WORLD TRADE WT/TPR/M/10/Add.1
28August 1996
ORGANIZATION(96-3376)
Trade Policy Review Body Original: Spanish
12-13 February 1996
TRADE POLICY REVIEW
VENEZUELA
MINUTES OFMEETING
Addendum
Answers toWritten Questions
Thefollowing communication wasreceived on22May1996fromthedelegation ofVenezuela
responding towritten questions submitted bythedelegations ofNewZealand, United States, Canada,
Australia, European Union andColombia totheTrade Policy Review Body forthereview ofVenezuela
andtoquestions raised bythediscussants during thereview meeting.
______________
Thedelegation ofVenezuela hasalsoprovided totheSecretariat copies ofthefollowing
documents, promised during thereview meeting:
-Sistema Andino deFranjas dePrecios, Resumen Gráfico, JUNAC, 1995(Spanish only)
-Andean System ofPrice Bands, Graphic Summary, JUNAC, 1995 (English only)
-Gaceta Oficial delAcuerdo deCartagena No.167,Decisión 371 (Spanish only)
-Gaceta Oficial delAcuerdo deCartagena No.172,Resolución 360 (Spanish only)
Inaddition, thedelegation ofVenezuela hasmade available acopyof"Agenda Venezuela -
lineamentos paraunPrograma deEstabilización yCambio Estructural orientada alcrecimiento yla
solidaridad" (Spanish only).
These documents maybeconsulted inRoom 1114.WT/TPR/M/10/Add.1
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TRADE POLICY REVIEW
VENEZUELA
Answers toWritten Questions ByVarious Countries
A. AGRICULTURE
1. United States: TheUnited States hasnotyetcompleted itsUruguay Round negotiations
withVenezuela oncorn. TheUnited States isstillwaiting foraresponse from Caracas toconfirm
thatVenezuela willnotviolate the20percentceiling binding onyellow cornnegotiated during
itsGATT accession. When doesVenezuela intend torespond?
Venezuela considers thatitsnegotiations onmarket access under theUruguay Round ended
inApril 1994. After theUruguay Round concluded, theUnited States proposed thatthequestion of
cornberenegotiated andVenezuela made acounter proposal thatwasrejected bytheUnited States,
therefore, thebinding of20percentforcorninourschedule ofconcessions remains ineffect without
anychange. Inaddition, Article 15andSection 1ofAnnex 5toDecision 371oftheCommission
oftheCartagena Agreement, which gives effect totheAndean Price Band System, make observance
ofWTO tariff commitments obligatory.
2. UnitedStates:WhendoesVenezuelaplantodecidehowtoadministerthetariff-ratequotas?
Does Venezuela have anyideahowtheTRQ'swillbeadministered?
TheExecutive iscurrently evaluating thevarious options foradministering tariff quotas.
3. United States: Thelastsentence inparagraph 88,Chapter IV,oftheSecretariat 'sreport
regarding sanitary andphytosanitary regulations isabitambiguous. Please clarify what reasons
constitute refusing togrant licences forother products, including specific reasons.
Theriskanalysis ofaproduct thatisthesubject ofanapplication forasanitary orphytosanitary
permit must yield apositive result before asanitary permit canbegranted, taking intoaccount the
origin oftheproduct andwhether ornotthephytosanitary orzoosanitary conditions aresuchthatthere
isnoriskofintroducing non-endemic pests ordiseases.
Thereason forrefusing sanitary permits forpoultry products from certain countries isthat
theycontain the"fowl pest" virus, which isnotendemic inVenezuela andconstitutes amajor disaster
forthepoultry industry. Venezuela usually grants import permits forpoultry products fromcountries
where there havebeennoreports ofthepresence ofthisvirus.
Itshould benoted thatcountries onwhich Venezuela hasimposed import restrictions forpoultry
products havenotapplied forrecognition ofpest-and-disease-free areas, asprovided forintheWTO
Agreement ontheApplication ofSanitary andPhytosanitary Measures.
Concerningpigmeat,Venezuelahasbeeninformedofcasesofswinerespiratoryandreproductive
syndrome andAfrican swine feverinseveral countries andboththesediseases areforeign toVenezuela.
Thesyndrome isnotendemic inVenezuela andconstitutes animportant sanitary risk.
There arenorestrictions onthegranting ofsanitary permits tocountries freeofthesediseases,
moreover countries onwhich restrictions havebeen imposed havenotprovided reports certifying
disease-free areas orthemethods usedtoguarantee theelimination ofthesanitary risks. DiscussionsWT/TPR/M/10/Add.1
Page3
withtheInternational Office ofEpizootics (OIE) ontherisks aswellastheprecautions taken by
Venezuela thatmight haveallowed therestrictions tobelifted werenotsuccessful. Basically, asfar
asthese diseases areconcerned Venezuela hasacted inaccordance withtherecommendations ofthe
International PigVeterinary Society (TheHague, August 1992).
Inthecaseofbovine meat, Venezuela bansimports from countries where theCvirus of
foot-and-mouth disease ispresent asitisnotendemic inVenezuela either. Imports from countries
which havesuccessful eradication programmes endorsed orrecognized bytheOIEareexamined by
therelevant sanitary authorities.
With regard tophytosanitary requirements, especially those concerning black beans, peanuts
andonions, therearenorestrictions ontheissueofsanitary permits andlargenumbers oftheseproducts
were imported from various countries in1995.
4. United States: How does Venezuela justify theperiodic denial ofcertificates forall
agricultural imports when domestic agricultural producers demand more protection fromimports?
Permits aregranted forthemajority ofagricultural products. Ascanbeseenfromthereply
totheprevious question, thegranting ofsanitary permits hasalways depended onpositive results of
theriskanalysis oftheproduct thatisthesubject ofanapplication forasanitary orphytosanitary permit,
taking intoaccount theproduct 'sorigin andwhether ornotthephytosanitary orzoosanitary conditions
aresuchthatthere isnoriskofintroducing non-endemic pestsordiseases. Regarding alinkbetween
therefusal ofsanitary permits andtheagricultural sector 'sdemand forgreater protection, wearenot
aware ofanygrounds forthisstatement.
5. Canada: Could Venezuela provide details about the"Règimen Especial "?Could Venezuela
provide more details ontheoperation ofthenewprice band system adopted toconform withthe
Andean Group 'scommon external tariff? What mechanisms areinplace toensure thatapplied
rates donotexceed themaximum bound rates?
In1995, Venezuela replaced thepricestabilization mechanism (price bands) applied since1991
aftertradereform intheagricultural sector bytheAndean Price BandSystem attheleveloftheAndean
Group, which hadbeenapproved bytheCommission oftheCartagena Agreement inDecision 371.
Resolution 360of10December 1995wasalsoadopted tofacilitate thecalculation ofadditional variable
duties andtariffreductions. ThisResolution fixesthecustoms tables andfloorandceiling prices under
theSystem foritsfirstyearofapplication.
Thebasic objective ofthePrice Band System istostabilize theimport costs ofaparticular
group ofagricultural products characterized bymarkedly unstable ordistorted international prices.
Thesystem alsoallows domestic prices toberelated tointernational prices, thusdiminishing therisks
fordomestic producers caused byfluctuations inexternal market prices.
Thefollowing arethebasic features oftheSystem:
Marker products: agricultural products whose international prices areusedtocalculate the
price bands (13products);
Associatedproducts:productsobtainedfromtheprocessingoramalgamationofmarkerproducts
(125products);
Reference markets: international markets ofrelevance toeachproduct forwhich reliable and
regular sources ofinformation areavailable;WT/TPR/M/10/Add.1
Page4
Floor price: theaverage price ofthemarker product inthereference market (onthebasis
ofprices forthepreceding 60months), lessafraction ofthestandard deviation;
Ceiling price: thefloor price plusthestandard deviation.
TheAgricultural Council (Consejo Agropecuario )actsasamechanism forcoordination, follow-
upandmonitoring oftheSystem.
Price stabilization isachieved byincreasing theadvalorem tariff when theinternational price
fallsbelow thefloor price anddecreasing thetariff down asfaraszerowhen theinternational price
risesabove theceiling price. Inother words, theprice bandmakes thetariff avariable factor that
isautomatically adjusted tocounteract extreme fluctuations ininternational prices.
TheSystem 'sapplication asasectoral policy makes itasuitable andpredictable mechanism
forremedying distortions without resorting tounnecessary prior increases inimport tariffs uptothe
bound limits anditensures thatincreases arenotpassed ontoconsumers.
Theapplication ofvariable taxes oradditional variable duties constitutes partofthetariff or
customs dutyassuchinVenezuela andcountries oftheAndean Group, andtheyarefixed andapplied
insuchawaythattheydonotexceed thelimits ofthebound tariffs intheschedules accepted byall
parties ineachcountry 'smarket access commitment.
IntheAndean Price Band System itcanbedetermined foreachMember country whether the
totaltariff (common external tariff plusadditional variable duty) ishigher thanthebound tariff. If
thisisthecase, Article 15ofDecision 371provides foraspecial system toallow Member countries
tolimit theamount ofvariable duties totheamount necessary tofulfil their prior market access
commitments within theframework ofGATT/WTO.
Lastly, itmustbeemphasized thatthetotaltariffs applied byVenezuela under theAndean Price
Band System havebeenlessthanthemaximum tariff commitments inourtariff quotas.
6. Canada: Could Venezuela provide details onthespecific prohibitions inplace regarding
theimport ofagricultural andagri-food products?
Seethereply toquestion 3.
7. NewZealand: LastyearVenezuela adopted theAndean Price Band System. While not
thecaseatpresent duetohighlevels ofcommodity prices, thisSystem could result inapplied
tariff rates exceeding Venezuela 'sWTO bindings. What measures doesVenezuela haveinplace
toensure thattheAndean Price Band System doesnotresult inbreaches ofitsWTO obligations?
Seethereply toquestion 5.
8. European Communities: Have regulations toguarantee theobservance ofin-quota bound
tariff levels been adopted?
Seethereply toquestion 2.WT/TPR/M/10/Add.1
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B. EXCHANGE REGIME
9. United States: What areVenezuela 'splans forreturning tocompliance withitsIMF
Article VIIIcommitments? Specifically, what areVenezuela 'splans forestablishing aunified
exchange rate?
Venezuela hasnotfailed tofulfil anyofitsobligations under theArticles ofAgreement of
theInternational Monetary Fund, neither Article VIIInoranyother Article, consequently itdoesnot
haveanyplanstoreturn tocompliance withitsIMFArticle VIIIcommitments. Furthermore, Venezuela
doesnotconsider thatreview ofitstrade policy bytheWorld Trade Organization istheappropriate
forum fordetermining whether ornotVenezuela complies withitsobligations under theIMFArticles
ofAgreement.
