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U.S. Department of State
Spain Country Commercial Guide
Office of the Coordinator for Business Affairs

                   COUNTRY COMMERCIAL GUIDE - SPAIN 1996

NOTE: This Country Commercial Guide (CCG) presents a comprehensive look 
at Spain's commercial environment through economic, political and market 

The CCGs were established by recommendation of the Trade Promotion 
Coordinating Committee (TPCC), a multi-agency task force, to consolidate 
various reporting documents prepared for the U.S. business community.  
Country Commercial Guides are prepared annually at U.S. Embassies 
through the combined efforts of several U.S. government agencies.



-  Major Trends and Outlook
-  Principal Growth Sectors
-  Government Role in the Economy
-  Balance of Payments Situation
-  Infrastructure Situation

-  Political Relationship with the United States
-  Major Political Issues Affecting Business Climate
-  Political System, Schedule for Elections, and Orientation of 
Political Parties

-  Marketing Channels
-  Agents/Distributors: Finding a Partner
-  Franchising
-  Direct Marketing
-  Joint Ventures/Licensing
-  Steps to Establishing an Office
-  Selling Factors/Techniques
-  Advertising
-  Pricing Product
-  Sales Service/Customer Support
-  Selling to the Government
-  Protecting your Product from YAPPER Infringement
-  Need for a Local Attorney

-  Best Prospects for Non-Agricultural Goods and Services
-  Best Prospects for Agricultural Products
-  Investment Opportunities

-  Trade Barriers, including Tariffs, Non-Tariff Barriers and Import 
-  Customs Valuation
-  Import Licenses
-  Export Controls
-  Import/Export Documentation
-  Temporary Entry
-  Labeling, Marking Requirements
-  Prohibited Imports
-  Standards
-  Free Trade Zones/Warehouses
-  Special Import Provisions
-  Membership in Free Trade Arrangements

-  Openness to Foreign Investment
-  Conversion and Transfer Policies
-  Expropriation and Compensation
-  Dispute Settlement
-  Political Violence
-  Performance Requirements/Incentives
-  Right to Private Ownership and Establishment
-  Protection of Property Rights
-  Regulatory System: Laws and Procedures
-  Bilateral Investment Agreements
-  APACHE and other Investment Insurance Programs
-  Labor
-     Foreign Trade Zones/Free Ports
-     Capital Outflow Policy
-     Major Foreign Investors

-  Banking Systems
-  Foreign Exchange Controls Affecting Trade
-  General Financing Availability
-  How to Finance Exports/Methods of Payment
-     Available Export Financing and Insurance
-  Project Financing Available
-  Banks with U.S. Banking Arrangements

-  Business Customs
-  Travel Advisory and Visas
-  Holidays
-  Business Infrastructure

A.  Country Data
B.  Domestic Economy
C.  Trade
D.  Investment Statistics
E.  US and Country Contacts
F.  Market Research
G.  Trade Event Schedule


Spain is once again enjoying economic growth.  Although still faced with 
serious structural problems, the economy has begun a slow but steady 
recovery: industries which had become moribund during several years of 
recession, are now showing increased signs of life and activity.  U.S.-
Spain bilateral relationships are excellent.  The government is moving 
ahead again with major infrastructure projects and privatization in a 
number of key sectors. U.S. firms are responding to these changes and 
stepping up their activities in Spain.

The Spanish economy is catching up along with the rest of Western Europe 
with moderate economic growth following the recession of 1993 and slow 
recovery in 1994.  Real GDP is likely to grow by about 3 percent in 
1995.  The recovery has shifted from export-led to investment-led 
growth: the government forecasts growth of nearly 4 percent for 1996.

The government has not, however, been able to bring the economy in line 
with macroeconomic objectives set forth in the European Union's (EU) 
Maastricht Treaty of 1992.  Unless it can bring these factors under 
control, Spain will have difficulty in sustaining long-term growth, and 
will not be able to join the Economic and Monetary Union, including a 
common EU currency in 1999.

Inflation continues to run at over 5 percent in 1995.  Short-term 
interest rates were recently raised to 9.25 percent and long-term rates 
remain at 400-500 basis points above comparable rates in Germany.  Plans 
to bring down the public sector deficit from a projected 5.9 percent of 
GDP in 1995 to 4.4 percent in 1996 will require politically painful 
spending cuts which have yet to be identified.  The public debt was 62.7 
percent of GDP at the end of 1994.  Unemployment stands at 18 percent.  
As a consequence of these structural problems and continued political 
scandals, the Spanish peseta has continued its strong fluctuations, 
having been devalued five times between September 1992 and March 1995.

The economic recovery is being fueled by increased industrial 
production, which rose 7.1 percent in 1994 - the largest increase in 20 
years.  The recovery was led by the automotive components, chemical, and 
electrical machinery sectors. 

Agriculture's contribution to Spain's overall economy is substantially 
less important now than it was in the years prior to Spain's accession 
to the EU in 1986.  Nevertheless, agriculture still plays an important 
role in the Spanish economy, accounting for approximately 5 percent of 
GDP.  Spain is now subject to EU agricultural policies, which do not 
always favor their most competitive crops.  EU reforms, coupled with a 
four year drought, have combined to give Spain one of its worst years in 
agriculture.  This has, however, resulted in an increase in food 
imports, primarily from the EU; although the United States also 
maintains a healthy 10-13 percent agricultural market share. 

Overall, the United States enjoys a $3.2 billion trade surplus with 
Spain which ranks as our 22nd largest export market and among our top 
ten agricultural markets.  In 1994, U.S. exports to Spain totalled $6.8 
billion: they are expected to increase 10 percent to $7.5 billion in 
1995, and an additional 19 percent to $8.9 billion in 1996.  Major U.S. 
manufactured exports to Spain include: aircraft and parts, 
telecommunications equipment, computers, coal and environmental 
equipment.  Good opportunities also exist for electric power systems, 
medical equipment, building products, chemical machinery, industrial 
controls, and franchising, telecommunications, and 
architectural/engineering services.  U.S. agricultural exports, which 
totalled $1.3 billion in 1994, continue to be dominated by oilseeds and 
products, grain and feed, and forestry products, with a good market also 
for consumer-oriented processed products, seafood, poultry, tobacco, and 

U.S. exporters face stiff competition from the European Union.  The 
market leaders are France, Germany and Italy, followed by the U.S. (6.8 
percent) and the U.K.  Although Spain maintains an open and relatively 
transparent trading system and U.S. products and services are well 
regarded in Spain, U.S. companies are disadvantaged vis-a-vis their 
competitors by duties imposed on products from outside the EU, higher 
transportation costs and often the entrenched presence of domestic and 
EU firms in the Spanish market.  However, U.S. companies can compensate 
with high quality products, new technology, fast delivery, and reliable 
after-sales service.

According to the U.S. Department of Commerce, the direct U.S. 
accumulated investment in Spain totalled $8.048 billion at 1994 year 
end, with $1.2 billion of this investment made during 1994. 

550 U.S. companies have established subsidiaries in Spain.  The U.S. 
(6.9 percent of total foreign investment) ranks third among investor 
nations after the Netherlands and France.  The Spanish central, 
regional, and local governments all actively encourage foreign 
investment, and have eased regulations and increased incentives.  High 
labor costs, old and inflexible labor laws and continuing IPR concerns 
in some sectors continue to be the main disincentives.

U.S. firms should find increased opportunities for trade and investment 
as the Spanish government moves ahead with privatization in the 
telecommunications, power, and oil and gas sectors.  Best opportunities 
exist in the telecommunications sector, especially for voice telephony 
and cable TV equipment and services.  An estimated $100 billion will be 
spent on roads, air and seaports, and railroads, and an estimated $15 
billion on environmental infrastructure over the next 10 years; opening 
up significant opportunities for aggressive U.S. equipment and service 

Country Commercial Guides are available on the National Trade Data Bank 
on CD-ROM or through the Internet.  Please contact STAT-USA at 1-800-
STAT-USA for more information.  To locate Country Commercial Guides via 
the Internet, please use the following world wide web address: WWW.STAT-
USA.GOV.  CCGs can also be ordered in hard copy or on diskette from the 
National Technical Information Service (NTIS) at 1-800-533-NTIS.


Major Trends and Outlook

The Spanish economy has joined the rest of Western Europe with moderate 
economic growth following the recession of 1993 and slow recovery in 
1994.  Real GDP is likely to grow by about 3 percent in 1995,  following 
the 1.7 percent registered last year.  The recovery has shifted from 
export-led (last year) to investment-led.  The government is forecasting 
growth of nearly 4 percent in 1996.   Sustained recovery, however, may 
be questionable if private consumption does not pick up faster, and if 
high interest rates continue to be necessary to control inflation.

The Maastricht Treaty of 1992 set out specific macroeconomic objectives 
for countries in the European Union.  These objectives were established 
as qualifications for participation in the Economic and Monetary Union, 
including a common EU currency.  In practice, they have become the 
parameters by which  the performance of the Spanish economy is judged.  
The following table summarizes four of  these objectives, and the latest 
data on Spain's performance.  A fifth criteria requires exchange-rate 
stability for two years before participation in a common currency 

(All figures are percentages)

               Inflation    Interest Rates  Deficit/GDP    Debt/GDP
                April'95    March'95         1994           1994
Reference level  1.9              8.7          -              -
Max. Limit       3.4             10.7         3.0          60.0
Spain            5.3             10.9         6.7          62.7

Inflation:  Restraining inflation may be the most difficult challenge 
facing the Spanish economy.  The Maastricht Treaty sets the maximum 
limit for acceptable inflation at 1.5 percentage points above the 
average rate for the three lowest-inflation EU countries.  In Spain, the 
12-month rate of increase of the CPI slowed to about 4.3 percent at the 
end of 1994, but during the first five months  of 1995 drifted back up 
to over 5 percent.  Temporary factors contributed to this rebound, 
including a VAT tax increase, devaluation of the peseta and effects on 
food prices of a severe drought.  Wage settlements so far this year have 
lagged behind inflation, with settlements through mid-May averaging 
about 3.5 percent.   There is concern, however, that structural problems 
in the Spanish economy may account for the difficulty in sustaining an 
inflation rate closer to the EU average.  In particular, barriers to 
competition in parts of the services sector allow relatively higher 
price increases in those areas. 

Interest Rates:   The Bank of Spain, projecting a continuation of 
inflation above 5 percent through 1995,  in early June raised short-term 
interest rates by 0.75 percent, to 9.25 percent.  The Maastricht 
criteria, however, refers to long-term rates, which are not directly 
manipulated by central banks, but are set by market forces.  
Specifically, Maastricht requires that long-term rates be  no more than 
2 percentage points (200 basis points) above the average rate for the 
three EU countries with the lowest inflation.  The "shorthand" 
comparison, widely used in the market, is with Germany.  Spanish long-
term rates have oscillated in recent months around 400-500 basis points 
above comparable German rates.  This probably reflects the inflation 
differential and increased concern about various "risks" of Spanish 
debt, including devaluation risk and the risk that the budget deficit 
might not be reduced as quickly as the Government projects.  

Deficit:  The Maastricht Treaty calls for public sector deficits to be 
held below 3 percent of GDP.  This is a major challenge for Spain, which 
since 1981 has brought its public sector deficit below that level only 
once, during the boom year of 1989.  During the 1993 recession, Spain's 
fiscal deficit exploded to 7.3 percent of GDP.  The government's policy 
is to bring the fiscal deficit down to 5.9 percent of GDP in 1995, then 
to 4.4 percent in 1996 and to 3.0 percent in 1997.  This probably cannot 
be achieved simply through stronger economic growth, but requires 
politically painful spending cuts, which have yet to be identified.

Debt:  Maastricht also requires that the amount of  government debt 
outstanding be less than 60 percent of GDP.  After growing steadily over 
several decades, Spain's outstanding debt went over that level in 1994, 
reaching 62.7 percent.  The government contends that if the annual 
fiscal deficit is reduced, as planned, to 3.0 percent of GDP, debt as a 
share of GDP will stabilize, and will decline if the economy grows 

Exchange Rate Stability:  Maastricht also requires that exchange rates 
be "stable" for two years before a currency is allowed to join the final 
phase of monetary union.  While the precise meaning of exchange-rate 
stability may be open to debate, the fact is that the Peseta has been 
devalued against its "central rate" within the European Monetary System 
(EMS) five times between September 1992 and March 1995.  The "central 
rate" has therefore moved from 65 pta/DM in 1992 to 85 pta/DM in mid-
1995.  The actual rate has varied within a band around that central 
rate; until July 1993 that band was 6 percent around the central rate, 
now it is 15 percent.  

The reform of the labor market implemented last year has introduced 
greater hiring flexibility and has made the market more operative, 
facilitating the functional and geographic transfer of employees.  With 
respect to nominal labor costs, various statistical sources indicate 
that nominal costs in Spain are lower in Spain than in most EU 
countries.  Viewing from the employer's standpoint, however, the 
relevant variables such as labor productivity and qualifications were 
comparable to other OECD countries like Japan.

