commerce by foreigners. In no case will such restrictions injure foreigners who, at the time the regulations enter into effect, are engaged legally in wholesale commerce; nor will such restrictions apply to citizens of nations which maintain on the Isthmus of Panama enterprises or organizations in which Panamanian citizens find facilities for employment..

On the other hand, the Government has granted concessions to various firms, domestic and foreign, under which the concessionaires are granted tax exemptions or other valuable consideration.

Taxation. The tax laws of Panama do not discriminate against foreign capital. Moreoever, there is a double-taxation treaty between Panama and the United States under which reciprocal exemption from double taxation on the profits of shipping companies is granted.

Labor regulations.-Panama labor law requires that 75 percent of the pay roll of any industry or firm must be paid to Panamanians. An exemption may be granted in the case of technicians.

Foreign exchange controls.-Panama does not control or restrict in any way the remittance abroad of funds for any purpose.

Competition with Government-owned companies.-Through its Banco Agropecuario (Agricultural and Livestock Bank) the Government has competed with private enterprise in the importation of agricultural and livestock equipment, supplies, and products. The Government has also assisted in financing construction of hotels and low-cost housing projects.

Nationalization.-There have been no instances of nationalization of private industries by the Government of Panama. However, article 218 of the constitution of 1946 makes provision for such nationalization.

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Official monopolies over imported articles or those not produced in the country may be established by the law as financial revenue. On establishing a monopoly by virtue of which any person is deprived of the exercise of a legitimate business or industry, the State will previously compensate those persons or enterprises whose business has been expropriated in the terms referred to in this article. Paraguay

Right to do business.-The basis of Paraguayan commercial law is the commercial code adopted by Argentina in 1889. Although subsequent amendments provided for specific changes, it is understood that there are few basic differences between Paraguayan and Argentine law on the establishment and control of ordinary commercial and industrial organizations. Foreign enterprises are subject to the same restrictions and requirements that apply to strictly domestic companies. There appears to be little or no evidence of discrimination between national and foreign capital.

Taxation. There appears to be no discrimination in taxation levied on domestic and foreign concerns.

Labor regulations. It is required by law that 90 percent of labor personnel and 95 percent of the other employees of any industrial commercial business be of Paraguayan nationality. Where the employment is not more than four persons there is exemption from this provision. In determining the proportion of nationals to be employed, all specialist technical personnel are excluded except when they can be replaced by Paraguayans capable of performing the same duties.

Foreign-exchange controls.-Under decree law No. 10043 of August 29, 1945, the basic Paraguayan exchange-control law, the importation of foreign capital is encouraged through the establishment of a register of foreign capital, uncer the supervision of the Bank of Paraguay, in which investors may elect to register, thereby obtaining the right to purchase stipulated amounts of official exchange to cover subsequent dividend, profit, and amortization payments. Application for such registration is approved by the bank, provided the investment meets certain requirements, the most important of which are that it contribute to the social and economic development of the country and that it does not exercise an unduly inflationary effect on the Para

guayan economy.

Registered capital entering Paraguay is converted into guaranties at the official exchange rate, whereas unregistered capital may enter at the higher free-market rate. However, investors who elect not to register with the Bank of Paraguay have no assurance that official exchange will be made available to them for the purpose of remitting dividends, interest, and profits abroad or for withdrawing their funds from the country, and must be prepared to effect all such remittances at the less advantageous free-market rate, should the state of the exchange market require it. Capital invested in Paraguay prior to the effective date of decree law No. 10043 may also qualify for registration by meeting requirements similar to those prescribed for new capital.

It is understood that at the present time the foreign-exchange situation in Paraguay is such that official exchange is being allocated only for remittances on account of registered capital.

Competition with Government-owned companies.-The Government of Paraguay participates in the shipping trade through its Flota Mercante del Estado, but this agency transports only a small portion of the country's water borne international traffic. The Paraguay Central Railway (principal line serving the country) is privately owned. However, the Government owns and operates a very small line, the Concepcion-Horqueta Railway.

A monopoly over the supply and distribution of meat within Paraguay is exercised by the Corporacion Paraguay de Carnes, a corporation owned jointly by the Government and private capital. The Alcohol Corporation, composed of all alcohol producers, is Governmentcontrolled. The sugar industry also is Government-controlled.

