VI. TRADE REGULATIONS AND STANDARDS Tariff and Import Taxes All imports are assessed a one percent customs handling charge. The import duties are calculated on the CIF value of the shipment. Venezuela has adopted the harmonized tariff schedule. Duties range from zero to twenty percent with few exceptions, such as automobiles which carry a duty of 35 percent, and motor oil which bears a surcharge of Bs. 60 per kilogram. All imports also face a ten percent tax. A luxury tax, on a sliding scale of up to 20 percent, will also apply to some goods. Goods subject to the 10 percent luxury tax include: all alcoholic beverages, cigarettes, vehicles priced between US$22,000 and $44,000, and jewelry. A 20 percent luxury tax is charged on commercial cable television services, vehicles priced at more than US$44,000, motorcycles of more than 500 cc, pleasure boats, coin-operated games, furs, and satellite dishes. Customs Valuation Customs calculates duties on the landed (CIF) cost of the product and on the gross weight of the import, thus including the weight or value of the packaging. Venezuela has recently established procedures for accessing countervailing duties to avoid dumping. Such duties have been levied on blue jeans coming from Asia and some plastics. The textile industry is locally requesting protection against what it considers dumping by some Asian producers. Typically customs authorities accept the value of the shipment as indicated on the documents, but underinvoicing can result in heavy fines to the importer. Import Licenses Import licenses have generally been eliminated, but there are a number of products which still require licenses. These include arms and explosives, which require an import permit from both the Ministry of the Interior and of Defense. Import certificates are required for certain products subject to special supervision, such as phytosanitary certificates for grains, seeds and plants. Medicines, foods and cosmetics require registration by the Ministry of Health. Customs will let these products pass without the appropriate sticker attached to the label or the printed label showing the registration number, if the importer can show the appropriate documentation from the Ministry. In the case of imported alcoholic beverages, the tax "band" must be affixed across the bottle closure before the shipment can leave the customs premises. Imported cigarettes are also subject to this type of measure and adhesive labels are not allowed. Export Controls In rare cases controls can be applied by the Foreign Trade Institute (ICE), but these are usually in cases where the control avoids a domestic shortage. The re-export of capital goods is normally not allowed, unless the owner has made prior arrangements (before importing) to the effect that the equipment is to be used only for a specific project and are not to stay in country (see Temporary Entry). Import / Export Documentation Venezuelan Customs requires that all documents be in Spanish. The invoice must be typewritten; a photocopy will not be accepted. The manifest of importation and declaration of value must be in quadruplicate. The following documents may be required: commercial invoice; bill of lading; packing list; certificate of origin (if required); special certificates or permits when required (such as phytosanitary or quality standards certificates or Ministry of Interior permit for firearms). It is important that the exporter consult with the Venezuelan importer regarding what documentation is required in addition to the invoice. Exporters should quote CIF prices for Venezuela (not FOB) since import duties are calculated on the CIF price. Insurance and freight must be listed separately on the invoice. The invoice must be in duplicate and must list both the value per unit and the total value of the shipment. Shipping and insurance costs are to be listed separately. The description for the merchandise must include the appropriate tariff number. It is best to obtain this number from the importer. To simplify the importation process when there is a large amount of cargo for one project, there should be a single declaration for all items, and each item should be listed separately with its respective tariff number. For new products, particularly those whose tariff number cannot be readily identified, it is important to obtain a specific tariff number, which the importer can obtain from customs. More details on special requirements and documentation are available in publications such as the following: Shipper's Export Manual Bureau of National Affairs 1231 25th Street N.W. Washington, D.C. 20037 Phone: (202)452-4200 Fax: (202)822-8092 Exporter's Encyclopedia Dun & Bradstreet International 140 Allen Street; Suite 200 Liberty Corner, N.J. 07938 Phone: (908)604-7900 Fax: (90)604-7958 All shipments must be made on a direct consignment basis. Customs regulations stipulate that the consignee is the owner of the shipment and is responsible for all customs payments. Thus, a consignee may make the required payments and remove the merchandise from customs. Some U.S. companies have had difficulties with sight draft transactions. When Venezuelan companies either delay or refuse to claim merchandise arriving in Venezuelan ports (for whatever reason), customs impounds goods not claimed, and, if steep fines and storage fees are not promptly paid, sells the goods at auction. In some instances, the original consignees have successfully bid on the same goods at auction and obtained them for less than the CIF value. To avoid these problems, exporters are advised to investigate Venezuelan companies thoroughly and carefully evaluate the advantages and risks of sight drafts versus irrevocable letters of credit. Since Venezuelan customs procedures are cumbersome and involve many steps, most importers use the service of a customs agent. The Commercial Section of the U.S. Embassy can provide names of reputable agents. Venezuelan customs brokers typically charge one percent of the CIF value, or less on regular orders. There are additional charges for document preparation and incidentals. These expenses are paid by the importer. Temporary Entry The customs law and its regulations allow the import of merchandise on a temporary basis for exhibitions, cultural purposes, demonstrations, scientific purposes or specific contracts. The importer must request permission for temporary entry, providing an exact description of the merchandise, its number or volume, its value and its expected date of re-export. Temporary entry forms may be requested from the Director General de