Investment in infrastructure has been a priority during the 1980s and 
1990s during which period Spain made one of the greatest investment 
efforts in the EU in infrastructure projects -nearly 5 percent of GDP- 
thanks to which the country now ranks fifth in the entire world in terms 
of transport capacity.  The ambitious Master Infrastructure Plan for 
1993-2007 lays down the objectives for the improvement of transport 
networks, and requires an investment of $138 billion.

In addition to these reforms, important progress has been made in the 
liberalization of key sectors such as telecommunications, a process 
which will be completed in 1998.  In this sector, Telefonica (the 
national telephone company) faces a serious threat as 30 percent of its 
projected revenue will be from mobile phones and data communications, 
which are being opened up to competition.

After a continuous decline over the last three years, industrial 
production in Spain rose by 7.1 percent in 1994, thus becoming the 
engine for the economic recovery.  This is the biggest increase of the 
last 20 years.  Automotive components, chemicals and electrical 
machinery were the most important industrial sectors within the 
manufacturing industry.  All this was made possible by the sizable 
increase in exports during 1994.

The opportunities in the Spanish market are characterized by a very fast 
evolution to more sophisticated products and marketing.  It is no secret 
that the number of companies who are looking for quality certification, 
flourish.  There was just one company registered with ISO/AENOR Label in 
1989, in 1994 there were more than 700.  So the market is growing not 
just in quantity but also in quality.

Since most economic indicators are pointing towards a continuing 
recovery, this together with a healthy trend in the tourism industry and 
an expected increase in exports -gives Spain cause for optimism.

The Government of Spain is carrying out a privatization program that 
will affect government-owned companies operating in key industrial 
sectors.  There are significant investment opportunities from 
privatization of companies in the telecommunications, power generation, 
and oil and gas sectors.  

The United States enjoys a $3.2 billion trade surplus with Spain which 
ranks as our 22nd largest export market and among our top ten 
agricultural markets.  In 1994, U.S. exports to Spain totalled $6.8 
billion: they are expected to increase 10 percent to $7.5 billion in 
1995, and an additional 19 percent to $8.9 billion in 1996.  Imports 
from Spain totalled $3.6 billion in 1994 and are expected to remain 
relatively stable over the next two years.  Major U.S. exports to Spain 
include: aircraft and parts, telecommunications equipment, computers, 
coal and pollution control equipment.  U.S. agricultural exports which 
totalled $1.3 billion in 1994, continue to be dominated by oilseeds and 
products, grain and feed, and forestry products.  Consumer-oriented 
processed products, seafood, poultry, tobacco and apples also have an 
excellent growth potential.  Major U.S. imports from Spain are fuel 
oils, footwear, automotive parts and aircraft and parts. 

U.S. exporters face stiff competition from the European Union.  The 
market leaders are France (17.4 percent of the market), Germany (14.6 
percent) and Italy (8.8 percent).  Although Spain maintains an open and 
transparent trading system and U.S. products and technologies are in 
demand, U.S. companies are disadvantaged vis-a-vis their competitors by 
duties imposed on products from outside the EU, higher transportation 
costs and often the entrenched presence of EU firms in the Spanish 
markets.  However, U.S. companies can compensate with higher quality 
products, the latest technologies, quick and reliable delivery, and good 
after-sales service.

Agriculture's contribution to Spain's overall economy is substantially 
less important now than it was in the years prior to Spain's accession 
to the EU in 1986.  Nonetheless, agriculture still employs about 9 
percent of the country's total active population and comprises about 4.6 
percent of the country's total GDP.

Spain is subject to EU agricultural policies, which have not always 
favored the most competitive Spanish crops.  In 1992 the EU reformed its 
farm policies for grains, milk, beef, oilseeds, and sheep, and these 
reforms could have a major impact on Spanish agricultural production.  
Most importantly for Spain, the EU is in the midst of reforming programs 
that will affect many Mediterranean crops such as olive oil, rice, 
almonds and others.

Spanish lamb, beef, grain, dairy, pulse and other sectors have had 
difficulties competing with increased competition from other EU 
countries, while for competitive sectors such as horticultural crops 
production or exports have not significantly increased.

Livestock and poultry are the most important sectors in terms of value 
of agricultural production in Spain, accounting for about 40 percent of 
total farm output.  Horticultural crops (citrus, deciduous fruit, olives 
and olive oil, nuts, wine and vegetables) is the second most important 
sector in value (35 percent) of output, but account for over 70 percent 
of Spain's agricultural exports.  Field crops (grain, tobacco, cotton, 
forage, sugar beets and oilseeds) cover a larger proportion of total 
planted area, but comprise only 25 percent of the value of total 

The most significant problems currently facing Spanish farmers are the 
lack of stable support prices for key commodities, growing competition 
from agricultural imports from other EU countries, high interest rates 
and high production costs.  Despite producer prices in ECUs for many key 
products that remained static or even dropped in 1993, prices in pesetas 
rose by about 15 percent due to a series of devaluations of the Spanish 
peseta that have taken place since 1992.

The outlook for 1995 suggests continued difficult conditions for certain 
farm sectors in Spain.  A major challenge for Spanish agriculture is 
adapting to the reality that other EU members may have a comparative 
advantage in producing certain agricultural commodities, especially 
grains, lamb, beef, poultry and beet-sugar.  In addition, a devastating 
drought which has plagued the Spanish countryside for 4 straight years 
has resulted in a dramatic decline in corn, cotton, rice and other 
irrigated crop production in southern Spanish production areas, leading 
to substantial losses in income for certain producers which may not be 
adequately compensated by present crop insurance programs.

Principal Growth Sectors

a) Agriculture

Consumer oriented products
  pet foods
  snacks foods
  candies and gums
  herbal teas
  low calorie products
  prunes and raisins
  frozen yoghurt
  frozen vegetables
  table sauces
  dietetic foods
Egg and egg products
Food products for heating with microwave 
Edible pulses

b) Industry and services

Telecommunications is one of the principal growth sectors in Spain.  A 
second cellular telephone license was awarded to Airtel last December.  
This company, which is partially owned by U.S. AirTouch, is committed to 
provide digital cellular service by the early fall of 1995.  Market 
demand for cellular services is expected to increase six-fold by the 
turn of the century.

Another area for growth within this sector is cable-TV.  Cable-TV is not 
regulated, and currently, only one percent of the population has access 
to this service.  The Government proposed a bill in January which is 
under debate in Parliament.  This law is expected to come out by the 
Spring of 1996.  Growth estimates for this market estimate a 5 percent 
penetration by 1998. 

Other growth areas include environment and aerospace.  In order to 
comply with EU environmental regulations, Spain has to invest an 
estimated $15 billion in industrial clean-up, sewage treatment, water 
and air pollution control, and water and soil treatment.  In the 
aerospace sector, the EU's "open skies" policy has added seven new 
regular airlines operating to cope with increased demand for air 
transport services.  

The Government of Spain is carrying out large investments to upgrade 
Spain's infrastructure.  Roads, airports, sea ports and railroads will 
receive over $100 billion till the year 2007.  Construction and related 
engineering services will benefit from these projects.

Government Role in the Economy

Spain's social-democratic Government exercises influence in the economy 
more through regulation than through direct ownership, although the 
Government does own part or all of several of Spain's largest companies.  
In 1993, the Government began partial privatization of several major 
parastatals.  This process was interrupted in 1994 and the first half of 
1995, but looks set to resume in mid-1995 after reorganization of the 
Government's industrial holding companies.  The Government tends to sell 
off stakes in firms, keeping a significant interest for itself.  Major 
targets for additional (partial) privatization in the near future 
include Argentaria (bank), Repsol (oil) and Telefonica (telecom).  

Balance of Payments Situation

Spain in recent years has run a significant deficit in merchandise trade 
-- equal to 3 percent of GDP in 1994 -- and a deficit in net investment 
income (e.g. debt servicing).  These deficits have been roughly balanced 
by receipts from tourism and transfers from abroad (e.g. from the 
European Union).  The resulting Current Account deficit, therefore, has 
been less than one percent of GDP for the last two years.  During the 
first quarter of 1995, imports of goods have been growing slightly 
faster than exports (25 percent versus 21 percent).  This is likely to 
continue, as faster growth of private consumption in Spain will lead to 
increased demand for imports.  Tourism receipts have continued to 
increase (up 17.5 percent over the first quarter of 1994), but the 
current account deficit nevertheless is expected to widen somewhat.  

Infrastructure Situation

Following are some facts and figures about infrastructure in Spain:

- Electricity: 46,600,000 KW capacity; 157,000 million KWh produced, 
4,000 KWh per capita (1992) 

- Railroads: 15,430 km total; Spanish National Railways (RENFE) operates 
12,691 km (all 1.668-meter gauge, 6,184 km electrified, and 2,295 km 
double track); FEVE (government-owned narrow-gauge railways) operates 
1,821 km (predominantly 1.000-meter gauge, 441 km electrified); 
privately owned railways operate 918 km (predominantly 1.000-meter 
gauge, 512 km electrified, and 56 km double track).

- Highways: 150,839 km total; 82,513 km national (includes 2,433 km 
limited-access divided highway, 63,042 km bituminous treated, 17,038 km 
intermediate bituminous, concrete, or stone block) and 68,326 km 
provincial or local roads (bituminous treated, intermediate bituminous, 
or stone block).

- Inland waterways: 1,045 km, but of minor economic importance 

- Pipelines: crude oil 265 km, petroleum products 1,794 km, natural gas 
1,666 km.

- Ports: Algeciras, Alicante, Almeria, Barcelona, Bilbao, Cadiz, 
Cartagena, Castellon de la Plana, Ceuta, El Ferrol del Caudillo, Puerto 
de Gijon, Huelva, La Coruna, Las Palmas (Canary Islands), Mahon, Malaga, 
Melilla, Rota, Santa Cruz de Tenerife, Sagunto, Tarragona, Valencia, 
Vigo, and 175 minor ports.

- Merchant navy: 242 ships (1,000 GRT or over) which includes 2 
passenger, 8 short-sea passenger, 71 cargo, 12 refrigerated cargo, 12 
container, 32 roll-on/roll-off cargo, 4 vehicle carrier, 41 oil tanker, 
14 chemical tanker, 7 liquefied gas, 3 specialized tanker, and 36 bulk. 

- Airports:  105 total, usable: 99.  Sixty of them have permanent-
surface runways.  Four of these have runways over 3,659 meters, 22 have 
runways between 2,440-3,659 meters; and another 26 have smaller runways 
between 1,220-2,439 meters.

- Telecommunications: generally adequate, modern facilities; 15,350,464 
telephones; broadcast stations - 190 AM, 406 (134 repeaters) FM, 100 
(1,297 repeaters) TV; 22 coaxial submarine cables; 2 communications 
satellite earth stations operating in INTELSAT (Atlantic Ocean and 
Indian Ocean); MARECS, INMARSAT, and EUTELSAT systems; 1 satellite 
HISPASAT, tropospheric links. 


Political Relationship with the United States

Spain and the United States enjoy excellent bilateral relations as 
befits close allies and industrial democracies.  The two governments 
share common views on a broad range of issues and are allies in the 
North Atlantic Treaty Organization (NATO).

Major Political Issues Affecting the Business Climate

Three political issues affect the current business climate in Spain:  
the need to create greater flexibility in the labor market;  an 
ideological split in the ruling Spanish Socialist Workers Party (PSOE);  
and a minority government dependent upon ad-hoc coalitions to advance 
its legislative program.

Labor market regulations in Spain are still too rigid, despite recent 
modifications (June 1994).  Companies in Spain faced with economic 
difficulties have problems downsizing staff, and are faced with high 
Social Security and redundancy payments.  Government efforts to 
eliminate these rigidities have been opposed by trade unions.

Two ideological tendencies compete for supremacy within the PSOE--one 
calls for increased liberalization of the economy, while the other 
stresses more traditional socialist policies and state intervention in 
the market.  The dispute is reflected in the conflicting positions 
adopted by the Finance and Public Works Ministries on such matters as 
cellular telephone licenses and cable TV regulation.  The debate has 
taken on increased significance in light of PSOE electoral misfortunes.

Finally, the Socialists must depend on other parties to form a majority 
in the Congress.  These informal coalitions are increasingly unstable, 
complicating Government action on pressing economic and political 

Political System, Schedule for Elections, and Orientation of Political 

Based on its constitution of December 1978, Spain is a parliamentary 
democracy.  President of Government (Prime Minister) Felipe Gonzalez 
Marquez, Secretary General of the PSOE, was first elected to his 
position in 1982;  his party governed with absolute parliamentary 
majorities from 1982 - 1993.  After the June 1993 general election, 
Prime Minister Gonzalez won an unprecedented fourth consecutive term, 
although his Socialist Party now presides over a minority government, 
seeking legislative accords on a case-by-case basis with all parties, 
but especially with the Catalan nationalist party, CiU, itself a 
coalition.  Continued party factionalism, high unemployment, a series of 
corruption scandals, and the GAL case involving extra-legal security 
force operations against ETA terrorists in the early '80s, have led to a 
significant decline in Gonzalez's popularity.  Also worthy of mention is 
a recent scandal involving the phone-tapping (by the Spanish 
intelligence unit, CESID) of leading politicians, prominent businessmen 
and even the King of Spain.  The Prime Minister claims to have first 
heard of this when the news broke in the press, but it has further 
undermined his government, causing the resignation of the Minister of 
Defence and the Vice President of the government.

