Mercosul

PART XXIV

24. INTERNATIONAL TREATIES

24.1. Overview
  
Treaties are written agreements executed between legal entities acting under International Law. Treaties may be entered into by and between States, between States and international organizations, or between the international organizations themselves, as long as the parties are represented by qualified agents. Said instruments seek to govern legal relations between the parties, which freely entered into them, and are aimed at producing legal effects at international level and achieving legal and legitimate goals. Under the rule of International Law, treaties are negotiated and concluded, so that the contracting parties are bound to fulfill and enforce their provisions. 
From the Brazilian perspective, treaties and conventions are negotiated and signed by the Head of the Executive Branch, i.e. the President of the Republic, prior to their ratification at the international level. Pursuant to Art. 49, I, of Brazilian Federal Constitution of 1988, they should be submitted for the approval of the National Congress: first by the lower house (House of Representatives) and then by the upper house (Federal Senate). After the issuance of a Legislative Decree by the Congress approving a treaty its text is submitted to the Brazilian President, who, in turn, issues a Decree incorporating the treaty to the domestic system, followed, thus, by enactment and publication of the international document within Brazilian legal system. Those coordinated steps are essential for Treaties to be enforceable within domestic law.

In parallel with the decision on approval by the National Congress, the Head of Executive Branch or Ministry of Foreign Affairs communicates the ratification to the depositary authority. Treaties are then registered with the UN Secretary General, which are then acknowledged by other countries, which is to say, by International Law.

24.2. International Trade

With regard to the multilateral trade system, Brazil is a member of the World Trade Organization, (WTO), which succeeded the primary framework of the old General Agreement on Tariffs and Trade (GATT) of 1947, according to the organization which was established by the Marrakesh Treaty of 1994.

Apart from its membership in the institutions of the modern international trade system, Brazil is one of the original signatory states of the 1944 Bretton Woods treaties, thus Member of the International Monetary Fund (IMF) and World Bank: It is also a founding Member and shareholder in the Inter-American Development Bank, and Observer State of the European Union, for which it maintains a Permanent Mission in Brussels.

In connection with its trade agenda in the last decades, Brazil has signed bilateral treaties with Austria, on 3/13/93, with the European Union, on 1/31/94, with Turkey on 04/10/95, with Uruguay, on 5/6/97, as well as supplementary arrangements with Peru, on 07/21/99, a protocol with Argentina, on 10/29/99, and an agreement with Costa Rica, on 04/04/2000. Further bilateral agreements are to be mentioned in this context: the Economic Cooperation Agreement with Hungary, signed on May 05, 2006; the Trade and Economic Cooperation Agreement with Kazakhstan, as of September 27, 2007; Economic and Industrial Cooperation Agreement with Czech Republic as of April 12, 2008; Cooperation on Economic, Scientific and Technological matters and Innovation with Greece, as of April 03, 2009; and Trade and Economic Cooperation Agreement with Jordania, as of October 23, 2008; and the Memorandums of Understandings for Cooperation on Trade and Investments Promotion, concluded with Bolivia (November 11, 2003), Chile (August 23, 2004), and Colombia (as of June 27, 2005).
 
24.3. Intellectual Property

With regard to the international protection of intellectual property rights (patent, trademarks, industrial designs, copyright and related rights and further IPRs), Brazil was a founding member of the Paris Union for Protection of Industrial Property, established on 1883, and further has acceded to the 1886 Berne Union for Protection of Literary and Artistic Works (February 09, 1922).
Since 1975, Brazil has been a Member of the World Intellectual Property Organization (WIPO), and it is also signatory of the Paris Convention for the Protection of Industrial Property, including the Hague Revisions of 1935 and the Stockholm revisions of 1967 and Berne Convention for Protection of Literary and Artistic Works of 1886, including Paris Revision (1971).

