Custom Regulations

SYNOPSIS

A. GENERAL PRINCIPLES

1. Control and Inspection Organizations 5.101
2. Software Control 5.107
3. Registration 5.113
4. Intervention of the Custom House-Broker 5.115


B. MERCOSUR

1. General Considerations 5.119
2. Mercosur Common List 5.123
3. Common Custom Tariff 5.125
. Adequacy Regime 5.126
. Convergence Regime 5.129
. Exceptions 5.130
4. Final Adequacy Regime 5.135
. Intrazone Convergence Schedule 5.136
5. Special Situations 5.137
6. Chile 5.139
7. Bolivia 5.142

C. OTHER BILATERAL CONVENTIONS
     AND PREFERENCES REGIMES

1. Basic Description 5.146

D. IMPORTS

1. Basic Procedure. Complementary Documents 5.155
2. Imports Subject to Government Authorizations 5.159
3. Taxable Basis. Valuation of Goods 5.160
4. Import Duties 5.163
5. Statistic Rate 5.167
6. Proof of Destination Rate 5.169
7. Value Added Tax 5.171
8. Collection of Income Tax 5.172
9. Antidumping Duties 5.173
10. Compensatory Duties 5.175
11. Minimum Specific Import Duties 5.176
12. Price Equalization Duties 5.177


E. EXPORTS

1. Basic Procedure 5.178


F. EXPORTS BENEFITS

1. General Principles 5.179

A. GENERAL PRINCIPLES

1. Control and Inspection Organizations

5.101. The principal organization of inspection and control of the international traffic of goods in our country is the "Dirección General de Aduanas" -(D.G.A.- Customs Office) Together with the "Dirección General Impositiva" (D.G.I.- Internal Tax Revenue Office), which is in charge of the collection, inspection and control of internal taxes, the D.G.A.

forms part of the "Administración Federal de Ingresos Públicos" (A.F.I.P. - Federal Administration of Public Revenues), which is in charge of the administration of the D.G.A. and the D.G.I. in whom it has delegated specific functions. In accordance with such functions the D.G.A. is in charge of the general supervision and administration of customs offices and their agencies, in order to secure a uniform enforcement of the laws in force by means of the enactment of general rules of interpretation, supervision and the decision regarding filed remedies.

5.102. Different types of control exist depending on the areas where the Customs House is operating. Thus, regarding the primary customs area (the territory where customs operations are performed or where these are supervised), the entrance, stay, circulation and departure of people and goods must be previously authorized by the customs office which determines places, timetables and other requirements to be fulfilled. Means of transport must enter the country through authorized frontier points and roads and at fixed timetables.

5.103. In the secondary customs area (customs territory excluding the primary area) the Customs House may demand the identification and registration of goods, or the exhibition of books or other documents; it may also seize goods which must be placed at the disposal of the corresponding authority within 48 hours, and may also demand the compliance with the conditions of delivery of goods and control the systems of goods identification.

5.104. A special surveillance area also exists (land and water frontiers, river banks of international or national rivers and the relevant air spaces) in which the functions of the Customs House surpass those in the secondary customs area. Thus, it may adopt specific surveillance measures in relation to the storage of goods, control the circulation of people and goods, determine special control systems in relation to certain goods and establish certain areas in which the circulation of people and goods is subject to authorization.

5.105. In case of suspicion of an illegal act, in the Argentine sea, the Customs House may demand the identification and registration of people and goods, or the submission of books or other documents; in case the illegal act is proved, it may seize the goods or establish areas in which the circulation of people and goods is subject to authorization.

5.106. There are other organizations in charge of the control and authorization of imports and exports of certain products:

- National Animal Health Service (S.E.N.A.S.A.)

- Ministry of Defense

- Ministry of Health and Social Security

- Secretary of Agriculture, Cattle Raising and Fishing

- Argentine Institute of Health and Vegetal Quality (I.A.S.C.A.V.)

- National Food Institute

- National Atomic Energy Commission

- Secretary of Programing for the Prevention of Drugs and Narcotrafic.

2- Software Control

5.107. International agreements are signed in order to reduce operative costs and facilitate customs controls. To such purpose, in Argentina modern techniques have been introduced in order to replace manual procedures for new software which enables users to connect their terminal to the Software M.A.R.I.A., by means of a magnetic card and a personal password, in order to make all the customs operations they wish. Once the required data are entered, the system verifies them and determines in a selective and intelligent way the administrative control system that corresponds to the movement of goods. These operations are registered in a form (either for importation or exportation) called "Documento Unico Aduanero" (D.U.A. Customs Document, form O.M. 1993).

5.108. This situation presents three alternatives:

a) Green Circuit: After payment of corresponding taxes, goods may be imported or embarked without further proceedings or revision.

b) Orange Circuit: The Customs House controls the documents before the goods are imported or embarked.

c) Red Circuit: The user shall submit the goods and the relevant documents to a physic control before shipment.

5.109. Customs control techniques which apply criteria of Intelligent Selection are called "A-priori Controls".

5.110. The system is connected to the banking electronic network (DATACASH and NEWNET), which allows to make payments immediately and from the user’s abode.