The principal opposition party is the center-right Popular Party (PP).  
In the June 1994 European Parliament elections, the PP picked up 40 
percent of the vote vis-a-vis 30 percent for the PSOE.  In the 
Andalucian elections held the same day, the Socialists lost their 
absolute majority and now form a minority government.  During the May 
1995 regional and municipal elections, for the first time ever, the PP 
fielded more candidates than PSOE, and Spanish banks offered a larger 
credit line to the PP for campaign financing.  The PP won pluralities in 
10 of the 13 autonomous regions having elections, and in 42 of 50 
provincial capitals, including Madrid.  The Socialists also lost the 
absolute majority in the Senate which they had enjoyed since 1982.

The electoral term for national government is a maximum four years, but 
elections can be called before that term expires.  Elections will be 
required on or before June 6, 1997.  Opinion polls suggest that PP would 
beat PSOE in a hypothetical general election.  Nonetheless, the CiU is 
publicly committed to supporting Gonzalez through 1995, allowing 
Gonzalez to remain in office through the Spanish EU presidency (July-
December 1995).  Pundits predict that general elections will take place 
in spring 1996.


Marketing Channels

The Spanish market is a series of regional markets joined to two major 
hubs--Madrid and Barcelona.  The vast majority of agents, distributors, 
foreign subsidiaries, and government-controlled entities that make up 
the economic power block of the country operate in these two hubs.  
Dealers, branch offices, or government offices located outside of these 
two hubs will
almost invariably obtain their supplies from their Madrid and Barcelona 
contacts rather than engage in direct importation.  The key to a foreign 
firm's sales success in Spain is to appoint a competent agent or 
distributor or to establish an effective subsidiary in either Madrid or 

However, investment incentives which reward investors for establishing 
manufacturing operations in the less developed areas of the country have 
resulted in some dispersion of U.S. investment in recent years.

The major competitors of U.S. exporters and investors in Spain are 
Western European firms, but Japanese companies are swiftly becoming 
formidable competitors in Spain.  Cost, financing terms, and after-sales 
servicing play important roles in marketability of a firm in Spain.  
Since Spain acceded to the EU, member states' exports to Spain have 
benefited from lower tariffs than U.S. exports.  The dutiable rate for 
almost all EU goods entering Spain is zero since January 1, 1993, while 
U.S. goods are subject to the EU's Common External Tariff.

American products retain competitiveness, in comparison to other 
exporters to the EU, because of lower production costs achieved through 
economies of scale.  European exporters provide generous financing and 
engage in extensive cooperative advertising.  Their governments also 
support exporters' efforts by assisting with trade promotion events.  
Although U.S. products are well respected for their high level of 
technology and overall quality, U.S. firms often fall short of their 
competitors in terms of flexibility on financing, adaptation of product 
design to local market needs, assistance with marketing, and after-sales 
service.  Spanish procedures follow those of the rest of Western Europe, 
where price remains paramount.  However, credit terms, after-sales 
service, and marketing assistance are key factors in any successful 

Use of credit to purchase consumer goods is now widely accepted in 
Spain, particularly in the cities, and banks compete aggressively to 
offer coverage.  All major U.S. credit cards, including Visa, Master 
Card, American Express, and Diners Club, are used.  Department stores 
and some upscale retailers sometimes offer their own credit, 
particularly for purchases of large ticket items.  Consumer credit is 
commonly used for the purchase of cars and homes. Housing developers, 
automobile dealers, and some manufacturers offer consumer financing 

The Madrid hub principally serves the central, southern, and western 
parts of Spain, while Barcelona serves the north and east.  Some 
overlapping occurs in Zaragoza, Bilbao, Valencia, and the Canary 
Islands.  Barcelona usually encompasses the Balearic Islands and the 
enclave cities of Ceuta and Melilla in North Africa. 

Regional characteristics influence buying patterns.  A competent agent 
or distributor takes this into account when marketing his products.  The 
Basque Country, part of Spain's north coast, and Catalonia, which 
includes Barcelona, have long traditions as autonomous regions with 
their own official languages and customs.  There are 15 other autonomous 
communities (similar to U.S. states) with varying but lesser degrees of 
autonomy and cultural identity. 

Madrid is Spain's center for banking, administration, and 
transportation, and it serves as the headquarters of many large 
international companies. Barcelona is the capital of Catalonia which 
boasts a strong industrial tradition.  The primary industries have 
historically been textiles, paints, chemicals, printing, plastics, 
fertilizers, electrical engineering, and machinery manufacture.  
Barcelona and Bilbao, the Basque Country's industrial center, are 
Spain's leading ports.

As an important container port, the Bilbao region has extensive 
shipyards, steel-works, iron-ore mines, chemical and cement works, pulp 
and paper mills, and oil refineries.  In eastern Spain, Valencia is the 
center of the Spanish furniture and ceramics industries, as well as a 
major center for citrus fruits and vegetables. 

Seville, the center of Andalucia with its river port, is a major source 
of olive oil, cork, wines, and other agricultural products.  The free 
port city of Vigo, in the far northwest, is Spain's most important 
fishing and fish-canning center. 

Agents/Distributors - Finding a Partner

Most U.S. exporters sell their products in Spain through distributors.  
Agents and distributors are generally exclusive, covering the entire 
country.  Although a majority of Spanish distributors have their head 
offices in Madrid or Barcelona, many are located in Bilbao, Valencia, 
and other Spanish industrial cities where a particular industry may be 

Distributors normally have sub-offices, enabling them to cover other 
parts of the country.  In general, a distributorship is governed by the 
conditions  agreed upon between the parties.  Spain applies the "freedom 
of contract" theory, by which the contracting parties may establish any 
stipulation, condition, or undertaking provided that it does not violate 
Spanish law, morals, or public policy. 

The principal-agent relationship is governed by Spanish Civil and 
Commercial Codes and Spanish labor laws.  On May 4, 1982, the Spanish 
Government amended Royal Decree 203381, regulating the "special labor 
relationship" between a principal and its agent.  An amendment (R.D. 
11951982) was published in the Boletin Oficial del Estado (Official 
State Bulletin, published daily as in the U.S. Federal Register) on June 
14, 1982.

This decree requires a principal and agent to execute a written contract 
in which they stipulate the agreed terms, including provisions for 
cancellation of the agreement.  A copy of the contract should be filed 
with the sales representative's local Office of Employment.  A fixed-
term, written contract normally does not raise any relevant issue with 
respect to its termination.  By contrast, termination of an indefinite 
duration agreement may raise a number of legal issues.  Successive 
renewals of a fixed-term contract may be interpreted by the courts as an 
indefinite-duration contract.

It also provides that, in the case of a definite term appointment, the  
term will be automatically renewed upon expiration for an identical 
term, unless either party objects to the renewal in writing at least one 
month before the end of the initial term.  The amendment limits all 
definite term appointments to a year, which can be automatically renewed 
only once.  However, upon the expiration of the renewal term, the 
appointment will be automatically converted into an indefinite-term 
appointment, unless either party objects to the conversion in writing at 
least one month before the end of the renewal term.

Unwritten agreements for all legal purposes are enforceable contracts, 
but require burden of proof.  Under Spanish law, no one is bound in 
perpetuity. Should a party grant indefinite, exclusive rights, it is not 
bound forever by the initial commitment to the point that it cannot 
revoke the original, exclusive mandate.  Nevertheless, an ongoing, 
indefinite relationship cannot be terminated without a reasonable cause.  
If it is terminated, damage compensation may apply, particularly if the 
termination is viewed by the court as being without reasonable notice or 
abusive.  Historically, the Spanish courts have been extremely 
conservative in awards.

U.S. firms seeking foreign distributors may contact the nearest U.S. 
Department of Commerce district office for an Agent Distributor Service 
or for assistance in requesting "Gold Key" service.  The Gold Key 
service is tailored to the needs of a visiting U.S. businessman, and 
assists in reaching potential agents and/or distributors.  Participation 
in trade events often leads to contracting with an agent or distributor.


There are 250 franchises in Spain, with over 25,000 outlets opened.  
They account for over 5 percent of total retailing.  It is forecast that 
they will grow to 7 percent of all retail stores by 1998.  Around 62 
percent of franchises are Spanish, followed by French, American, British 
and Italian.  Around 73 percent of all franchises are in the commercial 
retail sector.  Within commercial retail, consumer apparel is the 
highest with 44 percent of that total.  Franchised food stores are next 
in terms of numbers.

Franchising is a great tool for traditional small retail stores to face 
the stiff competition posed by larger retailing stores.  In large urban 
areas,  small retailers are faced with few traditional options; 
specialize, associate  with other retailers or close down.  Franchising 
offers them a safe and most promising new option.

Domestic statistics show that out of every five new independent retail 
operations opened each year; three or four either change business, 
ownership or close down before their first anniversary.  The same survey 
shows quite a different outlook for franchised outlets.  Four out of 
five remain open and still working with the same brand and promoter 
after their first anniversary. 

Several reasons have allowed franchising to maintain a non-stop 
sustained growth since the mid-1970's.  The most important ones are a 
continued improvement in the living standards of Spaniards and improved 
training and education of professionals in the retail trade.  

Franchising will remain popular in Spain.  Although its present growth 
rate has been slowed by the current recession, all analysts believe that 
demand will be sustained in the future.  As the market becomes more 
segmented and requires further specialization in retailing, demand for 
franchising will continue. 

Direct Marketing 

In the past, companies started to switch from massive media advertising 
campaigns to more cost effective and "measurable" promotional campaigns 
offered by direct marketing.  This change helped boost direct marketing 
demand in recent years.  Companies are finding out that in many cases, 
some of the marketing strategies used by direct marketing are more 
effective and less costly than a TV ad.  This trend will continue in the 
future. Under current economic conditions, companies look for solutions 
that are less expensive. 

The direct marketing sub-sector has maintained high growth in recent 
years.  Specifically, this market grew 10 percent to $1.5 billion last 
year (1993), and growth estimates for 1994 are 6 percent.  It is 
forecast to increase at a compound annual average growth rate of 15 
percent through 1997. 

One of the fastest growing segments in direct marketing is mail-order.  
The total mail-order market for 1993 was $667 million, almost a 12 
percent increase over the previous year. Marketing by mail-order 
represents only 0.4 percent of Spain's total distribution sales, lagging 
far behind the European Union average of 3-5 percent.  It is estimated 
that Spaniards spend an average of fifteen dollars in mail-order 
purchases compared to EU's average of $150.  Sector analysts forecast 
that Spain will catch-up with the EU's average mail-order spending in 15 
years time.

Tele-marketing is the fastest growing segment within the direct 
marketing activity.  Tele-marketing receipts amounted to $83 million in 
1993, about 20 percent of total direct marketing billings.  Sales 
estimates for 1994 indicate a 15 percent growth.

Mail order and tele-marketing spearhead this sub-sector's growth.  They 
make up 44 percent of total direct marketing billings at present, and it 
is forecasted that they will have an even bigger share of total revenue 
in the near future.  Large and better known distribution companies are 
entering the mail-order activity while growing sophistication in the 
telephone services offered by the public telephone company, Telefonica, 
brighten tele-marketing's future.

There are no specific regulations on distributing products through 
direct marketing.  There is a law called LORTAD that regulates data 
privacy.  Companies interested in developing a direct marketing 
operation in Spain should contact and join the Spanish Direct Marketing 
Association (AEMD - Asociacion Espanola de Marketing Directo).

Asociacion Espanola de Marketing Directo
Avda. Diagonal 437
08036 Barcelona
tel: (34-1) 414-0538
fax: (34-1) 201-2988

Joint Ventures/Licensing

Joint ventures in Spain can operate under different forms.  A group of 
companies can form temporary associations (uniones temporales de 
empresas - UTE), designed to exist for only a limited time, to undertake 
specific projects.  This type of association does not have separate 
legal personality, rather companies maintain their legal status while 
allowing common operations under a set of regulations.  Foreign 
companies can enter this type of arrangement. 

An Economic Interest Group (agrupacion de interes economico -AIE) is a 
vehicle for a joint venture between Spanish participants. It is similar 
in concept to a partnership, its participants having joint and separate 
liability for its debts.  To form an AIE, the participants must execute 
a public deed, incorporating bylaws, and record it at the commercial 
register.  The internal operation of an AIE is similar to that of a 
corporation, and an AIE can be transformed at any time into any other 
type of commercial entity. 

