DECREE NO. 5,937, OF October 19, 2006.

Disposes on the execution of the Fifty Seventh Additional Protocol to the Economic Supplementation Agreement no 18, among the Governments of the Federative Republic of Brazil, the Argentine Republic, the Republic of Paraguay and the Eastern Republic of Uruguay, of March 28, 2006.

THE PRESIDENT OF THE REPUBLIC, in the use of the assignment that gives it the art. 84, inciso IV, of the Constitution, and

Whereas the Treaty of Montevideo of 1980, which created the Latin American Integration Association (ALADI), firmed by Brazil on August 12, 1980, and approved by the National Congress, through the Legislative Decree no 66, of November 16, 1981, provides for the modality of Complementation Agreement Economic;

Considering that the Plenipotentiaries of the Federative Republic of Brazil, of the Argentine Republic, the Republic of Paraguay and the Eastern Republic of Uruguay, on the basis of the Treaty of Montevideo of 1980, signed, in Montevideo on November 29, 1991, the Economic Supplementation Agreement no 18, between the Governments of the Republic Federative of Brazil, the Argentine Republic, the Republic of Paraguay and the Eastern Republic of Uruguay, incorporated into Brazilian domestic law by the Decree no 550, of May 27, 1992;

Whereas the Plenipotentiaries of the Federative Republic of Brazil, of the Argentine Republic, of the Republic of Paraguay and the Eastern Republic of Uruguay, on the basis of the Treaty of Montevideo of 1980, signed, in Montevideo, on March 28, 2006, the Fifty Seventh Additional Protocol to the Economic Supplementation Agreement no 18, among the Governments of the Federative Republic of Brazil, the Argentine Republic, the Republic of Paraguay and the Eastern Republic of Uruguay;

DECRETA:

Art. 1st The Qüinquagumth Seventh Additional Protocol to the Economic Supplementation Agreement no 18, between the Governments of the Federative Republic of Brazil, the Argentine Republic, the Republic of Paraguay and the Eastern Republic of Uruguay, apensed by copy to the present Decree, will executed and fulfilled as entirely as in it contains.

Art. 2nd Decree comes into force on the date of its publication.

Brasilia, October 19, 2006; 185th of the Independence and 118th of the Republic.

LUIZ INÁCIO LULA DA SILVA

Celso Luiz Nunes Amorim

This text does not replace the one published in the DOU of 10/20/2006

ECONOMICAL SUPPLEMENTATION AGREEMENT No 18

CELEBRATED AMONG ARGENTINA, BRAZIL,

THE PARAGUAY AND THE URUGUAY

Sequentieth Seventh Additional Protocol

The Plenipotentiaries of the Argentine Republic, of the Federative Republic of Brazil, of the Republic of Paraguay and the Eastern Republic of Uruguay, accredited by their respective Governments, second powers heard in good and due form, deposited opportunely in the General Secretariat of the Latin American Integration Association (ALADI).

TAKING INTO ACCOUNT the Eighteenth Additional Protocol to the Economic Supplementation Agreement No 18 and the GMC Resolution No 43/03,

CONVVE IN:

Article 1º-Incorporating to the Economic Supplementation Agreement No 18 a Decision No 03/05 of the Common Market Council on the " Regime for the integration of productive processes in several States Parties to MERCOSUR with use of non-originating materials ", which is listed as Annex and integrates the present Protocol.

Article 2º-This Protocol will enter into force 30 days after the notification of the General Secretariat of the ALADI to the signatory countries of which it received the communication from the Registry of the MERCOSUR, informing the incorporation of the MERCOSUR standard and its corresponding Additional Protocol to the legal ordinances of the four States Parties to MERCOSUR.

The General Secretariat of ALADI should make such notification, if possible, on the same day it receives the communication from the MERCOSUR Registry.

The General Secretariat of ALADI will be depositary of this Protocol, of which it will send duly authenticated copies to the Governments of the signatory countries and the Registry of MERCOSUR.

IN FÉ THAN, THE RESPECTIVE Plenipotentiaries sign this Protocol in the city of Montevideo, at the twenty-eight days of the month of March of the year two thousand and six, in an original in the Portuguese and Spanish languages, being both texts being equally valid. (a.:) By the Government of the Argentine Republic: Juan Carlos Olima; By the Government of the Federative Republic of Brazil: Bernardo Pericás Neto; By the Government of the Republic of Paraguay: Juan Carlos Ramírez Montalbetti; By the Government of the Eastern Republic of the Uruguay: Gonzalo Rodríguez Gigena.

MERCOSUR / cmc/dec. In the 03/05

REGIME FOR THE INTEGRATION OF PROCESSES

PRODUCTIVE IN SEVERAL STATES PARTS

DO MERCOSUR WITH USE OF MATERIALS

DO NOT ORIGINATING

HAVING IN VISTA: The Treaty of Assumption, the Ouro Preto Protocol, Decisions No 26/03 and 02/04 of the Common Market Council,

XX_ENCODE_CASE_One CONSIDERING:

That it is necessary to proceed to full instrumentation of the prevailing mechanisms within the framework of MERCOSUR, with the aim of facilitating industrial complementation processes.

That realizing these processes of industrial complementation is a key factor for the generation of a productive thread that overcomes national borders and strengthens the community of interests.

Which for the deepening of MERCOSUR is necessary the implementation of instruments that tote smaller associates the opportunity to participate in productive processes of large economic wingspan in MERCOSUR.

THE COUNCIL OF THE COMMON MARKET

DECIDE:

Art. 1-Create a regime that allows for the integration of productive processes carried out in distinct States Parties with the use of materials originating in third countries. The goods benefited by this scheme could be destined for the internal market of the State Party where the productive process was completed, exported to another State Part of MERCOSUR or exported to extrazone.

