VI. TRADE REGULATIONS AND STANDARDS Tariffs and Import Taxes Spanish tariffs for EU countries are zero since January 1, 1993, while those third-country goods, including the United States and Japan, receive the EU's Common External Tariff. Since 1988, Spain has used the Harmonized System of tariff nomenclature for applying duties. U.S. goods are taxed under EU's normal dutiable rate. Spain has adhered to the GATT code since 1963. It subscribes to the 1979 Multilateral Trade Negotiations (MTN) codes on technical barriers to trade, subsidies, and customs valuation. Spain has a wide range of commercial treaties with Eastern Europe and the former Soviet Union. These set categories of goods to be traded over a specific number of years. For agricultural products, import documentation and tariffs are exactly the same as for other EU countries. While a few agricultural commodities are duty free or subject to minimal duties (soybeans, sunflower seed, corn by-product, lumber) the great majority of agricultural products (those covered by the CAP) and food products are subject to high duties or variable import levies which generally preclude access into the Spanish market. Under the U.S.-EU Enlargement Agreement, Spain annually imports 2.3 million tons of corn, sorghum and specified non-grain feed ingredients. The agreement was negotiated to compensate the U.S. for the loss of corn and sorghum exports to the Spanish market as a result of the accession to the EU in 1986. The recent GATT agreement extended the accord at least through the year 2,000. Customs Valuation Spanish customs value shipments at c.i.f. prices. For American products the tariff rate averages 5 percent. A shipment has to be cleared through customs by a registered customs agent. Usually, total costs to clear customs fall in the range of 20 to 30 percent of the shipments C.I.F. value. This includes tariffs, value added tax (15 percent), custom agent and handling fees. Import Licenses Spain was obligated under its EU accession agreement to transform its structure of formal and informal import restrictions for industrial products into a formal system of import licenses and quotas. While Spain does not enforce any quotas on U.S.-origin manufactured products, it still requires import documents, which are described below. Neither of these documents constitute a trade barrier for U.S.-origin goods. - Import Authorization. (Autorizacion Administrativa de Importacion - AAI) is used to control imports which are subject to quotas. Although there are no quotas against U.S. goods, this document may still be required if part of the shipment contains products or goods produced or manufactured in a third country. In essence, for U.S.-origin goods, the document is used for statistical purposes only or for national security reasons. - Prior notice of imports (Notificacion previa de importacion) which is used for merchandise that circulates in the EU customs union area but which is controlled for statistical purposes only. The importer must obtain the document and present it to the General Register. Importers apply for import licenses at the Spanish General Register of the Spain's Department of Commerce or any of its regional offices. The license application must be accompanied by a commercial invoice that includes freight and insurance, the c.i.f. price, net and gross weight and invoice number. Customs accepts commercial invoices by fax. The license, once granted, is normally valid for 6 months but may be extended if adequate justification is provided. Goods that are shipped to a Spanish customs area without proper import licenses or declarations are usually subject to considerable delay and may run up substantial demurrage charges. U.S. exporters should ensure, prior to making shipment, that the necessary licenses have been obtained by the importing party. Also, U.S. exporters should have their importer confirm with Spanish customs whether any product approvals or other special certificate will be required for the shipment to pass customs. Export Controls Spain has been a member of COCOM since 1985, and is active in the creation of the New Forum that will replace COCOM. Spain is also a member of the Australian Group for chemical products controls and a signatory of the Chemical Weapons Convention which will be effective in 1995. Exports controls are regulated by Organic Law 3/1992 and Royal Decree 824/1993. The Royal Decree establishes both the regulations and the COCOM lists applicable, as well as the procedures to follow. Import/Export Documentation Several different forms of documentation may be required for shipments to Spain. Exporters are required to present one commercial invoice, one bill of lading, and three copies of a certificate of origin for all shipments. Other certificates are needed for exporting pharmaceutical goods, perishable foods, live animals and some medical goods. Sanitary Certificates: U.S. Animal and Plant Health Inspections certificates are required from the U.S. Animal and Plant Health Inspection Service (APHIS) for importation of living plant material (including plants, plant products, and seeds) into Spain. Health inspection requirements also govern the importation of animals and parts of animals (including meat products, skins, hides, and similar products), marine mammals, fish, crustaceans, or mollusks and parts. Spanish regulations are subject to provisions of the Spanish Ministry of Agriculture. Inspections usually are carried out in local offices of APHIS, which are located in major U.S. ports and airports. Export agents or brokers may present products for inspection. Inspection of air shipments may be handled by the airlines. Pharmaceutical Certificates: These are required by Spanish customs for drugs and certain sanitary items. A standard analysis bulletin issued by the manufacturer, listing product composition is acceptable for customs purposes. Fines and Penalties: Regulations establish fines for whatever action that delays the normal customs procedure. Fines are not very big, usually around US$ 30 or 40. These do not include fraudulent actions. Anti-dumping and Countervailing Duties: As a signatory to the Anti-dumping and Countervailing Duty Codes of the GATT, Spain, through the EU Anti-dumping Committee penalizes products imported at less than their normal value which cause injury to domestic industry. The anti-dumping duty will be the difference between the dumped price and comparable domestic price of the exported