New Procedures for Cabotage Waivers

On February 11, 2021, the Ministry of Transportation issued Resolution No. 52/2021 by which it approved a new procedure for processing preliminary permits to foreign-flagged vessels to carry out operations in Argentine jurisdictional waters and repealed the previous procedure established in Ministry Resolution No. 870/2018.

According to the recitals of the rule, the Undersecretariat drafted a report in February 2021 in which it highlighted the need to further improve the previous procedure established under Resolution No. 870/2018, by incorporating new oversight mechanisms and optimizing existing administrative steps in the proceedings. According to the report, foreign vessels rendering service in the framework of a tender or contracting of public works require special treatment.

The waiver is governed by Article 6 of Decree/Law No. 19,492/44 – “National Cabotage Law,” as amended by Law No. 27,445, and establishes that when exceptional circumstances prevent the supply of a coastal area that covers basic necessities or the performance of a contract on account of there being no Argentine vessels that can render the service in question, the ministerial authority overseeing the national port authority may grant a preliminary permit, on a case-by-case basis, to foreign vessels, for as long as the force majeure circumstances subsist. It is also authorized to regulate the procedure, as well as to delegate its authorizing powers to a designee.

Thus, the Undersecretariat of Ports, Waterways and Merchant Navy was delegated the power to grant the exceptions analyzed herein as it is the national port authority and exercises its powers in accordance with the provisions of Decrees No. 817/92, No. 769/93, which regulates Port Activities Law No. 24,093 and No. 50/2019.

Among the most significant changes, this new procedure will be fully digital and operate through the remote procedure system (TAD). Requirements concerning the details of the operation to be carried out and the cargo to be transported have been expanded and must be demonstrated when the initial request is filed.

The Undersecretariat will be responsible for approving or rejecting waivers, after the National Directorate of Shipping Policy issues its recommendation as to the appropriateness of the procedure.

In the event that any of the grounds for permit denial occur, the procedure foresees a 10-business day term within which the applicant may correct any errors or make any clarifications it deems appropriate. Upon expiration of the term, and based on whatever new evidence is submitted, the Undersecretariat will once again evaluate whether or not to issue the permit.

In turn, if the granted permit exceeds 30 consecutive days, the beneficiary must notify the Secretary of Labor of the Ministry of Labor, Employment and Social Security, trade unions and trade associations and the Federal Administration of Public Revenues so that the foreign vessel may comply with the tax requirements that apply to Argentine flag vessels. Compliance with those obligations must be demonstrated within 15 business days from the end of the operations. 

Finally, the new procedure adds an obligation to submit a list of all crew members two days from the beginning of the operation, under penalty of the waiver being temporarily suspended.

When the recipient of the service is the Argentine Government, the procedure will be more abbreviated and flexible, and the requesting agency will have to inform the details of the operation and meet pertinent requirements. The Undersecretariat will only report national flag vessels suitable to carry out the operation, if no such vessels are available, the waiver will be deemed sufficiently justified.