Atthetimeofthereview, there wasasingle exchange rateinVenezuela, fixed inExchange
Agreement No.1ataselling price ofBs290toUS$1. Venezuela wishes toclarify thatbuying and
selling Brady bonds ontheVenezuela Stock Exchange andtrading ofthese andother titlesonexternal
financial markets atvarying discount rates donotconstitute foreign exchange operations under
Venezuelan law,therefore, inVenezuela there arenotransactions involving thepurchase orsaleof
foreign currency inexchange forbolivares. AVenezuelan public debtbond (Brady bond) isbought
orsoldinVenezuela inbolivares inatransaction thatislegally distinct from thesubsequent buying
orselling ofthebond onanyforeign market.
Exchange controls weretemporarily introduced withtheintention ofcounteracting aserious
emergency resulting fromtheflight ofcapital asaresult ofthecrisis inVenezuela 'sfinancial situation
during thefirsthalfof1994.
Decree No.1.292 of17April 1996 andExchange Agreement No.1ofthesame datesigned
bytheExecutive andtheCentral Bank ofVenezuela, bothpublished inGaceta Oficial No.35.941
ofthesame date, restored freeconvertibility ofcurrency inVenezuela andasaresult controls or
restrictions onforeign exchange transactions wereabolished, except forthose established elsewhere.
These exceptions concern compliance withtheobligation tosellorrepatriate foreign currency tothe
Central Bank ofVenezuela by22April 1996, thedateofentry intoforce ofDecree No.1.292 and
Exchange Agreement No.1mentioned above.
TheCentral BankofVenezuela wasauthorized toallow theexchange rateforbuying andselling
foreign currency tofluctuate freely onthemarket according tosupply anddemand.
Inthisconnection, Exchange Agreement No.1provides thattheexchange rateforbuying and
selling foreign currency shallfluctuate onthemarket according tosupply anddemand. TheCentral
Bank ofVenezuela maybuyandsellforeign currency ontheexchange market forthepurposes it
determines. Itfixesthereference rateofexchange daily. Thelatter isusedtopayimport duties and
other similar taxes.
Consequently:
(a) Foreign currency bonds maybefreely traded bothinVenezuela andabroad.
(b) Unless theparties specifically decide otherwise, which theyareperfectly freetodo,
foreign currency bonds maybepaidbyhanding overbolivares attheprevailing
exchange rateonthedateofpayment, according totheprovisions ofArticle 94ofthe
LawontheCentral Bank ofVenezuela.WT/TPR/M/10/Add.1
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(c) Transfers abroad forthepayment ofdebts ofanytype,including payment fortheimport
ofgoods orservices, thetransfer oftechnology orintellectual property rights, etc.,
maybemade without anyauthorization from theVenezuelan authorities.
(d) Theobligation toregister foreign direct investment andshare investments isstillvalid,
butthisdoesnotinanywayaffect theacquisition offoreign currency forpayments
abroad.
(e) Individuals andprivate enterprises mayfreely holdforeign currency accounts abroad.
Theonlyrestrictions onholding suchaccounts relate toactivities bypublic bodies,
which arealsoobliged toselltheforeign currency earned from theiractivities tothe
Central Bank ofVenezuela.
(f) TheGovernment bodies setuptoadminister theexchange control regime (Exchange
Administration Board (Junta deAdministración Cambiaria) ,Technical Office for
Exchange Administration andExternal DebtUnit(Oficina Técnica deAdministración
Cambiaria yUnidad deDeuda Externa )oftheMinistry ofFinance) havebeenreplaced
byanexchangeinformationunit(UnidaddeInformaciónCambiaria)undertheMinistry
ofFinance, which isresponsible fortheadministrative procedures forcessation ofthe
activities ofGovernment bodies thathavebeenabolished, monitoring compliance with
theobligations imposed bytheformer exchange control regime andtheapplication
ofanypenalties pursuant totheLawontheExchange Regime.
(g) Varioussublegalregulations(PresidentialDecrees,decisionsbytheMinistryofFinance,
theExchange Administration Board ortheCentral Bank ofVenezuela, aswellas
administrative measures decided upon bytheExchange Administration Board orthe
Technical Office forExchange Administration) which governed thefunctioning ofthe
exchange control regime havebeenabolished.
10. United States: Also, what areVenezuela 'splans foreliminating thefollowing controls
andrestrictions onforeign exchange flows (most ofwhich arereferred tointheboxonpage16):
(i)thesurrender requirement forforeign exchange receipts, covering goods andservices aswell
ascapital movements; (ii)therequirement ofapproval bytheExchange Administration Board
forpayments forimports ofgoods andservices other thanfrom LAIA countries; (iii)limits on
theavailability offoreign exchange for:(a)travel; and(b)remittances, including remittances
onprofits from debt-equity schemes; (iv)restrictions onservicing ofprivate sector debt; and
(v)therecent requirement thatpurchasers ofBrady bonds holdthem forsixdaysbefore resale?
Atthetimeofthereview, theGovernment intended toabolish thecontrols andrestrictions
ontheforeign exchange flows mentioned inthequestion. Itwasexpected thatthese controls or
restrictions would shortly beabolished. Nevertheless, theGovernment ofVenezuela wasunable to
specify when thiswould bedonebecause ofthenegotiations taking placewiththeInternational Monetary
Fund.
Asof22April 1996, thecontrols andrestrictions onforeign exchange flows mentioned in
thequestion were totally abolished.WT/TPR/M/10/Add.1
Page7
11. United States: Please explain exactly howVenezuela implements thefollowing aspects
ofitsprogramme: (i)thesystem ofestablishing priorities fortheallocation offoreign exchange
forimports ofgoods andservices onaproduct basis (i.e.,what tariff items areaccorded priority;
what doesthatpriority getforthose products, howarepriority products identified, howisthe
public made aware ofwhich products getpriority); (ii)theexclusion ofimports under Central
Bank clearing arrangements (specifically, through LAIA) fromtherequirement ofExchange Board
approval (i.e., isthere aruleoforigin requirement); (iii)granting priority toexporters who
require more thanthe10percentthattheyarenormally allowed toretain inorder topayfor
imported materials ortoservice their debt?
Regarding theestablishment ofpriorities fortheallocation offoreign exchange forimports,
themechanism established bytheVenezuelan Government intheregime inforce atthetimeofthe
reviewconsistedofallocatingforeigncurrency,inprincipleintheorderindicated,forimportapplications
bytheagri-food andhealth sectors, forcapital goods, sparepartsformachinery andequipment, transport
andtelecommunications and,lastly, forthecultural sector. Theallocation offoreign currency was
notrestricted topredetermined tariff headings butwithin theaforementioned general framework the
exchange authorities allocated currency according totheurgency oftheproblem whose solution required
foreign currency andtheavailability ofthecurrency itself. Consequently, therewerenopre-set amounts
offoreign currency foreachofthesectors mentioned. Thepublic wasinformed ofthesituation through
theofficial information putoutbytheexchange authorities andtheinformation provided bythe
commercial bank, which transmit requests forforeign currency.
Regarding thepossibility ofpaying forimports through theReciprocal Payments andCredit
Agreement (Convenio dePagos yCréditos Reciprocos )oftheLatin American Integration Association
(LAIA) without theauthorization oftheexchange authorities, recourse tothispossibility, which was
conceived asaformofgradual andprogressive liberalization oftheexchange control regime, hasalways
beensubject tosubmission oftherelevant certificate oforigin issued bythecompetent official authority
intheexporting country or,where appropriate, byprivate bodies empowered todosobytheofficial
authorities inthatparticular country andacting under theirresponsibility.
Lastly, regarding thepossibility ofgiving priority forforeign currency toexporters requiring
more thanthe10percenttheyarenormally allowed toretain, theVenezuelan exchange regime did
notcontain anyprovisions giving priority toexporters inthissituation toenable themtoobtain foreign
currency topaytheirimports orservice theirdebts.
12. United States: What areVenezuela 'splans foreliminating theforegoing practices, which
arediscriminatory andappear toviolate Venezuela 'sWTO commitments?
Firstly, theGovernment ofVenezuela wishes tostatethatinitsview thepractices referred
tointhisquestion arenotdiscriminatory anddonotviolate Venezuela 'sWTO commitments. Secondly,
itisemphasized thattheexchange control regime wasabolished concomitantly withthedefinition of
thesupport mechanisms forthebalance ofpayments andtheVenezuelan economy, which arecurrently
being discussed withtheInternational Monetary Fund andother multilateral financing organizations.
These practices wereabolished asfrom22April 1996withtheabolition oftheexchange control
regime andtherestoration ofthefreeconvertibility ofthebolivar.
13. United States: Does theGovernment ofVenezuela intend tobroaden theeligibility
requirements allowing export firms toholdbank accounts inforeign currency abroad? (According
toavailable information, toqualify forapproval forholding suchanaccount, aVenezuelan-based
company must have fixed assets of$50million, have atleast40percentforeign capital, useat
least35percentof"national material" andexport aminimum of40percentoftotalsales) .WT/TPR/M/10/Add.1
Page8
Atthetimeofthereview, oneofthepossibilities being considered bytheGovernment of
Venezuela inthecontext ofitsplans toliberalize theexchange control regime wastoallow exporting
firms toholdbankaccounts inforeign currency abroad.
Since 22April 1996, bothVenezuelan andforeign private enterprises operating inVenezuela,
whether ornottheyexport, havebeenfreetoholdbankaccounts inforeign currency abroad.
14. United States: Thisexport-conditioned foreign exchange benefit appears toustobea
violation ofWTO TRIMs obligations. How does theGovernment ofVenezuela justify this
discrimination? How doesthisprovision affect subsidiaries offoreign-based companies?
TheGovernment ofVenezuela recognized thattheoptimal efficiency ofenterprises which met
thecriteria mentioned inthequestion required thattheyshould beabletoholdforeign currency accounts
abroad. Subsidiaries ofcompanies withforeign capital which metthese criteria could request the
exchange authorities toauthorize them toholdsuchbankaccounts.
Thisspecial regime forcertain exporting companies withforeign capital wasabolished when
thebolivar again became freely convertible on22April 1996.
15. United States: With regard totheGovernment ofVenezuela 'sdebtservice obligations:
theGovernment ofVenezuela hasaccumulated intheorder of$800million inarrears tobilateral
creditors. Weencouraged Venezuela toremain current onthese obligations. What isVenezuela 's
strategy fornormalizing relations withbilateral creditors?
