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II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
(1) Introduction
1. Venezuela, which became anindependent republic in1810, hasenjoyed political stability and
virtually uninterrupted democratic civilian rulesince December 1958 following the"Pact ofPunto
Fijo",apower-sharing compromise reached between themain political forces ofthecentre, the
AD(Acción Democrática ),theChristian Socialist Party (Partido Social Cristiano/ Comité de
Organización Política Electoral Independiente ,COPEI) andtheDemocratic Republican Union (Unión
Republicana democrática, URD). The present coalition Government ofPresident
Rafael Caldera (COPEI), elected on5December 1993 with thesupport ofapolitical coalition
(CONVERGENCIA), andtookoffice on2February 1994.
(2) General Framework
2. Venezuela isafederal republic divided into22States, oneFederal District and72Federal
Dependencies (seebelow).
3. Executive power isinthehands ofthePresident, whoiselected byuniversal suffrage fora
period offiveyears. ThePresident appoints theCouncil ofMinisters, usually fromhisownpolitical
party. Ministers neednotbemembers ofthelegislature normembers ofthePresident 'spolitical party.
ThePresident maynotbeelected twice insuccession butmaybere-elected 10years following the
termination ofhismandate orthelapse oftwopresidential terms.
4. ThePresident may, incaseofexternal orinternal conflict orwell-founded reasons tobelieve
oneortheother mayoccur, declare astateofemergency andsuspend constitutional guarantees (except
fortheprohibition ofthedeath penalty andother limitations onprison sentences).1Astateofeconomic
andpolitical emergency wasdecreed inJune1994, atwhich timeexchange controls wereintroduced
andother economic measures taken (Chapter I).On6July1995, constitutional rights suspended in
1994 were restored, following thepassage ofanewfinancial emergency lawaswellasaconsumer
protection lawandthelawconcerning theexchange régime (Chapter I).
5. Legislative power isvested inabicameral Congress composed ofa50-member Senate (Senado )
anda204-member Chamber ofDeputies (Cámara deDiputados ).Senators (2fromeachState, 2from
theDistrict andtherestselected ontheminority representation principle) anddeputies (atleast2from
eachStateandonefromeachTerritory) areelected byuniversal suffrage. Theresponsibilities ofthe
Senate include thelaunching ofdebates onbillstoapprove international treaties.
6. Thejudiciary consists oftheSupreme Court ofJustice (consisting of15Magistrates, elected
atajointsession ofCongress fornineyears) andthetribunals. TheSupreme Court mayruleonwhether
lawsortheirinterpretation areconstitutional andwhether theproceedings ofthelegislative bodies are
legal.
7. TheStates areautonomous butmustcomply withthelawsandConstitution oftheRepublic.
They have individual Legislative Assemblies (Asamblea Legislativa )which legislate onregional
organization, financial oradministrative matters. TheStates cannot introduce separate customs; import,
1Articles 190and240oftheConstitution.Venezuela WT/TPR/S/10
Page 23
transit, export orexcise duties; taxes onliveanimals andproducts thereof; orprohibitions forthe
consumption ofgoods produced outside theirterritory.2
8. Elections forthepresidency andtheCongress takeplacesimultaneously every fiveyears, while
those fortheregional andmunicipal authorities areheldevery three years.
(3) Structure ofTrade Policy Formulation
(i) Legislative andExecutive branches ofGovernment
9. TheCongress maydebate, approve andamend lawsincluding those related totheBudget or
thefiscal régime. Billsmaybeintroduced bymembers orCommissions (Comisión Delegada or
Comisiónes Permanentes delCongreso )oftheCongress, theExecutive, theSupreme Court ofJustice
orbytheelectoral initiative ofnotlessthan20,000 citizens andmaybesubmitted toeither theChamber
ofDeputies ortheSenate. Billsmustbedebated twice ineachchamber ofCongress. Following approval
bybothchambers, billsbecome lawonthesignature ofthePresident. Laws maybeamended orrepealed
onlybynewlaws. ThePresident mayvetoandreturn billspassed byCongress either when these are
approved bysimple majority orconsidered unconstitutional. Inthefirstcase, billsmayagain be
approved byCongress; inthesecond, theSupreme Court maypronounce thatthemeasure isin
compliance withtheConstitution. Inbothsuchcases, ifthePresident thenrefuses toenact thelaw,
thePresident ortheVice-President oftheCongress assume thisresponsibility.
