VI. TRADE REGULATIONS AND STANDARDS - TARIFFS AND IMPORT TAXES Nicaragua maintains a maximum tariff level (DAI) on virtually all imports of 20 percent of CIF value. An additional Temporary Protection Tariff (ATP) of 5-15 percent of CIF value is levied on some 900 imported items, largely goods also produced in Nicaragua. Some 750 other products (whether imported or locally produced) are assessed a Specific Consumption Tax (IEC), generally limited to 15 percent of CIF value. A stamp tax of 5 percent (ITF) is levied on all imports. The country's 15 percent sales tax (IGV) is charged (in a cascading fashion) on entry of all imported goods that are not categorized as basic food basket items. Overall import taxation levels on so-called "fiscal" goods (e.g., tobacco, soft drinks, and alcoholic beverages) are particularly high. - CUSTOMS VALUATION In some cases, tariffs and import taxes are not assessed on a CIF/bill of lading basis, but rather on a "reference price" determined by Customs. At times, this reference price is significantly higher than the actual amount paid by importers. - IMPORT AND EXPORT LICENSES Although Nicaragua's Constitution reserves foreign trade as an exclusive preserve of the state, in 1991 President Chamorro signed a decree mandating pro forma 5-year licensing of private export and import transactions. In most cases, the issuance of these licenses is little more than a formality. Permits are required only for the importation of sugar; the importation of crude oil and petroleum derivatives remains in the hands of the state. Special permission must be sought from the Ministry of Government for the importation of firearms and explosives. U.S. exporters of food products should check with the Ministry of Agriculture concerning phytosanitary requirements. - EXPORT CONTROLS No special export controls exist. Gold exports may require special permission of the Central Bank. - IMPORT/EXPORT DOCUMENTATION Imports require the following documentation: - Bill of lading (for land and maritime shipments) - Packing list - Airway bill (for air shipments) - Invoice Exports (outside Central America) require the following paperwork: - Export certificate - Evidence of registration with the Central Bank's Combined Export Registry (RUE) - Customs form as provided by a broker - Copy of general export license for shipments of "traditional" goods (coffee, cotton, sugar, meat, shrimp, and lobster) All export documentation can be processed at the government's one-stop export center, CENTRAMEX, located at the Nejapa Shopping Center in Managua. - TEMPORARY ENTRY Exporters may import inputs (machinery, raw materials, packaging materials, etc.) duty free. Firms located in Las Mercedes Industrial Zone can conveniently import unfinished products for processing, and re- export on a duty-free, in-bond basis. This same treatment is accorded to subcontractors of Free Zone plants. Registered foreign investors are allowed to re-export equipment and machinery as repatriated capital. - LABELING/MARKING REQUIREMENTS A 1973 law sets out labeling requirements for food products (i.e., Spanish language, clear statement of ingredients, net weight, origin, etc.). However, regulations for this law have never been issued and so its provisions have never been strictly enforced, i.e., in practice, no labeling/marking requirements exist. Nevertheless, good business practice would argue for the Spanish language labeling of at least consumer products. - PROHIBITED IMPORTS Few restrictions exist. The Ministry of Natural Resources and the Ministry of Agriculture do regulate the use of agricultural chemicals; military weapons may only be imported by the Armed Forces (EPS). The duties/taxes on a few items (e.g., chicken parts with import charges of over 250 percent) are so high that sales here may not be feasible. - STANDARDS No standards are in place for manufactured and processed products. However, standards issued by the Central American Institute of Industrial Research and Technology are often used as a guide. The Ministry of Economy is in the process of drafting legislation relating to standards and consumer protection. It is possible that these laws will be in place within the next year. - FREE TRADE ZONES/WAREHOUSES The state-owned Las Mercedes Industrial Free Zone is located near Managua's international airport. A dozen firms (Nicaraguan, U.S., Asian, and European) are currently operating there; use of the Zone has expanded dramatically over the past two years. Free Zone firms currently manufacture clothing, shoes, gold jewelry, and extruded aluminum. Local law does allow for the establishment of private free zones. At least one group of investors is contemplating the establishment of such an enterprise. - SPECIAL IMPORT PROVISIONS Importers of pharmaceutical products must provide considerable documentation to the Ministry of Health. Importers of fresh produce, livestock, and food products should check with the Ministry of Agriculture for the latest phytosanitary regulations. - MEMBERSHIP IN FREE TRADE ARRANGEMENTS Nicaragua is a member of the Central American Common Market. As such, the majority of goods produced in these nations are imported duty free. The country also enjoys duty-free access to the Mexican and Venezuelan markets on a limited number of exports. Nicaragua and Mexico are currently negotiating a comprehensive free trade agreement which may well be finalized by year-end 1994. Sporadic free trade talks with Colombia and Venezuela have been under way for more than a year. Nicaragua is a Caribbean Basin Initiative beneficiary; it is currently not a beneficiary of the Generalized System of Preferences.