Free Port Law Nº 16246

CHAMBER OF SENATORS

In it´s today session, the Chamber of Senators has passed the following.

Draft Law CHAPTER 1 PORT ORGANIZATION AND SERVICES

Article 1º – The provision of efficient and competitive port services is a priority goal for the development of the country. Port services will be provided at the commercial ports of the Republic 24 hours a day, every day of the year, whenever the respective demand so requires. The provisions contained in the above two paragraphs will not disregard any wage regulations applicable to extraordinary working hours and holidays. MOVEMENT OF GOODS

Article 2º-Goods will circulate freely at the Montevideo Port. No formal authorizations or proceedings will be required. The activities to be carried out in that Port will not involve any modifications in the nature of products or goods, and will be restricted to warehousing, re-packing, re-labeling, assortment, grouping and de-grouping, consolidation and de-consolidation, handling and breaking down. The destination of any goods entering the Port may be freely changed. In no case, they will be subject to restrictions, limitations, authorizations or prior statements.

Article 3º- During their stay inside the Port premises, goods will be exempt of any duties and charges applicable to imports or during import proceedings. For all purposes, whenever goods are transferred from the Montevideo Port to the national customs territory, they will be considered as imports or incoming clearance from abroad, and should comply with the corresponding proceedings and payments. In order to enter the Montevideo Port, national or nationalized goods should adjust to regulations in force for exports or for outgoing clearance.

Article 4º- Provisions contained in articles 2 and 3 will apply to all others ports and port terminals in the Republic, the respective customs and port areas of which should be legally established, capable of receiving overseas vessels.

Article 5º-. Within 120 days of the enforcement of this law, and for application purposes, the Executive will establish the limits of customs and port premises not legally provided for yet.

Article 6º- The Convention for the Facilitation of International Maritime Traffic signed in London on April 9, 1965, as well as its Annexes and Amendments dated 1969, 1973, 1978 and 1986, are hereby approved notwithstanding the provisions contained in article 255 of Law Nº 13.319 of December 28, 1964.

PORT SERVICES

Article 7º- The Executive is responsible for establishing a port policy and monitoring its implementation. It will promote de de-centralization of the various ports in the Republic, notwithstanding the assurance of the proper coordination of any activities being carried our in such ports. Likewise, for those services being offered under a free competition system, it will provide for the necessary conditions to guarantee so, while keeping the right to establish maximum rates for such services.

Article 8º- Stowage, de-stowage, loading, unloading and related services, will be governed by the provisions contained in Chapter II in this law.

PORT SERVICES AT THE MONTEVIDEO PORT

Article 9º- Port services to be provided by private companies in the Montevideo Port, will adjust to the terms and conditions set forth in the regulation to be approved accordingly by the Executive, with the advice of the National Port Administration. Such regulation will establish the technical and economic requirements to be complied with by those companies. These companies will also be able to use their own equipment, gear and personnel, as well as hiring the use of equipment and gear from the National Port Administration. However, in no case the use of piers and existing state-owned cranes may result in a de facto monopoly by private agents. Private companies offering port services will be subject to the same organization and operational rules as the port, and will act in full accordance with the provisions established by the Port Master. The will also be subject to sanctions resulting of the noncompliance with such rules or provisions. The provisions set forth in this article in connection with equipment and gear from the National Port Administration, also apply to private companies offering services provided for in letter B) of Article 11.

Article 10º- Article 9 of Law Nº 5.495, of July 21st., 1916, is amended as follows: “ARTICLE 9. The National Port Administration will be responsible for: a) The management, preservation and development of the Montevideo Port, as well as of any other port, as entrusted by the Executive. b) Advising the Executive on port matters, with the capability of submitting proposals in this connection. c) Providing port services, either directly or indirectly, whenever the Executive so decides”.

Article 11º- The Board of Directors of the National Port Administration will have the necessary legal power to carry out its duties, and will be particularly able to: A) Construct any necessary works and acquire any necessary elements. B) Subject to the approval of the Executive: 1) Grant any concessions, permits or authorizations to either natural or legal persons, under either public or private law, for the purpose of: i) developing both maritime and on-shore port services: ii) using specific open or sheltered spaces inside the port premises, in order to store products or goods, to revise, assort, group or break them down; iii) constructing the necessary works for carrying out its activities. 2) Contract port services with third parties. 3) Associate to private capital for the provision of port services. This association will involve the participation in commercial ventures, as well as the inclusion of the National Port Administration in their management and equity, for which the ANP will be able to contribute any necessary or suitable part of its property.

Article 12º- The granting of concessions, permits or authorizations will be valid for a given period of time, although the Administration will hold the fullest power of control and verification. Permits or authorizations to be granted as provided for in this law, will not involve, in any case, the exclusive awarding to one or various companies, of the exploitation of the commercial piers belonging to the National Port Administration. Those concessions affecting any territory inside the port premises (piers, yards, warehouses, harbor, etc.) can only be granted whenever the beneficiary affords the construction of new works involving the provision of new services or the extension of existing ones. The relevant regulation to be approved and the specification documents, will establish the suitable ratio between the awarded space and the new investments.

Article 13º- In contracts to be signed under provisions contained in letter B) of Article 11, the National Port Administration will take the relevant legal and practical steps for the purpose of: A) Promoting the exercise of free choice by consumers: B) Avoiding the creation of de facto monopolies and, whenever not possible, to provide for guarantees so as to control them; C) Avoiding unlawful competition due to the awarding of subsidies, subventions or similar practices, particularly harmful to national bidders; D) Reaching excellent technological levels; E) Counting on adequate advice, even hiring independent consultants, preferably of national origin; F) Providing for the assessment of stock transfer or signing up commercial ventures, according to generally accepted standards; G) Ensuring the adequate disclosure of contracting, in order to guarantee the transparency of operations and allow for the largest participation of any interested parties (article 482 and subsequent of Law Nº15.903. of November 10, 1987, articles 653 and 655 of Law Nº16.170 of December 28, 1990); H) Providing for the greatest fairness in proceedings.

Article 14º-Private companies willing to provide port services in accordance with provisions set forth in letter B) of Article 11, should comply with the following conditions, nor withstanding any other condition resulting from specifications and contracts: i) To count on the technical and economic qualifications as provided for in the regulation ii) To use their own equipment, gear and personnel, as set forth in the contract and the general rules applicable to port management and the coordination of port activities. iii) To provide their services, under equal conditions, to whoever may be entitled to them according to the awarded authorization. iv) To keep service continuity and regularity.