TheGovernment ofVenezuela 'sstrategy fornormalizing relations withbilateral creditors is
directed intheshort termtowards payment ofarrears withthese creditors andinthelonger termto
rescheduling itsshort-term commitments based onthefollowing guidelines:
(a) Restructuring internal debtcommitments inorder toobtain theinherent benefits of
theAgenda. Theobjective ofthenegotiating processes willbetoensure thatpayment
dates areconsistent withestimated payment possibilities andfuture cashflows.
(b) Guaranteeing permanent access tolocal andinternational financial markets by
implementing aprogramme toallow anongoing reduction offinancing costs based
onanimprovement inVenezuela 'sperceived risk. Inaddition, thebasic and
fundamental goalofthefinancing strategy setoutintheAgenda istocreate enhanced
conditions forthesustainable development ofdomestic capital markets.
Subject toapproval oftherelevant law,theGovernment ofVenezuela isalsoconsidering the
creation ofafundforredemption andpayment ofthepublic debt,utilizing earnings fromhydrocarbons,
natural bitumen andmining resources.
16. United States: With regard tothefinancial sector: what isVenezuela 'sstrategy forits
strengthening?
Venezuela 'sstrategy forstrengthening thefinancial sector includes thefollowing measures.
(i) Culmination ofthesupport process byrepatriating capital inorder toremedy the
financial imbalance ofthenationalized banks.
(ii) Programme todispose oftheassets belonging toFOGADE andprivatization of
nationalized financial institutions.WT/TPR/M/10/Add.1
Page9
(iii) Financial support programme oftheWorld BankandtheInter-American Development
Bank tocounteract theeffects ofthebank crisis andtheimpact oftheadjustment
programme onthefinancial system (programme forbankcapitalization andwriting
offunproductive accounts).
(iv) Establishment ofafinancial security network employing thefollowing measures:
- Accelerated strengthening ofmechanisms tomonitor thefinancial system,
prevention andnon-discretional handling ofbanking crises, within the
framework ofcooperation agreements withtheWorld Bank-Inter-American
Development Bank, andtheCentral Bank ofVenezuela FOGADE-Bank
Superintendency (SB).
- Restructuringofthedepositinsurancescheme,currentlyanaggregateallowance
andsingle premium scheme, introducing jointresponsibility criteria forthe
prevention andhandling ofbanking crises soastolessen theeffects ofthemoral
hazard.
- Implementation oftheprogramme toraisethelevelofcapitalization offinancial
institutions established bytheBankSuperintendency (simple ratio), introducing
aplantodisclose tothepublic indicators ofeconomic soundness byweighting
theassetrisk.
- Establishment ofinformation requirements tomonitor theleveloftheliquidity
riskandtheinterest andmanagement risk,inaccordance withinternational
standards, soastostrengthen banking supervision inthese areas.
- Development ofrules tomake banks andthepublic sector more responsible
soastoimprove thequantity andquality offinancial information, maintaining
thenecessary balance between disclosure andsecrecy. Inthisarea,
consideration should begiven topromoting atransparent market inwhich
private institutions would provide services tomonitor banking riskunder the
supervision oftheSuperintendency.
Onetangible measure ofimmediate effect would betomake trialbalances
transmitted bythebanks totheBank Superintendency available tothepublic
andtorequire thedisclosure oftheiraudited balances.
- Reinforced application ofsound standards ininstitutions thatarenot
implementingthereorganizationprogrammeandwhichshowshortfallsincapital
and/or structural depreciation ofassets. Forexample, restricting thesharing
ofdividends, prohibiting thegranting ofnewcredits, making itcompulsory
toinvest funds oncallandother liquid resources ingovernment bonds.
17. NewZealand:Onpage3oftheVenezuelanGovernmentreport,itisstatedthat"restrictions
onfreeconvertibility have nothindered trade flows". NewZealand doesnotbelieve thatthis
isthecase. Attheindividual product level, theexchange situation isproving tobethedetermining
factor fortrade. Could theGovernment ofVenezuela please clarify howitisdealing withthis
problem toensure thattrade flows arenotdisrupted? When willexchange andprice controls
belifted?WT/TPR/M/10/Add.1
Page10
TheGovernment ofVenezuela considers thatexchange control didnotinanywaydisrupt trade
flows andhasnothadanydecisive effect onthevolume oftrade. Imports, infact,roseintheperiod
during which these restrictions wereinforce andonecontributing factor wasthatuntilveryrecently
theGovernmentofVenezueladidnothaveanymechanismsforthepriorityallocationofforeigncurrency
forcertain imports. Price controls havegradually beenabolished inrecent months andnowonlycover
averylimited number ofproducts.
Exchangecontrolsweretotallyabolishedon22April1996underDecreeNo.1.292andExchange
Agreement No.1.Price controls onlyaffect seven foodproducts ofmass consumption andcertain
medicines.
18. Colombia :Arethere currently anyexchange restrictions inVenezuela? Ifthisisthecase,
howlongaretheyexpected toremain ineffect? Please describe thegeneral outline ofthefuture
exchange policy?
Exchange controls hadbeenineffect inVenezuela since July1994. Atthereview meeting,
Venezuela saidthattheywould soonbeabolished onceasatisfactory levelofinternational reserves
hadbeenreachedandthesupportofinternationalfinancingorganizationshadbeenobtained.Thegeneral
outline oftheexchange policy wasbeing drawn up.Itwasproposed thatcurrent account controls
should beeliminated firstofallandsome control overcapital accounts should bemaintained temporarily
inorder toavoid theimpact oftheso-called "flight capital".
Theexchange restrictions thatoperated inVenezuela werefinally abolished on22April 1996
byDecree No.1.292 andExchange Agreement No.1.Thebolivar hasbecome freely convertible
anditsmarket ratefluctuates according tosupply anddemand. TheCentral Bank ofVenezuela has
beenauthorized tointervene intheexchange market when itdeems necessary. Itisexpected thatonce
theexchange ratehasbeenfixed according tomarket fluctuations asystem ofbands could beinstalled
under which theexchange parity would befixed inaccordance withaninflationary objective thatis
compatible withtheother measures inthemacroeconomic stabilization programme implemented in
Venezuela.
19. European Communities: IstheVenezuelan currency convertible oncurrent account?
Aretheforeign exchange controls stillineffect?
Atthetimeofthereview, Venezuelan currency wasnotfreely convertible neither oncurrent
account noronanyother accounts.
Exchange controls wereabolished on22April 1996inaccordance withtheprovisions ofDecree
No.1.292 andExchange Agreement No.1.Asfromthatdate,thebolivar hasbeenfreely convertible
forallpurposes.
20. Australia: Please provide more details onthetypeofexchange controls. How longwill
thismeasure remain inplace?
Thefollowing system ofexchange controls wasineffect inVenezuela from 27June1994:
(a) Foreign currency assets obtained before 27June1994 bycompanies orindividuals
domiciled orresident inVenezuela could beusedfreely;
(b) conversion intoforeign currency inVenezuela hadtobeattheratefixedintherelevant
Exchange Agreement signed between theExecutive andtheCentral BankofVenezuela.
Therateapplicable wasBs290toUS$1;WT/TPR/M/10/Add.1
Page11
(c) allpurchases offoreign currency were subject toprior registration ofthepurchaser
andprior authorization foreachpurchase. There were some general authorizations
uptopre-set limits: tourism, business trips, payments tostudents andother persons
abroad, etc.;
(d) authorizations topurchase foreign currency wereonlygiven forthepurposes laiddown
intheexchange control regulations, which included thefollowing provisions:
(i) Imports (imports paidforthrough theLAIA Reciprocal Payments andCredit
Agreements arenotsubject totheprior authorization requirement);
(ii) external debt;
(iii) payments related toforeign investment;
(iv) payments related tointellectual property rights.
(e) foreign exchange receipts, whether derived fromexports orother sources, werealso
subject totheexchange control rules;
(f) analternative mechanism wasthetrading ofVenezuelan public debtbonds inforeign
currency, better known asBrady bonds. These arewidely traded onexternal financial
markets andontheVenezuelan stock exchanges. There areseveral types ofBrady
bond, butthemost generally traded are"parA"bonds. These maybebought in
American dollars outside Venezuela andsoldinVenezuela inbolivars orbought in
Venezuela inbolivars andsoldabroad inUnited States dollars. Theexchange rate
forsuchtransactionswasusuallyhigherthantheofficialexchangeratementionedabove.
The exchange control regime was completely abolished on22April 1996, when
Decree No.1.292 andExchange Agreement No.1entered intoforce. These made thebolivar freely
convertible anditfluctuates according tothemarket, although theCentral Bank ofVenezuela may
intervene.
C. CUSTOMS VALUATION
21. United States: HasVenezuela completed thequestionnaire prepared bytheCommittee
onCustoms Valuation andsubmitted ittotheWorking Party forreview? Ifnot,when doesit
plantodoso?
TheGovernment ofVenezuela isnotaware ofthequestionnaire prepared bytheCommittee
onCustoms Valuation. Ithasmade thenecessary enquiries andwhen ithasthisquestionnaire itwill
respond toallthequestions andsubmit itfortheWorking Group 'sreview.
22. United States: Howdothepresent definitions of"normal price" and"commercial price",
asrelated inparagraph 53oftheSecretariat 'sreport, comply withtheWTO Valuation Code?
Thenormal price isthecontractual price ortheprice actually paidorpayable forgoods in
asituation offreecompetition, without theeffect ofanyrelations thatmight haveanimpact onthe
price. Ifthecontractual price declared tothecustoms islower thantheusual competitive price, the
customs valuation willtakeintoaccount thelatter. Theusual competitive price isdetermined onthe
basis ofprevious transactions concerning identical orsimilar goods tothose being valued, which isWT/TPR/M/10/Add.1
Page12
consistent withArticles 2and3oftheWTO Agreement onCustoms Valuation. Theterm"commercial
price" doesnotexistinVenezuelan legislation.
23. United States: HasVenezuela fullyimplemented theWTO Valuation Code? Ifnot,when
doesitexpect tobeinfullcompliance?
Venezuela hasnotyetimplemented theWTO Valuation Code. Itistaking advantage ofthe
special anddifferentiated treatment provided forintheCode toallow developing countries topostpone
application oftheAgreement 'sprovisions forfiveyears. IntheAndean Group, Venezuela approved
Decision378,whichincorporatestheWTOAgreementonValuationaswellasotheradditionalprovisions
thatmake iteasier forcustoms authorities toverify thedeclared value. Inaddition, valuation regulations
arebeing drawn upandtheywillincorporate Decision 378andother textsoftheTechnical Committee
onCustoms Valuation. These regulations should beapproved inthesecond halfof1996.
