LATAM: BORDERS
motivation in going places [where you can go] without any restriction.” At the second Summit of the
Americas, delegates will not only be seeking updates on any imminent Brazilian border duty free store openings, but they will also be seeking a progress report on another critical regional issue. In January, news emerged that
ASUTIL was devising a plan to tackle the exclusion of key duty free product sales following a resolution permitting land border duty free sales among Mercosur bloc countries.
Addressing Mercosur 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. An agreement to harmonise
regulations for border duty free stores to begin operating in countries subscribing to the Southern Common Market regional integration union was confirmed on 16 December 2018. While ASUTIL welcomes the (Mercosur/GMC/Res.
resolution No. 64/18) in principle, it says this
was agreed without consulting representatives of the region’s travel retail sector. ASUTIL has
subsequently
responded to the resolution, which it believes places restrictions on ‘basic basket’ purchases and is confident of a positive outcome. Donagaray reveals the association
has agreed not to sell the basic basket items as it works hard to address the issue with the different governments. He says: “We expect to be able to turn things our way in terms of the restrictions and want to continue selling what we have been in the shops.” Pressed on what the ideal eventual
scenario would be, he responds: “It would be to continue selling duty free products with a list of basic basket items which cannot be sold. “We do not want to be IKEA.
We have agreed not to sell certain products in duty free, but want to be able to sell cigarettes and electronics etc.” 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
Duty Free Americas maintains US focus
While Brazil clearly remains a top priority for Duty Free Americas (DFA), the company is continuing to open new stores in the US. The construction of a new outlet in the
Texan city of Donna in Hidalgo County, which borders Mexico’s Rio Bravo, is slated for completion by the end of the year. Spanning 1,000sq m, the store will
mirror the design and offer of most other UETA outlets and sell liquor, perfume, cigarettes, chocolate, watches and sunglasses. Leon Falic, President, Duty Free
Americas confirms to TRBusiness: “A new MARCH 2019
UETA store is opening up on the Donna- Rio Bravo Bridge. “We invest a lot in these small cities
and have become of the largest employers.” He adds: “We believe in America and
we’re going to continue investing in the Americas, but we think the US is still important to us. “We’re still going to grow on the
border and in the airports.” With DFA committed to growing on
the border, the company must surely be among the world’s major DF&TR players looking to capitalise on the Brazilian land border duty free opportunity.
Family Values (left to right): Joseph Falic; Jerome Falic; Leon Falic; and Dov Falic.
TRBUSINESS 53
Once the stores do open, Brazilians will be able to buy goods to the value of $300 (as the allowance currently stands), just like they are permitted to do in border stores in neighbouring countries.
TRBusiness
(including electrical, hydraulic and sanitary materials); tyres; large appliances; and weapons and ammunition. The Mercosur resolution in
its current form represents a bittersweet scenario for ASUTIL. The positive is there is recognition of the importance of duty free on the border and its impact on regional economies. On the other hand, the negative is the restrictions on products being sold that sets a bad precedent. At present, the resolution is due
to be incorporated into state parties’ legal systems by 1 April, but this could be delayed, according to ASUTIL. «
Above: The Mercosur headquarters in Montevideo.
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