10. ThePresident isalsoempowered toissue implementing regulations forlaws. ThePresident
negotiates foreign loansandinternational treaties; inorder toberatified, thelatterrequire Congressional
approval bymeans ofspecial law(leyespecial ).3Healsodecides thedatewhen suchanapproval law
canbepromulgated. International treaties orregulations published intheOfficial Gazette havethe
rankofdomestic legislation; nevertheless, inpractice, these arenotapplicable intheabsence of
implementingregulations.TheExecutiveisempowered,uponauthorizationbylaw,toadoptexceptional
economic andfinancial measures tosafeguard thepublic interest. Thispower wasusedtoimplement
theforeign exchange controls described inChapter I.
11. Trade policy formulation isdirected byaCabinet (Consejo deMinistros )which decides on
thebasisofconsensus. Since 1970 theForeign Trade Institute (Instituto deComercio Exterior ,ICE)
oftheMinistryofExternalRelations(MinisteriodeRelacionesExteriores)hashadthemainresponsibility
fortrade policy formulation andimplementation inco-ordination withother Government agencies,
inparticular theMinistry ofDevelopment (Ministerio deFomento ).4Other agencies involved include
theMinistry ofFinance (Ministerio deHacienda ),theMinistry ofAgriculture andLivestock (Ministerio
deAgricultura yCría,MAC), theMinistry ofEnergy andMines (Ministerio deEnergía yMinas ),
theMinistry ofEnvironment andRenewable Natural Resources (Ministerio delAmbiente ydelos
2Article 18oftheConstitution.
3Inemergency situations, theDelegated Committee oftheCongress (Comisión Delegada delCongreso ),a
committee incharge ofCongress affairs during theofficial break period, maygrant provisional approval tothe
Executive fortheratification ofinternational treaties. Toobtain afinalapproval ordisapproval these must be
submitted totheCongress (Article 128oftheConstitution).
4Since 1994, theMinister ofDevelopment isalsothePresident ofICE. Thefactthatbothtrade andindustrial
policies areunder hisresponsibility isintended toensure better coordination inpolicy making inthese areas.WT/TPR/S/10
Page 24Trade Policy Review Mechanism
Recursos Naturales Renovables ),theCentral Office forCoordination andPlanning (Oficina Central
deCoordinación yPlanificación ,CORDIPLAN) andtheVenezuelan Investment Fund (Fondo de
Inversiones deVenezuela ,FIV). Intheareaofservices, ICE'sfunctions arelimited tothecoordination
ofinternational negotiations while policy related matters aretheresponsibility ofanumber ofpublic
sector institutions (Chapter V).
12. Inearly1995, abillonthereplacement ofICEandtheMinistry ofDevelopment byaMinistry
ofIndustry andTrade (Ministerio deIndustria yComercio ,MIC) wasunder consideration bythe
Congress. TheMIC, which isexpected tobecome operational inlate1995orearly1996, would cover
bothindustry andtrade related matters.
13. TheCentral Bank ofVenezuela formulates foreign exchange andmonetary policies. Incase
ofemergency, thePresident andhisCabinet ofMinisters (elpresidente enConsejo deMinistros )can
decree foreign exchange controls orrestrictions. TheExecutive cancreate ordesignate apublic
institution tocoordinate theimplementation ofthese measures.
14. ICEprepares analyses ondevelopments intrade flows, foreign trade relations andtheeffects
ofthecountry 'strade policies. Other public sector institutions, including theCentral Bank andits
export finance fund(Fondo deFinanciamiento alasExportaciones ,FINEXPO) (Chapter IV),undertake
periodic reviews which cover trade policy matters.