24. United States: Inparagraphs 54,57,58and59,ofChapter IVoftheSecretariat 'sreport
refers toasystem ofminimum values andminimum import prices. Please explain howthissystem
ofofficially established minimum values isconsistent with paragraph 2ofAnnex IIItothe
Agreement onImplementation ofArticle VIIandwiththeMinisterial Decisions andDeclarations
contained intheWTO Valuation Committee textrelating tominimum values.
TheAndean PriceBandSystem allows theuseofofficial minimum prices tocalculate thetaxable
basisofmarker products. Theuseofsuchvalues orofficial minimum prices iscovered byparagraph 2
ofAnnex IIItotheAgreement ontheImplementation ofArticle VII.
25. United States: Maintaining exclusive import rights forcertain items requiring prior import
authorization would appear torestrict trading rights inthese items. HowdoesVenezuela justify
continuing thispractice?
IftheUnited States isreferring toChapter IV,paragraph 64,under Section (x),itshould be
noted thatpetroleum products arenotsubject totheNote(imports reserved fortheExecutive). This
Notewasabolished upon publication ofthelatest customs tariff (Official Gazette No.5.039-Special,
dated 9February 1996).
Regarding theremaining products, itshould bepointed outthatthese concern so-called
"precursor" products, which areusedtoproduce narcotic andpsychotropic substances, sotheState
deems itnecessary toregister andmonitor importing enterprises, although thevolume tobeimported
isnotrestricted.
26. United States: Venezuela states thatnopre-shipment inspection system iscurrently used.
Does Venezuela plantoimplement suchasystem inthefuture?
AsstatedintheSecretariat'sreport,Venezueladoesnotcurrentlyhaveanypre-inspectionsystem
andnosuchsystem isenvisaged inthefuture.
27. European Communities: Hasthelegislation oncustoms valuation beenadopted? Does
Venezuela nowapply therules oncustoms valuation intherelevant WTO Agreement?
Seethereply toquestion 23.
28. Colombia: Could Venezuela indicate whether there isanyconcrete plantoabolish the
1percentcustoms service tax?WT/TPR/M/10/Add.1
Page13
Pursuant tothecommitments undertaken byVenezuela when itacceded toGATT in1990,
the5percentcustoms service taxwasreduced to1percentadvalorem. Thistaxreflects the
approximate costoftheservice provided bythecustoms authorities andhastheadvantage ofremoving
anydiscretionary authority tocalculate thecostofeachindividual shipment. Other administrative
alternatives are,however, being considered soastoadapt thetaxasclosely aspossible tothecost
oftheservice supplied, without prejudice toeaseofapplication andobjectivity.
D. IMPORT LICENCES
29. United States :Thisisapoint ofclarification. Except forthelicences issued forthehealth
andsafety ofplants, animals andconsumers, aretherestofVenezuela 'slicences issued
automatically?
Venezuela doesnotrequire import licences, butforcertain specified goods legalformalities
havetobecompleted andapermit orcertificate obtained. These requirements aremaintained toprotect
public morality, human health andlifeandtheenvironment orforreasons ofnational defence and
security.
30. United States: Why areanumber ofimportant consumer goods stillcovered byimport
prohibitions orlicensing requirements?
Only alimited number ofconsumer goods aresubject toimport prohibitions andthese are
justified inorder toprotect public morality, human health andlifeandtheenvironment orforreasons
ofnational defence andsecurity. Noproducts aresubject tolicensing requirements assuch. Theimport
ofspecified products requires thecompletion ofcertain legal formalities intheform ofpermits or
certificates, forthereasons mentioned above.
31. United States: When doesVenezuela plantosubmit theWTO questionnaire onimport
licensing procedures totheLicensing Committee?
TheGovernmentofVenezuelaiscurrentlycompletingtheWTOquestionnaireonimportlicensing
procedures anditisestimated thatitwillbesubmitted within thenextfewweeks.
32. United States: Chapter IV(1), paragraph 2,andparagraph 61ofSection (2)(ix) notethat
"Import prohibitions andlicensing havebeenreduced totheextent necessary forkeeping upwith
security orhealth concerns orinternational commitments". However wenotethatthere isalack
ofscientific justification fordenying imports ofbeef, poultry, pork, usedtyres, usedcarsand
usedclothing, which ineffect means bansonimports ofthese products. (i)CanVenezuela provide
laws, decrees, resolutions, outlining requirements thatifmetwould allow theimport ofthese
products? (ii)Howcanpublic safety beanissueifimports ofusedvehicles areallowed forpublic
transportation purposes?
(a) Foragricultural products, there arerules anddecisions byinternational bodies which, if
observed, allow these products tobeimported. Theprohibitions onusedvehicles, tyresand
clothing areabsolute restrictions established intheDecree fixing thecustoms tariffs.
(b) Theimport ofallvehicles under tariff heading 8702 (public transport) isprohibited.
33. Canada: Venezuela hasinvoked thetwo-year delay fortheapplication oftheautomatic
import licensing provisions. What steps arebeing taken toimplement theAgreement attheend
ofthatperiod (i.e.byJanuary 1997)? When willVenezuela submit itsresponse totheimport
licensing questionnaire andprovide details ofitsimport licensing regime?WT/TPR/M/10/Add.1
Page14
Venezuela doesnotinfacthaveanyimport licences initstrade regime, therefore, itdoesnot
needtoadopt anyspecial measures toimplement theAgreement onImport Licensing Procedures.
TheGovernment ofVenezuela willshortly submit itsreplies tothequestionnaire onimport
licensing procedures. Inthisconnection, itmustbeemphasized thatthereisnosystem ofimport licences
inVenezuela. Foraspecified number ofgoods, however, some legalformalities mustbecompleted
intheform ofpermits orcertificates.
E. TAXES
34. United States :Certain internal taxes onalcoholic beverages onlyaffect certain items.
How doesVenezuela justify these measures inlightofitsWTO obligations toprovide national
treatment?
TheLawonTaxes onSpirits andAlcoholic Beverages provides fordomestic taxeswhich affect
some imported alcoholic beverages more thannational alcoholic drinks. Thedifference between the
twoisBs3perlitre,which attheexchange rateineffect (Bs468toUS$11)isequivalent toUS$0.0064
perlitre. Although thisdiscriminatory taxontheselling price tothepublic, andconsequently on
consumption patterns foralcoholic beverages, onlyhasaminimal realeffect, itshould bementioned
thataspartoftheirconsideration ofthereform andmodernization oftheVenezuelan taxsystem the
taxauthorities (SENIAT) arecurrently considering abolition ofthistax.
35. United States: How doesVenezuela justify thedifferential taxondomestic andforeign
alcohol products? Thisappears toviolate GATT/WTO Article IIIonnational treatment.
Ascanbeseenfromthepreceding reply, theGovernment ofVenezuela recognizes thatthere
isdiscrimination against certain imported beverages astheyaretaxed more thannational alcoholic
beverages and,asmentioned, thisdiscriminatory taxiscurrently under review within theframework
oftheongoing reform ofthetaxsystem inorder tomeetVenezuela 'scommitments inWTO.
36. Canada: With respect totheadditional taxes onalcohol andalcoholic beverages, could
Venezuela provide details withrespect totheproduct coverage, actual rates andthevalue basis
fortaxcalculations?
Thefollowing table shows thetaxes fixed under theLawonNational andImported Spirits
andAlcoholic Beverages andgives adetailed breakdown byproduct, actual ratesandthebasis for
taxcalculations.
1On21May 1996.WT/TPR/M/10/Add.1
Page15
Alcoholic beveragesNational production tax
Tax/production
(Bs)Tax/delivery to
thepublic (Bs)Retail sales tax
(%)
Ethyl alcohol 9xAAlt.* 0 0
Distilled alcoholic beverages inthe
form ofbeerandwine 13.50 xAAlt. 0.10 xlt. 10
Beer 0.60 xlt. 0.05 xlt. 8.50
Natural wines (notexceeding 14
proof), punch andsangria without
theaddition ofalcohol 0.15 xlt. 0 8.50
Fortified orcompound wines (over
14proof butnotexceeding 20),
sangria withadded alcohol
9xAAlt. 0.10 xlt. 10
Alcoholic beveragesTaxonimported alcoholic beverages
Tax/production
(Bs)Tax/delivery to
thepublic (Bs)Retail sales tax
(%)
Rum andspirits 12xlt. 0.10 xlt. 10
Bitter, dryandsweet liqueurs 13.50 xlt. 0.10 xlt. 10
Brandy, cognac, whisky, ginand
others 15.30 xlt. 0.10 xlt. 10
Ethyl alcohol 18xAAlt. 0 0
Beer 2.25 xlt. 0.05 xlt. 8.5
Natural wines 0.45 xlt. 0.10 xlt. 8.5
Fortified orcompound wines 2.25 xlt. 0.10 xlt. 10
Cider notexceeding 7proof 0.45 xlt. 0.10 xlt. 8.5
Alcohol rawmaterials 3xAAlt. 0 0
*AA litres =Reference litres at100 proof (litres ofabsolute alcohol).
37. European Communities: What steps arebeing taken toremove discriminatory specific
taxes foralcohol products? Please provide detailed products? Please provide detailed product
coverage, actual rates andthevalue basis fortaxcalculations.
Seethereplies toquestions 34,35and36.
F. TARIFFS
38. UnitedStates:Havetariffsurchargesoncheese,maize,mineralwaterandotheragricultural
products been eliminated, asanticipated intheSecretariat report?WT/TPR/M/10/Add.1
Page16
Asindicated intheSecretariat 'sreport, these tariffsurcharges wereabolished byDecrees 325
of31August 1994 (specifically relating tomaize imports), 989of20December 1995, which fixed
thenewVenezuelan customs tariff, Official Gazette No.5.039-Special of9February 1996 (forthe
remaining products).
39. United States: Venezuela indicated thatthetariff surcharges were tobesuppressed by
January 1996. Hasthishappened?
Seethereply toquestion 38.
40. European Communities: Have tariff surcharges been suppressed byJanuary 1996 as
expected?
Seethereply toquestion 38.
G. INVESTMENT
41. United States: Certain features ofVenezuela 'stariff regime havetheeffect ofpromoting
local processing orlocal content, forinstance inratereductions forimported inputs forauto
assembly. DoesVenezuela intend toeliminate these trade-distorting measures inthenearfuture?