There is also a European version of the AIE, the European Economic 
Interest Group (agrupacion europea de interes economico -AEIE).  This is 
a cross-border version of the Spanish AIE, introduced by EU Regulation 
2137 of 1985.  A local AEIE is a separate legal entity and must be 
incorporated in Spain.  It must be recorded in the commercial register, 
and in almost all respects it is similar in constitution and operation 
to an AIE.

These three models of joint venture are tax transparent; that is, their 
income is apportioned among their members.  In all of these cases losses 
as well as profits can be attributed to the members. 

Licensing agreements are similar to those in the United States and the 
rest of Europe, and are contemplated under local business law.  
Licensing agreements are reviewed by the General Directorate of Foreign 
Transactions (DGTE) in the Ministry of Economy.

Payments for licensing fees, technical assistance, consultants' fees, 
trademarks, patents, technology transfers, and other non- patented 
matters, are freely transferable abroad.  In most cases such payments 
are subject to Spanish taxation and normally taxes will be withheld at 
the time of payment.  The procedure to recover amounts withheld are 
established in the double taxation agreement between the United States, 
implemented on January 1, 1991.  This treaty follows the OECD Draft 
Convention on Double Taxation. 

Steps to Establishing an Office

The first decision a foreign investor in Spain must make is whether to 
incorporate a subsidiary (i.e. a separate corporation) or a branch.  
Both have full legal status for any kind of operation, and their profits 
are taxable in Spain.

If the investor decides to incorporate a subsidiary, the next decision 
is whether to incorporate a public limited-liability company (sociedad 
anonima, or SA) or a private limited company (sociedad de 
responsabilidad limitada or SL or SRL).  The SA is structured for larger 
operations; the SL for smaller.

In both of these companies the shareholders are not liable for the 
company's debts.  The main differences are in their capital (10 million 
pesetas versus half a million), the number of founding members (3 versus 
2), flexibility permitted at general meetings, transfer of shares and 
management of an SL.

Companies interested in setting up an operation in Spain must consider 
legal advice.  Major consulting groups as well as law firms are 
available to carry out the necessary steps to incorporate in Spain.  A 
summary of the steps needed to carry out such an operation follows. 

(A) To acquire legal status, an American firm must follow the following 

- Registration of company name: promoters must acquire a certification 
that the name chosen for the future company is not already registered. 
Applications must be presented at the Central Mercantile Registry.  The 
certification is valid for two months.

- Public deed or incorporation charter: the founding partners proceed to 
sign the constitution deed for the business according to the company's 
charter.  This is done at any of the public notaries that exist in 
Spain.  The name certification is required as well as the company's 

- Pay asset transfer tax and legal proceedings document tax: these are 
taxes paid up for new incorporation (they amount to roughly one percent 
of capital stock).  These taxes have to be paid up at the provincial tax 
delegation where the company has incorporated.  Needed documents are a 
completed form model 600, both a legalized and simple copy of the Public 
Deed (provided by the public notary).  This must be done within 30 
working days from the date of Public Deed. 

- Acquire the Tax Identification Code (locally called CIF - Codigo de 
Identificacion Fiscal): this number becomes the company's identification 
and is required for all the transactions.  The provincial tax delegation 
provides it.  Needed documents are form model 036, a copy of the public 
deed and a photocopy of applicant's I.D. if it is a partner, or 
photocopy of the power of attorney authorizing the applicant.  This must 
be done within 30 working days from the public deed.  The CIF number 
must be withdrawn within 6 months of application.

- Registering the company: the company must be registered at the 
Corporate registry corresponding to the incorporation address. Needed 
documents: first copy of the Public Deed (provided by public notary) and 
certificates that taxes (look above) have been paid up.  There is a two 
month period for completing registration.

(B) In order to start any economic activity the following are required: 
- A fiscal license: companies and individual businessmen must acquire a 
fiscal license.  This is a local tax levied on fiscal year's activities.  
This can be acquired at the local tax administration.  Needed documents: 
I.D. of individual person or C.I.F. (tax identification code) for 
companies, I.D. of legal representative and motor vehicle tax and 
technical inspection card if it is a transport enterprise.  In some 
professional services the approved seal of the professional association 
or bar is required.  This license must be requested 15 days before 
starting any economic activity. 

- Census declaration: companies and individual businessmen must register 
in the corporate census for value added tax purposes and to be included 
under personal tax declaration system.  This is done at the local tax 
administration.  Necessary documents: Photocopy of C.I.F. (tax 
identification code) and identity card. It must be done prior to the 
beginning of business activity.

- Tax books: regulations establish that companies must reflect different 
internal operations in special books; (a) income and sales book; (b) 
expenses or purchase book and (c) inventory book. Books have to be 
legalized at the local tax administration. Necessary documents: fiscal 
license and photocopy of I.D. These books have to be legalized 30 
natural days after fiscal license. 

(C) Social Security Registration 

- Registration of a company: once incorporated and ready to start 
operations, companies have to register with Social Security.  This 
registration is unique for each province where there is a work center.  
The self-employed have to register as well.  Documents are a copy of the 
deed of constitution of the company and photocopy of the applicant's ID 
or power of attorney.  For individual businessmen, an ID is required.  A 
contract with a Workers Compensation Fund is also needed for this 
procedure. These procedures are carried out at the local Social Security 

- Opening communication: communication of the opening of the work center 
or resumption of economic activity.  Must be done within 30 days 
following the beginning of activity.  Companies and individual 
businessmen must keep two logs; (a) visitor's log and (b) a personnel 
registration book.  This needs to be done at one of Social Security's 
provincial delegations.  Necessary documents: details of the company and 
work center plus description of the activities to be carried out. 

(D) The following procedures may be required by the town council (it 
varies from town to town).

- Municipal tax liability depending on the street category. 

- Construction licenses if there is going to be any work carried out in 
the premises to adapt it to the new economic activity.

- Opening license that accredits that the project's installations 
conform with municipal regulations.

- Town council is required to be notified every time there is a change 
in ownership.

(E) Other specific requirements

- Industry Property Registry for trademarks, patents, commercial names, 
distinguishing signs, industrial models, etc.

- Industrial Registry for industrial activities, workshops, toxic or 
dangerous substance warehouses, as well as manufacturing operations of 
any product.

- Company Qualification Certificate for construction, installations 
and/or electrical repairs, wood and cork sectors, and activities of 
engineering and consulting.

- Identification papers or certificate for individual persons or 
companies involved in electrical installations, gas, air conditioning 
and compressors.

- Special Registry for food industries and wholesale establishments 
(except supermarkets and hyper-markets). 

- Special Registry for industries involved in the transformation and 
storage of agricultural products.

- Special registry for manufacturers, importers, retailers and 
distributors of gambling equipment. 

- Commencement authorization for bars, cafeterias, restaurants and 

- Application license for travel agencies.

- Special registry for companies involved in the security sector. 

Selling Factors/Techniques

Client satisfaction is not a big issue in Spain.  Foreign distribution 
companies that have entered this market have introduced this concept.  
Only recently are consumer groups beginning to appear.  A new product 
liability law was passed in July of this year (1994) which will 
effectively protect consumers. 

Relationships are still very important in selling U.S. products 
successfully in Spain.  This factor is sometimes more important than 
price or quality, especially in large account sales. The decision making 
process within a Spanish company is different from that in the United 
States.  It is usually centralized in the leading executive of the 
company.  This person will take action after it is reviewed by different 
departments, making the sales process longer.  An initial "yes" usually 
means that they will study the situation, and not necessarily that they 
will buy the product.

New selling techniques are becoming very popular.  Vending machines have 
sprouted all over Spain in the last decade.  Direct marketing by mail 
order, telephone, TV or computer are growing considerably.  Demand for 
logistical services is rising sharply.  Otherwise, selling techniques, 
taking into consideration local tastes, are very similar to those in the 
Western World. 


There are approximately 15 million television sets in use in Spain.  The 
average daily television audience is 23 million.  The relative success 
of the private networks since 1990 has weakened the domain of TVE (TVE: 
30 percent, Autonomous: 15 percent, Private: 55 percent).

Until 1990, Television Espanola (TVE) was the only national television 
network.  It operates two channels, TVE1 which concentrates more on news 
and popular entertainment programs and TVE2 which more closely 
approximates the offerings of a U.S. PBS station.  It also carries more 
sports coverage than TVE1. 

Catalonia, the Basque Country, Galicia, Andalucia, Valencia and Madrid 
operate regional (autonomous) government TV stations.  In 1990, the 
Federation of Autonomous Radio and Television (FORTA) was formed to 
centralize film and sports rights acquisition for regional television 
stations and to coordinate their planning and programming processes. 

In 1989, the Government of Spain authorized the creation of commercial 
television and issued licenses to three new private commercial channels:  
Antena 3 TV, Canal Plus, and Telecinco.

Antena 3 TV: This was the first private national network to begin 
broadcasting, in December 1989.  Today it broadcasts 24 hours per day, 
reaches 82 percent of Spain and is the leader in terms of size of 

Telecinco:  TV 5,the second private channel, began broadcasting in March 
1990.  It has a hold on children's programming. 

Canal Plus: Controlled by Prisa/El Pais, it broadcasts a mixed set of 
free and coded programs. For the latter, viewers pay a users fee.  It 
has close to one million subscribers but its encoded programs are 
available to anyone with a television and a de-codifier supplied by 
Canal Plus. 

Cable is slowly growing in Spain.  Legislation to regulate cable 
television is being debated in Parliament.  It is expected that by the 
Spring of 1996 there will be a cable TV regulation.  The Mexican 
satellite service, Galavision, and the British Sky network are also 
widely available.  In mid-1992 the first of two Spanish Hispasat 
satellites was launched in an effort to promote cable TV within Spain 
and send a signal to Latin America.

Spain has a well-developed chain of radio stations.  There are 35 
million (estimated) receivers in use and the estimated average daily 
audience is 16 million.  The majority of Spaniards obtain their news 
from radio, not television, placing radio as the most important medium 
for the dissemination of information concerning the U.S.  The principal 
radio networks are: 


SER (private)....................................... 6,735,000
Radio Nacional (Government)......................... 3,245,000
COPE (Catholic Church).............................. 2,492,000
Antena 3 (private).................................. 1,305,000
Catalunya Radio.....................................   422,000

In Madrid, five major daily newspapers and three economic/financial 
dailies receive international and national coverage from the major world 
wire services and three Spanish news agencies, one of which is the 
government-owned EFE service.  Most also have U.S.-based correspondents.  
Madrid dailies:

DAILY NEWSPAPER                                   CIRCULATION

EL PAIS (liberal-left) .............................   407,000
ABC (conservative) .................................   327,000
EL MUNDO (centrist).................................   255,000
DIARIO 16 (centrist) ...............................   163,000
YA (center-right) ..................................    46,000
EXPANSION (economic)................................    34,000
CINCO DIAS (economic).   ...........................    21,000
LA GACETA DE LOS NEGOCIOS (economic),(est.)  .......    16,000

The three major Madrid-based news agencies are:  EFE, Colpisa and Europa 

Barcelona has five daily newspapers.  They also receive international 
coverage from international wire services and the three news agencies 
headquartered in Madrid.  Barcelona dailies:

     TITLE                                        CIRCULATION

EL PERIODICO (center-left)..........................   181,000
LA VANGUARDIA (independent).........................   206,000
EL OBSERVADOR ......................................    50,000
AVUI (Catalan/nationalist) .........................    35,000
DIARI DE BARCELONA (Catalan/nationalist) ...........    30,000

About 40 magazines are published in Spain.  Some of the more important 

      TITLE                           CIRCULATION

HOLA (social).......................................   656,410
TIEMPO (left-independent)...........................   179,017
CAMBIO 16 (centrist)................................   143,000
TRIBUNA (independent) ..............................    95,000
EPOCA (conservative) ...............................    78,203
ACTUALIDAD ECONOMICA (econ conservative)............    31,479
EL SIGLO (centrist) ................................    25,000
MERCADO (economic conservative).....................    15,000
POLITICA EXTERIOR (foreign affairs).................    12,000

U.S. non-government correspondents and media representatives:

The Associated Press, Time, LA Times, The International Herald Tribune 
and The Wall Street Journal are represented in Madrid although only AP 
has a full-fledged correspondent in residence.  Among broadcast media, 
CBS, ABC, and CNN are all represented by stringers.

Broadcast Media

Television is fast becoming the preeminent advertising medium, replacing 
newspapers in peseta volume of ads shown.  With 300 television sets per 
1,000 inhabitants, television reaches 96 percent of Spanish households.  
The standard TV commercial is 20 seconds, and 10 seconds is the minimum.  
Rates are reasonable.  Radio advertisements last 10 to 30 seconds and 
are generally used by local merchants in urban areas. 

Printed Media

Full color advertisements are offered in all the leading dailies and 
magazines, and rates are considered low by U.S. standards. Newspapers 
publish regular supplements on topics such as high technology, 
communications, education, and science, and these are often the media of 
choice for advertisements by leading multinationals in these fields. The 
technical press also has reasonable rates, but circulation is 
considerably smaller than in comparable magazines in the United States.

