Concluding remarks by the Chairperson

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.