Thecasementioned inthequestion istheonlyoneinwhich thetariff applied inVenezuela
provides foratariffreduction according totheinputs ofnational origin used. Thismeasure wasadopted
pursuant totheComplementary Agreement fortheAutomobile Sector concluded within theframework
oftheCartagena Agreement andwasdulynotified totheCommittee onTrade-Related Investment
Measures soitiscovered bythetransitional period offive(5)years provided forinArticle 5.2of
theAgreement onTrade-Related Investment Measures. Anychange totheserulesbefore thetransitional
period expires issubject toarelevant decision bythemember countries oftheCartagena Agreement.
42. United States: Wewelcome theopening ofthebanking andinsurance industries in
Venezuelabutnotethatforeignparticipationisstillconstrainedbycertainconstitutionallimitations.
Arethere anyplans toeliminate these constraints?
There arenoconstitutional limitations onforeign investment inVenezuela. Onthecontrary,
theConstitution specifies that"theLawshallestablish rulesonparticipation byforeign capital innational
economic development" (Article 107). Decision No.291oftheCommission oftheCartagena
Agreement, which establishes theCommon Regime onForeign Capital andonTrademarks, Patents,
Licences andRoyalties, andisthelegalmeasure applicable inVenezuela toforeign investment. There
isalsoasystem ofnational treatment forforeign investors. Certain sectors ofeconomic activity are
reserved fordomestic enterprises, namely enterprises inwhich foreign participation doesnotexceed
20percentofthecapital, andthismust bereflected inthetechnical, financial, administrative and
commercial management oftheenterprise. InVenezuela, thesesectors areradioandtelevision stations,
Spanish-language newspapers andprofessions whose exercise isgoverned bydomestic legislation.
TheConstitution allows theStatetoreserve certain industries, production orservices ofpublic interest
forreasons ofnational commodity. Participation byprivate national orforeign capital inthesesectors
istherefore prohibited. There arenoplans toreform thisconstitutional provision.
43. Australia:WewouldbeinterestedtoknowhowquicklyVenezuelaenvisagesthenegotiations
withtheIMF being concluded (page 3),andhowrapidly Venezuela willbeabletoimplement
reforms thatareagreed? What views doestheVenezuelan Government haveontheeffect these
negotiations might have oninvestor confidence andeconomic recovery?WT/TPR/M/10/Add.1
Page17
Negotiations withtheIMFarefairly advanced, butitispremature tospecify anydatefortheir
conclusion. Venezuela isready toimplement thereforms agreed withtheIMFassoonasisnecessary
toensure thesuccess ofitsmacroeconomic adjustment programme. TheGovernment ofVenezuela
believes thatanagreement withtheInternational Monetary Fund willhaveapositive effect oninvestor
confidence andtherehabilitation oftheVenezuelan economy.
44. Australia: Wenotefrom thereport thatVenezuela istaking action toencourage foreign
investment,includingrecentchangestotheforeigninvestmentlaw,butwouldbeinterestedwhether,
andinwhat timeframe, theVenezuelan Government hasplans tointroduce ascheme thatpermits
theunhindered repatriation ofprofits?
Atthetimeofthereview ofVenezuela 'stradepolicy, theGovernment announced itsintention
toabolish theexchange control regime, which wastheonlyobstacle tofreerepatriation ofprofits.
Negotiations withtheInternational Monetary Fund andother multilateral financing organizations are
being pursued forthispurpose.
There arenownoexchange controls astheywere totally abolished on22April 1996.
Consequently, since thatdateinvestors havebeenfreetotransfer theirprofits abroad.
H. DOMESTIC LEGISLATION AND LEGAL PROCEDURES
45. United States: Chapter II,Section (5),paragraph 24:Inthispart, itisindicated that
oncepublished intheOfficial Gazette, provisions ofinternational agreements areimplemented
directly. However, inparagraphs 9-10, which describe Venezuela 'sapproval process for
international agreements, itisexplained that"nevertheless, inpractice, these arenotapplicable
intheabsence ofimplementing regulations". Could Venezuela please clarify whether, for
international agreements tobeenforceable, implementing legislation isrequired?
Pursuant totheConstitution, international agreements havetobeapproved byaspecial law
inorder tobeenforceable, unless theyaresimply toimplement orimprove upon already-existing
commitments, toapply principles specifically recognized byVenezuela, tocarry outordinary actsin
international relations ortoexercise powers specially attributed bythelawtotheExecutive. When
theagreements havebeenapproved bylaw,thePresident oftheRepublic mustratify them andthey
thenbecome partoftheVenezuelan legalsystem withthestatus oflaws. Assuch, theyareapplicable
inVenezuela andentail rights andobligations thatcanbeinvoked before theadministrative andjudicial
authorities without itbeing necessary fromthelegalperspective tohaveanimplementing law.Incertain
instances, however, theprovisions ofanagreement aredrafted inverygeneral terms orimpose
obligations ontheVenezuelan authorities toassign competence orestablish procedures fortheir
application anditisthennecessary toadopt aspecial lawestablishing these procedures orassigning
thecompetence inquestion inorder tofacilitate thelaw'seffective application.
46. United States: Chapter II,Section (5),paragraph 25:Inthisparagraph, itisindicated
thatGATT 1947andtheWTO Agreements formpartofdomestic legislation, however, footnote 15
(onpage27)indicates thattheGATT 1947andtheWTO Agreements werepublished intheOfficial
Gazette, notthatimplementing legislation hasbeen passed (also noted inparagraph 28).
BothGATT 1947 andtheWTO Agreements constitute partoftheVenezuelan legalsystem.
GATT 1947 wasnotapproved bylawassuch, however, theSpecial Congressional Committee took
adecision toauthorize itsapplication, pursuant totheconstitutional procedure applicable when an
agreement hastobeimplemented andtheLegislative Chambers arenotinsession. TheWTO
Agreements werepublished intheOfficial Gazette following theirapproval bylawandtheirratification
bythePresident oftheRepublic. Noimplementing legislation hasbeenadopted.WT/TPR/M/10/Add.1
Page18
47. United States: Regarding TRIPS, itisunclear toushowtheinvocation ofinternational
and/or regional provisions relates tothedomestic procedures outlined inparagraphs 9-10ofthis
Chapter.
TheDecisions bytheCommission oftheCartagena Agreement regarding intellectual property
(Decision No.344,which establishes theCommon Regime onIndustrial Property, Decision No.345,
which establishes theCommon Regime fortheProtection oftheRights ofBreeders ofNewVarieties
ofPlants, andDecision No.351onCopyright) aredirectly applicable inVenezuela without theneed
forprior approval byCongress oranyother public body, pursuant totheregulations oftheCartagena
Agreement andtheTreaty establishing theCourt ofJustice oftheAgreement, which provide forthe
direct andpreferential application ofDecisions bytheCommission oftheCartagena Agreement.
48. United States: What provisions oftheGATT 1947andWTO Agreements havebeentwice
debated, published intheOfficial Gazette, andbeen implemented through regulations?
TheWTO Agreements were thesubject oftwodebates ineachChamber ofCongress and
published intheOfficial Gazette following adoption andratification ofthecorresponding law. To
date, noimplementing provisions havebeenissued forthislaw,buttheyarenotnecessary forits
provisions tobeconsidered mandatory inVenezuelan law,aswasexplained inthereply toquestion 45.
TheGATT 1947wasalsodiscussed, approved andratified, insofarasitsprovisions areincorporated
intotheGATT 1994. TheGATT 1947, assuch, hasnotbeen approved bylaw,although the
corresponding draftlegislation wastabled inCongress bytheNational Executive in1990. Asmentioned
inthereplytoanearlier question, theCongressional Commission approved provisional implementation
oftheGATT 1947, which hasnotbeenpublished intheOfficial Gazette.
49. United States: Thedocumentation forthisconsultation includes frequent references to
legislation thatisplanned orinprocess (including TRIPS, Safeguards, A-D/SCM).
TheGovernment ofVenezuela iscurrently preparing draftlegislation tomake application of
WTO provisions more effective, inparticular byestablishing procedures oradapting them tothe
provisions oftheMarrakesh Agreement andtheAnnexes thereto.
50. United States: Could yousummarize thestatus ofthevarious pieces oflegislation still
necessary toimplement theUruguay Round Agreements?
Asmentioned inthereply totheprevious question, theGovernment ofVenezuela isstill
considering thevarious draftlawsnecessary formore effective application oftheWTO Agreements.
51. UnitedStates:CanVenezuelaclarifywhyitsexistinglegislationdoesnothavetobechanged
tobring itintoconformity withtheAgreement onA-D/CVD legislation ifinternational agreements
require implementing legislation tocome intoforce?
InVenezuela, matters related toanti-dumping andcountervailing duties aregoverned bythe
LawonUnfairInternationalTradePractices.FollowinglegislativeapprovaloftheMarrakeshAgreement
anditsAnnexes, therelevant legalregulations applicable inVenezuela arethose oftheAgreement,
while theprovisions oftheLawonUnfair International Trade Practices onlyremain inforce when
theydonotcontradict theprovisions oftheMarrakesh Agreement anditsAnnexes onanti-dumping
andcountervailing duties. Please seethereply toquestion No.45regarding implementing legislation
forinternational agreements inVenezuela.WT/TPR/M/10/Add.1
Page19
I. REGIONAL AND PREFERENTIAL AGREEMENTS
52. United States: Venezuela isparty toanumber ofregional preferential trading agreements.
Have allofthese agreements beenfullynotified totheWTO/GATT? Have theybeenreviewed?
Ifnot,whynot? When doesVenezuela intend tonotify these agreements?
Alltheregional andpreferential agreements signed byVenezuela arewithin theframework
ofLAIA. Regarding theindication intheSecretariat 'sreport thatthelastreport bytheLAIA tothe
CommitteeonTradeandDevelopmentwassubmittedoverthreeyearsago,theGovernmentofVenezuela
willcontacttheSecretariatofLAIAregardingthesubmissionofanup-to-datereport,includinginteralia
detailed information onthelatest agreements signed byVenezuela, fortheconsideration oftheMembers
ofWTO.
53. Canada: Wewould appreciate more information regarding theelements tobecontained
inthenegotiations between theAndean Group countries andMERCOSUR? Atwhat stage are
these negotiations? When doyouplantocomplete thenegotiations toestablish aSouth American
FreeTrade Area?
ForVenezuela, MERCOSUR constitutes avitally important agreement andinthisrespect it
isactively promoting theAndean Group-MERCOSUR Integration Project.
