RESTRICTED
WORLD TRADE WT/L/132
20February 1996
ORGANIZATION(96-0631)
Original: English
NOTIFICATION INPURSUANCE OFPARAGRAPH 3OFTHE UNDERSTANDING
REGARDING NOTIFICATION, CONSULTATION, DISPUTE SETTLEMENT
AND SURVEILLANCE AND THE DECISION ONNOTIFICATION
PROCEDURES ANNEXED TOTHE FINAL ACT EMBODYING
THE RESULTS OFTHE URUGUAY ROUND OF
MULTILATERAL TRADE NEGOTIATIONS
Thefollowing communication, dated 31January 1996, hasbeenreceived fromthePermanent
Mission ofBrazil forcirculation toWTO Members.
_______________
AsIindicated inmystatement totheCouncil forTrade inGoods on29January 1996, after
negotiations within MERCOSUL, theBrazilian Government senttoCongress Provisional Measure
N1,235 dated December 14,1995 thatdeals withtheautomotive sector. TheProvisional Measure
wasregulated byDecree N1,761, published intheofficial gazette on27December 1995.
Incompliance withthegeneral obligation tonotify contained intheDecision onNotification
Procedures, Iamenclosing herewith anunofficial English translation ofthepertinent legislation for
circulation among WTO Members.
Brazil isaware oftheimplications ofthatlegislation toitsWTO obligations andhasexpressed
itsreadinesstomaintaininformalconsultationswithinterestedtradingpartnersonthebestwaytocomply
withthem. Tothatend,Brazil intends tosubmit arequest ofwaiver asforeseen inArticle IX:3of
theMarrakesh Agreement establishing theWorld Trade Organization.WT/L/132
Page2
PROVISIONAL MEASURE N.1,235 OFDECEMBER 14,1995
Reduces import duties onspecified
products andprovides forother
measures
THE VICE-PRESIDENT OFTHE REPUBLIC ,inhiscapacity ofacting President oftheRepublic
andintheexercise ofthepowers conferred upon himbyArticle 62oftheConstitution, adopts the
following Provisional Measure which shallhavetheforce oflaw:
Article 1.There maybegranted, under theconditions toberegulated, with validity through
December 31,1999:
I-aninety percent reduction intheimport dutyonnewmachines, equipment, including testing
equipment, toolsets,molds andmodels formolds, industrial andquality control instruments and
apparatus, aswellastheirrespective accessories, spare andreplacement parts;
II-areduction ofasmuch asninety percent oftheimport dutyonrawmaterials, parts, pieces,
components, setsandsubsets, finished andsemi-finished, andpneumatic tires;
III-areduction ofasmuch asfiftypercent oftheimport duties onproducts listed inlines"a"and
"c"ofParagraph 1ofthisArticle.
Paragraph 1.Theprovisions ofitems IandIIareapplicable exclusively toassembling companies and
manufacturers of:
a) passengers andmixed-use vehicles andjeeps.
b) station wagons, vans, pickup trucks andvehicles forthetransportation ofgoods having
amaximum loading capacity offourtons.
c) vehicles forthetransportation ofgoods having aloading capacity equal toorsuperior
tofourtons,vehiclesforthetransportationoftwentypersonsormoreandtruck-tractors.
d) agricultural tractors andharvesting machines.
e) tractors, road-building andexcavation machines andforklifts.
f) bodies forautomotive vehicles ingeneral.
g) trailers andsemi-trailers usedforthetransportation ofmerchandise and
h) partsandcomponents, setsandsubsets, andpneumatic tires,tobeusedfortheproducts
listed inthepreceding lines.
Paragraph 2.Theprovisions ofitemIIIareapplicable solely todomestic companies thatassemble or
manufacture theproducts referred totherein.
Paragraph 3.Theapplication ofthereduction referred toinitems IandIIcannot result inaimport
dutypayment lower thantwopercent.