product. The duration of the countervailing duty imposition varies from case to case and the duty imposed currently ranges from 5 to 33 percent. Temporary Entry Spanish reexport system is regulated by Order of July 24, 1987, conforming to EU regulations. Reexports inquiries must be addressed to the port's Customs Director. Re-exports of U.S. goods from Spain follow the same procedures as exporting Spanish products. Goods reexported to other EU member states are subject to statistical surveillance. Reexports outside the European Union not covered by specific EU regulations are exported by accompanying a Customs Export Declaration at the exit point. A limited number of goods require a Prior Notice of Export. Exporters of high-technology goods subject to U.S. export control procedures must ensure that Spanish clients and subsidiaries are aware of domestic export controls any reexporting. There are four types of procedures for handling the re-export of goods: 1) Temporary Imports.-- Goods imported for a limited period of time under an ATA carnet. A bank guarantee in the form of a bond equivalent to duties owed must be provided to Customs, which will be refunded once the goods leave the country. 2) Temporary Admission.-- Goods that will be incorporated into a final product for export. Prior approval by the Ministry of Commerce is necessary. The same procedure as for temporary imports applies for re-export. 3) Replacement Goods.-- Companies with continuing needs for primary materials, commodities, or intermediates can request prior approval from the Ministry of Commerce for replacement goods, after the second year of operation. They must deposit a bond with Customs on the compensatory tax only. Replacements for defective goods destroyed under Customs supervision are also admitted duty-free, but requires extensive supporting documentation. 4) Drawback.--Duties are paid simultaneously with presentation of a list of the products to be re-exported eventually. Later, a rebate (drawback) is made upon customs clearance out of Spain. This procedure also requires prior approval by the Ministry of Commerce. Companies are advised to use the carnet procedure to temporarily bring goods into Spain for demonstration purposes without paying duties or posting bond. The carnet must be presented to the customs authorities whenever entering or leaving the country. Consumable items and give-away samples are not included under carnet procedures. ATA carnets are predominantly used for commercial samples, tools of trade, advertising material or cinematographic, audio visual, medical, scientific, or other professional equipment that will be imported for a period of less than a year. The advantage of the ATA carnet is that it allows exporters to avoid normal customs clearance formalities. The carnet also provides a financial guarantee to foreign customs officials that, if the goods are not re-exported, the duty will be paid. A bond equivalent to the duty is charged. The ATA carnet is used internationally and should be distinguished from the EU carnet, sometimes referred to as the ESC carnet. Introduced in July 1985, this carnet is used for the temporary movement of certain types of goods between EU countries, usually equipment and working materials. Unlike the ATA carnet, it does not require posting a bond. Carnet applications are available from all district offices of the U.S. Department of Commerce, most U.S. chambers of commerce, and authorized export insurance companies. They are also issued by the U.S. Council of the International Chamber of Commerce in New York. They are available at EU customs offices only. Advertising material, catalogs, price lists, and similar printed items are admitted duty free. However, to avoid any problems such items should always be labeled, "no value." Otherwise, a customs duty is likely to be levied on the sample. As a signatory to the International Convention to Facilitate the Importation of Commercial Samples and Advertising Matter, Spain admits samples of negligible value duty free. Those items of commercial value and not covered under carnet procedures may be imported for up to a year by business people upon payment of bond. Upon presentation of the customs receipt and re-export, the deposit is refunded. Qualifying business people bringing commercial samples should come equipped with a letter from his or her principals attesting to this status, identifying the samples, and certifying that the samples are not for sale. The letter should have a visa from the nearest Spanish Consulate. Labeling, Marking Requirements In view of the complexity and rapid change in marking, labeling, and testing requirements in Spain, U.S. exporters should request pertinent instructions from their importers prior to shipment. In general, special requirements exist for foodstuffs, beverages, textiles, drugs and pharmaceuticals, fertilizers, precious metals, tires, and firearms. Following are specific categories of goods, for which marking, labeling, and/or testing requirements are applicable. Foodstuffs.--The Directorate General of Health sets human consumption standards for the preparation, residual content, and storage media for virtually all classes of foodstuffs. The labels on the container must include the product designation, list of ingredients, weight or volume, dates (manufacturing, packing, minimum shelf life, and expiration dates), directions for food preservation (if applicable), identification of the firm involved (manufacturer, packer, or importer), and country of origin. If the original label is not in Spanish, a similar one must be prepared in Spanish, firmly affixed to the container. Milk products, margarine, chocolate, and soaps have other, more technical labeling requirements. Wines and other alcoholic beverages must meet Spanish standards. Textiles.--Customs and point-of-sale regulations require that all textile goods and ready-made clothing have a Spanish label. Standard Spanish textile nomenclature and content requirements must be stated on the label. Requirements relating to textile content, labeling, and packaging are specific and extensive. They are regulated by R.D. 928/1987, dated June 5, 1987. Manufacturers' trademarks, duly registered, are permitted on textile products. Drugs, Pharmaceuticals, and Cosmetics.--These goods are subject to technical inspection and registry by the Directorate General of Health prior to entry. There are also detailed marking and labeling requirements, somewhat similar to those for foodstuffs, but which also include detailed chemical composition. Fertilizers and Fungicides.