authority forthispurpose.
Article 15. Enterprises interested inrequesting domestic content andmanufacturing programmes
inaccordance with Article 5ofthisDecree shall include intheir applications plans forindustrial
development andinvestments inthecountry soastoensure thetechnical andeconomic feasibility of
progressively achieving thelocal-content requirements aswell asanyother requirements asmay be
established bytheimplementing authority.
Article 16. Enterprises which receive thebenefits oftheprogrammes provided forinArticle 5
ofthisDecree butdonotcomply with thedomestic content requirement shall payafineequal to
onehundred percent (100%) oftheshortfall inlocal content levels.
Article 17. Independent autopart manufacturers who transfer their export credits inaccordance
with Article 4ofthisDecree cannot simultaneously usethem forthepurposes laiddown inArticle 6
ofthisDecree.
Article 18. Independent autopart manufacturers having anIndustrial Specialization Programme
under Decree 2,641 of29December 1992 andsupplementary orclarificatory provisions thereto mayG/TRIMS/N/1/ARG/1/Add.1
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notcount towards thatprogramme theexports used forobtaining thebenefits provided forinArticles 4
and6ofthisDecree.
Article 19. Independentautopartmanufacturersshallfacilitateanyinspectionsorverificationsordered
bytheimplementing authority andprovide thatauthority under oath, within thetime-limits itestablishes,
anyinformation requested concerning anymatter relating totheprovisions oftheautomotive regime.
Article 20. This decree shall enter intoforce onthedayfollowing itspublication intheOfficial
Journal.
Article 21. Forcommunication, publication, transmittal totheNational Registry Office andfiling.
DECREE No.33
(Signed) José Caro Figueroa (Signed) Dr.Carlos N.Corach
Acting Chief ofCabinet