Brazil is also a signatory party to the Patent Cooperation Treaty (PCT), concluded in Washington in 1970, which was then ratified and incorporated into Brazilian law. Further international intellectual property treaties, adopted under the auspices of WIPO or which are administrated by this Organization, were signed by Brazil, such as the Madrid Agreement on Indications of Source of 1896; the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations of 1961, Strasbourg Agreement of 1971, concerning the International Patent Classification; Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms of 1971 and the Nairobi Treaty on the Protection of the Olympic Symbol of 1981.

Since 1994, with the establishment of the World Trade Organization, Brazil became Member of TRIPS – Agreement on Trade-Related Aspects of Intellectual Property Rights (Annex IC of 1994 WTO Agreement), which was incorporated to Brazilian domestic law by the Decree No. 1.355/94. Under the provisions of TRIPS and the WTO Agreement, any international IP related disputes involving Brazil and WTO Members can be brought to the WTO Dispute Settlement Body (DSB), which has jurisdiction over disputes dealing with international trade related matters, including trade on goods, subsidies, dumping, non-tariff barriers, trade on services and intellectual property. 
 
Within the field of bilateral relations on intellectual property, Brazil has signed several international treaties and agreements, for example: with Sweden (1955) for protection of industrial and commercial brands, with France (1983) concerning industrial property, with the former USSR (1982), for scientific and technological cooperation, with the United States (1957) and Italy (1963), concerning copyrights.

24.4. Taxes

Within the field of tax law related to international trade relations, Brazil signed, ratified and transformed into internal law, a variety of different international agreements “to avoid double income tax taxation” (international double taxation accords), examples of which that we may site are the agreements reached with: Germany (2006), Argentina (1982), Austria (1976), Belgium (1973), Canada (1986), Chile (2003), China (1993), Denmark (1974), Ecuador (1988), Spain (1976), Finland (1998), France (1972), Hungary (1991), India (1992), Israel (2005), Italy (1981), Japan (1967 and 1978), Luxembourg (1980), Mexico (2006), Norway (1981), Peru (2009), Philippines (1991), Portugal (2001), the Netherlands (1991), South Africa (2006), South Korea (1991), Sweden (1976 e 1996), Slovakia and the Czech Republic (1991), Ukraine (2006).
Furthermore, Brazil also signed international income tax exemption treaties for maritime and air transportation companies with the following countries: South Africa, Chile, France, Italy, England and Ireland, Switzerland and Venezuela. Due to these agreements, which are designed to prevent double taxation, Brazil applies reduced tax rates, pursuant to what is established in the aforementioned treaties, which runs contrary to ordinary rules established by Brazilian domestic legislation, for anticipated earnings, including interest relative to the acquisition of goods requiring long term financing. Those reduced tax rates are allowed, even when the paying source has undertaken the tax burden, due to the transactions concluded either in Brazil or abroad, with persons residing in Brazil or abroad.
 Additionally, with the objective to develop projects and actions related to technical cooperation involving tax and customs administration matters, Brazil concluded a complementary treaty with Cuba, on 05/27/1998, which placed a priority on tax administration and further aspects related to collection, procedures and systems within the tax administration relationship with banking networks; the adaptation or development of a revenue classification system and adaptation of information technology systems to manage collections, as well as network operation and information technology, by means of systems development.

24.5. Latin America

After the end of the Second World War, Brazil was a major player in shaping the institutional framework for the establishment of a free trade area in Latin America, acting as one of the founding Members of the Latin American Free Trade Association, the “ALALC” (“Associação Latino-Americana de Livre-Comércio”). This organization was created by the Montevideo Treaty, which was concluded by Argentina, Brazil, Bolivia, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela on February 18, 1960. Major goals of ALALC were the gradual establishment of a Latin American common market and the promotion of integration efforts at regional level.