Art. 2-Companies wishing to use the benefits of this scheme should submit a project to the competent authority of the corresponding State Party, which, within a period of twenty (20) days, will analyse it and evaluate it. This authority will send copy of the project and the result of the analysis and evaluation to the National Coordination of CCM of your country, which should forward, within five (5) working days, additional copies to the competent authorities of the remaining states Parties, through each National Coordination of CCM.

The project should contain the following information:

-the identification of the companies of each State Party, which will participate in the integrated productive process;

-the breakdown of the productive processes that are predicted carry out in each State Party;

-the total times foreseen for the finalization of all productive steps involved;

-the detailing of the inputs used and their corresponding participation in the calculation of regional content;

-the requirement of origin beholdout for the final product.

The integration of productive processes in MERCOSUR regarding products under sanitary control must also meet the specific requirements set out in own normatives on the subject.

Art. 3-Fulfilled the time frame of five (5) working days set out in the 2nd article, the Project will be incorporated for its treatment on the agenda of the next CCM Ordinary Meeting, always and when it has been received ten (10) working days prior to such a meeting, to your analysis and determination of the tariff preference that will be granted to the intermediate goods. The CCM is expected to express itself on the projects at the latest at the following meeting that have been submitted. The projects will be approved through a Guideline of the MERCOSUR Trade Commission.

Art. 4-A tariff preference mentioned in Article 3rd will be applied to the intermediate products used in the last step of integrated production, and should be established in such a way as to contemplate the tariff reduction of aggregated inputs and values regional, without allowing, with this, a less onerous taxation than that applicable to non-originating inputs used in the integrated productive process having as basis the tariff effectively applied in the last State Party.

For such effects will apply the following formula:

	? TMI-? TIEZ? * ø?
PREF=	? = 1	* 100
	TMI

TMI: Fee of intermediate merchandise in the last-step EP

TIEZ?: Fee of the extra-zone insumo-one-tieth in last-step EP

Ø?: Participation of the extra-zone insumo in the value of intermediate merchandise that joins the last-step EP

Art. 5-A CCM will incorporate its permanent activities the determination of the tariff preference of which it treats the 4th article, as well as the monitoring of the present Regime with views to its enhancement.

Art. 6-In each State Party involved in the approved integrated process, the operations will be able to apply for the use of materials originating in MERCOSUR or extrazone to be incorporated into the goods subject to the integration of productive processes.

The goods proceeded from MERCOSUR or extrazone, inclusive of intermediate ones, joining the amparo of this scheme in the States Parties where the initial or intermediate stages of the integrated productive process occur, will be considered in the form of a temporary admission linked to further export.

Intermediate goods will enter the territory of the State Party where the last step of the integrated productive process, upon payment of the tariff effectively applied in the latter State Party, once the tariff preference set out in the terms of Article 4th of this standard is applied.

The output of the goods in productive integration process from a State Party to the following will be done in the form of a definitive export for consumption, which will entail the application of the totality of the standards governing such operations in each State Party.

Art. 7-A The movement between the States Parties of the goods understood in the intermediate steps of the integrated process shall be accompanied by a producer / exporter statement, containing the information required for the certification of origin of the merchandise obtained through the accumulation of productive chains, in particular, those related to the value aggregation in the step carried out in the corresponding State Party, as well as of the indication of the CCM Guideline that approved the granting of the Regime.

Art. 8-Companies benefitted by the present regime assume the responsibilities for fulfilling their obligations derived from the project, and shall maintain a file of the documents allowing to substantiate the realization of the steps of the productive process integrated, as well as the commercial operations that will justify the granting of the scheme, by the time limit of five (5) years.

Art. 9-A In order to establish whether a commodity originates in the amparo of this regime, it should be considered that the totality of the steps of the integrated productive process, carried out in the territory of one or more States Parties, takes place in the territory of the latter State Party involved in the process.

The final products drawn up under this scheme could be exported to the amparo of a Certificate of Origin of MERCOSUR, issued by the State Party where the last step of the productive process has been completed.

Art. 10-Those cases where doubts are present about the fulfilment of the MERCOSUR origin requirements, the State Party of import will be able to use the verification and control procedures set out in the CMC Decision No 01/04, questioning the State Part where the last step of the integrated productive process has been carried out.

Art. 11-The non-compliance of the terms and conditions set forth in the approved project shall give way, in each State Party, to the implementation of the measures laid down in the customs legislation of each State Party involved.

Additionally, the competent authority of each State Party shall cancel the authorization which makes it possible to make use of the present regime and will disable the / s involving / s involved in the project to reap the benefits of this scheme by the five year term.

Art.12-The competent authority that applies the disabilitancy to which reference is made in the second paragraph of Article 11 should notify this circumstance, within the five (5) working days after disabling, to the competent authorities of the other States Parties involved in the project and the National Section of the CCM of its own State Part.

This National Section is expected to present the corresponding information at the following meeting of the CCM. Such information is to be incorporated into the Foreign Trade Database when it is in operation.

Art. 13-The competent authorities of each State Party for the application of this Regime, are:

Argentina: Secretaría de Industria, Comercio y de la PYME

Brazil: Ministry of Development, Industry and Commerce (MDIC)

Paraguay: Ministerio de Industria y Comercio

Uruguay: Ministerio de Industria, Energía y Minería

Art. 14-Request the States Parties to instruct their respective Representations to the Latin American Integration Association (ALADI), to protocol this Decision in the framework of the Economic Supplementation Agreement No 18, pursuant to established in the GMC Resolution No 43/03.

Art. 15-States Parties shall incorporate this Decision to their national legal ordinances prior to 01 /I/2006.

XXVIII CMC-Assumption, 19 /VI/05