TheAndean Group countries areatpresent renegotiating withMERCOSUR countries the
preferences contained inthebilateral agreements signed within theframework ofLAIA sincethe1980s
inorder tomake these preferences multilateral. Thisphase isknown astherenegotiation ofthe
"historical heritage" stage anditshould beconcluded during thecourse oftheyear. TheFree-Trade
Area willbedefined during thesecond stage ofthenegotiations oncethemultilateralization ofthe
historical heritage hasbeencompleted.
54. European Communities: Please provide information onplans forthedevelopment of
regional groups ofwhich Venezuela isamember andtheirrelationship withthemultilateral trading
system.
Venezuela 'sparticipation inregional agreements andthestrengthening ofitspreferential trade
isinnowaycontradictory tothecommitments ithasassumed within themultilateral framework.
Venezuela participates intheregional agreements inaspirit of"open regionalism" which dulytakes
account oftheeconomic openness policies prevalent intheglobal andLatin American economy and
thetrends towards globalization intheinternational economy. Theagreements towhich Venezuela
isaparty reflect thisperspective andprovide abroad range ofregulations thatarecompatible with
Venezuela 'srelations outside these agreements.
Theintegration strategy which Venezuela hasbeenpursuing inrecent years isaimed atthe
strengthening, improvement andextension oftheadvances made inthetrade liberalization process.
55. Australia:AustraliawelcomestheinitiativetoestablishaFree-TradeAreafortheAmericas.
Webelieve thatFTAA hasthepotential togiveawelcome boost tothedevelopment offreer and
fairer trade andinvestment, butwewould beconcerned iftheFTAA developed along a
discriminatory andexcluding path. (i)Wewould welcome Venezuelan views onhowtheysee
theFTAA developing; (ii)What roledoyouseeforexisting regional bodies suchasNAFTA,
MERCOSUR, G3andtheAndean Pact? (iii)Atthisstage, hasVenezuela identified apreference
forimplementing theFTAA through thenegotiation ofanew, hemisphere-wide agreement or
vianegotiation heldbetween regional groups (e.g. between enlarged versions ofMERCOSUR
andNAFTA)? (iv)Ifthelatter approach wereused, howwould Venezuela envisage thatregionalWT/TPR/M/10/Add.1
Page20
groupings might address theissue ofconverging their respective trading regimes? (v)Does
Venezuela foresee thattheMarch Trade Ministers 'meeting inColombia might leadtoan"Early
Harvest" oftrade liberalizing andfacilitating measures inorder torestore momentum totheFTAA
initiative? (vi)Wewould beveryinterested toknow what areVenezuela 'sparticular interests
andconcerns withtheFTAA process.
Venezuela views withsatisfaction theprogress made inthenegotiations onthefuture Free-Trade
Area fortheAmericas (FTAA) andhasshown commitment equal tothatofother countries inthe
hemisphere.
Venezuela hasmajor tradepartners intheareaanditisinitsfundamental interest tostrengthen
trade links. Oneareaofconcern istheneedtoachieve abalanced agreement thattakes intoaccount
thedifferent stages ofdevelopment inthevarious countries. Venezuela isaware thatthesearecomplex
negotiations thatrequire careful preparation andwillleadtoradical changes atalllevels ofsociety.
Theexisting subregional integration systems should playaleading roleinestablishing theFTAA
andVenezuela supports measures tostrengthen them, gradually extending themtoother countries and
forging evercloser linksamong these groups soastocreate theFTAA. Inpractice, itwillmostlikely
beacomplexprocessbutitshouldfacilitateharmonizationandconsistencyamongthevariousintegration
agreements intheAmericas.
TheNorth American Free-Trade AreaTreaty hasbeenviewed withinterest bytheGovernment
ofVenezuela andconstituted animportant point ofreference, inthesame wayastheUruguay Round
Agreements, during thenegotiations among Venezuela, Colombia andMexico, ontheconclusion of
aFreeTrade Treaty among theGroup ofThree.
Likeother countries intheAmericas, Venezuela isstudying thevarious approaches andoptions
fortheFTAA negotiations. Asalready mentioned, itsupports thestrengthening andextension ofthe
agreements towhich itisalready aparty.
TheMinisterial Meeting inCartagena onceagain reaffirmed support forthebases oftheFTAA
negotiating process.
J. NEGOTIATIONS
56. United States: Wenotethatithasnotsatisfied itsnotification obligations intheareas
ofimport restrictions, import prohibitions, licensing requirements andstate trading, andfiscal
credit andexport finance programmes. When doesVenezuela intend tocomplete thenotifications
ithasnotyetmade?
Inhisstatement totheTrade Policy Review Body, Venezuela 'sMinister forIndustry andTrade,
Mr.Werner Corrales, recognized thattheGovernment ofVenezuela hadnotyetfulfilled itscommitment
tomake several notifications. Heexplained thedifficulty ofmaking changes inthelegal and
administrative structure, compounded bytheserious financial andeconomic crises experienced by
Venezuela, which takeupefforts andcapacity. Venezuela nevertheless seriously andfirmly intends
tofulfil allthenotification requirements assoonaspossible.
K. STATE TRADING
57. Canada: Apoint ofclarification, arethe"Buy Venezuelan" Decree andDecree 1182the
same Decree? Ifnot,weunderstand thatthe"Buy Venezuelan" Decree hasbeen repealed, but
what isthestatus ofDecree 1182?WT/TPR/M/10/Add.1
Page21
Decree 1182 andtheso-called "Buy Venezuelan" Decree areoneandthesame.
58. Canada: Wenoted thatVenezuela hasnotsubmitted anynotification onstate trading
enterprises subject toArticle XVII provisions. WillVenezuela submit anynotification? Ifso,
when doesitintend tosubmit thenotification (given thatthenotifications wereduelastsummer)?
Please provide acomplete listofproducts affected byVenezuela 'sstate trading enterprises.
Venezuela willnotify theenterprises subject toArticle XVII assoonaspossible.
59. Canada: Arethere currently anygovernment-to-government counter-trade orbarter
arrangements ineffect? Ifso,forwhat products? Forwhat year? Which countries areinvolved?
Venezuela doesnotatthemoment haveanyagreement providing forcounter-trade.
K. GOVERNMENT PROCUREMENT
60. United States: IsVenezuela considering adhering totheGovernment Procurement
Agreement orotherwise liberalizing andimproving thetransparency ofitsprocurement regime?
Venezuela hasnotconsidered acceding totheAgreement onGovernment Procurement nor
doesitconsider itnecessary toliberalize andimprove itsprocurement regime.
61. Canada: Does Venezuela intend toratify theWTO Agreement onGovernment
Procurement?
Venezuela doesnotpropose toaccede totheAgreement onGovernment Procurement.
62. Canada: I.Aregoods, services andconstruction contracts opened tointernational
competitive bids? Ifso,overwhat threshold areinternational bidsopened? II.Howisadecision
made toprocure internationally versus domestically? III.Areforeign companies permitted to
bid? Ifso,dotheyhave tocomply withspecial conditions? IV.What istheminimum time
required topublish bidinformation, purchase documentation andsubmit aproposal?
I. Yes. Thethreshold isdefined according tothetypeofactivity concerned anditscost.
There isageneral callforbidsopentothepublic asawhole iftheestimated costofthecontract
forthepurchase ofgoods orthecontracting ofservices exceeds Bs70million; thisisalsothecase
forconstruction contracts iftheestimated costexceeds Bs200million.
There isaselective callforbids, i.e.,thecontracting authority callsoncertain enterprises to
make anoffer, iftheestimated costofthecontract forthepurchase ofgoods orservices exceeds
Bs7million butisnothigher thanBs70million; inthecaseofconstruction contracts, iftheestimated
costofthecontract exceeds Bs70million butisnothigher thanBs200million; orwhen theNational
Register ofContractors (Registro Nacional deContratistas )certifies thatthere arenotmore than
10registered enterprises dulyqualified tocarry outthework irrespective ofitscost.
Aselective callforbidsmayalsobemade inthefollowing cases: iftheexecution ofthework,
thesupply ofgoods orofservices hastobecontracted outtospecialized international enterprises that
donotoperate inVenezuela; ifthegoods aretobepurchased forexperiments orresearch; orfor
reasons ofState security.WT/TPR/M/10/Add.1
Page22
Thecontract forcarrying outthework isawarded directly tothechosen enterprise bythe
contracting authority iftheestimated costofthegoods tobepurchased ortheservices tobesupplied
doesnotexceed Bs7million; inthecaseofconstruction contracts, iftheestimated costofthecontract
doesnotexceed Bs70million; orifcarrying outthework orsupplying thegoods orservices is
commissioned byapublic sector body.
II. After thetenders havebeenreceived, bidcommittees (Comisiones deLicitación )areresponsible
forensuring thattheymeet thecriteria forthetender procedure inorder toselect theenterprise to
carry outthework; thedecision willdepend onwhich enterprise, intheopinion ofthecontracting
authority, hasmade thefairest offer.
When choosing among offers thatpresent afairrange ofsimilar conditions, preference will
begiven totenders thatmeetthefollowing criteria: greater involvement ofdomestic engineering and
technology; more extensive useofdomestic human resources atalllevels, including themanagerial
level; higher national value added orgreater useofdomestic parts orinputs; larger national share
intheenterprise 'scapital; possession oftheNOVEN trade mark; better conditions forthetransfer
oftechnology, etc.
III. Yes. Inprinciple, itisnecessary tobelisted intheNational Register ofContractors inorder
toparticipate inanybidprocedure ordirect award byorganizations orbodies, subject totheregulations
laiddown intheLawonTendering.
TheRegulations ofthisLawstatethatanyinterested party must submit anapplication for
registration accompanied bythefollowing documentation:
(i) Copy ofthedulyupdated articles ofassociation andthefirm'sstatutes;
(ii) up-to-date listofthemembers ofthefirm'sboard ofdirectors, administrators, and
legalrepresentatives;
(iii) taxclearance certificate andcopyoftheincome taxdeclaration forthelatest financial
year;
(iv) financial statements fortheprevious three financial years audited byanindependent
public accountant, unless thefirmhasnotbeeninexistence forthree years;
(v) copyofthetaxinformation registration (Registro deInformación Fiscal (RIF)) ;
(vi) proof ofpayment ofthelatest compulsory social security contribution;
(vii) information onother characteristics ofthefirm; and
(viii) information regarding thetechnical andprofessional staff.
Thebidder mustalsoofcourse meettheminimum technical, administrative andfinancial criteria
specified intheadvertisement containing theinvitation totender.