Paragraph 4.Theapplication ofthereduction referred toinitems IIIofthisArticle cannot result in
payment ofaimport duties lower thantheCommon External Tariff.
Paragraph 5.Theproducts dealtwithinitems IandIImustbepartofthefixed assets orbeusedin
thecompany 'sproductive process, resale notpermitted, except incases andunder conditions setforth
intheregulation.
Paragraph 6.Theprovisions ofArticles 17and18doDecree-Law N.37 of18November, 1966 are
notapplicable toproducts imported under theterms ofthisArticle.
Paragraph 7.Theprovisions ofArticle 11ofDecree-Law N.37of1966 arenotapplicable tothe
products imported under theterms ofthisArticle.WT/L/132
Page3
Article 2.TheExecutive Branch mayestablish theratiobetween:
I-thetotalFOB value oftheimports ofrawmaterial andproducts listed inlines "a"and"h"of
Paragraph 1ofthepreceding Article, arriving from andoriginating from acountry member ofthe
MERCOSUL, inaddition tothose imports made under theconditions setforth initemIIandIIIof
thepreceding Article, andthetotalvalue ofthenetexports made, inaperiod tobedetermined, by
company.
II-thevalue ofpurchase ofproducts listed initems Iofthepreceding Article, manufactured inBrazil,
andthetotalFOB value oftheimports ofthesame products, made intheconditions setforth, ina
period tobedetermined, bycompany.
III-thetotalvalue ofpurchase orrawmaterials, produced inBrazil, andthetotalFOBvalue ofthe
imports ofrawmaterials made under theconditions setforth initemIIofthepreceding Article, in
aperiod tobedetermined ,bycompany; and
IV-thetotalFOBvalue oftheimports oftheproducts listed inline"h"ofParagraph 1ofthepreceding
Article, made under theconditions setforthinitemIIofArticle 1andthevalue ofnetexports effected,
inaperiod tobedetermined, bycompany.
Paragraph 1.Toavoid theconcentration ofimports thatareprejudicial todomestic production, the
Ministry ofIndustry, Commerce andTourism mayestablish additional limits totheimports ofproducts
listed initemIandIIofthepreceding Article, under theconditions setforth inthesame item.
Paragraph 2.Itisunderstood asnetexport theFOBvalue ofexports ofproducts listed inParagraph 1
ofthepreceding Article, made inconvertible currency, afterthededuction of:
a)theFOBvalue oftheimports made under the"draw back" regime and
b)thevalue ofthecommission paidorcredited toanagent orrepresentative abroad.
Paragraph 3.Exports made indomestic currency arenottobeconsidered inthecalculation ofnetexports
referred tointhisArticle.
Paragraph4.ForcompaniesthatcometoestablishthemselvesinBrazil,fornewandcompleteproduction
linesthatresult inanincrease totheinstalled capacity andforthenewplants ofcompanies already
established inBrazil, asdefined intheregulations, aperiod -torunfromthedateofthefirstcustoms
clearance ofproducts listed initemIIandIIIofArticle 1-maybeestablished fortheattainment of
theratios referred tointhisArticle.
Article 3.Forthepurposes ofArticles 2and4,afterdeduction oftheamount ofcommission paidor
credited toagents orrepresentatives abroad, there shallbecomputed intheexports:
I-sales totrading companies, including those established under theterms ofDecree Law1,248 of
29November 1972, atthevalue invoiced bythemanufacturer tothetrading company and;
II-exports made through wholly-owned subsidiaries.