5.111. Finally, the system is completed with "deferred" controls on the documents already submitted and controls "a posteriori" by means of accounting audits, verification of stock, production and customs documents.

5.112. The system described is presently in force at Ezeiza,Buenos Aires International Airport, and Buenos Aires Customs House, which allows substantial savings of time and a considerable reduction of costs.

3. Registration

5.113. In Argentina those who intend to export and import goods periodically must register in the Importers and Exporters Registry, which is kept by the D.G.A. In case of an isolated import or export the registration is not necessary, but there must be an authorization by the Customs House that may demand a proof of solvency or the constitution of a security interest to such purpose.

5.114. To obtain registration it is necessary to prove previous registration before the D.G.I. by means of the "Clave Unica de Identificación Tributaria" and filling in the relevant form.

4. Intervention of the Custom House-Broker

5.115. Custom house-brokers are individuals which act in their capacity as auxiliaries of the customs service in the name of other persons, as intermediaries between those interested in customs operations and the persons they represent. They help with the regular and correct collection of custom taxes. They must keep a book signed by an officer of the Customs House, in which they must register all the operations, taxes paid or outstanding and the like; they must be registered in the Importers and Exporters Registry and in the Public Registry of Customs House-Brokers; they must prove their solvency and they must grant a guaranty in favour of the D.G.A. in order to secure the fulfillment of their obligations.

5.116. The presence of a custom house-broker is not compulsory, however, taking into consideration his Custom technical knowledge, his participation may be usually necessary and convenient.

5.117. The custom house-broker must prove his capacity as agent by means of submitting to the Custom House a special or general power of attorney, or enclosing the bill of lading or other equivalent document that authorizes him to legally disposed of the goods. Otherwise he shall be considered the importer or exporter, depending on the operation.

5.118. The custom house-broker receives a fee generally based upon a percentage of the F.O.B. value for exports and the C.I.F. value for imports.

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B. MERCOSUR

1. General Considerations

5.119. On March 26, 1991, Argentina, Brazil, Paraguay and Uruguay signed the Asunción Treaty creating the South Common Market or MERCOSUR. This treaty established the free circulation of goods and services among the countries through the elimination of custom duties, non-tariff restrictions and other equivalent measures; it also established the coordination of macroeconomic and sector policies of the States Members and their commitment to adapt their legislation in order to foster the integration process.

5.120. The main aspect of the treaty are: the free circulation of goods, services, financial resources and production factors, including the circulation of workers, the elimination of custom duties and non-tariff restrictions to the circulation of goods, the creation of common custom rates, the adoption of a common commercial policy, the coordination of macroeconomic and sector policies, the coordination of positions in regional and international economic-commercial forums, the adaptation of the legislation in order to foster the integration process.

5.121. The importation of goods produced in the States Members may benefit from the reduction of duties only if the documents corresponding to the importation of such goods are accompanied by a statement proving the compliance with the origin requirements. In such a case an Origin Certificate is issued.

5.122. Importation duties for almost all goods imported within the Mercosur have been reduced to zero, excluding those that appear on the convergence lists which will be reduced at the end of each calendar year by twenty per cent of the articles of the lists, and will be zero by 1999.

2. Mercosur Common List

5.123. The "Nomenclatura de Comercio Exterior" (N.C.E.), based on the "Sistema Armonizado de Designación y Codificación de Mercaderías" (S.A.D.C.M.), was incorporated to Argentine law by Law 24,206, Decree-laws 1135/87, 2612/90 and 2657/91 in force for exportation and importation trade as a whole, since January 1, 1992. Decree-law 2275/94, in force since January 1, 1995, substitutes the N.C.E. by the "Nomenclatura Común Mercosur" (N.C.M.- Mercosur Common List), which is common to all members of the Asuncion Treaty. Pursuant to decree-law 2275/94 intrazone commerce is defined as the exchange of goods among the Mercosur State Members ; and extrazone commerce is the exchange of goods with countries that do not belong to Mercosur.

5.124. Said decree-law 2275/94 has been modified by decree-law 998/95 which created the Common Custom Tariff (A.E.C.).This tariff is calculated in accordance with the "Nomenclatura del Sistema Armonizado" that includes about 8,500 positions.

3. Common Custom Tariff

5.125. At present Mercosur is an imperfect custom union where certain products are subject to intrazone duties (Adequacy Regime), and on the other hand several products are subject to rates other than the common custom tariff A.E.C. (Exceptions Regime), for that purpose the A.E.C. and the adequacy regime to the A.E.C. have been established. Convergence to the A.E.C. during the transition period may be ascending or descending. The A.E.C. includes all the Mercosur Common List, but for a list of 300 products that countries such as Argentina, Brazil and Uruguay may keep out of the A.E.C. until January 1, 2001.

- Adequacy Regime

5.126. The adequacy regime is that pursuant to which the parties to the Mercosur Treaty choose different products that are subject to a determined tariff and commit themselves to reduce said tariff each year. Thus, for instance, by means of Decision 24/94, lists of products were made and Argentina has chosen 221 positions. The main sectors involved are steel products.

