Argentina's president recently participated in the latest summit of the Mercosur countries (along with the presidents of Brazil, Paraguay and Uruguay), which took place in Montevideo, Uruguay, on December 20 2011. At the summit a deal was struck to allow each member country to raise its common customs duty rates to a maximum of 35% on up to 100 items per country. The stated intent of this increase in duty rates is to help to combat "an avalanche of predatory exports" from other countries as a consequence of the international economic crisis.
Each country has the right to request the increase to the common Mercosur tariff by following the mechanism set forth in Decision 39/11 of the Common Market Council. Such increase will be applied only for imports to the country adopting the increase, as an exception to the common Mercosur tariff.
For this purpose, a country willing to increase duties on imports of certain products must file a request with Mercosur's presidency, with a copy to the other member countries and Mercosur's secretariat. The request should, among other things, contain the following information:
- the tariff item number that will be subject to the duty increase;
- a description of the product;
- the current and requested duty rate;
- the time period during which the increase shall apply (which cannot exceed 12 months);
- the reasons for the increase; and
- statistical data on imports and exports of the product during the past three years.
Once the other countries have received the request, they will have 15 working days to raise any objection to the increase. If no objection is raised during this time period, the country requesting the increase may proceed with the increase within 60 days. On the other hand, if an objection to the increase is raised, the request and the objection must be discussed by the four countries' representatives on Mercosur's Commerce Commission, which will have the final say on this matter.
If agreed, the increase will apply for a period of no longer than 12 months from the date on which it enters into force in the respective country, but may be extended for subsequent periods of 12 months. Each extension will be subject to the same procedure outlined above.
Due to remain in place until December 31 2014, the new mechanism has been promoted by Argentina and Brazil (though Uruguay and Paraguay have demonstrated their reluctance) - a confirmation of the protectionist policies that have been followed by the Argentine and Brazilian governments since 2008 as a consequence of the international economic crisis.
For further information on this topic please contact Esteban P Rópolo at Baker & McKenzie SC by telephone (+54 11 4310 2200), fax (+54 11 4310 2299) or email ([email protected]).