Paragraph 4.Under theconditions tobesetforth intheregulations, there shallbecomputed asnet
exports theamounts corresponding to:
I-theexport FOBvalue products oftheexporter 'sownmanufacture, listed inlines"a"and"h"of
Paragraph 1ofArticle 1;
II-themachines, equipment, including testing equipment, tools, molds andmodels formolding,
instruments andindustrial andquality control apparatus, accessories, spare andreplacement parts,
manufactured inBrazil andincorporated tothefixed assets ofthecompanies, and
III-thetotalimport FOB value ofnewtools, aswellasaccessories, spare andreplacement parts,
incorporated tothefixed assets ofcompanies.WT/L/132
Page4
Article 5.Theamounts inUSdollars, converted attheaverage exchange ratesforpurchase onthe
freeratessegment, aspublished bytheCentral Bank ofBrazil atthedateoftheinvoice, shallbetaken
intoconsideration forpurposes oftheprovisions contained inthisProvisional Measure.
Article 6.Thecompanies thatmanufacture theproducts listed inline"h"ofParagraph 1ofArticle 1,
thatexport theproducts listed therein tothecontrolling orassociated companies ortomanufacturers
established inBrazil ofproducts listed inlines"a"and"g"ofParagraph 1ofthesame Article may
transfer tothem thevalue ofnetexports relative tothose products, provided thattheexports were
brokered bytheassembling company.
Article 7.TheExecutive Branch shallestablish annual average nationalization indices resulting from
international commitments made byBrazil totheassembling companies andmanufacturers ofproducts
listed inlines"a"and"h"ofParagraph 1inwhose production imported inputs, listed initems IIof
thesame Article, were used.
Soleparagraph. Thecompanies thatcome toestablish themselves inBrazil, thenewandcomplete
production linesthatresult inanincrease ininstalled capacity andthenewfactories ofcompanies already
established inBrazil, asdefined intheregulations, mustmeettheindex referred tointhisArticle in
three years starting fromthedateofthebeginning ofproduction ofthereferred products asprovided
intheregulations.
Article 8.Theintra-MERCOSUL tradeofproducts listed inArticle 1shallfollow thespecific applicable
rules.
Article 9.Theprovisions ofthepreceding Articles apply onlytocompanies thathavesigned special
export commitments under theterms ofDecree-laws N.1,219 of15May 1972 and2,433 of
19May1988, aftertheMinistry ofIndustry, Commerce andTourism, inaccordance withtherelevant
legislation, hasdeclared theendoftherespective commitments.
Article 10.Import authorization forandcustoms clearance ofproducts listed inlines"a","c"and"g"
ofParagraph 1ofArticle 1areconditional uponthepresentation ofthefollowing documents, without
prejudice toother legalandregulatory requirements:
I-Certificate ofcompliance withthenational traffic legislation.
II-Certificate ofcompliance with theenvironmental rules contained inLaw N.8,723 of
October 29,1993.
Paragraph 1.Thecertificates ofcompliance dealtwithinitemIandIIshallbeissued inaccordance
tonorms issued bytheNational Traffic Council (CONTRAN) andtheNational Environment Council
(CONAMA).
Paragraph 2.Adaptations necessary toobtain certificates shallbemade atthepoint oforigin.
Paragraph 3.Without prejudice tothepresentation ofthecertificate dealt withinitems I,evidence
ofeachvehicle'scompliancewiththenationaltrafficlegislationshallbepresentedbythetimeofregistry,
supply ofplateandlicensing.
Article 11.TheExecutive Branch shallestablish thequalification requirements forthetreatment referred
toinpreceding Articles, aswellasforthecontrol mechanisms necessary totheverification ofthefaithful
execution oftheprovisions ofthisProvisional Measure.
Paragraph 1.Therecognition oftheimport duties reduction provided forinArticle 1shallbeconditional
upon thepresentation ofthequalification referred tointhechapeau ofthisArticle.
Paragraph 2.Until thisProvisional Measure isregulated, theMinistry ofIndustry, Commerce and
Tourism mayauthorize theimports oftheproducts listed initems IofArticle 1withninety percent
import duties reduction bycompanies referred toinParagraph 1ofthesame Article.WT/L/132
Page5
Paragraph 3.Theauthorization referred tointhepreceding Paragraph shall beequivalent tothe
fulfillment ofthequalification requirement forpurposes ofrecognition oftheimport duties reduction.