On August 12, 1980, in Montevideo, the same ALALC Members states established the Latin American Integration Association, “ALADI”, a regional organization which became operative in March 1981. According to Art.1 of the 1980 Treaty, ALADI Contracting Parties stressed that their concerns were  “to move forward with the integration process undertaken to promote economic and social development, harmony and balance throughout the region”. The 1980 Montevideo Treaty sets forth important principles regarding the integration process: i) pluralism: ii) convergence; iii) flexibility; iv) differential treatment; and v) multiplicity. Those principles significantly differ from the main contours of the trade liberalization schema set forth by the 1960 Montevideo Treaty which established ALALC.
In line with the tradition of free trade in the region, despite of the limited scope of the preceding ALALC and ALADI treaties, Brazil and Argentina later concluded important bilateral treaties, specifically designed for a fast growing bilateral common market area: the Development Integration and Cooperation Treaty, signed in Buenos Aires on November 29, 1988, twenty-four Protocols, followed by other bilateral agreements on specific topics, which include the Treaty for the Establishment of a Statute for Brazilian-Argentinian Bi-national Companies, dated as of June 6, 1990. As described in Chapter 24.6, further efforts on regional integration process led to the establishment of MERCOSUR in 1991, according to the provisions of Asunción Treaty, which was concluded between Argentina, Brazil, Uruguay and Paraguay on March 26, 1991.

The main legal framework of ALADI provides three mechanisms for the establishment of preferential trade areas in Latin American region, basically: i) regional tariff preferences which are granted for products originating from a ALADI Contracting Party, based on tariffs applicable to exporting third countries;  ii) regional scope agreements to be negotiated and conclude amongst Contracting Parties and iii) partial scope agreements between two or more ALADI Contracting Parties (see, for instance Resolution No.2 of the Council of Foreign Ministers, as of August 12 1980 on partial scope agreements concluded under ALADI umbrella).  Regional or partial scope agreements are designed to cover tariff relief and trade promotion, as well as further policy aspects concerning the regional integration, such as economic complementation; agricultural trade; cooperation in financial, tax, customs and health matters; scientific and technological cooperation;  environmental protection; pharmaceutical goods in transit; tourism promotion; technical standards and other areas. Under the framework of ALADI, Brazil has also signed multilateral agreements of economic nature with Argentina, Chile, Mexico, Uruguay and Venezuela, in 1995, and bilaterally, Economic Mutual Assistance Agreements (“ACE”) with Chile (1996, 2006), Bolivia (1997, 2005), Mexico (2002) and a Limited Scope Economic Mutual Assistance with Suriname (2005).
Particularly with regard to partial scope agreements, Contracting Parties may negotiate several matters related to the regional integration process, such as (ii) rules on trade conduct: subsidies and countervailing duties; unfair trade practices; licenses and import procedures; and (ii) other rules on non-tariff matters: payments; financial cooperation; tax cooperation; animal and plant sanitary cooperation; customs cooperation; transport facilitation and state procurement.
In addition, within ALADI context, Contracting Parties had implemented several preferential systems, which are comprised of market opening lists and cooperation programs, such as in the fields of business, investment strategies, financing and technological support. ALADI Contracting Parties had also accorded preferential treatment to certain landlocked countries in the region (such as Bolivia, and Paraguay), by means of countervailing measures, aimed at favouring their entire participation in the regional integration.  
Since Montevideo Treaty of 1980 is a “framework treaty”, the institutional and normative development of the integration process amongst Latin American countries is further complemented and shaped by other multilateral regional agreements, treaties and organizations, such as Andean Community, MERCOSUR, G-3 Free Trade Agreement, UNASUL. In this sense, ALADI has established consensus on flexibility and convergence principles guiding the regional integration processes in Latin America, with the purpose to deep and enlarge a common economic area. This initiative is not carved out by a market oriented approach, but rather by a gradual and open development of the integration process. 

Edited by:
Alberto Murray Neto – amurray@prmurray.com.br
Fabricio Bertini Pasquot Polido – fpasquot@prmurray.com.br

24.6 MERCOSUR

The MERCOSUR Treaty, concluded on March 26, 1991 in Asunción, Paraguay, was intended to create a common market between Brazil, Argentina, Uruguay and Paraguay (the primary MERCOSUR State Parties), wherein the following objectives were established:

(a) the free circulation of goods, services and production factors amongst the State Parties, through the elimination of tariff and non-tariff related barriers between the countries;

(b) the establishment of a common external tariff and the adoption of a common relationship commercial policy, both at a regional as well as an international level;

(c) the coordination of sector related macro-economic policies among member nations, with respect to foreign trade, agriculture, industry, tax issues, foreign exchange, capital, services, customs policies, transportation and communication, as well as any other item upon which they may come to negotiate;

(d) commitment from the States Parties to harmonize their respective legislation, with the intent of achieving full integration.