The National Administration for Public Enterprises, a new Government organization, was authorized by a decree of August 30, 1947, to engage in the following activities: quarrying, cattle raising, manufacturing of wood pulp, paper, cement, and other products and may assume a monopoly for the domestic distribution of petroleum products. It is too early to determine the extent to which these functions will be implemented.

During the war the National Subsistence Administration was established in order to control imports of essential commodities for allocation among importers. It continues to function and imports on its own account, for resale, certain bulk-purchased commodities such as wheat, salt, cement, caustic soda, etc. Private firms are represented on its governing board.

Nationalization.-Commercial telephone, telegraph, and telecommunication services, also domestic air transport, are exclusive Government enterprises in Paraguay.

Peru

Right to do business.-Under the terms of the Peruvian Code of Commerce foreign nationals as well as companies organized abroad may engage in business in Peru. The national constitution guarantees freedom of work not inimical to morals, health, and public security.

The nationality of shareholders is unrestricted, except in the case of insurance companies and oil companies. A majority of the shares of insurance firms must be owned by Peruvian nationals, and oil companies are obliged to place at least 25 percent of their capital stock with the state or with Peruvian investors. Otherwise, there is no restriction on the nationality of company owners nor as to the type of business in which foreign firms may engage.

Taxation.There is no evidence of serious discrimination against foreign-owned companies under Peru's income-tax laws. The only instance in which income earned by foreign nationals or firms is taxed at a different rate from that of domestic organizations is in the case of complementary income tax. Under this tax, dividends on registered shares held by residents abroad, net profits obtained by foreign firms, interest paid by affiliate companies to main offices abroad, and certain other income received by residents abroad are subject to a fixed rate of 12 percent. The tax on similar income of Peruvian residents ranges from 2 percent on 10,000 soles to 30 percent on income exceeding 100,000 soles.

Labor regulations.-Under Peruvian labor law, not less than 80 percent of all persons employed by an enterprise must be Peruvian nationals, and 80 percent of the pay roll must be paid to Peruvian citizens.

Foreign exchange controls.-All sales of exchange at the "official" rate of 6.50 soles per dollar require approval of the exchange and import control authorities. In addition there is a free market in which transactions are not controlled and in which the rates fluctuate widely, ranging in recent months from 9 to 18 soles per dollar. Since the foreign-owned mining and petroleum companies are principal suppliers of exchange in Peru, it is understood that they obtain exchange for all their legitimate requirements, including the importation of supplies, and the payment of interest, dividends and salaries, at the rate at which they deliver their export proceeds to the authorities, viz, 6.50 soles per dollar. In view of the current serious shortage of exchange, however, it is unlikely that other foreign interests can obtain exchange for dividends at the official rate, although the authorities are empowered to authorize sales at that rate.

Competition with Government-owned companies.-The Peruvian Government maintains monopolies in the distribution of salt, matches, industrial alcohol, tobacco and tobacco products, guano, playing cards, and explosives, and engages in the direct manufacture of salt, tobacco products, denatured alcohol, and the extraction of guano. The Government likewise participates directly in the production and distribution of petroleum products, but not on a monopolistic basis. Various other enterprises in which the Peruvian Government has been active include coal mining, large-scale construction projects, hydroelectric development, and distribution of basic foodstuffs.

Nationalization.-No nationalistic trends which would operate severely against existing foreign-owned enterprises have been noted. In opposition to this has been the need, generally recognized by the

present administration, for foreign capital investment in Peru. However, discussions of present pending petroleum legislation have indicated the existence of strong sentiment for the reservation of decided advantages for the state or domestically owned companies in the exploitation of Peru's petroleum resources.

Uruguay

Right to do business.-Foreigners may operate freely, with the same rights and privileges as Uruguayan citizens in the engagement in business in that country. The participation of foreign capital which may be invested in such private commercial or industrial enterprises is not limited but is, of course, subject to the provisions regulating the entry of capital into that country.

Special laws apply to the establishment of banks, insurance companies, public utilities, and certain other enterprises referred to under, "competition with government-owned companies."

