ASUTIL to address ‘restrictive’ Mercosur DF ruling

By Luke Barras-hill |

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Mercosur headquarters in Montevideo, Uruguay. Source: Mercosur.

ASUTIL (Asociación Sudamericana de Tiendas Libres) will devise a plan to tackle the exclusion of key duty free product sales following a resolution permitting land border duty free shops among Mercosur bloc countries.

An agreement to harmonise regulations for border duty free stores to begin operating in countries subscribing to the Southern Common Market regional integration union took place on 16 December.

While ASUTIL welcomes the resolution (Mercosur/GMC/Res. No. 64/18) in principle, it says this was agreed without consulting representatives of the region’s travel retail sector.

As a result, the association is developing a response to a resolution that it views as placing restrictions on ‘basic basket’ purchases.

A Board meeting is due to be coordinated in the coming week to establish a position to put to official entities, according to ASUTIL Secretary General José Luis Donagaray.

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José Luis Donagaray, Secretary General, ASUTIL.

APRIL IMPLEMENTATION

The resolution itself defines merchandise excluded from the land free and tax free stores regime.

This includes tobacco products and cigarettes; fabrics, yarns and footwear (except running shoes and flip-flops); and basic consumer basket items (including animal-based products, vegetable-based products, and warehouse goods).

It also precludes the sale of transportation parts (including oils and fuels); civil construction supplies (including electrical, hydraulic and sanitary materials); tyres; large appliances; and weapons and ammunition.

Speaking to TRBusiness, Donagaray said: “On one side, we are happy we’ve got a Mercosur harmonisation and agreement on the border stores. On the other, we are very worried because there are some restrictions on products to be sold.

“Not only ASUTIL but no association or operator was advised about this or received any sort of consultation. We are going to work to change these restrictions.”

Donagaray admitted that any restrictions, not just on tobacco sales, represent a problem.

“Tobacco, some electronics, leisure, clothes… these are part of the everyday basket. We need to work a lot on this issue to be very clear what is and isn’t affected.

“I’ve been speaking with our Vice President (Enrique Urioste) and President (Gustavo Fagundes) over the last few days and we have a call tomorrow (Monday 7 January) to implement a strategy. We need to (approach this) government by government to be clear.”

MercosurRESOLUTION AT A GLANCE

The Mercosur resolution is due to be incorporated into state parties’ legal systems by 1 April.

It enables them to authorise free shop regimes on their terrestrial borders.

This will be executed ‘in a coordinated manner’ to prevent distorting effects on the region’s economies and shall not erode common external tariffs between state parties.

Quantitative limits on sale volumes and values will be established by each state party to prevent travellers from engaging in re-selling. The list of prohibited products can be expanded based on parties’ interests.

A mechanism to record sales made in the free stores and to exchange information will be implemented by collecting agencies of the state parties. This regime will be reviewed annually.

The Mercosur common market, a South American trade bloc promoting economic regional development, was founded in 1991 through the Treaty of Asunción between Argentina, Brazil, Paraguay and Uruguay.

Mercosur state parties include Argentina, Brazil, Paraguay and Uruguay. Venezuela is currently suspended, while Bolivia is in the process of accession.

Chile, Colombia, Ecuador, Guyana, Peru and Suriname are designated as associated states.

Associated states refer to members of the Latin American Integration Association (ALADI) that engage in free trade agreements with Mercosur and are involved in meetings concerning the common interests of its bodies.

This applies to Chile, Colombia, Ecuador and Peru, with Guyana and Suriname falling under agreements pertaining to Article 25 of the 1980 Treaty of Montevideo.

BRAZIL STORES UPDATE

News of the resolution comes amid further ‘delays’ to Brazil’s land border duty free shop openings.

As reported in November, the first of Brazil’s inaugural border duty free shops were tipped to open by the end of 2018 after the Ministry of Finance’s Receita Federal finally approved legislation for locations in any of the country’s 32 border twin cities.

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The first land border duty free shops at any of Brazil’s 32 twin cities were tipped to open at the end 2018.

A draft bill to legalise duty free stores within the country’s borders was originally permitted in 2012.

ASUTIL’s Donagaray had previously been clear that he did not expect any to open prior to March 2019, however, there was the suggestion some smaller local operators could begin operations before that date as software released had paved the way for permit applications.

A Department of Federal Revenue of Brazil meeting took place in Porte Alegre on 7 December, but Donagaray updates TRBusiness that March remains the realistic timeframe for the initial openings.

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