(ii) Advisory bodies
15. Noformal, overall periodic review oftrade policy isoperated byanyindependent body.
However, theVenezuelan authorities consult extensively withbusiness interests andacademics onpolicy
formulation andimplementation matters. Although consultations arerather informal thanformal,
theprivate sector participates todiscussions withICE'smanagement andtheAdvisory Board (Consejo
Asesor )oftheCentral Bank.
(4) Trade Policy Objectives
(i) General trade policy objectives
16. Until 1989 Venezuela 'strade policy objectives weresetinageneral framework ofincreased
stateinvolvement intheeconomy aswellasahighdegree oftariffandnon-tariff protection. In1989,
when external debtconsiderations made thisdevelopment model unsustainable, atrade liberalization
process wasinitiated withtheobjective ofeliminating theanti-export biasandintegrating thedomestic
totheworld economy. Venezuela 'saccession totheGATT waspartofthisnewapproach.
17. Atpresent Venezuela 'stradepolicy objectives include protection ofdomestic producers against
distortions which arecaused byunfair competition practices; increasing thedomestic value added of
exported items; anddiversification andexpansion ofnon-traditional exports.
18. Under itsConstitution, Venezuela iscommitted infostering economic integration in
Latin America withtheobjective ofraising common welfare andsecurity.5Accordingly, regional and
bilateral agreements constitute important elements inthetrade policy framework aimed atpromoting
Venezuela 'sparticipation intheworld economy andimproving market access foritsexports ofgoods
5Article 108oftheConstitution.Venezuela WT/TPR/S/10
Page 25
andservices totheregion. Inthiscontext, apriority objective istoexpand regional integration by
establishing afreetrade areainLatin America andtheCaribbean aswellasbyimproving bilateral
relations withcountries outside theregion.6
(ii) Sectoral trade policy objectives
19. Untiltheendofthe1980s, Venezuela 'stradepolicy objectives weretopromote thedevelopment
ofbasic industries bytheState aswellastoprotect domestic producers.
20. While present sectoral policy objectives maytakeaccount oftheneedtoincrease efficiency,
itisnotVenezuela 'spolicy toachieve neutrality oftreatment between sectors. First, policy isto
encourage theexploitation anddevelopment ofthecountry 'sextensive natural resources, inparticular
petroleum, natural gasandminerals. These remain essentially reserved fortheState, although there
isnowincreased scope forjointventures withminority foreign participation. Second, thelowpricing
ofenergy inputs andtariffescalation aredesigned toencourage processing (i.e.,increased value added)
inVenezuela. Alocalcontent planintheautomotive sector provides higheffective protection against
suppliersfromoutsidethesub-region(Venezuela,ColombiaandEcuador).AccordingtotheVenezuelan
authorities, theplanforms partofacommon policy which aimstopromote specialization andderive
benefits fromanenlarged sub-regional market inequitable competitive conditions. Agriculture ismainly
import-competing, although there hasalsobeen some liberalization inthissector andsome
(non-traditional) products areexported, e.g.bananas.
(iii) TheUruguay Round
21. Venezuela became aformal participant intheUruguay Round following itsaccession tothe
GATT in1990.7Itsprimary objective inthenegotiations wasthestrengthening ofthemultilateral
tradingsystem,whichconstitutesanimportantelementforVenezuela'sdevelopmentstrategy.Itfavoured
adoption ofamore accurate framework ofrulesgoverning trade ingoods andservices, reinforcement
ofthedispute settlement mechanism, improvement ofmarket access conditions andtheestablishment
ofmultilaterally agreed rulesinareas suchasTRIPs andTRIMs. Apart fromseeking recognition for
itsunilateral trade liberalization measures, Venezuela supported fullliberalization oftrade intropical
products (including coffee, cocoa andbananas) andelimination ofdistortive practices ofmajor trading
partners inthissector. Italsoexpressed concern overthethreat bytheUnited States touseunilateral
retaliation, apractice which itconsidered tobeinconsistent withtheGATT framework ofrules.8
22. Venezuela signed theMarrakesh Agreement concluding theUruguay Round, which itratified
on29December 1994 tobecome afounder member oftheWTO asof1January 1995.9Theoverall
outcome ofthenegotiations isseenaspositive forVenezuela asmostofitsobjectives wereattained.