Billboards are commonplace in urban areas.  They are prohibited along 
main roads.  Rates are reasonable. 

Ads may be placed directly in the media or through an ad agency. 
Commissions average 15 percent, and many agencies have creative staffs 
to develop ads likely to appeal to the Spanish population, including 
regional tastes.  In general, U.S. multinational ads are successful, 
once adapted to Spanish tastes.  There are no standard rates for ad 
placement or creative development, and competition is strong for 
multinational and foreign clientele. Ad agencies are located mainly in 
Madrid and Barcelona. 

Management Consulting Firms

National and multinational market research agencies offer their services 
mainly in Madrid and Barcelona, with expertise in key sectors such as 
footwear, textiles, processed foods, metallurgy, shipbuilding, and 
electronics.  Most major American consulting and auditing firms are 
present in Spain, including KPGM Peat Marwick, Arthur Andersen, Price 
Waterhouse, Deloitte & Touche, and Ernst & Young. 

Pricing Product

Pricing a product in Spain is similar to that in the United States, 
although mark-ups tend to be slightly higher.  Products and services in 
Spain are subject to Value Added Tax.  At present it stands at 16 
percent.  A reduced rate of six percent is applied to sales and imports 
of human or animal foodstuffs, water, books, newspapers, magazines, 
pharmaceutical products, personal dwellings, and school supplies. 

Payments are based on 90 day terms.  Large corporations (including large 
retailers) negotiate or impose larger payment terms that can go up to 6 
months.  The Government defers all payments.  Depending on which 
department, payments can be deferred by as much as one year.  So, 
financial charges must also be factored into product pricing. 

Sales Service/Customer Support

Demand among Spanish consumers for sales and customer service is 
growing.  All technical products as well as most consumer products have 
sales service/customer support.  Regulations require that sales service 
is available for government procurement.

Customer support is not as developed as in the United States. Many shops 
have no return policies.  Only large department stores and new retailers 
(usually foreign) have as liberal return policies as in the United 

Selling to the Government

Even though Spain automatically acceded to the GATT Government 
Procurement Code when it joined the EU in 1986, it did not implement the 
code until late 1992.  EU directives on the Procurement Code, 
particularly EU Directive 88295 of March 1988, provide the framework for 
Spanish legislation on government procurement.  These directives outline 
procedures for awarding contracts for construction and supply of public 
works, as well as procurement for entities operating in the fields of 
telecommunications, water, transport, and services.

A proposed directive will open up procurement of services such as 
insurance, architecture, and waste disposal. 

Although a law on consolidating and rationalizing public-sector 
purchases was passed in 1985, there is still no central purchasing 
agency within the Spanish Government or its controlled industries.  Each 
government ministry, agency, or government-owned company procures 
supplies and services independently.  Regional and local government 
agencies follow the same general procedures regarding foreign purchases 
as the central government.

Various types of tenders are used in government procurement:

a) the auction (subasta), in which the contract is awarded to the lowest 

b) the selective tender (concurso-subasta), in which the contract is 
awarded to the lowest of pre-qualified bidders;

c) the tender (concurso), in which the contract is awarded on the basis 
of most advantageous overall proposal in which price may not be the 
determining factor; and 

d) the private tender, in which the contract is awarded to whatever firm 
the government chooses.

International tenders are announced at least 40 days prior to the 
submission date and domestic tenders 20 days before the submission date.  
Validating documentation may be requested at submission.  All 
requirements are published in the Official State Bulletin.  For major 
procurement, especially military systems, the Spanish Government 
generally asks vendors to offer substantial offsets.  An offsets package 
may combine transfer of technology, investment, or additional Spanish 
export transactions.  Typical offset commitments for military sales 
reportedly range from 100 to 130 percent of the purchase price.  

U.S. firms seeking contracts from Spanish Government-controlled entities 
must have an established agent, distributor, or subsidiary in Spain 
before bidding on contracts.  Under Spanish law, foreign companies 
seeking contracts with the Spanish Government enjoy the same 
opportunities as do Spanish firms.  The foreign enterprise must, 
however, be a legal entity (for example, corporation or partnership) in 
accordance with its own national laws. 

The foreign firm must also be prepared to accept jurisdiction of the 
Spanish courts in legal issues that may arise in implementing the 
contract.  Supply and service contracts are approved by the ministry 
having jurisdiction.  Approval of the Ministry of Economy and Finance is 
required for contracts resulting in payments in foreign currencies. 

Protecting your product from IPR infringement

Spain is a signatory to the Paris Convention for the Protection of 
Industrial Property.  The Spanish Patents Act of March 20, 1986 brought 
Spain into conformity with the European Patent Convention and the 
anticipated EU Patent Convention as a requirement for its entry into the 
EU.  Both the Trademark Law of November 1988 (Law 32) and the 
Intellectual Property Law 1750/87 address protection for brand names and 
trademarks.  Spain is also a party to the Madrid Agreement on 
Trademarks.  These laws are in accordance with EU standards.  The 
Intellectual Property Law of November 1987 offers copyright protection. 

a) Patents

A non-renewable 20-year period for working patents is available, and the 
patent must be worked within three years of patenting.  Spain is 
revising its patent laws pertaining to chemicals, pharmaceutical, and 
biotechnology to conform with EU standards. 

b) Industrial Designs

These are known by their form or external characteristics and are 
eligible for exclusive exploitation for renewable periods of 10 years.  
Although third parties may oppose registration on basis of similarity to 
already registered models, registration is not forfeited because of non-

c) Trademarks

The Industrial Property Registry provides protection of trademarks for a 
10-year period from the date of application, although such protection 
may be renewed.  Trademarks must be registered to be protected.  
Protection is not granted for generic names, geographic names, those 
violating Spanish customs, or other inappropriate trademarks. 

d) Copyrights

Copyright protection is extended for all literary, artistic, or 
scientific creations, including computer software.  Spain and the United 
States are members of the Universal Copyright Convention. To be accorded 
protection, U.S. authors must register with this organization. 

Need for a Local Attorney

Foreign companies and individuals are advised to hire legal advice for 
any operation they intend to do in Spain.  Either to set up a subsidiary 
or a branch, to carry out business transactions or to acquire residency 
in Spain.  Regulations are complex and legal help is useful in many 
every day commercial activities. 


Best Prospects for Non-agricultural Goods and Services

List of Best prospects

1.   Pollution Control and Water Resources Equipment
2.   Franchising
3.   Computers and Peripherals
4.   Aircraft and Parts
5.   Telecommunications Services
6.   Electric Power Systems
7.   Medical Equipment
8.   Building Products
9.   Architectural/Engineering Services
10.  Telecommunications Equipment
11.  Chemical Machinery
12.  Industrial Controls

Rank of Sector: 1 

Name of Sector: Pollution Control and Water Resources Equipment

ITA Industry Code: POL/WRE

Estimated average annual growth rate of imports from the U.S. is 30 
percent through 1998.  The Spanish Government has given top priority to 
the expansion of sewage treatment systems throughout the country.  Spain 
is expected to spend over $15 billion for sewerage treatment 
systems/hardware from 1993 to the year 2005.  Around $11 billion will be 
from the private sector and be spent before the year 2000.  American 
businesses will have an opportunity to bid on these contracts, but 
should be fully prepared to compete with companies based in the EU. 

Since January 1, 1993, when the Single European Market was established, 
Spain has to fully comply with all EU Environmental Directives.  In 
addition to the Central Government, there are 17 Autonomous or Regional 
Governments in Spain which issue environmental laws and regulations and 
that are mandatory for their territories.  The Regional Governments 
incorporate the laws issued by the Central Government as well as the 
Directives of the  Community, and they are actually the ones that 
enforce all of them within their territories.  

The Spanish Central Government budget for Pollution Control Projects in 
1995 call for the expenditure of almost $2 billion, for industrial 
clean-up as well as for research, development and new technology.  In a 
recent study prepared by several Spanish banks, the annual national 
investment in environment is of over $5 billion, most of which is from 
the public sector in civil environmental works and water treatment.  The 
environmental market is expected to grow 12 percent annually.

The new National Criminal Code which has just been presented to the 
Congress, and which most probably will be approved and implemented from 
the first quarter of 1996, calls for fines of up to $300,000 and one to 
four years imprisonment for those responsible for creating emissions, 
dumps, wastes, radiations, noises, vibrations, injections or deposits to 
the atmosphere, soil, sub-soil, and sea and continental waters, which 
result in ecological damages.  Government officials who permit or favor 
these actions will be punished with up to one year imprisonment, fines 
of up to $ 300,000, and the inability to hold any public office for 
eight to twelve years.  This new regulation will force Spanish industry 
to look for cleaner technologies and pollution control equipment to 
treat their emissions and industrial wastes, etc.  This will mean new 
and greater opportunities for U.S. environmental technologies over the 
next eight years.  

The Spanish Government estimates that the investment required to meet EU 
Environmental Standards could be over $ 12 billion.  The major sectors 
that have to make the biggest investments are: oil and energy, 
chemicals, plastics, motor vehicles, mining, metallurgy, tanning, 
textiles and other basic industries.

        Data           (all figures in US Dols millions)

                              1994     1995     1996 
A. Total Market Size:        4,000    9,648    10,800
B. Total Local Production:   2,800    6,756     7,500
C. Total Exports:              600      700       800
D. Total Imports:            1,200    2,800     3,300
E. Imports from the U.S.:      360      800     1,000 
F. Exchange rate $1            134      130       130

(The above statistics are unofficial estimates)

Rank of Sector:  2

Name of Sector: Franchising

ITA Industry Code: FRA 

The number of franchises established in Spain in 1994 was approximately 
250, representing a growth of almost 20 percent compared with 1993. The 
total number of franchise units extends just over 23,500; a 30 percent 
growth compared with 1993. This trend will continue through 1996.

The franchise sector in Spain is relatively underdeveloped compared to 
the rest of the EU. Approximately 4 percent of retail sales are 
conducted through franchises. The retail/distribution sector is 
undergoing a dramatic transformation which greatly benefits franchising. 
Many believe that the survival of the traditional shop lies through 
conversion to franchise. The potential for U.S. franchising in Spain is 
very promising. U.S. franchisers have strong representation in the fast 
food and service oriented markets. However, there are proportionally 
fewer U.S. franchises in the remaining sectors.

With an average growth rate of 20 percent, franchises in Spain offer 
excellent new business opportunities to expanding companies. The service 
sector: Real estate, temporary employment, cleaning services, parcel and 
mail deliveries, management services, language teaching, software 
applications, travel agencies, car services etc. are hot prospects for 
the Spanish market.

             Data       (all figures in US Dols millions)

                                          1994     1995     1996

A. Total Sales                            6,000    7,200    8,500  
B. Sales by local firms                   3,600    4,200    4,800
C. Sales by local firms abroad              150      200      250
D. Sales by foreign owned firms           2,400    3,000    3,700
E. Sales by U.S. owned firms                660      800    1,000
F. Exchange rate $1                         134      130      130

(The above statistics are unofficial estimates)

Rank of Sector: 3

Name of sector:  Computers and Peripherals

ITA Industry Code: CPT

Following a period of crisis, the computer sector has now begun a sound 
recovery.  Annual average growth in this sector is estimated at 10 
percent though 1997.  Most industrial and service sectors (banking, 
insurance, communications) are generating increased demand due to 
renovations of equipment and the introduction of new, more efficient 

CD-ROMs account for a large part of the recovery in this sector.  The 
CD-ROM market has made its entry into the Spanish market and annual 
growth rates of over 300 percent are expected for the next three years.  
The largest growth is expected in the industry/business segment, but the 
home sector is also expected to experience impressive growth.  There are 
also good opportunities in specific segments like laser printers, 
plotters, graphic cards, laptops, as well as in LAN hardware.

U.S. brands dominate the market, and face little competition from EU and 
Japanese manufacturers. The current U.S. dollar exchange rate also 
favors U.S. brands. Most brands of U.S. hardware come from plants in 
South East Asia.  

The Spanish "n" must be physically present in all keyboards. 

               Data       (all figures in US Dols millions)

                                     1994       1995        1996

A. Total market size                 3,158      3,500       3,850
B. Total local production            1,148      1,380       1,600
C. Total exports                       400        510         650
D. Total imports                     2,390      2,630       2,900  
E. Imports from the U.S.             1,000      1,120       1,255
F. Exchange rate  $1                   134        130         130

(The above statistics are unofficial estimates)

Rank of Sector:  4

Name of Sector:  Aircraft and Parts 

ITA Industry Code:  AIR

Recent EU "open skies" policy has brought competition in the Spanish air 
transport market.  The liberalization of Spain's internal air transport 
has resulted in an increase of new airlines.  Seven new regular airlines 
have started operations since January 1994.  There are eight more 
companies requesting airline licenses from the Civil Aviation 
Authorities.  This has resulted in an increase in the total number of 
airplanes operating in Spain, and a steady reactivation of the spare 
parts market.  This trend is expected to continue as underdeveloped 
regional market is growing rapidly. 

