SECTION VI - TRADE REGULATIONS AND STANDARDS - Tariffs and Import Taxes In December 1984, El Salvador and other Central American countries signed the Agreement on Central American Tariffs and Duties setting the basis for a statistical and fiscal control on imports and exports and standards or regulations of regional trade. As its main annex the Agreement had the Uniform Tariff for Central American Nomenclature (NAUCA II), which has now been replaced by the Central American Tariff System (SAC). This entered into force as the tariff structure of El Salvador in February 1994. The SAC is made up of 5,653 levies distributed in 95 chapters with duties of 5, 10, 15, 20, 25 and 30 percent ad-valorem; duties are distributed as follows: Part I has 5,327 (94.2 percent) items which have a common external Central American tariff. Part II has 135 (2.4 percent) items which are still in negotiations for a common external tariff. Part III has 182 (3.2 percent) items which are not scheduled to be part of the external tariff regime, and 9 (0.2 percent) items with tariffs applicable only in El Salvador. - Customs Valuation Customs valuation is applied by the Direccion General de la Renta de Aduanas (Customs Bureau) for all articles. In general, the price in the commercial invoice is used for tax purposes; however, if there is a doubt about the accuracy of the stated price, Customs assigns a value based on their regulations. For example, for used cars they use N.A.D.A., Edmund's and the Truck Blue Book, all U.S. publications. - Import Licenses Customs does not generally require import licenses. However, when the imported goods are vegetables or animals, a license from the Ministry of Agriculture is needed to certify that the goods meet local health and sanitary regulations. In addition, firearms require a license from the Ministry of Defense. - Export Controls All exporters must register in the Centro de Tramites de Exportacion (Export Procedures Center) in the Banco Central de Reserva. For agricultural products, animals and veterinary products, the exporter must be registered in the Consejo Salvadoreno del Cafe (for coffee), Centro de Desarrollo pesquero-CENDEPESCA (for seafood), Inspeccion de Productos de Origen Animal-IPOA (animal products) and Direccion de Defensa Agropecuaria (for live animals). - Import/Export Documentation The following is a list of documents needed for processing imported goods through Customs: i. Import license (when required) ii. Commercial invoice iii. Bill of lading, airway bill or carta de Porte. When imports come from the Central American Region the only document required is the Customs Form (Formulario Aduanero). The following documents are required by CENTREX, a part of the Banco Central de Reserva, when exporting: i. Export license (Registro de exportador) ii. Application for export registry (Solicitud de Registro de Exportacion). iii. Commercial invoice (factura comercial). iv. Authorization of the Ministry of Agriculture when required. v. Authorization of the Ministry of Finance and of the Ministry of Labor for machinery and industrial equipment. - Temporary Entry Customs may authorize temporary entry of foreign merchandise with temporary or partial suspension of duties for specific purposes under the condition that they must be re-exported within the time authorized and without any modification or transformation. A bond must be presented as guaranty that the temporarily imported goods will be re-exported within the time authorized. Temporary entry of goods for transformation, manufacture or repair may be granted under special provisions of the law that refers to free trade zones. - Labeling, Marking Requirements These requirements are included in the Law for the Protection of the Consumer (Ley de Proteccion del Consumidor) which entered into force on August 31, 1992. The key provisions are as follows: i. retailers must have the price of the product either on the packaging or on a visible place. ii. The products that are sold by weight or volume or any other measure must have the weight, volume or an exact measure of its content on the label. iii. The list of ingredients, expiration date, dosage, contraindications, risks involved when used, residual toxic effects, and any other requirements established by the Ministry of Public Health in the case of pharmaceuticals must also be printed on the label. - Prohibited or Restricted Imports According to customs laws and regulations, the following items are either prohibited or restricted: i. Books, booklets, budgets, emblems, posters and any other articles of a subversive character or doctrines contrary to the established political, economic and social order. ii. Figures, statues, books, booklets, almanacs, magazines, engraved or lithographed articles, newspapers, lithographs, stamps, photographs, and cards of an obscene nature or any other obscene articles. iii. Movies contrary to ethics and good behavior. iv. Abortives. v. Gambling machines. vi. Roulette wheels, gambling tables, and any other item or article used for gambling. vii. Opium with less than nine percent of morphine, scrapes and opium ashes, and any material used for smoking