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More private investment needed to diversify the economy
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This second Trade Policy Review of Venezuela has contributed
considerably to a better understanding of Venezuela's trade and
investment policies, and the context within which they have been
formulated and implemented. The full and admirable engagement of the
strong Venezuelan delegation, headed by Minister Rosales, and the
active involvement of many Members, the comprehensive replies and
comments have allowed us to achieve this understanding, shedding light
on the many revisions made to Venezuela's institutional and legal
framework since its first Review in 1996.
Members
recognized that Venezuela was going through a period of momentous
economic, political and social changes. These were reflected in a
number of legislative and institutional reforms, some of which had
encountered strong opposition.
Members
welcomed Venezuela's commitment to further strengthening the
multilateral trading system, but several observed that Venezuela has
yet to fulfil various notification obligations concerning technical
regulations, SPS and, perhaps, incentive programmes. Venezuela was
invited to fill those notifications in the near future, with the aid
of the WTO Secretariat if necessary and, thus, enhance the
transparency of its trade regime.
Venezuela's
economic performance has fluctuated considerably since 1996. After a
period of moderate economic growth in 2000 and 2001, Venezuela entered
into a recession in 2002. Members attributed this in part to a high
and growing reliance on the petroleum sector, which had left the
economy vulnerable to developments in the world oil market. This
reliance has also resulted in a narrow export base, eroded the
competitiveness of the non-oil sector, and discouraged a deeper
integration in the world economy. Members considered that Venezuela's
adoption of a floating exchange rate regime would help address its
structural problems, and encouraged Venezuela's ongoing efforts to
diversify its export markets and products.
Venezuela
is strengthening and modernizing its competition policy legislation.
Members praised Venezuela for the liberalization of its investment
regime and the adoption of a new foreign investment law since its last
Review. These represent important steps to increase private
investment, particularly in view of Venezuela's historically low
investment to GDP ratio. In this context, some Members requested
Venezuela to consider taking further steps to make its institutional
and legal framework more predictable, including by locking-in recent
liberalization initiatives under multilateral rules.
Venezuela
was commended for having simplified its customs procedures and taking
measures to implement the Customs Valuation Agreement. All tariffs are
bound but there is a relatively wide gap between applied and bound
tariffs. In this respect, Venezuela was invited to participate
actively in the non-agricultural market access negotiations under the
Doha Development Agenda with a view to lowering bound tariffs, and
thus increase predictability. Members noted that the Andean Price Band
System applied by Venezuela was an element of uncertainty facing
exporters, and asked questions about its WTO consistency. Also
questioned was the apparent different application of the value-added
tax to domestic and foreign products.
Members
expressed concern with respect to Venezuela's increased use of
non-tariff measures. The import licensing regime came under
particularly close scrutiny, especially with respect to its
transparency and the scope for discretion in its use. Related concerns
were raised about SPS permits. Several queries related to new
labelling requirement for footwear and textiles. Members also noted
the increase in the number of anti-dumping and countervailing
measures, and asked about certain provisions in Venezuela's new
Safeguards Law.
A
number of Members requested further information with respect to
Venezuela's incentives regime. In the area of intellectual property,
questions were raised with respect to the ratification of some WIPO
Treaties and Venezuela was encouraged to step up its enforcement
efforts. The legal framework governing government procurement,
including the preferences granted to domestic suppliers attracted much
interest, and some Members encouraged Venezuela to accede to the
plurilateral Agreement on Government Procurement.
Members
also sought further clarification on a number of specific areas,
including:
- monetary
and fiscal policy, the exchange rate regime and inflation;
- the
foreign investment regime, remaining related restrictions, and
legal stability contracts;
- tariff
exemptions and tariff quotas;
- intellectual
property rights, parallel imports and compulsory licensing.
With
respect to sectoral policies, Members noted that there was scope for
further liberalization in agriculture, as witnessed by high tariff
rates, the use of variable levies and import permits. They also took
note of the importance Venezuela grants to developing the agricultural
sector, as part of its efforts to improve living standards and
diversify its economy.
Members
clearly welcomed the liberalization of several key service activities
over the last six years, which had resulted in increased foreign
presence in areas such as banking and telecommunications. Venezuela
was encouraged to make further liberalization commitments in the
ongoing WTO negotiations, corresponding to its current regime and
beyond. As well, Members requested information on:
- restrictions
and incentives in the energy sector, and its further opening;
- assistance
to motor vehicle production, including the Family Car Programme;
- electricity
and maritime transport.
The
delegation of Venezuela provided written and oral answers to the
questions posed during the Review and undertook to send further
responses within 30 days. The replies provided have made a major
contribution to this meeting, and were clearly appreciated by Members.
This
brings us to the conclusion of our second Review of Venezuela. This
Review is taking place at a difficult time for Venezuela, but I have
the conviction that it will meet the challenge, building on its
natural wealth, human capital and a clear resolve to persevere in the
path of economic modernization and liberalization. In this respect, I
am heartened by Venezuela's conviction that full integration in the
world economy is a priority in its strategy to achieve a higher
standard of living for its people. I am further encouraged by
Venezuela's renewed pledge to meet its international commitments.
Rigorous compliance with the rule of law, at all levels, does indeed
offer Venezuela reliable markers to guide it out of the current
difficulties. Thus, in order to strengthen further the multilateral
trading system, I urge Venezuela to continue participating actively in
the Doha Development Agenda, and to use this process to inject greater
predictability to its own trade and investment regime.
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