In 1995, the U.S. trade surplus with Nicaragua was valued at $12 million, or
$7 million less than in 1994. U.S. merchandise exports to Nicaragua were $250
million, up 35 percent from 1994. Nicaragua was the United States' eight-first
largest export market in 1995. U.S. imports from Nicaragua totaled $238 million
in 1995, a $71 million increase over imports in 1994.
Nicaragua is a member of the Central American Common Market (CACM), which
also includes Costa Rica, Guatemala, El Salvador, and Honduras. The CACM members
are working toward the full implementation of a common external tariff (CET)
which ranges between 5-20 percent for most products. However, in 1995 the
members of the CACM agreed to reduce the CET to 0-15 percent, but allowed each
member country to determine the timing of the changes. With the exception of
certain items, there are no duties for products traded among CACM members.
The Government of Nicaragua also imposes a variety of import fees, including
a temporary protection tariff (ATF) of 5 to 10 percent on about 900 items, a
specific consumption tax (DAJ) of approximately 15 percent on 750 items, a 5
percent stamp tax (ITF), and a 15 percent value added tax (VAT). As a result of
a tax reform law passed in 1995, effective January 1, 1996, the combined total
import fee percentage of the ATP, DAJ and ITF taxes should not exceed 35
Agricultural Price Bands
Nicaragua implemented a price band mechanism for yellow corn, sorghum, rice
and soybeans in 1992. Similar to the price band practices of other countries in
the region, the Nicaraguan government calculates the price band from a time
series based on international prices for the prior 60 months on a given product.
The fifteen highest and lowest prices are eliminated, with the remaining highs
and lows establishing the price band. Imports entering with values within the
defined band are assessed a 20 percent tariff. Imports entering with prices
above the band are assessed lower duties, according to a predetermined schedule;
those imports priced below the band are assessed a higher tariff. The basic
tariff plus the surcharge should not exceed 45 percent of the international
c.i.f. price of a determined period. Additionally, the basic tariff minus the
discount should not be lower than 5 percent of the international c.i.f. price.
The U.S. Government has strongly opposed this policy, which limits access of
U.S. agricultural products.
LACK OF INTELLECTUAL PROPERTY PROTECTION
Nicaragua made substantial progress in 1995 toward concluding a Bilateral
Intellectual Property Rights Agreement with the United States that would go
beyond the protection levels afforded under the WTO TRIPs agreement.
Piracy of video recordings, unauthorized video broadcast, and piracy of U.S.
satellite signals by the local cable television operators is widespread. The
current law does not explicitly protect computer software, which contributes to
The current law is inadequate with respect to short term of protection and
broad exclusions of subject matter from patentability. A new draft patent law
was prepared by the executive branch of the Nicaraguan Government and submitted
to the National Assembly, but is not yet under active consideration.
The current law provides inadequate protection of the rights of trademark
holders, especially well- known marks. However, in November 1994 the Central
American Convention for the Protection of Industrial Property, of which
Nicaragua is a signatory, was revised. The Convention has been signed by the
Nicaraguan executive branch, but has not yet been ratified by the National
Assembly. Upon entry into force, the Convention is intended to ensure
compatibility with the Paris Convention and Uruguay Round TRIPs provisions.
Sandinista-era cases of expropriation of U.S. citizen-owned investments or
properties is a continuing problem. Although the Chamorro government has said
resolution of these cases is a priority, resolution of cases has been slow. The
U.S. Government continues to press the Nicaraguan Government to provide prompt,
adequate and effective relief to affected U.S. owners and investors.
In order to receive the benefit of the 1991 Foreign Investment Law -- which
provides guaranteed repatriation of profits and repatriation of original capital
three years after the initial investment -- investments must be approved by an
interagency foreign investment committee. These approvals can be time-consuming
and contain criteria -- e.g., approval by the government's environmental agency
-- which lack clear definition. Investments may be made without foreign
investment committee approval, but such investments do not enjoy repatriation
In July 1995, the Governments of Nicaragua and the United States concluded a
Bilateral Investment Treaty (BIT) which was designed to improve the investment
climate by recognizing intellectual property rights, and by guaranteeing the
repatriation of capital and compensation for damages. As of January 1996,
neither country's legislative branch had ratified the BIT.