Venezuela seestheWTO asamultilateral forum where developing countries willhavetheopportunity
6More details onVenezuela 'sregional integration objectives arecontained inTable II.1.
7MTN.TNC/13, 23January 1990.
8MTN.SB/16, 17July1991; MTN/GNG/TRIPS/W/2, 16October 1991; MTN.TNC/28, 13January 1993;
MTN.SB/19, 13July1993.
9LawapprovingtheMarrakeshagreemen testablishingtheWTO(LeyAprobatoria delAcuerdo deMarrakech
porelqueseEstablece laOrganización Mundial delComercio ),Official Gazette No4829; 29December 1994
WT/L/51Rev.1, 24April 1995.WT/TPR/S/10
Page 26Trade Policy Review Mechanism
todefend themselves more effectively against unilateral action. Theresults incertain areas suchas
textiles andclothing, anti-dumping, countervailing measures andservices (professional andfinancial)
areconsidered asparticularly beneficial forthecountry. Venezuela 'sspecific commitments, including
those made onitsGATT accession, arediscussed inChapters IVandV.
23. Regarding theWTO agenda Venezuela, based onrecent experience, isconcerned bythepossible
useoflegitimate issues suchasenvironmental andworker 'srights protection todisguise protectionist
trends. Venezuela believes thatconsideration should begiven tothefactthatthelatter issue isdealt
withother multilateral institutions, including theInternational Labour Office which haslong-standing
experience inthisarea.10
(5) Trade Laws andRegulations
24. Theprovisions ofinternational agreements which havebeenratified andpublished intheOfficial
Gazette areimplemented directly, derogate existing domestic legislation andcannot beaffected by
subsequent laws. Andean Group Decisions havesimilar status buttheirimplementation doesnotrequire
legislative approval.
25. BothGATT (1947) andtheWTO Agreements formpartofthedomestic legislation andcan,
therefore, bedirectly invoked before thecourts. Theauthorities communicated totheWTO Secretariat,
inseveral casesintheareaofindustrial property international and/or regional provisions wereinvoked.
26. TheState protects private sector initiatives. Nevertheless, tofoster economic development,
itmaydictate measures affecting production andregulate themovement, distribution andconsumption
ofnational wealth.11Monopolies areprohibited andexclusive concessions should begranted ona
temporary basis. Nevertheless, under theconstitution, therighttoexploit certain industries orservices
ofpublic interest aswellastocreate, expand andcontrol basicheavy industry isreserved fortheState.12
Protection isafforded toscientific, literary andartsworks aswelloninventions, marks oforigin and
trademarks (Chapter IV(4)(vii)).13
27. Trade policy guidelines arecontained inDecree 239(Normas delaPolítica Comercial )of1989.
Nobasictradelawassuchexists inVenezuela. Recent laws, promulgated afteraccession totheGATT,
cover government procurement, unfair tradepractices, competition matters, etc.). Outdated legaltexts
havebeenorarereplacedbyprovisionswhichwereagreedatAndeanGroup,multilateralorinternational
levelandsubsequently incorporated intodomestic legislation; details aregiven inChapter IV.Trade
policy measures, covered bytheseinstruments, havebeenimplemented bydecrees orresolutions issued
byGovernment institutions, agencies orthePresident.
28. Following thelegislative approval mentioned earlier (section II(4)(iii)), theWTO Agreements
nowsupersede previous legislation notinconformity withtheirprovisions; however, implementing
lawsorregulations havetobeissued inanumber ofareas which remain tobeidentified.
10MTN.TNC/MIN (94)/ST/57, 13April 1994.
11Article 98oftheConstitution.
12Article 97oftheConstitution.