Article 12.Thecompanies taxed onthebasis ofactual profit maypromote accelerated depreciation,
inanamount corresponding tothenormal depreciation andwithout prejudice thereto, ofthepurchase
ormanufacture costofnewmachines, equipment, apparatus andinstruments listed intheAnnex to
LawN.9,000 of16March 1995 andpurchased between thedateofpublication ofthisProvisional
Measure and31December 1997, usedinthepurchaser 'sindustrial process.
Paragraph 1.Theaccelerated depreciation portion shallconstitute anexclusion fromthenetprofit and
shallberecorded intheactual profit ledger.
Paragraph 2.Theaccumulated depreciation mayexceed thepurchase costofthegood, converted in
UFIR (Fiscal Reference Units) quantity, pursuant tothepertinent legislation.
Paragraph 3.Beginning inthemonth inwhich thelimitreferred tointhepreceding Paragraph isreached,
thenormal depreciation, recorded inaccounting books, mustbeadded tothenetprofit todetermine
theactual profit.
Paragraph 4.Theprovisions ofthisArticle areapplicable tothegoods referred totherein, object lease
agreements.
Article13.Thenon-compliancewiththeprovisionsaboutratios,limitsandindicessetforthinaccordance
withArticles 2and7shallsubject thecompany tofinesof
I-seventy percent oftheFOBvalue oftheimports made under theconditions setforth initems Iof
Article 1thatexceed theratioreferred toinitems IIofArticle 2.
II-seventy percent applied totheFOB value oftheimports made under theconditions setforth in
items IofArticle 1thatexceed theadditional limits referred toinParagraph 1ofArticle 2;
III-sixtypercent applied totheFOBvalue oftheimports ofrawmaterials made under theconditions
setforth initems IIofArticle 1thatexceed theratioreferred toinitems IIIofArticle 2;
IV-sixtypercent applied totheFOBvalue ofimports made under theconditions setforthinitems II
ofArticle 1thatexceed theadditional limits referred toinParagraph 1ofArticle 2;
V-seventy percent applied totheFOBvalue oftheimports made under theconditions setforth in
itemIIofArticle 1thatcontribute tothenon-compliance withtheindex referred tointhechapeau
ofArticle 7;
VI-120% oftheFOBvalue oftheimports made under theconditions setforth initemIIandIIIof
Article 1thatexceed theratioreferred toinitems IofArticle 2;
VII-seventy percent oftheFOB value oftheimports ofproducts listed inline"h"ofParagraph 1
ofArticle 1made under theconditions setforthinitems IIofArticle 1thatexceed theratioreferred
toinitems IVofArticle 2.
Article 14.Thetaxtreatment provided forinthisProvisional Measure
I-shallbeconditional upon proof bythetaxpayer ofregularity ofpayment ofallfederal taxes and
contributions;
II-maynotbeenjoyed incombination withothers ofthesame nature.
Article 15.TheExecutive Branch, within ninety days, shallsendtotheNational Congress abillfor
thepurposes provided forinArticles 56and57ofLawN.8,931 of22September 1994.
Article 16.Theactspractised onthebasis ofProvisional Measure 1,200 of24November 1995 are
hereby validated.WT/L/132
Page6
Article 17.ThisProvisional Measure shallenter intoforce onthedateofitspublication.
Article 18.Provisional Measure N.1,200 of24November 1995 isrevoked.
Brasilia, 14December 1995, 174thoftheIndependence and107oftheRepublic.