those products. viii. Non stamped paper for cigarettes, white or colored in rolls, spools, booklets or small tubes. ix. Machines and tools for making coins. x. Counterfeited coins and bills. xi. Plain silver coins of less than 0.900 purity. xii. Tokens of any metal or alloys that may be used as substitutes for legal coins. xiii. Coffee trees. xiv. Coffee seeds for planting. The Customs Administrator on the scene is responsible for determining if a specific item falls under any of the above categories. His decision can be appealed to the Director of Customs. Please note that Customs is recommending a revision to this law with fewer restrictions. - Standards There is no legislation about the use of standards, but U.S. standards are generally required on international purchases. - Free Trade Zones Under the Foreign Investment Promotion and Guarantee Law of 1988 and the 1990 Export Reactivation Law, the Government of El Salvador (GOES) provides various incentives and tax breaks for export-oriented manufacturing concerns. Any export firm can have itself declared a free trade zone. El Salvador has four processing zones currently operating. Labor regulations in these zones are identical to those throughout the country. The free trade zones that are operating in El Salvador are the following: A. San Bartolo Free Zone - It is currently being privatized. It is located 10 kms. east of San Salvador on Boulevard del Ejercito. B. El Progreso Industrial Park - a privately owned free trade zone, located on the road to La Libertad Port, about seven miles west from San Salvador. It has 12,000 square meters of space in ten buildings. During 1993 another 2,000 square meters of space were added. C. El Pedregal - located about five miles from El Salvador's International Airport and 23 miles from San Salvador, privately owned, with space available for rent. D. San Marcos Free Zone - privately owned, located three miles from San Salvador, on the road to the El Salvador International airport. - Special Import Provisions Certain basic foods are subject to a price band mechanism to determine tariffs. More information is available from the USDA office in Guatemala or from the local USDA employee at the U.S. Embassy in San Salvador. - Membership in Free Trade Arrangements El Salvador has 28 commercial and 18 technical cooperation treaties in effect. Three of these treaties (Mexico, Spain, Venezuela) contain references regarding the promotion of joint-ventures. El Salvador has joined with Guatemala and Honduras to begin negotiations on a free trade agreement with Mexico and Colombia. The GOES signed the GATT on April 19, 1991 as member 101 and this was made legal by Decree No. 750. Some of the most important treaties are the following: -- FREE TRADE AND ECONOMIC INTEGRATION AGREEMENT BETWEEN THE REPUBLICS OF EL SALVADOR AND GUATEMALA. On March 17, 1992 an agreement promoting Free Trade and Economic Integration was signed by both countries. It included customs standardization within a maximum of two years beginning on the date of signature. This agreement grants free trade on all products originated in both countries, except raw coffee in all forms (berry, pergamin and gold), wheat flour, refined and unrefined sugar, oil and petroleum by-products. -- NUEVA OCOTEPEQUE AGREEMENT ON TRADE AND INVESTMENT. On May 12, 1992 the Governments of Guatemala, El Salvador and Honduras signed the Nueva Ocotepeque Agreement which includes the organization of a free trade zone with the three countries, customs standardization, signing the Common External Duty (SAC), establishment of bank branches in the three countries, integration of the stock markets, and review of finance legislation in the three countries. -- FREE TRADE AGREEMENT AND PREFERENTIAL EXCHANGE EL SALVADOR-PANAMA. This agreement was signed in August, 1970 and includes 366 levied items already negotiated. The treaty is administered by a permanent commission formed by representatives of both countries. It is indefinite, but it may be terminated by either party provided there is three years notice. -- COMPLEMENTARY AGREEMENTS -- CENTRAL AMERICA-MEXICO, CENTRAL AMERICA-VENEZUELA, CENTRAL AMERICA-COLOMBIA. After the meeting of the Central American presidents with the president of Mexico in January, 1991 in Tuxtla Gutierrez, Mexico, the Ministers of Finance of the Central American countries and the Minister of Trade in Mexico signed in Managua, in August 1992, the Multilateral Frame Agreement (Acuerdo Marco Multilateral) for the Program of Trade Liberalization among Central American and Mexican governments. This Frame Agreement is the basis for an Economic Complementary Agreement for Free Trade among Central American Countries and Mexico, which shall be perfected by 1996. In February 1993, the presidents of the Central American countries, Venezuela and Colombia signed a Trade and Investment Agreement which shall substitute previous agreements signed bilaterally by Venezuela and Colombia with the Central American countries. By this agreement the countries are bound to begin on June 30, 1993 a process of free trade that will gradually be developed until it is completed in June, 2003.