13Article 100oftheConstitution.Venezuela WT/TPR/S/10
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(6) Trade Agreements andArrangements
(i) Multilateral agreements
29. Following procedures initiated inJune1989, Venezuela 'saccession toGATT wasapproved
bytheCONTRACTING PARTIES on26July1990.14ItsProtocol ofAccession wassigned on
1August 1990 andVenezuela became the98thcontracting party on31August 1990.15
30. Venezuela didnotadhere toanyoftheMTN (Tokyo Round) Agreements orArrangements,
although itmaintained observer status intheAgreements onSubsidies andCountervailing Measures,
andonImport Licensing Procedures. Themain reason foritsnon-adherence toanyofthese Codes
related tothecoincidence ofitsaccession withthere-negotiation ofthese agreements inthecontext
oftheUruguay Round. Theauthorities considered itpreferable towaitfortheconclusion ofthe
negotiations before undertaking anysuchcommitments.
31. Under theAgreement Establishing theWTO, Venezuela assumed, aspartoftheSingle
Undertaking, allcommitments under theMultilateral Trade Agreements which apply toMembers.
Atpresent, Venezuela doesnotintend toadhere toanyoftheplurilateral trade agreements.16
32. Since 1971 Venezuela hasbeen abeneficiary under various GSP(Generalized System of
Preferences) schemes.17
33. Since 1January 1995, theEUhasgranted exceptional temporary assistance toVenezuela by
extending GSPtariff preferences similar tothose already provided todrug-producing countries such
asBolivia, Colombia, Ecuador andPeru.Itconsists offullsuspension ofthecommon customs tariff
duties onEUimports ofcertain industrial goods fortheperiod 1995 to1998. Similar benefits cover
certain agricultural items until31December 1995. Theauthorities consider thatthese preferences,
which affect virtually allproducts (except petroleum), willconstitute animportant incentive for
non-traditional exports.
34. Although anactive participant inthenegotiations fortheestablishment oftheGlobal System
ofTrade Preferences (GSTP), Venezuela, which signed theagreement inApril 1988, didnotimplement
itbecause itfailed toratify bytheoriginal deadline in1991. Inearly1995, Venezuela wasnegotiating
itsadhesion totheGSTP atasecond round ofnegotiations; inthiscontext, SriLanka, Bangladesh
14GATT document L/6716, 30July1990.
15Venezuela 'sprotocol ofaccession wasapproved onaprovisional basis bytheDelegated Committee ofthe
Congress, discussed earlier (section II(3)(i)).Afinalapproval ordisapproval, asrequired bytheConstitution,
hasnever been given bytheCongress.
16TheUruguay Round Plurilateral Trade Agreements comprise theAgreement onTrade inCivil Aircraft,
theAgreement onGovernment Procurement, theInternational Dairy Agreement andtheInternational Bovine
Meat Agreement. These arebinding onlyonthose WTO Members which have accepted them.
17According toUnited States Trade Representative (USTR), between 1991 and1994 (first semester), the
share ofVenezuelan eligible exports totheUnited States benefiting from GSPtreatment roseprogressively from
94percentto98percent. Thecorresponding shares fortheEuropean Union andNorway were of62percent
(1992) andaround 98percent(1994).WT/TPR/S/10
Page 28Trade Policy Review Mechanism
andLibya made requests forconcessions while Venezuela offered tariffcutsofranging from5percent
to20percentfor43eight-digit NANDINA (agricultural andindustrial) items.
35. Venezuela isamember oftheUnited Nations, theWorld Bank, theInternational Monetary
Fund, theInternational Maritime Organization (IMO) andtheOrganization ofPetroleum Exporting
Countries (OPEC), aswellasanumber ofregional bodies including theInter-American Development
Bank (IDB), theOrganization ofAmerican States (OAS) andtheLatin American Economic System
(SELA).
36. Venezuela isasignatory totheInternational Coffee Agreement, theInternational Cocoa
Agreement andtheU.N. Code ofConduct forLiner Conferences. Itisalsoamember inregional
commodity producers 'groups (e.g., theLatin andCaribbean Sugar Producers Group orGEPLACEA,
theUnion ofBanana Exporting Countries orUPEB, etc.).