Servicios Aduanales (General Director of Customs Services) at the Ministry of Finance in Caracas at fax number (58-2) 41-57-71. A bond covering the full value of the duty payable in case the products stay in the country must be obtained which will be returned once the products have left the country. Normally, temporary entry permits are granted for a maximum stay of up to six months. The one percent customs handling charge must be paid and is not reimbursable. Temporary entry of samples by visiting businessmen is allowed, but the determination of what is a sample is left to the customs agent at the port of entry. Samples arriving unaccompanied as freight are never considered as such, unless declared as having no commercial value and prepared in such a form that they cannot be sold commercially. Labeling and Marking Requirements Spanish is the official language of Venezuela, and the only official measuring system is metric. Labels must list all ingredients, the contents of the package in the metric system or in units, and the registration number of the Ministry of Health or the Ministry of Agriculture in the case of animal feeds or veterinary medicines. Stickers are allowed in the case of imported products. These stickers must also identify the importer. Operating instructions or owners manuals must be in Spanish. Prohibited Imports At this time, imports of used autos, of used clothing and of used tires are prohibited. Some products can only be imported by government agencies, such as cigarette paper (tax authorities calculate cigarette tax on the volume of cigarette paper imported by the manufacturers), bank notes, weapons of war and certain explosives. The government can delegate authority to import on its behalf, and can place orders for such products with the local sales agents of the foreign manufacturers. Weapons for private use, such as shotguns, sporting rifles, air rifles, non-military pistols and commercial explosives can only be imported through a company owned by the Ministry of Defense named CAVIM, which, can delegate this authority to established sporting goods stores and users of commercial explosives. Standards The Venezuelan standards agency COVENIN has established almost 300 obligatory standards that apply to imported products. In such cases, customs authorities require a Venezuelan certificate of compliance. The certificate can be obtained based on a letter confirming compliance granted by a recognized standards institute in the country of origin. Importers have experienced some difficulty in cases in which no recognized foreign standards exist. Exporters should consult with their customers, since technically it is the responsibility of the importer to provide such certificates. COVENIN is presently compiling a list of recognized foreign private certification institutes for customs to consult. If no such certificate can be obtained, COVENIN can in some cases arrange for local testing at the cost of the importer, although this can present difficulties when, for example, the tester is a local competitor of the imported product. Cost may also be prohibitive in the case of small or mixed shipments. It is not yet clear whether adherence to ISO 9000 guidelines will be acceptable or not in place of a standards compliance certificate. For updates and clarifications of COVENIN standards, contact either the Foreign Commercial Service at the U.S. Embassy in Caracas or COVENIN (See Appendix C). Free Trade Zones / Warehouses Venezuela has two free trade zones. One, located on the Paraguana peninsula, is for industrial purposes only, such as assembly, manufacture for export, or maquila. It is being used by only a few enterprises. The other one is the duty-free area comprising the island of Margarita. The sale of duty-free merchandise from the island to the mainland is subject to quotas. Duty-free bonded warehouses are available at ports, airports and in most major towns. Industrial establishments can also be declared in-bond if these are used for assembly, completion or improvement of products for re-export. Little use is being made of this possibility, except by some clothing manufacturers. Special Import Provisions There are no special requirements except those discussed above. It should be noted that freight handling in ports and airports is somewhat rudimentary and that damage might occur unless the products are well packed. Containers are handled efficiently, but will not pass customs as such unless their contents fall under one single classification number (harmonized code). If they contain consolidated mixed cargo, customs will separate their contents to check each single item. In order to alleviate congestion at ports and airports, Customs will authorize this procedure to take place in a bonded warehouse or under special arrangements at extra cost at the recipient's warehouse. The containers must be sealed during the transfer. Courier services such as UPS, Federal Express and DHL should not be used to transport merchandise if packages exceed two kilograms in weight. In those cases, the shipments are treated as air freight and could be subject to delays in customs. These facilities should be used primarily for the shipment of documents. Likewise, parcel post shipment using the mails should be avoided. First of all, Venezuelan mail is very unreliable. If such a parcel arrives, customs will send by mail a notification to the recipient, who then has to reply by mail that he is willing to accept the package. The recipient then has to go in person to the central post office, where in the presence of a customs official the package is opened. This entire procedure can take months. In short, the speediest procedure is air freight, or in the case of very heavy shipments, sea freight. Membership in Free Trade Agreements Venezuela is a member of the Andean Pact with Colombia, Ecuador, Bolivia and Peru. The Pact is negotiating a common external tariff which it hopes to have in effect by the end of 1994. Venezuela enjoys close commercial relations with Colombia. They strengthened their relationship within the Andean Pact with a free trade agreement which has led to a substantial increase in bilateral trade. Venezuela is also expanding its relations with Mexico and Colombia through the Group of Three free trade agreement which was signed June 13, 1994. Venezuela has a partial free-trade agreement with Chile, Argentina, Brazil and CARICOM, and is negotiating with Colombia a free trade agreement with the Central American Common Market. Venezuela has expressed interest in eventual membership in NAFTA.