--Imported fertilizers must be registered with the local Agriculture Department Office. Inspection and analysis will be performed prior to customs clearance. All printed advertising and publicity materials must be approved by the Department of Agriculture, and labels must be in Spanish and include detailed precautions. Firearms.--All firearms must be cleared by the Spanish Government Proving Grounds and bear the stamp of that organization. Metals.--The Spanish Guaranty Bureau provides assay services and affixes its hallmark for all imported precious metals. Motor Vehicles.--Each vehicle will be inspected for engraved serial numbers on both the engine and chassis. If one of these is not available, Spanish customs levies a special charge for stamping the same number. Tires and Tubes.--All tires and inner tubes must be marked with a serial number. For agricultural products, labeling requirements are fully harmonized within the EU Labeling information, however, must be in Spanish. Prohibited Imports Spanish regulations ban the import of illicit narcotics and drugs. They also set up very restrictive regulations for imports of explosives, fire weapons, defense equipment and material in general, tobacco, and gambling material. EU regulations on hormones ban U.S. beef and beef products from entry into the EU. In addition, EU health regulations on live cattle ban U.S. high genetic cattle imports. Standards At present there are no requirements for either ISO 9000 certification or its EU equivalent. Nonetheless, demand for products that meet these standards is growing. Spain establishes specific certification for certain products. This certification procedure is referred to as "homologation" and involves cumbersome product testing by approved laboratories. Although most of the local homologation requirements and testing standards are gradually disappearing as Spanish legislation conforms to EU directives, certain homologation and other special requirements remain for some products. Generally, a product that meets the standards and certification requirements of any other EU country can be imported and sold in Spain without further testing. Spanish homologation requirements remain in force for computer keyboards and screens, dot matrix printers, teleprinters, medical equipment, electric typewriters, telecommunications equipment, motor vehicles, bicycles, pleasure boats, gas connectors, etc. Applications for homologation are processed by the Ministry of Industry and Energy and by the Ministry of Transport and Telecommunications. These national standards will be phased out as EU norms take effect. The Spanish Standards Certification Association (AENOR - Asociacion Espa ola de Normalizacion y Certificacion) is responsible for developing voluntary standards and certification programs. It represents Spain in international standards bodies. The Spanish Government publishes a listing of approved laboratories for testing and certification each year. Electrical products which operate in a voltage range of 50 to 1,000 volts alternating current or 75 to 1,500 volts direct current have to meet the EU low voltage directive. There are three accepted forms of proofs of conformity with this regulation: a mark issued by an authorized EU agency; a certificate issued by an approved EU authority; or a declaration issued by the manufacturer. In the latter, the manufacturer self-certifies that the product, manufactured with good engineering practices, will not endanger the safety of persons, domestic animals, or property when properly installed and maintained and used in applications for which it was made. Spain now allows the entry of used equipment, material, and goods. However, they are subject to the same standards concerning safety as apply to any new import. Additionally, there may exist regulations specific to the particular type of equipment, such as computers and peripherals, that is being imported. Free Trade Zones/Warehouses There are three different customs regulations in Spain. The EU common customs apply to the mainland and Balearic Isles. The Canary Islands, previously a customs free area, is undergoing a transition period until the end of the century to meet EU customs regulations. There is a customs free trade area in the two northern Africa enclaves of Ceuta and Melilla under Spanish sovereignty. Both in the mainland and islands there are numerous free trade zones (in most of Spanish airports and sea ports) where manufacturing, processing, sorting, packaging, exhibiting, sampling, and other commercial operations may be undertaken free of any Spanish duties or taxes. The largest free trade zones are the ones in Barcelona, Cadiz and Vigo. Others vary in size from a simple warehouse to several square kilometers. Spanish customs legislation allow that companies have their own free trade area like IBM. Duties and taxes are payable only on those items imported for use in Spain. Special Import Provisions Goods are cleared by Customs agents or brokers who handle the necessary formalities on behalf of the importing firm or individual. A bill of lading, an original invoice with a copy, a certificate of origin, and an import declaration are required for most clearances through Customs for products which will remain in Spain. Import declarations are made at the Secretariat of Commerce or its branch delegations in major port cities throughout the country. Declarations must use the exact terminology of the tariff classification under which the goods are being imported. A 3-month grace period is allowed for U.S.-origin goods arriving without proper documentation, subject to a written guarantee by the customs agent. Goods in transit need only be listed on the vessel or aircraft manifest and do not have to be unloaded. Transit goods may also be unloaded for shipment to a Customs-approved warehouse prior to reshipment from Spain or to another customs house in Spain for declaration or further reshipment. Membership in International Organizations Spain is a member of the United Nations and all its specialized bodies (World Bank, International Monetary Fund, GATT, ILO, etc.), UNCTAD , European Council, NATO, Asian Bank for Development, OECD, African Development Bank, European Reconstruction and Development Bank, and Inter-American Development Bank, etc. Since January 1, 1986, Spain is a member of the European Union.