(ii) Regional agreements
37. Asindicated inAnnex Table A.II.1, since thelate1980s Venezuela 'sregional commitments
haveexpanded greatly. Inthenearfuture, these should bebroadened inthelightofplans forthe
formation ofvarious regional trade agreements intheAmericas. Theauthorities consider that,inthe
lightofrecent andplanned developments, priority needs tobegiven totheharmonization oflegal
frameworks andrelevant policies ofparticipating countries.
38. Venezuelan exports, inparticular, havederived considerable benefits fromregional integration
intheAndean Group (Chart II.1). Theshare ofimports subject topreferences wasmarkedly smaller
thanforexports. Nevertheless, between 1988and1993theshare ofallimports ofpreferential origin
intotalimports grew by33percentto14percent, orabout US$1.5 billion (Chart II.1). Imports
fromAndean Group countries (mainly Colombia) more thandoubled while, while imports fromother
LAIA partners grewatmoreslowly. Intotal, imports fromAndean andotherLAIA countries accounted
formore than13percentoftotalimports. Theshare ofnon-traditional exports toLAIA and
Andean Group partners tripled tomore than37percentin1993. Thisperformance wasmainly linked
totherapid growth ofexports toColombia (25percent)andMexico (6percent)withwhich regional
trade liberalization commitments have recently been intensified (Annex II.1). Theprogressive
implementation ofthetradeagreements withColombia andMexico should leadtofurther intensification
ofintra-regional trade.Venezuela WT/TPR/S/10
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(a) LAIA
39. Venezuela isamember oftheLatin American Integration Association (LAIA), established
on12August 1980 bytheMontevideo Treaty, replacing theLatin American FreeTrade Association
(LAFTA, 1960).18Thelong-term objective ofthisTreaty isthegradual andprogressive establishment
ofaLatin American Common Market. Theinstruments usedtoattain LAIA objectives comprise two
maincategories ofagreements: Regional-Scope Agreements, where allmember countries participate
according totheirlevelofdevelopment19andPartial-Scope Agreements thatbindonlytheirsignatories
(Annex II.1). Apart fromgranting tariff preferences, some ofthelatter embody activities which aim
atfostering economic complementarity anddeveloping economic cooperation activities between
signatories.20Additionally, aReciprocal Payments andCredit Agreement isintended tofacilitate
intra-regional transactions (seeChapter III).
40. Abi-annual report onLAIA activities isrequired tobesubmitted every twoyears totheGATT
Committee onTrade andDevelopment, although itisnowmore thanthreeyears sincethelastreport.21
(b) Andean Group
41. Venezuela isasignatory totheCartagena Agreement establishing theAndean Group.22The
main objectives ofthisAgreement aretoaccelerate theeconomic growth ofparticipating countries
through economic integration, tohelpmembers tofulfiltheseeconomic integration objectives, originally
setunder the1960 Montevideo Treaty, andtoestablish favourable conditions fortheconversion to
18TenoutoftheelevenLAIAmemb erswerecontractingpartiestotheGATT(Ecuadorwasclosetocompleting
accessionprocedures)whileeightofthemwereWTOmemb ersbyMay1995.GATTTPRMreportsonArgentina,
Bolivia, Brazil, Chile, Colombia, Mexico, Peru andUruguay provide background material onLAIA.
19ALADI/AR.PAR/4 of1August 1990, Regional Scope Agreement No.4 andAmending Protocol of
12March 1987. Countries areclassified inthree categories: (i)most-developed, (ii)those atanintermediate
stage ofdevelopment, and(iii)least-developed. Countries higher upintheclassification areexpected togrant
morebenefitsthanthosestandinglowerandtomakeaneffortgrantdeeperpreferencestoleastdevelopedcountries
aswellasonproducts ofspecial export interest tothem. Inaddition totheRegional Tariff Preferences Agreement
(Preferencia Arancelaria Regional ,PAR), Regional Market-Opening Agreements infavour ofleast-developed
LAIA countries based onnon-reciprocity andco-operation, provide fortheimmediate elimination ofalltariff
andnon-tariff restrictions onimports ofcertain export items (specified ineach agreement between thedonor
andthebeneficiary) intoother LAIA markets. These areRegional Market-Opening Agreements No.1, 2and
3infavour ofBolivia, Ecuador andParaguay, respectively.