MERCOSUR Associate States include Chile and Bolivia (both in 1996), Peru (2003), Venezuela, Colombia and Ecuador (the last three in 2004). By means the execution of Economic Mutual Assistance Agreements, the main objective is to establish a free trade zone throughout MERCOSUR and with each one of these countries, upon which special tariff conditions will be applied. Some of these countries, like Chile and Venezuela, currently negotiate their adhesion to MERCOSUR and may become full members in the near future.

Five Annexes integrates the 1991 Asuncion Treaty establishing the MERCOSUR: I) Trade Liberalization Programm; II) General Origin System; III) Dispute Settlement; IV) Safeguard Clauses and V) Working Sub-Groups of the Common Market Group. The application of the Annexes provisions is made in connection with Article 3º of Asuncion Treaty. In this sense, it is important to remark that the 1991Treaty was further bolstered by the adoption of specific Protocols concerning said matters

The institutional framework of MERCOSUR is based on the rules set forth in the Asuncion Treaty and the 1994 Ouro Preto Protocol (Additional Protocol to the Asunción Treaty on the Institutional Framework of MERCOSUR of 1994), which stresses the objectives and principles of the organization particularly the implementation of a Custom Union as one of the stages for consolidating a Common Market.

According to Art.1 of the 1994 Ouro Preto Protocol, the institutional bodies of MERCOSUR are structured as follows:

(a) Common Market Council (“CMC”) – the CMC is comprised of the Foreign Affairs or Economic Ministers (or the equivalent) of the MERCORSUR Parties. This is the highest institutional body with decision making powers within the framework of MERCOSUR, and the it is responsible for insuring enforcement and implementation of the provisions established in the Asuncion Treaty. The CMC is also the entity that represents MERCOSUR when negotiating and signing treaties and agreements with non-member states (“third countries”), with international institutions and other nations in general;

(b) Common Market Group (“GMC”) – the GMC is comprised of four permanent members and four substitute members appointed by each member State, representing the following entities: I) Foreign Affairs Ministry; II) Economic Ministry (or the equivalent); and the Central Bank. The GMC is the executive body of MERCOSUR and responsible for implementing all the decisions which are taken by the CMC. Further tasks of GMC are the following: i) to supervise the activities of the MERCOSUR Trade Commission (“CCM”) and the administrative agencies, ii) to propose measures seeking to implement a trade liberalization program, iii)_to coordinate a macro-economic policy, iv) to participate in negotiations with international agencies and non-member States with respect to the signing of accords, and if necessary, to act in the solution of controversies within the scope of MERCOSUR, and v) to organize and coordinate the activities undertaken by the Working Sub-Groups;

(c) The MERCOSUR Trade Commission (“CCM”) – the CCM is comprised of four permanent members and four substitutes, appointed by each one of the MERCOSUR member States, and coordinate by each one of the Foreign Affairs Ministers of each country. It is is responsible for insuring the enforcement of the mechanisms related to the implementation of a common commercial policy. The CCM is also the entity responsible for speaking on behalf of the member States with respect to any question raised with respect to the Common External Tariff and objections raised by the private sector;

(d) Joint Parliamentary Commission (“CPC”) – this body is comprised of 64 (sixty-four) permanent members and 64 (sixty-four) substitute members. Each one of the member States appoints 16 (sixteen members), who should be members of their own respective National Congresses. In this sense, the CPC represents the legislative bodies of the State Parties of MERCOSUL. Within the scope of the MERCOSUR institutional structure, the CPC plays the role of consultative and decision making body;