Asanexception tothegeneral principle, however, noregistration intheNational Register
ofContractors isrequired fordirect awards ofcontracts foranamount notexceeding Bs700,000 or
ingeneral callsforbids, selective bidsordirect awards ofcontracts outside Venezuela.WT/TPR/M/10/Add.1
Page23
IV. Aninvitation totender ispublished inoneofVenezuela 'smass circulation newspapers and
inalocalnewspaper. TheBidCommittee thensends acommunication (indicating thesubject ofthe
tender, thetime-limit andtheplace forthesubmission offulldocumentation, aswellastheplace, date
andtimeofthepublic receipt andopening oftheenvelopes containing theoffers) toeachofthe
contractors, notifying those whohavebeenpreselected bythecontracting authority. Thisistoallow
them tosubmit theirbidswithin thetime-limit fixed ineachcase, taking intoaccount inparticular
thecomplexity ofthework ortheservices tobeprovided, although thisperiod maynotbelessthan
five(5)working daysfrom thedateofsubmitting thefulldocumentation.
Thebids,dulysigned andinsealed envelopes, arehanded overtotheBidCommittee inaspecial
public ceremony. TheCommittee thenopens theenvelopes containing thebidsatthesame public
ceremony, reads outtheessential elements theycontain andnotes intherecord anystatement made
byacontractor. Therecord issigned bythemembers oftheCommittee, thecontractors present and
official observers.
TheCommittee considers theoffers, selects those which arethemostadvantageous andmakes
itsrecommendations inareasoned report within twenty (20)working daysfromthedateofreceiving
thebids.
Within thirty (30)working daysfollowing receipt oftheCommittee 'sreport, thecontracting
authority approves oneofthebidsordeclares thattheinvitation totender isannulled. Theperson
whose bidisaccepted mustprovide theguarantees required bythecontracting authority forexecution
ofthecontract, toitssatisfaction andwithin thetime-limited fixed, inaccordance withtheterms of
theinvitation totender.
L. PRIVATIZATION
63. European Communities: Please giveamore precise description oftheparticipation of
theState intheeconomy. Which enterprises enjoy exclusive orspecial privileges?
Article 97oftheConstitution states that"...theStatemayreserve toitselfspecified industries,
production orservices ofpublic interest forreasons ofnational interest andmaydecide onthe
establishment anddevelopment ofabasic heavy industry under itscontrol".
Using thisauthority, theStatehasreserved thefollowing activities foritssoleparticipation:
(i) Hydrocarbon industry andtrade(Law Reserving totheStatetheHydrocarbon Industry
andTrade, dated 29August 1975, published inOfficial Gazette No.1.769-Special
of29August 1975);
(ii) domestic market forhydrocarbon products (Law Reserving totheStatetheExploitation
oftheDomestic Market forHydrocarbon Products, dated 21June1973, published
inOfficial Gazette No.1.591-Special of22June1973);
(iii) naturalgas(LawReservingtotheStatetheNaturalGasIndustry,dated26August1971,
published inOfficial Gazette No.29.594 of26August 1971);
(iv) exploitation ofironore(Decree No.580reserving totheState exploitation ofiron
oreforreasons ofnational interest, dated 26November 1974, published inOfficial
Gazette No.30.577 of16December 1974).WT/TPR/M/10/Add.1
Page24
Recently, contractual forms ofprivate andforeign investment inthehydrocarbon sector have
beenapproved.
Inaddition, through theregional development corporations ortwoindependent bodies called
theVenezuelan Investment Fund (Fondo deInversiones deVenezuela (FIV))andtheDeposit Guarantee
andBanking Security Fund (Fondo deGarantía deDepósitos yProtección Bancaria ),theVenezuelan
Stateisashareholder inanumber ofenterprises producing goods andservices inseveral different sectors
(iron andsteel, aluminium, bauxite, telecommunications, radio andtelevision, hotels, etc.). These
enterprises donotenjoy anyexclusive orspecial privileges withtheexception ofthetelephone company
(CompañíaAnónimaNacionalTeléfonosdeVenezuela(CANTV)),whosecapitalismainlyprivatealthough
theFIVowns 49percentoftheshares. Thiscompany enjoys amonopoly untiltheyear2000.
64. European Communities: Describe anyrecent developments intheprocess ofprivatization
andtheoutlook forthisprocess.
TheGovernment ofVenezuela hasidentified themajor privatization operations totakeplace
thisyear, including privatization ofits49percentshareholding inCANTV, privatization ofthe
Venezuelan, Consolidated andRepublic banks, which became Stateproperty afterthefinancial crisis
in1994, andthealuminium companies (VENALUM, ALCASA, BAUXILUM andCARBONORCA),
together withsaleofitsshares intheVenezuelan airmail line(Línea Aeropostal Venezolana ),although
other companies maybeincluded inthislist.
Thepossible agreement withtheInternational Monetary Fund andtherecent abolition ofthe
exchange control regime areimportant elements inaccelerating andstrengthening theprivatization
process.
65. Australia: Recognizing thatVenezuela hastransferred 29enterprises andother assets
under itsprivatization policy, what percentage offuture planned enterprises tobetransferred
doesthisreflect? How significant istheextent ofprivatization sofarcompared totheoverall
levelofState-owned companies? What future plans arethere forfurther privatization?
Thisisaverysmall percentage asthenumber ofenterprises which theVenezuelan Stateintends
toprivatize islarge. TheState considers thatprivatization isanintegral partofitsmacroeconomic
adjustment programme andtherefore plans togiveastrong impetus tothisprocess.
M. OTHER MATTERS
66. United States: Theissue ofdiscriminatory aspects ofVenezuela 'sStandards Regime has
foralongtimebeenasubject forcomplaints from United States exporters, especially intheauto
parts sector. While thedocumentation notes that"international" standards areusedforreference
fordeveloping Venezuelan regulations andnorms, theSecretariat document goesontostatethat
only5percentcorrespond toISOstandards. What plans doesVenezuela have toimprove this
situation?
Regarding thelowpercentage ofuseofinternational standards asareference when developing
Venezuelan standards andregulations, itshould benoted thatinthemajority ofcases there areno
international standards fortheproducts usedasareference fordomestic standards. Attheendof1995,
Venezuela had3,215 Venezuelan standards (COVENIN), ofwhich 263were compulsory.
Withregard toVenezuela 'splans toimprove thissituation, since1994theCOVENIN Technical
Committees onStandardization havehadguidelines onrevision ofthecompulsory standards ineffect
ineachsector inorder todecide whether ornottheyhadtobecompulsory inorder tomeethumanWT/TPR/M/10/Add.1
Page25
safety andenvironmental protection criteria inaccordance withtheprovisions oftheWorld Trade
Organization.
Work isstillgoing onanditwillbenoted thatofthe354COVENIN standards thatwere
compulsory in1995, only263remained compulsory on31January 1996.
Inaddition, during 1994, revision ofResolution 1.449 (Registration ofImported Products)
wasinitiated withtheobjective ofextending ittodomestic products.
67. European Communities: How hastheVenezuelan economy performed since theperiod
covered inthereports bytheGovernment andtheSecretariat? Hasthere been arecovery or
hasGNP percapita fallen further in1995?
68. European Communities: IstheVenezuelan Government taking steps tobring domestic
prices offueluptointernational levels?
Inhisstatement atthereview ofVenezuela 'strade policy, Minister Corrales replied tothe
question bytheEuropean Communities andother countries concerned bywhattheytermed highlevels
ofsubsidies implicit inVenezuela 'sdomestic fuelprices. Hestated that"theGovernment wasconvinced
oftheneedtomake adjustments andwould implement thisdecision oncetwoconditions hadbeenmet:
amethod withconsiderable social impact, namely theactual capacity toimplement thesubsidy with
afocus onpublic transport; andassessment ofthetimeliness ofimplementing themeasures. Given
thepolitical implications ofimplementing thedecision, itstiming istheexclusive preserve ofthe
President oftheRepublic".
Itshould bementioned inthisconnection thaton15April thePresident oftheRepublic
announced aseries ofmeasures thatincluded anincrease inthepetrol prices from Bs5.20to50,10
to55and14to60perlitrefor87,91and95octane fuelrespectively, while theprice ofdiesel fuel
rosefrom Bs4.50to48perlitre. These prices came intoeffect on16April.
Price controls
69. Australia: Please provide more details onthetypeofprice controls adopted for"basic
goods" (page 2ofthereport bytheGovernment ofVenezuela). Which "basic goods" dothese
measures refer to?How longwillthismeasure remain inplace?
There areatpresent nocontrolled goods inVenezuela andthecontrols ineffect atthetime
ofthereview ofitstradepolicy wereabolished byResolution No.1779oftheMinistry ofDevelopment
(Official Gazette No.359.66 of24May1996). ThisResolution states that"manufacturers, producers
andimporters oftheproducts listed shallfixtheirmaximum price according tothecoststructure and
areasonable margin ofprofit".
Thepricecontrols system inexistence uptoMay1996wasbased onabasicbasket offoodstuffs
andservices deemed bytheExecutive tobeessential. TheResolution usedthese prices tofixthe
maximum selling prices.
Policy onexports ofnon-traditional products
70. Australia: Onpage3ofthereport, Venezuela comments onincreased diversification of
itsexports andattributes thisinparttothepromotion ofnon-traditional exports. Wewould
appreciate anelaboration onthemeasures adopted toachieve this.WT/TPR/M/10/Add.1
Page26
InJune1989, Venezuela adopted aprogramme ofeconomic andtradeopenness, which included
anumber ofmeasures topromote theexport ofnon-traditional products. These measures include the
following:
-Adoption ofspecial customs regimes;
-financing scheme fornon-traditional exports;
-flexibility oftheexport process, rationalization ofexport procedures;
-identification ofthegoods tobeexported;
-institutional support forexporters, particularly inregard tomarket penetration;
-negotiation oftrade agreements withneighbouring countries.
TheForeign Trade Institute (Instituto deComercio Exterior (ICE))istheGovernment body
responsible forpromoting non-traditional exports. Aspartofitspromotion policy, theInstitute has
reached agreements withseveral regional agencies inorder toestablish offices inkeyzones inVenezuela
tocarry outactivities topromote thedevelopment ofexport trade inindustrial centres. Theactivities
include promotion, action andpublic information tothepublic ontrade matters.
TheICEalsohasconsultation andcooperation mechanisms withtheprivate sector called Trade
Promotion Committees (Comités dePromoción Comercial (CPC) ).These areorganized bybranch
ofeconomic activity. Thepurpose oftheCPCs istoinitiate systematic rapprochement withthe
production sector inorder toestablish ajointstrategy forpenetrating international markets.