5.127. Reduction systems may be lineal or automatic, by means of annual decreases of 25% taking the tariff resulting from an initial preference of the total federal tariff in force on August 5, 1994. The initial preference is 10%, and applies in Argentina and Brazil as from January 1, 1995.

5.128. On the other hand, it is established that no tariff charged to the intra-Mercosur commerce for a tariff position in accordance with the adequacy regime, may be superior to the common custom tariff. During the period the present regime is in force, the states members are entitled to withdraw products from their lists and to reintroduce them. Products withdrawn are charged with tariff zero, and those reintroduced are treated as from the date of reintroduction. Each State Member may increase the quotas for the products or put them back to original levels, they may also speed up of normalize the tariff reduction schedule.

- Convergence Regime

5.129. Goods included in the adequacy regime of the Custom Union are charged with extrazone initial import duties superior to the ones established for intrazone trade (regional preference margin) with annual reductions until reaching the A.E.C. on January 1, 2000. All products included in the convergence to the A.E.C. schedule must comply with the respective origin rules as long as there is an extra-intrazone tax differential.

- Exceptions

5.130. Chemical and petrochemical sector generally experiences an ascending convergence to the A.E.C. (around 14%) form minimum levels of 2%. There are 201 positions.

5.131. Steel sector with 85 positions in general shows a descending convergence to the A.E.C. from levels of around 14%.

5.132. Paper sector has four positions including press paper, tissue paper, boxes and corrugated cardboard.

5.133. Footwear sector, with 17 positions being sport shoes the most outstanding, shows a descending convergence to A.E.C. of 10% from levels of around 30%.

5.134. Certain final products such as toys and home appliances show a descending convergence to the A.E.C. of 20% from levels of around 24/29%.

4. Final Adequacy Regime

5.135. Products that on December 31, 1994, were included in the exception list attached to the Partial Agreement on Economic Complementation No. 18 (hereinafter A.A.P.C.E. Nro. 18 -), and products which have been subject to safeguard measures will have a term of 4 years for Argentina and Brazil and 5 years for Paraguay and Uruguay only for products exempt from A.A.P.C.E. Nro. 18. During such term, products shall benefit from a lineal and automatic reduction schedule.

- Intrazone Convergence Schedule

5.136. Duties applied to the intrazone trade shall be annually reduced in a lineal and automatic way as from the level resulting from the application of a 10% initial preference to nominal duties in force as of August 5, 1994, until reaching 0% of duties in the term aforementioned.

- Special Situations

5.137. Capital goods, maximum tariff 14%, ascending and descending convergence to 2001 for Argentina and Brazil. As regards Software and Telecommunications the maximum tariff is 16% with ascending and descending convergence to 2006 for Argentina and Brazil.

5.138. The A.E.C., Convergence Lists for the goods mentioned before, Federal Exceptions Lists and Lists of Exceptions resulting from the Adequacy Regime came in force on January 1, 1995.

6. Chile

5.139. On June 25, 1996, the States Members of the MERCOSUR and the Republic of Chile signed the Economic Complementation Agreement No. 35. Said Agreement established the legal and institutional framework of cooperation and physic and economic integration in order to create an extended economic space to facilitate the free circulation of goods and services and the full use of production factors, make an area of free trade among the Parties within a maximum term of 10 years, encourage the development and use of physic infrastructure, encourage mutual investments among the economic agents of the Parties, and encourage the complementation and cooperation in the areas of economy, energy, science and technology.

5.140. As from the date the Agreement came in force, it was decided that negotiated tariff preferences and regulations thereof became ineffective, since the Agreement replaced to all effects the tariff treatments, origin regime and safeguard clauses in force among the Parties.

5.141. A ten-year period was established for the creation of the Free Trade Area, by means of a Commercial Liberation Program that will be applied to products coming from the territories of the Parties. This program consists of progressive and automatic reductions applicable to duties in force for third countries at the time of shipment of goods.

7. Bolivia

5.142. On March 6, 1997, the States Members of the MERCOSUR and the Republic of Bolivia signed the Economic Complementation Agreement No. 36. This Agreement established the legal and institutional framework of cooperation and physic and economic integration to facilitate the free circulation of goods and services and the use of production factors, create a free trade area among the Parties within a maximum ten-year period, encourage the development and use of physic infrastructure, establish the regulatory framework to encourage and protect investments, encourage the complementation and cooperation in the areas of economy, energy, science and technology, encourage consultations, when necessary, in commercial negotiations with third countries or extraregional country blocks.

5.143. The Agreement also provides that within a ten-year period the Parties shall create a Free Trade Area by means of a Commercial Liberation Program that will be applied to products coming from the territories of the Parties. Such program will consist of progressive and automatic reductions applicable to duties in force for third countries at the time of shipment of goods.

5.144. This Agreement includes the tariff preferences negotiated before among the Parties in the Partial or Regional Agreements pursuant to the A.L.A.D.I., as it is provided for in the Commercial Liberation Program.

5.145. As from the coming into force of this Agreement the preferences negotiated in the Partial or Regional Agreements mentioned before, become ineffective.

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