MARCO ANTONIO DEOLIVEIRA MACIEL
Pedro Malan
JoséSerra
JoséFrederico AlvaresWT/L/132
Page7
DECREE No.1,761 OF26DECEMBER 1995
Itprovides forreduction ofimport
duties onproducts thatitspecifies and
contains other provisions
THE PRESIDENT OFTHE REPUBLIC ,intheexercise oftheauthority conferred upon himby
Article 84,item IV,oftheConstitution,
DECREES
Chapter I
DEFINITIONS
Article 1.Forpurposes ofthisDecree, there shall beconsidered:
I-"Capital Goods": new machines, equipment, including testing equipment, tools, molds and
models formolding, industrial andquality control instruments andapparatus, aswell asthe
respective accessories, spare andreplacement parts, incorporated tothefixed assets;
II-"Inputs": rawmaterial, parts, pieces, components, setsandsubsets, finished andsemi-finished,
andpneumatic tires;
III-"Vehicles forTransportation": passengers andmixed usevehicles, jeeps, station wagons, vans,
pickup trucks andvehicles fortransportation ofmerchandises ofanyloading capacity, vehicles for
transportation oftwenty persons ormore, andtruck-tractors.
IV-"Beneficiaries", assembling companies andmanufacturers of:
a) passengers andmixed usevehicles andjeeps;
b) station wagons, vans, pickup trucks andvehicles forthetransportation of
merchandise having amaximum loading capacity offour tons;
c) vehicles forthetransportation ofmerchandise having aloading capacity equal or
superior tofour tons, vehicles forthetransportation oftwenty persons ormore, and
truck-tractors;
d) agricultural tractors andharvesting machines;
e) tractors, road-building andexcavation machines andforklift trucks;
f) bodies formotor vehicles ingeneral;
g) trailers andsemi-trailers used forthetransportation ofmerchandise;
h) parts, pieces, components, setsandsubsets, finished andunfinished, andpneumatic
tires, tobeused inproducts listed intheprevious lines;
V-"Auto parts": products listed inline"h"oftheprevious item;
VI-"Vehicle assemblers": companies thatassemble ormanufacture theproducts listed inlines "a"
and"c"ofitem IV;
VII-"Direct exports": sales totrading companies, including those incorporated under theterms of
Decree-law No.1,248 of29November 172, andtheexports made through wholly-owned
subsidiaries;
VIII -"Additional exports": taken intoconsideration the"Ceiling", thevalue corresponding to:
a)twenty percent oftheFOB value oftheexports ofproducts listed inlines "a"to"h"of
item IV,ofitsown manufacture:WT/L/132
Page8
b)onehundred percent in1996 and1997, 95% in1998 andseventy percent in1999 ofthe
FOB value oftheimports ofnew tools, aswell astheir accessories, spare andreplacement
parts, recorded asfixed assets;
c)140% in1996, 120% in1997, 95% in1998 andseventy percent in1999, ofthe
purchases of"Capital Goods" manufactured inBrazil;
IX-"Ceiling"": themaximum limit thatthevalues relative tolines "b"and"c"oftheprevious
item canreach, asawhole, inorder tobeconsidered "Additional Exports" andwhich corresponds
to37% ofthe"Net exports", made ineach calendar year, after thededuction of"Additional
Exports" andtaken intoconsideration thedifference between thevalue corresponding tothe
"Ceiling" andthevalue of"Additional Exports" carried over tosubsequent years, without prejudice
totheconsideration ofthe"Ceiling", ineach calendar year;
X-"Net Exports": FOB value oftheexports ofproducts listed inlines "a"and"h"ofitem IV,
added tothe"Indirect Exports" andthe"Additional Exports", after thededuction of:
a) theFOB value oftheimports made under the"drawback" regime;
b) thevalue ofthecommission paid orcredited totheagent orrepresentative abroad;
c) theexports paid innational currency.