20Venezuelaparticipatesinthefollowingsectoralagreemen ts:No.5(chemicalindustry),No.13(phonography),
No.15(petrochemicals),No.18(photography)andNo.27(glass),aswellasinagreemen tsoncultural,educational
andscientific cooperation andtourism promotion (GATT document L/6946, 20December 1991).
21Mostrecently,GATTdocumentsL/6946,20Decemb er1991;L/6985,5March1992;and,L/6985/Add.1,
9April 1992.
22Founders oftheAndean Group areBolivia, Colombia, Ecuador andPeru. Venezuela became amember
in1973. Chile (afounder) withdrew in1976, butcontinued toparticipate indiscussions onissues suchasroad,
transport, double taxation andregional multinationals. On25August 1992, Peru shifted from fullmember to
observer status andconcluded bilateral trade agreements withother partners (Table II.1). Except forEcuador
whoseprotocolofaccessiontotheWTOwasexpectedtoberatifiedbyDecemb er1995,allAndeanGroupcountries
were contracting parties totheGATT andsubsequently have become WTO Members.Venezuela WT/TPR/S/10
Page 31
aLatin American common market.23According totheVenezuelan authorities, afullcommon market
intheAndean Group should befullyaccomplished within fouryears fromnow. Apart fromthetrade
liberalization programme among members andtheestablishment ofacommon external tariff(Table II.1
andChapter IV),theAndean Group 'sregulatory framework includes, interalia,acommon régime
onindustrial property rights, rules against unfair trade practices, technology transfer, transport and
rules oforigin. There isalsoasupra-national dispute settlement mechanism.
42. InJune1995, Andean Group countries were intheprocess ofdefining theelements tobe
contained innegotiations withMERCOSUR countries fortheestablishment ofaSouth American Free
Trade Area (AreadeLibre Comercio Sudamericano ,ALCSA).
43. Venezuela seesitself asabridge between theMERCOSUR andtheAndean Group. Asof
1996, itintends tonegotiate unilaterally afreetrade agreement withMERCOSUR. Theprocess of
revision ofthebilateral trade agreements maintained withindividual MERCOSUR countries, termed
astheHistorical Patrimony (Patrimonio Histórico )Agreements, wastobeinitiated inlate1995.
44. Since 1990, themembers oftheAndean Group havesubmitted tworeports ontheiractivities
totheGATT Committee onTrade andDevelopment.24
(c) TheGroup ofThree
45. Venezuela isasignatory totheAgreement onFreeTrade oftheGroup ofThree (Tratado de
Libre Comercio delGrupo delosTres)which alsoincludes Colombia andMexico. TheAgreement,
which isintended toliberalize alltariffs, represents aconsiderable extension ofpreferential treatment
asitextends LAIA 'sregional preferential treatment (Annex Table A.II.1) totheentire customs tariff
andcovers items contained inprevious bilateral Partial-Scope orother trade agreements between the
twoAndean Group members andMexico. Inaddition topreferences andsectoral matters (agriculture,
automotive, textiles andclothing), theprovisions oftheAgreement alsocover rulesoforigin, sanitary
and phytosanitary measures, government procurement, investment, services (financial,
telecommunications, transport, professional) andintellectual property.
(d) CARICOM
46. Venezuela considers itsAgreement withtheCaribbean Common Market (CARICOM), signed
on13October 1992, asameans forproviding tradeandinvestment opportunities totheleast-developed
countries oftheregion.25
(e) Central America
47. AsindicatedinAnnexTableA.II.1,apartfromtradepreferencesgrantedtoimportsfromCentral
American Common Market (CACM) countries, since 1990 Venezuela andColombia have been
23Article 1oftheCartagena Agreement of26May 1969. GATT TPRM reports onBolivia, Colombia and
Peru alsoprovide background material ontheAndean Group.
24Thereports arecontained inGATT documents L/6737, 12October 1990 and,L/7089, 12October 1992.