Replies tothewritten questions bytheDiscussant, Mr.Carlos Paranhos (Brazil)
71. Venezuela isimplementing amajor macroeconomic reform programme. Please summarize
themain features andobjectives ofthisprogramme. Please explain thepresent exchange rate
policy. After thereform ofthebanking system, whatisthepresent participation oftheVenezuelan
State inthebanking system?
Seethereplies inSection B,Exchange Regime.
72. Inthelightoftherequirements ofthestabilization planadopted, (i)howdoesVenezuela
evaluate theresults oftheUruguay Round Agreements onthestabilization programme? (ii)What
wastheimpact oftheimplementation oftheUruguay Round Agreements onthestabilization
programme?
TheGovernment ofVenezuela evaluates positively itsaccession toGATT in1990 and
subsequently totheWTO asafounding Member. Asalready explained, despite therecent difficulties
faced byVenezuela, exacerbated bythefinancial crisis in1994, which made itnecessary toimplement
mechanisms tocurbinflation, increase taxrevenue through more extensive andefficient collection
oftaxesandcounteract thenegative outflow offoreign currency, theGovernment ofVenezuela continues
topursue itsfundamental development strategy based ontheexport sector andoptimum useofthe
potential ofleading industries, withtheStatepromoting competitiveness intheproduction apparatus
andenhancing distributive equity.WT/TPR/M/10/Add.1
Page27
Venezuela considers thattheresults oftheUruguay Round havebeenglobally positive. Firstly,
itbelieves thattheimprovement intheconditions ofaccess foritsexports through tariff reductions
andbetter discipline innon-tariff measures willhelptoenhance itsintegration intheglobal economy.
Secondly, itisconfident thattheimprovement inthemultilateral trade rules, especially intheareas
ofanti-dumping, subsidies, import licences andagriculture, willprovide thepredictability andsecurity
thatitsproducts require asaprecondition forsuccessful penetration ofglobal markets. Thirdly, the
improvements intheWTO dispute settlement mechanisms, especially thealmost automatic adoption
oftheconclusions andrecommendations ofthepanels, willmake itpossible todefend more effectively
thelegitimate tradeinterests oftheOrganization 'sMembers. During theshort period ofitsexistence,
asareplacement fortheformer GATT, theWTO hasshown itself tobeanappropriate andsuitable
forum formonitoring international trade andlaunching negotiating initiatives thattakedueaccount
ofthedifferent levels ofeconomic development ofitsMembers.
Venezuela alsoconsiders, that,initsparticular case, thereisamutual andbeneficial feedback
between theimplementation oftheresults oftheUruguay Round, ontheonehand, andthe
macroeconomic stabilization programmes being implemented inVenezuela, ontheother.
73. Venezuela isimplementing anewtrade policy since 1989. Please explain themain features
ofthispolicy. Please indicate thepresent institutional framework andthelegislative instruments
adopted.
In1989, Venezuela independently putintoeffect anumber ofmeasures aimed atrevitalizing
economic activity, including areduction intheapplicable customs tariff, theelimination ofnon-tariff
measures, theabolition ofprice controls (except forasmall number ofessential consumer goods),
areduction insubsidies, liberalization oftheforeign investment regime andthecapital market,
modernization ofthetariffsystem, strengthening ofintellectual property rights andtheimplementation
ofaprivatization programme. Theseries ofmeasures adopted hasbeencomplemented bythenew
disciplines oftheGATT andtheWTO, which offergreater predictability andsecurity forVenezuela 's
foreign trade flows.
Thebasic instrument forthetrade policy initiated in1989 isDecree 239,which setsoutthe
rulesfortrade policy. TheGovernment alsoestablishes trade policy rulesindecrees andresolutions
within thelimits setbythelaw.Asaresult ofVenezuela 'saccession toGATT andWTO, therelevant
agreements arepartofVenezuelan trade legislation. Oneother basic instrument istheVenezuelan
Customs Tariff, which wasupdated inDecember 1995 andpublished intheGaceta Oficial inearly
1996.
TheVenezuelan State authorities involved intrade policy arecurrently theMinistry of
Development, theForeign Trade Institute (under theauthority oftheMinister forForeign Affairs),
whichmainlyactincoordinationwiththeMinistryofFinance,theMinistryofAgricultureandLivestock,
theMinistry ofEnergy andMining, theMinistry oftheEnvironment andRenewable Natural Resources,
theCentral Coordination andPlanning Office, theVenezuelan Investment Fund andthePDVSA.
Itshould benoted thatinDecember 1995 itwasdecided tocreate aMinistry ofIndustry and
Trade, which willhavemajor responsibility forVenezuela 'strade andindustrial policy.
74. Venezuela isamember ofseveral regional trade arrangements, suchastheAndean Group,
LAIA, Group ofThree, CARICOM, CACM, andhasnegotiated bilateral agreements withsome
Latin American countries: (i)What measures isVenezuela taking toensure thatthese
arrangements areGATT/WTO compatible andconsistent with each other? (ii)Have these
plurilateral andbilateral agreements been notified?WT/TPR/M/10/Add.1
Page28
Seethereply toquestion 52.
75. Venezuela hasanimportant trade withNorth America, buthasalsoanincreasing trade
withSouth American countries, what istheposition ofVenezuela vis-à-vis thetwomostsignificant
trade arrangements intheregion (NAFTA andMERCOSUR)? What istheVenezuelan view
ontheproject foraFreeTrade Agreement fortheAmericas?
Seethereplies toquestions 53and55.
76. Measures topromote import substitution andthediversification ofexports: please indicate
themain features ofthelegislation onforeign direct investment inVenezuela. Please describe
themechanisms ofexport incentives presently inforce.
77. Privatization isanimportant feature ofthestabilization plan: (i)Please summarize the
basic characteristics oftheprivatization programme; (ii)Which formerly State-owned sectors
andenterprises arenowunder private control? (iii)What aretheestimated receipts forthe
Venezuelan Government oftheprivatization programme? (iv) What istheimpact ofthe
privatization programme ontheinternal economy andonVenezuelan external trade?
Thebasic toolsfortheefficient functioning oftheStateare,ontheonehand, decentralization
and,ontheother, theprivatization ofindustrial andtrade activities sothat,added tothereduction
inpublic spending, theseactivities canbemade more efficient andtheresources fortheirrevitalization
canbeobtained. Thebasic components ofthisorganizational process are:
-Adecrease inState participation inallindustrial andtrade activities through transfer of
theownership orcontrol ofenterprises;
-therestructuring ofenterprises whose typeofactivity cannot becarried outbytheprivate
sector butwhich require radical changes inorder tobecome efficient;
-thedefinition oradaptation oftheregulatory framework, especially forsectors suchas
water, electricity andtelecommunications where consumers havetodealwithnatural
monopolies caused bythestructural features ofthese activities;
-revision oftheState'srolethrough therestructuring andprivatization ofpublic enterprises,
coordinated bytheVenezuelan Investment Fund, which istheExecutive body legally
responsible forcoordinating andimplementing thepolicy ontheprivatization and
restructuring ofStateinstitutions, marking thebeginning ofaprocess thathasgradually
involved allsectors ofsociety andhasbeenstrengthened attheinstitutional levelthrough
theadoption ofthelegalframework foritsimplementation. Theexperience gained has
enabled continuous improvements intheprojects andtheiradaptation toVenezuela 'snew
needs.
FortheState, privatization isaneconomic policy trend thatmeets theneeds andpossibilities
forthecountry 'sdevelopment andmodernization andsince1989ithasprovided asuccessful alternative
forthefunctioning ofalarge number ofState enterprises producing goods andservices byfreeing
themfromtheeconomic andfinancial operational degradation theyfaced, andthishasledtofar-reaching
structural reform. Theprivatization process entails adecrease intheState'sroleasentrepreneur and
astrengthening ofitsroleinguiding theproduction process. Inthiscontext, denationalization meets
theobjective ofachieving amore efficient State andimproving thequality oflifeforVenezuela 's
population.WT/TPR/M/10/Add.1
Page29
TheGovernment ofVenezuela isimplementing apriority programme forthesaleof16public
enterprises during 1996 andearly 1997. Themain privatization operations include: privatization of
theState's49percentshareholding inCANTV, privatization oftheVenezuelan, Consolidated and
Republic banks, which were transferred totheState following thefinancial crisis in1994, andthe
aluminium enterprises (VENALUM, ALCASA, BAUXILUM andCARBONORCA), aswellasthe
saleofshares intheVenezuelan airmail line,although other enterprises maybeincluded inthislist.
Thepossible agreement withtheInternational Monetary Fund andtherecent abolition ofthe
exchange control regime areimportant elements inaccelerating andstrengthening theprivatization
process.
Since 1989, theStatehastransferred 31companies andothershares, yielding US$2,400 million
incashintransparent operations and,inaddition totheamounts received, thishasmeant thetransfer
totheprivate sector ofsome 44,000 jobsaswellassavings inoperating andinvestment costs which
theStatewould havehadtopayifithadremained theowner. Theresults oftheprivatization process
areasfollows: seven sugar mills (ElTocuyo, Cumanacoa, RíoYaracuy, Tacarigua, LasMajaguas,
Ureña, Portuguesa), fivebanks (Occidental deDescuento, República, ÍtaloVenezolano, Popular, Coro),
fivehotels (Cumanagoto, Miranda, Irahara, ElTamá, Moruco), onetelecommunications enterprise
(CANTV), theconcession tooperate bandAofthecellular telephone system, oneairline (VIASA),
andoneshipyard (ASTINAVE). Seven industrial assets havealsobeenliquidated (Cerámicas Cumaná,
Terrenos delAeropuerto Caracas, Lamforte Industrial Plants andBarquisimeto Plastic, Puerto Cabello
SaltRefinery, Motonaves CVN (3),Catatumbo Cement).
ThePrivatization Lawprovides thatthenetrevenue fromtheprivatization ofgoods, enterprises
orservices belonging totheStatemayonlybeusedtopayoffthecapital oftheexternal public debt.
78. Automotive regime: Please explain theautomotive regime inforce, including fiscal
incentives, tariff reductions, export andlocal content requirements. What arethegoals tobe
achieved?
79. Agricultural policy: Please indicate themain features oftheagricultural policy inforce.
Please explain indetail theAndean System ofPrice Bands.
Seethereply toquestion 5.
80. Notification requirements: Members oftheWTO were required tosubmit asignificant
number ofnotifications under thenewagreements. What isthepresent Venezuelan situation
interms ofcompliance withnotification requirements?
Seethereply toquestion 56.