XI-"Average Nationalization Index": ratio ofthepurchase value of"Inputs" produced inBrazil
tothetotal purchase value of"Inputs", netoftaxes, used intheoverall production pereach
"Beneficiary", ineach calendar year;
XII-"Newcomers":
a)"Beneficiaries" thatcome toestablish themselves inBrazil;
b)new andcomplete production lines, additional totheexistent ones, thatentail anincrease to
theinstalled capacity ofthe"Beneficiaries", hereby defined asthose thatintroduce inBrazil
anew model oftheproduct listed inlines "a"and"e"ofitem IV,oranew family of
models, with investments inacomplete setoftools forthemaking ofanew body;
c)new plants ofthe"Beneficiaries";
XIII -"Direct Imports": purchases made abroad bythe"Assemblers ofVehicles" themselves;
XIV -"Indirect Imports": purchase made inaccordance with theinstructions issued together bythe
Ministers ofFinances andIndustry, Commerce andTourism, through trading companies, including
those incorporated under theterms ofDecree-Law N.1,248, of1972.
Chapter II
QUALIFICATION
Article 2.Thebenefit oftheimport duty reduction dealt with intheDecree depends on
qualification.
Paragraph 1.Only thecompany thathaspresented proof ofregularity inthepayment ofallfederal
taxes andsocial contributions may qualify.
Paragraph 2.Thecompanies thatmanufacture "Auto parts" canqualify totheimport duty
reduction dealt with inthisDecree provided thatthey present proof thatmore than fifty percent of
their respective annual netinvoicing derives from thesaleofproducts destined totheassembling
ormanufacture ofproducts listed inlines "a"and"h"ofitem IVofArticle 1ortothe"Auto parts"
replacement market.
Paragraph 3.TheMinisters ofFinance andIndustry, Commerce andTourism shall establish, ina
single act,thenorms andprocedures forthequalification referred tointhechapeau ofthisArticle.WT/L/132
Page9
Chapter III
IMPORT DUTY REDUCTIONS
Article 3.Ifthey follow theprovisions oftheprevious Article, the"Beneficiaries" may import,
until 31December 1999:
I-"Capital Goods", with aninety percent import duty reduction; and
II-"Inputs", with aimport duty reduction of:
a) 85% in1996;
b) seventy percent in1997;
c) 55% in1998;
d) forty percent in1999.
Sole paragraph. Thereduction provided forinthisArticle shall notresult inpayment ofanimport
duty lower than thatthatitwould bedueincase atwopercent advalorem ratewere applied.
Article 4.The"Vehicle Assemblers" may carry out"Direct orIndirect Imports", until
31December 1999 of"Transportation Vehicles" with afifty percent import duty reduction.
Sole paragraph. Thereduction provided forinthisArticle shall notresult inpayment ofimport
duty inanvalue lower than thatitwould bedueifthecorresponding import duty included inthe
Common External Import duty were applied.
Chapter IV
RATIOS AND LIMITS
Article 5.Theratio between thepurchases of"Capital Goods" manufactured inBrazil andthe
imports of"Capital Goods" with aimport duty reduction must be,asaminimum, percalendar
year, oneandoneuntil 31December 1997 andoneandoneandahalfbeginning January 1,1998.
Sole paragraph. Theratio referred tointhechapeau ofthisArticle canbealtered byanagreement
between theentities thatrepresent theBrazilian industry ofcapital goods andtheinterested
company, approved bytheMinistry ofIndustry, Commerce andTourism.
Article 6.Theratio between thepurchases ofrawmaterials produced inBrazil andtheimports of
rawmaterials with import duty reduction must be,asaminimum, percalendar year, one-to-one.
Article 7.Thetotal FOB value oftheimports ofrawmaterials andproducts listed inlines "a"and
"h"ofitem IVofArticle 1,coming from andoriginating from thecountries members of
MERCOSUL, added totheimports of"Inputs" and"Transportation Vehicles" with import duty
reduction, cannot exceed, the"Net Exports", percalendar year.
Sole paragraph. Anupward ordownward variation oftheratio referred tointhechapeau ofthis
Article shall beadmitted until 31December 1998, uptotenpercent forpurposes ofuseor
compensation intheimmediately following calendar year.
Article 8.Thetotal FOB value oftheimports of"Auto parts" with import duty reduction shall not
exceed, percalendar year, twothirds ofthe"Net Exports".