About 80 percent of Spain's civil airplanes come from the U.S. 
manufacturers Boeing and McDonald Douglas.  Even the most recent players 
in this market have chosen American airplanes versus European ones.  
Spanish airlines prefer financial leasing versus outright acquisition.  
Leading financial companies in Spain are involved in buying aircraft to 
lease to airlines.

In the drive to decrease operating costs, several airlines are 
considering operational leasing from U.S. companies.  This service 
market is expected to increase dramatically in the short term.  

U.S. aircraft manufacturers face competition from domestic companies 
(small aircraft) and from Airbus.  Nonetheless, estimated average annual 
growth rate of U.S. exports in this sector is 12 percent through 1997.

The recent agreement by the Spanish Government to acquire surplus F-18s 
from the U.S. Navy, to complement the 75 units of this model that the 
Spanish Air Force already has, will greatly boost engine, system 
upgrades and spare parts exports.  The Spanish Armed Forces are also 
considering the acquisition of "Black Hawk" helicopters, that will 
greatly enhance opportunities for U.S. air parts manufacturers.

                         Data      (all figures in US Dols millions)

                                 1994         1995    1996    

A. Total market size:           1,431        1,615    1,780
B. Total local production:        302          345      370
C. Total exports:                  21           25       25
D. Total imports:               1,149        1,300    1,440 
E. Imports from the U.S.:         900        1,000    1,110
F. Exchange rate $1:              134          130      130

(The above statistics are unofficial estimates)

Rank of Sector: 5

Name of Sector: Telecommunications Services 

ITA Industry Code: TES

The telecommunications market is still dominated by Telefonica, Spain's 
national operator.  Gradual deregulation is slowly opening up 
opportunities for U.S. firms, although not as quickly as hoped for since 
the long-awaited cable telecommunications bill will not be passed until 
Spring 1996.  Cable TV programming and services will benefit enormously 
from U.S. know-how, and once the regulatory framework is finally 
approved, activity will be frenetic in a quest to develop and offer 
services to the Iberian Information Superhighway.

Two GSM cellular networks will begin operating in 1995 (one has a U.S. 
technological partner), although until 1997 anticipated growth will 
still be in the TACS900 analog service run by Telefonica, whose 
subscriber rate is growing at a spectacular rate of 70 percent.  By 
1997, a PCN cellular license may be offered, although not until the GSM 
network expands.

The big money spinner is voice telephony.  Although this market will not 
be open to competition until 1998, U.S. firms can get their foot in the 
door by offering voice telephony as a value added service for those 
corporate clients who have U.S. equipment linking their closed group 
network for data transmission (liberalized service).  For domestic 
clients, U.S. firms can join those already offering callback and calling 
card services for long distance calls. 
Satellite transmission will be free to competition in 1995, opening 
opportunities to Spanish program providers and operators.  It is worth 
noting that radio-paging services (liberalized in 1993) are struggling 
to keep their heads above water due to lack of clients.

                   Data      (all figures in US Dols millions)

                                        1994       1995       1996    

A. Total market size:                 10,400       10,920    11,466
B. Total local sales:                 11,180       11,740    12,327
C. Sales abroad by local owned cos.    2,900        3,045     3,197
D. Local sales by foreign owned cos.   1,500        1,950     2,450 
E. Local sales by U.S. cos.:             450          525       620
F. Exchange rate $1:                     134          130       130

(The above statistics are unofficial estimates)

Rank of Sector: 6 

Name of Sector:  Electric Power Systems 

ITA Industry Code:  ELP

The Government of Spain has just made some modifications to the National 
Energy Plan 1991-2000, adjust some of the objectives to current market 
realities.  The changes stress the need to develop even further 
renewable energy in line with the update of the EU Thermie Plan.  The EU 
plan promotes projects in renewable energy through subsidies .  There 
are good opportunities for U.S. exporters in wind and solar energy, and 

Spain offers good potential for wind energy development.  Several U.S. 
and Spanish companies are already developing projects that will build 
close to 700 MW of wind farms, throughout Spain.  According to 
estimates, there is good potential to develop even more wind energy.  
U.S. companies can benefit from the opportunities arising in this sector 
thanks to their long experience in wind technology.

The National Energy Plan establishes large investments in utilities 
using gas as the primary source of energy.  There are also good 
opportunities in small co-generation equipment.  

U.S. equipment makes up roughly 41 percent of total imports.  They face 
very strong competition from EU manufacturers such as German (20 percent 
of import share) and French equipment suppliers (15 percent share).  
Estimated average annual growth of imports from the U.S. is 10 percent 
through 1997.

                     Data      (all figures in US Dols millions)

                                   1994        1995      1996    

A. Total market size:             2,675        2,905    3,000
B. Total local production:        1,541        1,723    1,800
C. Total exports:                   240          245      250
D. Total imports:                 1,426        1,550    1,600 
E. Imports from the U.S.:           570          620      685
F. Exchange rate $1:                134          130      130

(The above statistics are unofficial estimates)

Rank of Sector: 7 

Name of Sector: Medical Equipment

ITA Industry Code: MED

Public health care institutions are the predominant end-users of medical 
equipment accounting for 75-80 percent of total purchases.  The market 
is heavily import dependant.  U.S. medical devices and hospital 
equipment are the most highly regarded among Spanish M.D.'s and domestic 
importers/distributors.  U.S. exports in the sector should be even more 
enhanced by two factors: 1) the fact that the Spanish National Health 
Care Service has been able to reduce the payment time to their suppliers 
from 14-15 months to 6-7 months (a long-standing problem).  However, 
U.S. companies entering this market still require good cash-flow to 
adjust to long payment periods.  2) The current favorable U.S. dollar 
exchange rate also favors U.S. firms over their main competitors from 
Germany, Japan, Italy, the U.K. and France.  Domestic industry is 
growing very slowly and is not able to keep pace with growing demand, 
reducing domestic suppliers' share of the market.

Improvements have been made in the registration process for sterilized 
medical supplies. The process of registration has been reduced from 10-
12 months to 6-8 months and the EU directive on the common EU seal is 
being applied in Spain with the advantage that registration is 
recognized by the other EU countries. 
Several U.S. companies (mainly the large manufacturers) are developing 
the strategy of concentrating either production or central distribution 
in a single EU country. This masks imports of medical equipment into 
individual EU countries.   

                   Data      (all figures in US Dols millions)

                                     1994    1995     1996

A.  Total market size               1,250    1,500     1,650  
B.  Total local production            250      275       290
C.  Total exports                      50       60        65
D.  Total imports                   1,050    1,290     1,415
E.  Imports from the U.S.             395      440       495
F.  Exchange rate $1                  134      130       130 

(The above statistics are unofficial estimates)

Rank of Sector: 8

Name of Sector: Building Products

ITA Industry Code: BLD

The recovery in the construction sector is expected to continue during 
1995.  New government housing incentives; the continued implementation 
of the government's Infrastructure Master Plan (which includes 
improvement of the country's highways and waterway systems, airport and 
port facilities, etc.); the demand from end-users (professionals and 
individuals) for buildings of better quality, comfort, and improved 
security and safety (as established by new EU standards) are increasing 
demand for new buildings and reactivating a building products market.  

U.S. products have a good reputation in this sector, but face strong 
competition from both local and foreign manufacturers (mainly from 
within the EU).

              Data            1994      1995      1996

A. Total Market Size:         10,000  11,000   12,100
B. Total Local Production:    10,000  11,200   12,320
C. Total Exports:              1,000   1,200    1,440
D. Total Imports:              1,000   1,200    1,440
E. Imports from the U.S.:        320     350      385
F. Exchange rate $1              134     130      130

(The above statistics are unofficial estimates)

Rank of Sector: 9

Name of Sector: Architectural/Construction/Engineering Services

ITA Industry Code: ACE

The recent approval of the Infrastructure Master Plan calls for a total 
investment of $147 billion until its expected completion in 2010.  Major 
projects will include: the massive refurbishment and revitalization of 
Spain's airport system, with special emphasis on Madrid's Barajas 
International Airport; seaport and coast refurbishment; water works, 
with special emphasis on the redistribution of water throughout Spain; 
highway construction and maintenance; and the upgrading of 
environmentally degraded areas.

New and innovative techniques offered by U.S. firms are well regarded, 
but face strong competition from both domestic (Spanish engineers are 
well considered and experienced professionals) and foreign (mainly 
French and German) counterparts.  It is recommended that U.S. firms 
enter this market sector in association with a well-established local 

             Data                     1994    1995    1996    

A. Total Market Size:                 910    1000    1100
B. Total Local Production:            650     700     770
C. Total Exports:                     200     220     242
D. Sales by foreign owned companies:  460     520     595
E. Sales by U.S.-owned firms:         175     200     220
F. Exchange rate $1                   134     130      130

(The above statistics are unofficial estimates)

Rank of Sector: 10 

Name of Sector: Telecommunications Equipment 

ITA Industry Code: TEL

According to GOS officials, Spain's telecommunications sector has the 
highest annual growth rate of all the European countries at the present 
time (10 percent over the next three years before voice liberalization).  
Telefonica, Spain's telecommunications giant continues to be the major 
end-user and retailer for equipment, although those sectors which are 
already liberalized, such as data transmission and radio-paging, offer 
alternative clients.

The boom sector in 1995 is cellular transmission (terminals and 
infrastructure) with the inauguration of the two GSM networks.  
Competition is strong from both domestic and European suppliers, with 
the U.S. still leading the field in cellular terminal sales.

The delay in approval of the cable network bill means a limited market 
at present for those companies ready to enter the market.  Although 
eager to position themselves, many companies are waiting to enter the 
market until they can be guaranteed return on their investment.

By 1997 there may be a PCN license (opening up a niche for U.S. 
suppliers) which will complement Telefonica's ISDN expansion, which now 
can service 70 percent of Spain's network.  Almost 50 percent of the 
cities are digitalized.

All equipment for the network requires certification that can take up to 
6 months.

                  Data      (all figures in US Dols millions)

                               1994    1995    1996                  
A. Total Market Size:         2,760    2,898    3,043      
B. Total Local Sales:         2,725    2,861    3,004
C. Total Exports:             1,098    1,152    1,210
D. Total Imports:             1,130    1,186    1,245
E. Imports from the U.S.:       396      415      436
F. Exchange rate $1:            134      130      130

(The above statistics are unofficial estimates)

Rank of Sector: 11

Name of Sector:  Chemical Machinery and Equipment 

ITA Industry Code:  CHM

Estimated average growth rate of imports from the U.S. is 5 percent 
through 1996. Although total estimated market for 1996 is still below 
1992 levels, the sector is showing signs of steady recovery in terms of 
production and investment in capital goods.

Main reasons for the increase of investments in chemical machinery are 
the updating of the existing equipment,  improvement in quality 
standards, environmental regulations and energy savings.

Nearly 60 percent of the market is served by local industry, while the 
main foreign supplier is the U.S. (around 25 percent of total imports), 
followed by Germany (20 percent) and France (10 percent). Imports are 
primarily in the following sub-sectors: basic chemicals machinery 
(around 39 percent), treated chemicals, basically gum, plastics and 
soaps (29 percent), and pharmachemicals (19 percent).

                  Data      (all figures in US Dols millions)

                                   1994    1995    1996    

A. Total market size:         1,054        1,129    1,158
B. Total local production:      636          684      701
C. Total exports:                77           85       87
D. Total imports:               495          531      544 
E. Imports from the U.S.:       124          133      136
F. Exchange rate $1:            134          130      130

(The above statistics are unofficial estimates)

Rank of Sector: 12

Name of Sector:  Industrial Controls 

ITA Industry Code:  PCI

Estimated average growth rate of imports from the U.S. is 5 percent 
through 1996. The sector is expected to grow due to increasing use of 
automatization by Spanish industry (Spain currently has an estimated 75 
percent automatization level out of an optimal level of 80 percent, 
often cited by industrial sources).

Approximately 80 percent of the market is served by local industry, 
while the main foreign supplier is the U.S. (around 20 percent of total 
imports). Imports are primarily in the following sub-sectors: 
automatization components (43 percent of total imports) and equipment 
for automatization (30 percent).