Documents L/6841, 6May 1991 andL/7088, 12October 1992 notify recent Andean Group legislation.
25CARICOM's13memb ersareAntiguaandBarbuda,Bahamas,Barbados,Belize,Dominica,Grenada,Guyana,
Jamaica, Montserrat, St.Kitts andNevis, St.Lucia, St.Vincent andGrenadines, andTrinidad andTobago.WT/TPR/S/10
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negotiating anAgreement onTrade andInvestment (Acuerdo sobre Comercio eInversión )withCACM
fortheestablishment ofafreetradeareaby2003. Thenegotiations, which wereexpected toconclude
priorto30June1993, arecurrently under suspension. Pending issues include thetrade liberalization
programme andrules oforigin. Negotiations areexpected toresume when CACM countries apply
acommon external tariff. Thisagreement refers alsotonon-trade related matters suchasemployment,
shipping andnatural resources.
(f) Other
48. InJune1994 Venezuela joined theAssociation ofCaribbean States (Asociación deEstados
delCaribe ).26Itsobjective istoestablish aframework forflexible co-operation onissues suchas
economic integration, trade, investment, transport, communications, science andtechnology and
environmental protection.
49. InDecember 1994, Venezuela participated intheSummit oftheAmericas where, interalia,
aprogramme forcompleting thenegotiations foraFreeTrade AreafortheAmericas (FTAA) theyear
2005wasagreed. According tothePlanofAction, theOASandtheIDBwould ensure thefollow-up
oftheSummit 'sdecisions, while Trade Ministers developed theprogramme further inJune1995 at
Denver andarescheduled tomeetagain onMarch 1996.
(iii) Bilateral agreements
50. Venezuela 'sComplementarity Agreement withChile istobemodified inorder toreduce the
listofexempt products andaccelerate theliberalization programme. ThePartial-Scope Agreement
withCuba istoberenegotiated bytheendof1995withtheobjective ofimproving preferential treatment
forVenezuelan exports.
(iv) Other agreements orarrangements
51. Under theSanJoséPactof1980 (Acuerdo deSanJosé),Mexico andVenezuela supply oil
tocertain countries ofCentral America andtheCaribbean oncommercial terms.27However, partof
theinvoice value, ranging from20to25percentoftheamount depending onaverage oilprice level,
isreserved infavour oftheimporting countries andcanbereturned intheform ofsoft,tiedloans.
These must bedirected toeconomic development projects containing ahighdegree (80percentor
over) ofVenezuelan components ingoods andservices. Theterms oftheagreement, renewed each
yearinAugust, were duetoberevised inJune1995, butatthetimeofworking (November 1995)
stillhadtobeapproved bytheGeneral Assembly oftheInvestment Fund ofVenezuela (FIV) andthe
relevant Congressional Committees. Among issues being discussed were theideathatfunds would
nolonger bedeposited withthecentral banks ofthebeneficiaries, interest would become variable and
disbursements would besuspended whenever payments fallintoarrears.28TheFIV, discussed in
Chapter III,isresponsible fortheoperation oftheagreement.
26TheAssociation ofCaribbean States wasestablished in23June 1993. Apart from Caribbean island States,
other participants areColombia, Costa Rica, ElSalvador, Honduras, Mexico, Nicaragua andSuriname (Journal
ofCommerce, 6December 1994).
27More information ontheoperation ofthePactinCosta Ricacanbefound initsTPR reports (WT/TPR/S/1,
9May 1995). SeealsoChapter Vofthisreport.
28Latin American Regional Reports-Andean Group Report, 22December 1994.Venezuela WT/TPR/S/10
Page 33
52. Uptomid-1994,VenezuelahadlentatotalamountofUS$1.4billiontofinance164development
projects under theagreement. Theoutstanding debtofthebeneficiaries stood atUS$640 million;
oilsupplies toPanama were cutin1989 because ofanoverdue debtofUS$131 million.29Forthe
period 1993-1994 thebeneficiaries ofthepactpurchased oilworth US$336 million.
29Latin American Weekly Report, 21July1994; Caribbean &Central America Report, 28July1994.