(e) Administrative Secretariat (“SAM”) and the Economic and Social Consultation Forum  (“FCES”). The SAM is responsible for publishing Official Bulletins for MERCOSUR and to insure the safekeeping of relevant documents. It is also responsible for giving publicity to the activities of the GMC. The FCES, in turn, is the entity that represents the economic and social areas of the MERCOSUR States, for which it is a consulting body; and

(f) Working Sub-Groups (“SGT”) – The Work Sub-Groups are subject to theGMC authority. Its task is to manage survey studies that are of specific interest to MERCOSUR and to issue decisions and resolutions which will be subsequently overseen and monitored by the CMC. Currently, there are 15 (fifteen) working sub-groups, which are arranged in the following structure:

 SGT No. 1 - Communication;
 SGT No. 2 – Institutional Aspects;
 SGT No 3 – Technical Rules and Conformity Assessment;
 SGT No 4 - Financial Matters;
 SGT No 5 - Transportation;
 SGT No 6 - Environment
 SGT No 7 - Industry;
 SGT No 8 - Agriculture;
 SGT No 9 - Energy;
 SGT No 10 – Labor Matters, Employment and Social Security Relations;
 SGT No 11 – Health care;
 SGT No 12 – Investments;
 SGT No 13 – Electronic Trade;
 SGT No 14 – Accompaniment of Current Economic and Trade Circumstances; and
 SGT No 15 – Mining.

By means the Decision CMC No. 23/05, the Common Market Council adopted the Protocol establishing the Parliament of MERCOSUR (“Protocolo Constitutivo del Parlamento del MERCOSUR”). Headquartered in Montevideo, the Parliament will serve as new body of the organization, representing the citizens of the region in an independent and autonomous manner. Thus, the Parliament is not a representative body of the Member States, but rather of MERCOSUR citizens. The first stage of implementation started on December 31, 2006; in its second and last stage, from January 2014, MERCOSUR Parliament will be fully integrated by representatives elected by place a direct, universal and secret vote placed by the citizens of all Member States.
Proposed Evolving Reforms in MERCOSUR. The Decision CMC Nº 56/07 of the Common Market Council established the main guidance for an institutional reform of the organization: i) restructuring of the decision-making bodies of MERCOSUR and their affiliate bodies, including their competences; ii) enhancement of MERCOSUR dispute settlement system, as well as the strengthening of its institutional bodies; iii) improvement of the mechanisms related to transposition, entry into force and enforcement of MERCOSUR rules and regulations ; iv) establishment of a budgetary framework able to encompass both the budgetary requests made by MERCOSUR Secretariat and the Secretariat of the Permanent Review Court.

In addition, by means the Resolution GMC 06/10, the Common Market Group approved the creation of the High Level Meeting for the Institutional Analysis of MERCOSUR (RANAIM -"Reunión de Alto Nivel para el Análisis Institucional del MERCOSUR"). The objectives of the High Level Meeting are focused on the analysis of the main institutional aspects related to MERCOSUR and policy-making oriented proposals which are conducive to the enhancement of the integration process and strengthening of MERCOSUR institutions.
Tariffs and Trade within MERCOSUR.  Since January 1, 1995, there are no longer any tariff barriers amongst MERCOSUR Parties. The large majority of products sold between the four countries – there are a few exceptions – are not subject to any customs taxes. Additionally, a Customs Union was established to become effective on January 1, 1995. As such, an instrument was created to make the member countries more competitive within the international market, the Common External Tariff (TEC).
Any request for amendment to current TEC rates are analyzed, at technical level, by the Technical Committee N.1 of the MERCOSUR Trade Commission (CCM); after internal public consultations take place, the CCM proceeds to a comprehensive analysis of the TEC related rates and submit them to Common Market Group for approval. Within Brazilian regulatory framework, the analysis of said requests is carried out by the Foreign Trade Division (CAMEX - Câmara de Comércio Exterior) of the Ministry of Industry, Development and Foreign Trade. CAMEX is the domestic body in charge of transposing the TEC related amendments which have been approved by Common Market Group into Brazilian legal system, by means the enactment of specific Regulations. 
As it takes place within the context of common market in European Union, the TEC should act as bedrock for MERCOSUR integration process. This tariff will cover the majority of the products imported from countries that are not MERCOSUR members, with the exception of those products which are listed as “sensitive” in their respective countries. In case of Brazil, for instance, sensitive goods are related to capital assets, information technology and telecommunications.
With the purpose of avoiding cash flow deviations within intra-block trade, MERCOSUR Parties established a common external tariff which should range between 0% and 20%, based on 11 taxable rate levels, increasing by twos. According to the Decision of the Common Market Council (“CMC”) No. 22/94, a TEC of 14% (fourteen percent) was implemented for capital assets, applicable to Brazil and Argentina starting from January 1, 2001. On 2010, by Decision No. 60 of Common Market Group (“CMG”), the members of the Group for Productive Integration has their status before MERCOSUR updated and became part of the Common Market Group. This decision has affected the status of implementation of TEC related provisions by Paraguay and Uruguay. After that, according to Decisions No. 28/09 and 61/10, Uruguay and Paraguay, respectively, agreed to implement the TEC definitely by December 31, 2011.     