                     Data      (all figures in US Dols millions)

                                1994    1995    1996    

A. Total market size:          1,499    1,590    1,631
B. Total local production:     1,188    1,271    1,304
C. Total exports:                291      321      329
D. Total imports:                603      640      656 
E. Imports from the U.S.:        128      131      137
F. Exchange rate $1:             134      130      130

(The above statistics are unofficial estimates)

Best Prospects for Agricultural Products

Grain and Feed and By-Products
Oilseeds and Oilseeds By-Products
Forestry Products
Marine Fisheries Products
Consumer-Oriented Products
Edible Pulses 
Fresh Fruits 

Commodity: Total Oilseeds (2230000) (1000 HA) (1000 TREES) (K MT)
Beg. Month/Year of Marketing Year:  00 / 93  00 / 94  00 / 95
SPAIN                  Revised 1993      Prelim 1994      Forecast 1995
                       Old     New      Old     New      Old     New
Area Planted           0   2,111        0   1,463        0   1,204
Area Harvested         0   1,746        0   1,345        0   1,108
Beginning Stocks       0      47        0       9        0      31
Production             0   1,283        0   1,110        0     783
MY Imports             0   1,989        0   3,060        0   3,029
MY Imp. from U.S.      0     914        0   1,649        0   1,557
MY Imp. from the EC    0      38        0      30        0      35
TOTAL SUPPLY           0   3,319        0   4,179        0   3,843
MY Exports             0      42        0      17        0       7
MY Exp. to the EC      0      38        0      17        0       7
Crush Dom. Consumption 0   2,646        0   3,422        0   3,232
Food Use Dom. Consump. 0      77        0      79        0      77
Feed,Seed,Waste Dm.Cn. 0     545        0     630        0     518
TOTAL Dom. Consumption 0   3,268        0   4,131        0   3,827
Ending Stocks          0       9        0      31        0       9
TOTAL DISTRIBUTION     0   3,319        0   4,179        0   3,843
Calendar Year Imports  0   2,423        0   2,970        0   3,004
Calendar Yr Imp. U.S.  0   1,290        0   1,605        0   1,567
Calendar Year Exports  0      28        0       8        0       5
Calndr Yr Exp. to U.S. 0       0        0       0        0       0

Commodity: Total Oils (4240000) (1000 METRIC TONS)
Beg. Month/Year of Marketing Year:  00 / 93  00 / 94   00 / 95
SPAIN                   Revised 1993      Prelim 1994      Forecast 1995
                        Old     New      Old     New      Old     New
 Crush                  0   2,667        0   3,461        0   3,160
 Extr. Rate, 999.9999   0       0        0       0        0       0
 Beginning Stocks       0     319        0     307        0     237
 Production             0   1,292        0   1,372        0   1,149
 MY Imports             0     148        0     160        0     175
 MY Imp. from U.S.      0       0        0       0        0       0
 MY Imp. from the EC    0      42        0      43        0      34
 TOTAL SUPPLY           0   1,759        0   1,839        0   1,561
 MY Exports             0     400        0     538        0     359
 MY Exp. to the EC      0     210        0     150        0     146
 Industrial Dom. Consum 0      72        0      87        0      58
 Food Use Dom. Consump. 0     962        0     956        0     957
 Feed Waste Dom. Consum 0      18        0      21        0      20
 TOTAL Dom. Consumption 0   1,052        0   1,064        0   1,035
 Ending Stocks          0     307        0     237        0     167
 TOTAL DISTRIBUTION     0   1,759        0   1,839        0   1,561
 Calendar Year Imports  0     184        0     145        0     175
 Calendar Yr Imp. U.S.  0       0        0       0        0       0
 Calendar Year Exports  0     390        0     490        0     449
 Calndr Yr Exp. to U.S. 0      11        0      15        0      35

 Commodity: Total Oilmeals (0810000) (1000 METRIC TONS)
 Beg. Month/Year of Marketing Year:  00 / 93  00 / 94  00 / 95
 SPAIN                  Revised 1993      Prelim 1994      Forecast 1995
                         Old     New      Old     New      Old     New
 Crush                   0   2,646        0   3,422        0   3,232
 Extr. Rate, 999.9999    0       0        0       0        0       0
 Beginning Stocks        0     278        0     172        0      97
 Production              0   1,753        0   2,393        0   2,247
 MY Imports              0   2,202        0   1,812        0   2,022
 MY Imp. from U.S.       0      77        0      55        0      50
 MY Imp. from the EC     0      41        0      40        0      42
 TOTAL SUPPLY            0   4,233        0   4,377        0   4,366
 MY Exports              0      84        0      80        0      68
 MY Exp. to the EC       0      81        0      63        0      58
 Industrial Dom. Consum  0       0        0       0        0       0
 Food Use Dom. Consump.  0       0        0       0        0       0
 Feed Waste Dom. Consum  0   3,977        0   4,200        0   4,031
 TOTAL Dom. Consumption  0   3,977        0   4,200        0   4,031
 Ending Stocks           0     172        0      97        0     267
 TOTAL DISTRIBUTION      0   4,233        0   4,377        0   4,366
 Calendar Year Imports   0   2,166        0   1,922        0   2,037
 Calendar Yr Imp. U.S.   0      81        0      55        0      55
 Calendar Year Exports   0     100        0      80        0      70
 Calndr Yr Exp. to U.S.  0       0        0       0        0       0

 Commodity: Tobacco, Unmfg., Total (1211000) (HECTARES) (METRIC TONS)
 Beg. Month/Year of Marketing Year:  01 / 93  01 / 94  01 / 95
 SPAIN                  Revised 1993      Prelim 1994      Forecast 1995
                        Old     New      Old     New      Old     New
 Area Planted           18,570  17,603   18,570  16,050   0  16,200
 Beginning Stocks       43,380  43,380   23,880  31,790   0  14,358
 Farm Sales Weight Prod 41,600  41,600   42,300  42,283   0  42,300
 Dry Weight Production  34,112  34,112   34,686  34,672   0  34,686
 U.S. Leaf Imports      9,622   9,622   11,000  15,263    0  15,000
 Other Foreign Imports  35,047  35,047   41,500  38,247   0  45,000
 TOTAL Imports          44,669  44,669   52,500  53,510   0  60,000
 TOTAL SUPPLY          122,161 122,161  111,066 119,972   0 109,044
 Exports                14,791  14,791   13,200  25,102   0  15,200
 Dom. Leaf Consumption  28,500  20,500   28,000  24,000   0  24,000
 U.S. Leaf Dom. Consum.  9,300   9,300   10,500  11,500   0  12,200
 Other Foreign Consump. 45,690  45,780   42,400  45,012   0  44,100
 TOTAL Dom. Consumption 83,490  75,580   80,900  80,512   0  80,300
 TOTAL Disappearance    98,281  90,371   94,100 105,614   0  95,500
 Ending Stocks          23,880  31,790   16,966  14,358   0  13,544
 TOTAL DISTRIBUTION    122,161 122,161  111,066 119,972   0 109,044

 Commodity: Total Edible Fishery Prods. (0300000) (METRIC TONS)
 Beg. Month/Year of Marketing Year:  01 / 93   01 / 94     01 / 95
 SPAIN           Revised 1993      Prelim 1994      Forecast 1995
                 Old      New      Old      New     Old       New
 Landings/Comm'l Catch
             88,0617   880,617   854,000   854,000   854,000   850,000
 Fresh/Frozen Productn.
             79,2555   792,555   768,000   768,000   768,000   764,400
 Canned Production
             22,1500   221,500   223,000   223,000   224,000   224,000
 Cured Production
               9,000    39,000    10,300    40,000    10,500    41,000
 Total Production
           1,023,055 1,053,055 1,001,300 1,031,000 1,002,500 1,029,400
 Fresh/Frozen Imports
             71,7300   754,406   730,000   861,500   750,000   850,000
 Canned Imports
              43,300    28,554    49,300    30,000    57,000    80,000
 Cured Imports
              49,700    14,758    45,000    16,000    45,000    16,500
 TOTAL Imports
             810,300   797,718   824,300   907,500   852,000   946,500
 Fresh/Frozen Exports
             271,300   291,646   290,000   366,047   300,000   400,000
 Canned Exports
              37,300    23,460    39,000    25,000    39,300    26,000
 Cured Exports
               8,400    13,881     8,600    15,000     8,600    15,000
 TOTAL Exports
             317,000   328,987   337,600   406,047   347,900   441,000
 Domestic Consumption 1,452,155 1,521,786 1,473,200 1,532,453 1,493,600 

 Commodity: Softwood Lumber (2482000) 1000 CUBIC METERS
 Beg. Month/Year of Marketing Year:  01 / 92    01 / 93     01 / 94
 SPAIN                Revised 1992      Prelim 1993      Forecast 1994
                      Old     New      Old     New      Old     New
 Production          1,700   1,700    1,500   2,200        0   2,000
 Imports             1,150   1,150    1,100     919        0     950
 TOTAL SUPPLY        2,850   2,850    2,600   3,119        0   2,950
 Exports                46      46      100      55        0      50
 Domestic Consumption 2,804   2,804    2,500   3,064        0   2,900
 TOTAL DISTRIBUTION  2,850   2,850    2,600   3,119        0   2,950

 Commodity: Temperate Hardwood Lumber (2483020) 1000 CUBIC METERS
 Beg. Month/Year of Marketing Year:  01 / 92      01 / 93      01 / 94
 SPAIN                  Revised 1992      Prelim 1993      Forecast 1994
                        Old     New      Old     New      Old     New
 Production             630     765      630     575        0     800
 Imports                381     381      300     301        0     320
 TOTAL SUPPLY         1,011   1,146      930     876        0   1,120
 Exports                 10      10       15       7        0      10
 Domestic Consumption 1,001   1,136      915     869        0   1,110
 TOTAL DISTRIBUTION   1,011   1,146      930     876        0   1,120

 Commodity: Wheat (0410000) (1000 HECTARES)(1000 MT)
 Beg. Month/Year of Marketing Year:  10 / 93      10 / 94      10 / 95
 SPAIN                    Revised 1993    Prelim 1994    Forecast 1995
                          Old     New      Old     New      Old     New
 Area Harvested          2,035   2,035    2,013   1,995        0   2,051
 Beginning Stocks          250     250      120     120        0       0
 Production              5,001   5,001    4,300   4,311        0   4,000
 TOTAL Mkt. Yr. Imports  2,294   2,294    2,200   2,200        0   2,700
 Jul-Jun Imports         2,294   2,294    2,200   2,200        0   2,700
 Jul-Jun Import U.S.        22      22       20      20        0      20
 TOTAL SUPPLY            7,545   7,545    6,620   6,631        0   6,700
 TOTAL Mkt. Yr. Exports  1,050   1,050    1,150   1,150        0   1,100
 Jul-Jun Exports         1,050   1,050    1,150   1,150        0   1,100
 Feed Dom. Consumption   2,435   2,435    1,530   1,541        0   1,600
 TOTAL Dom. Consumption  6,375   6,375    5,470   5,481        0   5,600
 Ending Stocks             120     120        0       0        0       0
 TOTAL DISTRIBUTION      7,545   7,545    6,620   6,631        0   6,700

 Commodity: Barley (0430000) (1000 HECTARES)(1000 MT)
 Beg. Month/Year of Marketing Year:  10 / 93      10 / 94      10 / 95
 SPAIN                  Revised 1993    Prelim 1994    Forecast 1995
                        Old     New      Old     New      Old     New
 Area Harvested       3,484   3,484    3,581   3,602        0   3,662
 Beginning Stocks       700     700    1,400   1,400        0     100
 Production           9,520   9,520    7,500   7,596        0   7,000
 TOTAL Mkt. Yr. Imports  32      32      100     500        0   1,000
 Oct-Sep Imports         32      32      100     500        0   1,000
 Oct-Sep Import U.S.      0       0        0       0        0       0
 TOTAL SUPPLY        10,252  10,252    9,000   9,496        0   8,100
 TOTAL Mkt. Yr. Exports 800     447      900     900        0       0
 Oct-Sep Exports        800     447      900     900        0       0
 Feed Dom. Consumption 6,952   7,305    7,000   7,396       0   7,000
 TOTAL Dom. Consumption 8,052   8,405    8,100   8,496      0   8,100
 Ending Stocks        1,400   1,400        0     100        0       0
 TOTAL DISTRIBUTION  10,252  10,252    9,000   9,496        0   8,100

 Commodity: Sorghum (0459200) (1000 HECTARES)(1000 MT)
 Beg. Month/Year of Marketing Year:  10 / 93     10 / 94     10 / 95
 SPAIN                  Revised 1993      Prelim 1994      Forecast 1995
                         Old     New      Old     New      Old     New
 Area Harvested            4       4       21      20        0      10
 Beginning Stocks          0       0        0       0        0       0
 Production               20      20       82      74        0      40
 TOTAL Mkt. Yr. Imports  375     375      400     400        0     500
 Oct-Sep Imports         375     375      400     400        0     500
 Oct-Sep Import U.S.     175     175      205     205        0     305
 TOTAL SUPPLY            395     395      482     474        0     540
 TOTAL Mkt. Yr. Exports    0       0        0       0        0       0
 Oct-Sep Exports           0       0        0       0        0       0
 Feed Dom. Consumption   395     395      482     474        0     540
 TOTAL Dom. Consumption  395     395      482     474        0     540
 Ending Stocks             0       0        0       0        0       0
 TOTAL DISTRIBUTION      395     395      482     474        0     540