Taxation. Taxation on industry and commerce does not distinguish between nationals and foreigners. The only exception is in the case of the real-estate tax, in which there is a surcharge for absenteeism when property owners reside abroad or are Uruguayans remaining outside the country for more than 6 months. The tax on absenteeism affects individuals and business organizations domiciled outside the country.

Labor regulations.-Ordinary commerce and industry are not required to employ a fixed percentage of workmen who are Uruguayan nationals. However, organizations which will require a large personnel are sometimes required under a special clause in their charter to engage a certain percentage of Uruguayans. This percentage may vary from 60 to 90. In the case of public works, regulations specify a minimum of Uruguayans who must be employed.

Foreign exchange controls.-While such remittances from Uruguay do not require specific authorization in each instance, as in some other countries, general supervision is exercised by the exchange control authorities through requiring all nontrade remittances to be effected through the free market, regulating the supply of exchange available in the free market, regulating free-market rates, and the requirement that all free-market transactions shall be reported.

Competition with Government-owned companies. The National Administration of Fuels, Alcohol, and Cement (ANCAP) has a monopoly on the refining of petroleum products; distribution is shared with private companies, with ANCAP retaining about one-half or this business. The organization also maintains a monopoly of alcohol distillation, and is the exclusive supplier of cement for public works.

The Frigorifico Nacional, Government meat-packing establishment, has a monopoly on meat packing for distribution in Montevideo. Private companies engage in meat packing for export.

Canoprole, the National Cooperative of Milk Producers, is owned jointly by Government and private capital. It exercises a monopoly of milk processing and distribution in Montevideo, and for export. Sulfuric acid and phosphates are produced by Government-owned plants.

The National Government of Uruguay participates in banking activities and also through its Banco de Seguros conducts an insurance business. Only the private companies now in business are permitted to operate in this field.

Mining activities are restricted to Uruguayan citizens.

The municipality of Montevideo operates two hotels, two gambling casinos, and a cabaret.

Nationalization.- The National Government of Uruguay owns and operates all of the country's commercial telegraph services, the prin-. cipal telephone system, one-fifth of the railway mileage, port of Montevideo facilities, and most of the country's water-supply systems, including Montevideo. The National Government also owns and operates electric power plants and contemplates a completely integrated Government-operated system when additional facilities are completed.

Venezuela

Right to do business.-Foreign companies may carry on business, take part in litigation, establish agencies or branches, exploit natural resources, or introduce any industry in Venezuela (except water power, timber, aviation, and subsoil rights which are permissible only under concessions from the Government), provided they comply with the formalities of Venezuelan law. In these respects no distinction is made between foreign and Venezuelan companies. Foreigners have the same civil rights as Venezuelans, except political rights, which accrue only to Venezuelan citizens.

Taxation. There is some distinction in current Venezuelan incometax laws between income of residents and that of nonresidents derived from wages, salaries, pensions, and other emoluments. The rate is 1 percent in the case of residents and 3 percent for nonresidents. The surtax on income in excess of 9,000 bolivares, which ranges up to 26 percent on incomes exceeding 28,000,000 bolivares, while not directly discriminating against foreign-owned firms, nevertheless imposes a heavy burden on foreign petroleum companies operating in Venezuela, in view of their relatively large incomes in comparison with domestic companies. Moreover, the rates applicable to the exchange sold in Venezuela by the oil companies and by other exporters, 3.09 and 3.32 bolivares per dollar, respectively, are in effect a tax paid by the oil companies that is not paid by the exporters of products other than petroleum.

Labor regulations. According to the 1936 labor law, at least 75 percent of salaried employees and laborers must be Venezuelan, except where, for technical reasons, a temporary reduction of this percentage is permitted.

Foreign exchange controls.-Exchange for these purposes may be obtained in and remitted from Venezuela without official intervention of any kind.

Competition with Government-owned companies. Through its various dependencies, the Government of Venezuela has participated in an increasing number of economic activities, including air transport, shipping, and the distribution of essential foodstuffs. Notable is the control recently established over sugar. The Government maintains a direct monopoly on matches.

Nationalization.-While continuing efforts are made to secure all possible advantage for the State, notably from the exploitation of Venezuela's natural resources, it is not believed that there exists at present a marked general trend toward actual nationalization.