Furthermore, pursuant to Decision CMC No. 34/2003, the Common Market Council introduced the “Common Importation System for Capital Assets not produced in MERCOSUR”. The objective of importing these assets is to modernize the productive sector of the MERCOSUR States and to encourage investments within the region. Thus, two product lists were created: the Common System List, temporarily at a taxable rate of 0% (zero percent) and the National Lists, temporarily at a taxable rate of 2% (two percent), for products not accepted on the Common List.

The goods included in the aforementioned lists will remain protected from importation at different taxable rates for a minimum of 21 (twenty-one) and maximum of 27 (twenty-seven) months, from the date of their inclusion on the List, renewable for an equal period of time, upon the request made by a Party to the CMC. In addition, by means Decision CMC No. 40/2005, the Common Market Council extended the initial deadline for this system to be into force from January 1, 2006 to January 1, 2011. From this date on, MERCOSUR states shall act in accordance with the operative systems for importing new capital assets.

MERCOSUR Parties are awaiting similar regulations for amendments to applicable TECs related to capital assets produced in the region, as those which were submitted by Party States to the Trade Commission by June 30, 2001. After several extensions, Decision CMC No. 40/2005 established the date of December 31, 2006 as the deadline for the High Level Group to examine the consistency and dispersion of the Common External Tariff constituted to present that TEC modification proposal for capital assets.
ith regard to information technology and telecommunications assets, Decision CMC No. 07/1994 establish the agreed schedule with regard to the date of convergence for relevant tariffs to January 1, 2006. A maximum common tariff of 16% (sixteen percent) was set to be in force from that date. Decision CMC No. 33/03 however sets forth that the Trade Commission should negotiate a Common System for Information Technology and Telecommunications Assets, which should be approved by the Common Market Group by December 31, 2005. Subsequently, Decision CMC No. 39/2005 not only extended this deadline through December 31, 2006, but it also agreed to institute another High Level Group to examine the consistency and dispersion of the common foreign trade. This High Level Group was equally mandated to prepare, until June 30, 2006, a proposal for a comprehensive review of TEC rates applicable to information technology and telecommunications assets. The tariffs will become effective as of January 1, 2009. The proposed changes should be put into practice following a convergence schedule to be in force starting from January 1, 2007. Until that stage, the Party States could apply a distinct taxable rate from the TEC in force – including 0% (zero percent), where it is the case – upon the realization of negotiations among the Argentina, Brazil, Paraguay and Uruguay..

However, with the creation of the Ad Hoc Group, for the sectors of Capital Goods and Information Technology and Telecommunications Assets (GAH BK/BIT), by the CMC Decision No. 58/08, those obligations were admitted by this new group. As a consequence of that, those members shall comply with a Common System for Information Technology and Telecommunications Assets non-Produced in MERCOSUR until December 31st, 2015,. Therefore it was established new deadlines for the application of domestic rates on the imports of Information Technology related goods. As defined by the Decision CMC No. 57/10, Brazil and Argentina may apply a distinct rate, including 0%, until December 31st, 2015. Uruguay and Paraguay may apply 0%, as well, for IT goods originated from third countries, thus, outside from MERCOSUR, and 2% for the other cases, until December 31st 2018 and December 31st, 2019, respectively.