Article 9.Inthecase of"Newcomers", theratios referred toinArticles 5and8shall becalculated
taking asabasis aperiod ofthree years, considering asthefirstyear theinterval between thedate
ofthefirstcustoms clearance oftheimports with import duty reduction of"Inputs" ortheWT/L/132
Page10
"Transportation Vehicles" andDecember 31ofthefollowing year, after which thecalendar year
criterion shall beused.
Article 10.The"Average Nationalization Index" shall be,asaminimum, ofsixty percent, ineach
calendar year.
Paragraph 1.The"Inputs" coming from ororiginating from thecountries members ofthe
MERCOSUL, whose values arecompensated byexports, shall bedeemed produced inBrazil for
thepurposes ofthecalculation ofthe"Average Nationalization Index".
Paragraph 2.Theprovisions ofthechapeau ofthisArticle shall berequired solely from the
"Newcomers" after thethird year tobecounted from thedate ofthebeginning oftheproduction of
theproducts listed inlines "a"and"h"ofitem IVofArticle 1.
Article 11.Thecompanies thatmanufactures "Auto parts" andexport tocompanies controlled or
associated toassembling companies ortomanufacturers ofproducts listed inlines "a"and"g"of
item IVofArticle 1,established inBrazil, may transfer tothelatter thevalue of"Net Exports"
relative tothose products, provided thattheexports wasbrokered bytheassembling company or
byanational manufacturer.
Article 12.Inthecase ofconcentration ofimports prejudicial tothenational production orinthe
imminence ofbeing prejudicial, theMinistry ofIndustry, Commerce andTourism may establish
additional limits ontheimports of"Capital Goods" and"Inputs" with import duty reduction.
Chapter V
PENALTIES
Article 13.Thenon-observance oftheprovisions inthisDecree shall subject the"Beneficiaries" to
thepayment offines inthevalue of:
I-seventy percent oftheFOB value oftheimports of"Capital Goods" with import duty reduction,
incase ofnon-observance oftheratios established inArticle 5.
II-seventy percent oftheFOB value oftheimports of"Capital Goods" with import duty
reduction incase ofnon-compliance with theadditional limits established inaccordance with
Article 12;
III-sixty percent oftheFOB value oftheimports ofrawmaterials with import duty reduction in
case ofnon-observance oftheratio established inArticle 6.
IV-sixty percent oftheFOB value oftheimports ofrawmaterials with import duty reduction
thatdoes notcomply with theadditional limits established inaccordance with Article 12.
V-seventy percent oftheFOB value oftheimports of"Inputs" with import duty reduction incase
ofnon- observance ofthe"Average Nationalization Index";
VI-120% oftheFOB value oftheimports of"Inputs" andof"Transportation Vehicles" with
import duty reduction incase ofnon-observance oftheratios established inArticle 7.
VII-seventy percent oftheFOB value oftheimports of"Auto parts" with import duty reduction
incase ofnon-compliance with theratio established inArticle 8.WT/L/132
Page11
Chapter VI
GENERAL PROVISIONS
Article 14.Theimports andpurchase dealt with inthisDecree shall bedeemed tohave been made,
depending onthecase, atthetime of:
I-customs clearance; or
II-theincorporation tothefixed assets ofthe"Beneficiaries".
Article 15.Thevalues inUnited States ofAmerica 'sdollars, shall beconsidered forthepurposes
ofthisDecree asconverted attheaverage exchange forpurchase atthefreeexchange rates
segment, published bytheCentral Bank ofBrazil.
Article 16.Therules oforigin established byDecree N.1,568, of21July 1995 andother pertinent
legislation remain inforce.
Article 17.This Decree shall enter intoforce atthedate ofitspublication.
Brasilia, 26December 1995, 174thoftheIndependence and107thoftheRepublic.
FERNANDO HENRIQUE CARDOSO
Pedro Pullen Parente
JoséFrederico Alvares
JoséSerra