MERCOSUR State Parties undertook, pursuant to Decisions CMC No. 69/2000 and No. 33/2005, to fully eliminate, by December 31, 2007, special customs importation systems that had been unilaterally adopted by the Parties. This obligation does not include the Special Customs Areas, but merely the systems and benefits that imply total or partial exemption of customs rights that create tax burdens on the temporary or definitive importation of goods and that have not been subject to improvement and later exportation of goods from third party countries. The targeted products subject to these mechanisms will benefit from free trade within MERCOSUR market until December 31, 2007, provided that they fulfill the requirements set forth by MERCOSUR Origin System. Likewise, the Common Market Council has further established exemptions with regard to goods destined for specific activities pertaining to the execution, coordination or foment of scientific or technological investigations, and which are recognized as such by the relevant authorities in each Party, and are not subject to any TEC, pursuant to Decision CMC No.36/2003.

Decision CMC No. 68/00, by its turn, stipulates that MERCOSUR State Parties could establish and maintain a list of 100 (one hundred) items from the Common Legal Regime of MERCOSUR (NCM) as TEC exceptions, until December 31, 2002. MERCOSUR States may modify up to 20% (twenty percent) of the products on this exception list every six months, provided that it is duly authorized by the GMC in advance. According to the most recent decision on those matters, the Decision CMC No. 58/2010, until December 31, 2011, Brazil and Argentina may maintain the list of 100 (one hundred) items as exceptions to the TEC, Uruguay a list of 225 (two hundred and twenty five) and Paraguay a list of 149 (one hundred and forty nine).

Recently, MERCOSUL approved the Decision No. 56/2010, by which the State Parties approved the Duty Union Program. Until now this is the only major project on macroeconomics coordination within the Organization, which includes, for example, Common Automotive Policy, Trade Economic Incentives, Common Trade Defense Strategy; Productive Integration and Simplification and Harmonization of Customs Procedures intrazone.

The Common Market Council approved and regulated the elimination of double charging and the distribution of customs earnings (Decisions CMC No. 54/2004 and No. 37/2005). Thus, goods imported or originated from third party countries that enter into the territory of the Party States starting on January 1, 2006 will receive treatment as commonly originated goods both with respect to its circulation along MERCOSUR borders, as well as their incorporation into productive processes,  provided that they are applied (i) a TEC of 0% (zero percent) or (ii) a tariff preference of 100% (one hundred percent), for all four parties and simultaneously, and that they are subject to the same origin requirement, within the scope of each one of the agreements signed through MERCOSUR, without quotas or requirements for temporary origin, when they are originating from and the provenance of countries or groups of countries to whom this preference has been granted. A list of these products is included in Attachments I and II of said CMC Decision, and it will be periodically updated by the Common Market Council. The elimination of multiple TEC charges acts as solution to one of the main problems cited with respect to the customs system that is put into force in MERCOSUR.

The most recent decision on those matters is Decision CMC No. 10/10. According to that, double charging and the distribution of customs earnings shall be completed on December 31, 2016, after 3 (three) periods of incorporation of changes. This process, as previously remarked, is characterized by the gradual elimination of domestic tariff and regulatory constraints.
The advanced stage of the MERCOSUR consolidation mechanisms demonstrates that the integration process underway in Latin America, at least with respect to the Southern Cone, is no longer merely a theoretical project, rather it is an important step toward regional integration and cooperation. After 20 years of existence, MERCOSUR has proven that State Parties and Associate Members achieved positive and concrete results.

Edited by:
Alberto Murray Neto – amurray@prmurray.com.br
Fabricio Bertini Pasquot Polido – fpasquot@prmurray.com.br
Aline Pacheco Pelucio – apacheco@prmurray.com.br