 Commodity: Corn (0440000) (1000 HECTARES)(1000 MT)
 Beg. Month/Year of Marketing Year:  10 / 93      10 / 94      10 / 95
 SPAIN                    Revised 1993    Prelim 1994    Forecast 1995
                          Old     New      Old     New      Old     New
 Area Harvested            274     274      342     342        0     270
 Beginning Stocks          300     300      200     200        0     100
 Production              1,698   1,698    2,200   2,269        0   1,600
 TOTAL Mkt. Yr. Imports  2,782   2,782    2,300   3,100        0   3,100
 Oct-Sep Imports         2,782   2,782    2,300   3,100        0   3,100
 Oct-Sep Import U.S.     1,175   1,175    1,300   2,000        0   2,000
 TOTAL SUPPLY            4,780   4,780    4,700   5,569        0   4,800
 TOTAL Mkt. Yr. Exports      0       0        0       0        0       0
 Oct-Sep Exports             0       0        0       0        0       0
 Feed Dom. Consumption   3,580   3,580    3,500   4,469        0   3,800
 TOTAL Dom. Consumption  4,580   4,580    4,500   5,469        0   4,800
 Ending Stocks             200     200      200     100        0       0
 TOTAL DISTRIBUTION      4,780   4,780    4,700   5,569        0   4,800

 Commodity: Rice, Milled (0422110) (1000 HECTARES)(1000 MT)
 Beg. Month/Year of Marketing Year:  10 / 93      10 / 94      10 / 95
 SPAIN                   Revised 1993     Prelim 1994     Forecast 1995
                         Old     New      Old     New      Old     New
 Area Harvested           50      50       63      63        0      55
 Beginning Stocks         88      88       45      38        0      71
 Milled Production       221     221      270     273        0     242
 Rough Production        316     316      386     390        0     346
 MILLING RATE (.9999)  7,000   7,000    7,000   7,000        0   7,000
 TOTAL Imports           100     154      150     160        0     160
 Jan-Dec Imports         150     177      150     150        0     160
 Jan-Dec Import U.S.      14      17       20      20        0      14
 TOTAL SUPPLY            409     463      465     471        0     473
 TOTAL Exports            90     135      150     100        0     100
 Jan-Dec Exports          90      82      150     170        0      80
 TOTAL Dom. Consumption  274     290      270     300        0     300
 Ending Stocks            45      38       45      71        0      73
 TOTAL DISTRIBUTION      409     463      465     471        0     473

 Commodity: Lentils (0542300) (1000 HECTARES)(1000 MT)
 Beg. Month/Year of Marketing Year:  07 / 93      07 / 94      07 / 95
 SPAIN                  Revised 1993     Prelim 1994     Forecast 1995
                        Old     New      Old     New      Old     New
 Area Harvested          31      31       36      34        0      50
 Beginning Stocks        19      19       18      28        0      39
 Production              20      20       26      19        0      25
 TOTAL Mkt. Yr. Imports  52      65       45      73        0      55
 Jul-Jun Imports         52      65       45      73        0      55
 Jul-Jun Import U.S.     22      18       20      17        0      17
 TOTAL SUPPLY            91     104       89     120        0     119
 TOTAL Mkt. Yr. Exports   0       1        0       1        0       1
 Jul-Jun Exports          0       1        0       0        0       0
 Feed Dom. Consumption    0       0        0       0        0       0
 TOTAL Dom. Consumption  73      75       72      80        0      80
 Ending Stocks           18      28       17      39        0      38
 TOTAL DISTRIBUTION      91     104       89     120        0     119

 Commodity: Peas (0542400) (1000 HECTARES)(1000 MT)
 Beg. Month/Year of Marketing Year:  07 / 93      07 / 94      07 / 95
 SPAIN                   Revised 1993    Prelim 1994    Forecast 1995
                         Old     New      Old     New      Old     New
 Area Harvested            7       7       50      70        0      85
 Beginning Stocks          0       0        0       0        0       0
 Production               10      10       50      70        0      80
 TOTAL Mkt. Yr. Imports  280     280      290     470        0     500
 Jul-Jun Imports         280     280      290     470        0     500
 Jul-Jun Import U.S.       1       1        1       3        0       3
 TOTAL SUPPLY            290     290      340     540        0     580
 TOTAL Mkt. Yr. Exports    0       0        0       0        0       0
 Jul-Jun Exports           0       0        0       0        0       0
 Feed Dom. Consumption   285     285      335     535        0     575
 TOTAL Dom. Consumption  290     290      340     540        0     580
 Ending Stocks             0       0        0       0        0       0
 TOTAL DISTRIBUTION      290     290      340     540        0     580

 Commodity: Fresh Apples (0574000) (HA) (K TREES) (MT)
 Beg. Month/Year of Marketing Year:  07 / 92      07 / 93      07 / 94
 SPAIN              Revised 1992      Prelim 1993      Forecast 1994
                    Old      New      Old     New     Old      New
 Area Planted       56,000   54,035   55,900   54,035  55,900   53,000
 Area Harvested     53,600   52,314   53,500    52,314  52,000   51,000
 Bearing Trees      51,300   49,700   51,200    49,700  51,200   48,450
 Non-Bearing Trees   2,200    1,635    2,200     1,635   22,00    1,900
 Total Trees        53,500   51,335   53,400    51,335  53,400   50,350
 Commercial Production
                 1,034,300 1,034,300 839,200   839,200 721,700  694,400
 Non-Comm. Production
                    61,100    61,100  34,900    34,900  32,300   30,000
 TOTAL Production 1,095,400 1,095,400 874,100  874,100 754,000  724,400
 TOTAL Imports     100,300    100,300  102,000   147,000 100,000  
 TOTAL SUPPLY    1,195,700  1,195,700  976,100 1,021,100 854,000  
 Domestic Fresh Consump
                   762,300   762,300  710,100  740,100 605,000  655,000
 Exports, Fresh Only
                  28,600     28,600   20,000    32,000  19,000   20,000
 For Processing  260,600    260,600  200,000   200,000 200,000  180,000
 Withdrawal From Market
                 144,200    144,200   46,000    49,000  30,000   30,000
               1,195,700  1,195,700  976,100 1,021,100 854,000  885,000

 Commodity: Poultry, Meat, Total (0114000) (1000 METRIC TONS)
 Beg. Month/Year of Marketing Year:  01 / 94      01 / 95      01 / 96
 SPAIN                   Revised 1994      Prelim 1995      Forecast 
                         Old     New      Old     New      Old     New
 Beginning Stocks          0       0        0       0        0       0
 Production              860     880      885     895        0     895
 Whole, Imports           30      29       31      28        0      30
 Parts, Imports           70      65       74      62        0      65
 Intra EC Imports         70      68       74      70        0      75
 TOTAL Imports           100      94      105      90        0      95
 TOTAL SUPPLY            960     974      990     985        0     990
 Whole, Exports            4       7        4       7        0       6
 Parts, Exports            8       8        9       9        0       8
 Intra EC Exports         10      12       10      13        0      12
 TOTAL Exports            12      15       13      16        0      14
 Human Consumption       948     957      977     966        0     973
 Other Use, Losses         0       2        0       3        0       3
 Total Dom. Consumption  948     959      977     969        0     976
 TOTAL Use               960     974      990     985        0     990
 Ending Stocks             0       0        0       0        0       0
 TOTAL DISTRIBUTION      960     974      990     985        0     990


            Millions of Dollars

                         1991    1992    1993

Milk and Cream                 1/      1/      1/
Yogurt and Buttermilk          1/      1/      1/
Butter                         0       0       0
Cheese                        1/       1/      1/
Ice Cream                     1/       0       1/
Table Eggs                    2        2       3
Beef                          1/       1/      0
Pork                          0        1/      0
Poultry                      16       12      12
Puffed and roasted cereals    2        2       1/
Bakery Products               1/       1       1
Pasta Products                1/       1/      1/
Soups and soup preparations   1/       1/      1/
Sauces and Seasonings         5        2       1
Baby Foods                    1/       1/      0
Sugar, confectionery          1/       1       1/
Chocolates and preparations   1/       1/      1/
Nuts                         47       57      33
Raisins                       1        2       1
Dates                         1/       1/      0
Figs                          0        0       0
Prunes                        4        5       3
Peanuts                      10       14      13
Confectionary Sunflowerseed  16       19      15
Apples                        1/       2       1/
Kiwifruit                     1/       1/      0
Fruit Juices                  1/       1/      1/
Canned Fruit and Vegetables   5        7       7
Beer                          2        3       1
Wine and Vermouth             1/       1       1
Bourbon                       7        6       2

-TOTAL                      118      136      96

1/ Less than $1 million

Peseta/US$ exchange rates:  1991 - 103.8; 1992 - 102.38; 1993 - 127.26.

Source: Spanish Customs Office

Investment Opportunities

Several sectors in Spain are experiencing large growth which justifies 
investment in Spain and which also generate export sales.  These sectors 
are telecommunications and infrastructure development.  Note that 
products manufactured in Spain can be marketed without any duties or 
restrictions in the remaining EU countries.  

The telecommunications market is undergoing a liberalization process.  
There are already two operators competing for cellular telephone 
service.  Value added services are already liberalized.  Several 
companies already offer paging, trunking and satellite services.  Basic 
voice telephony will be fully liberalized in 1998.  Cable TV is 
practically non existent.  

Both voice telephony and cable TV offer the best opportunities for 
American investors.  In voice telephony only Government owned Telefonica 
is allowed to offer that service.  From 1998, any company may provide 
that service in direct competition with Telefonica.

Cable TV offers even greater opportunities.  There is a cable TV law 
being debated in Parliament, which will clarify the current unclear 
status of cable.  At present, there is only a one percent penetration 
rate for cable TV, but experts believe this rate will increase rapidly 
to five percent in two years.  The law is expected by Spring 1996.

There are good opportunities for architect and engineering service 
companies.  The Government of Spain is going to spend over $100 billion 
in the next 10 years in public works, mainly road construction, airport 
and port renovation and development of high speed train lines.  Demand 
for the latest engineering techniques for these works will increase.

The Government of Spain has a large privatization program that will 
affect companies operating in every industrial sectors.  Significant 
investment opportunities can be found in telecommunications, power 
generation and oil.  The Government intends to reduce its share of the 
capital in Telefonica, Endesa and Repsol.

Telefonica is one of the largest telecommunications operator in the 
world.  Around 25 percent of its stock is already listed in the NYSE.  
Its international affiliate has interests in telecommunications 
companies in Argentina, Peru, Chile and Puerto Rico.  Although it has 
not been announced, the Government plans to privatize around 10 percent 
of its assets during 1995.

Endesa is another company that the Government plans to privatize.  It is 
the largest power utility in Spain.  It is diversifying into 
telecommunications and broadcasting as well, it is involved in the 
consortium to provide cable TV to the Baleares islands.  It is also 
negotiating the acquisition of a stake in private TV station Antena 3 
TV.  Details of the privatization will most probably be published after 
this Summer.

Repsol is the largest petroleum and gas company in Spain.  It has retail 
distribution networks in other EU countries such as the U.K., France and 
Portugal.  A significant stake was just privatized during the first 
quarter of this year, but the Government is considering privatization of 
another package before the end of 1995.   

The Government of the United States acknowledges the contribution that 
outward foreign direct investment makes to the U.S. economy.  U.S. 
foreign direct investment is increasingly viewed as a complement or even 
a necessary component of trade.  For example, roughly 60 percent of U.S. 
exports are sold by American firms that have operations abroad.  
Recognizing the benefits that U.S. outward investment brings to the U.S. 
economy, the Government of the United States undertakes initiatives such 
as Overseas Private Investment Corporation (OPIC) programs, investment 
treaty negotiations and business facilitation programs, that support 
U.S. investors.


Trade Barriers, Including Tariffs, Non-Tariff Barriers and Import Taxes

Spanish tariffs for EU countries have been zero since January 1, 1993, 
while those third-country goods, including those from the United States 
and Japan, receive the EU's Common External Tariff.  Since 1988, Spain 
has used the Harmonized System of tariff nomenclature for applying 
duties.  U.S. goods are taxed according to the standard EU duty rate.

Spain has adhered to the GATT code since 1963.  In December, 1994, Spain 
ratified adherence to the Marrakesh accord, which concluded the Uruguay 
Round of international trade negotiations and established the World 
Trade Organization.

For agricultural products, import documentation and tariffs are exactly 
the same as for other EU countries.  While a few agricultural 
commodities are duty free or subject to minimal duties (soybeans, 
sunflower seed, corn by-product, lumber) the great majority of 
agricultural products (those covered by the CAP) and food products are 
subject to high duties or variable import levies which significantly 
restrict access into the Spanish market.

In 1993, during the Uruguay Round negotiations, the EU committed itself 
to implementing a permanent basis the compensation it had been providing 
to the United States since 1987 for Spain's accession to the EU.  The EU 
had owed the United States compensation due to Spain's breach of its 
GATT tariff binding on imports of corn and sorghum when Spain joined the 
Common Agricultural Policy.  The compensation came in the form of 
minimum import commitments for corn and sorghum, as well as tariff 
reductions on about 25 products.

Non-tariff barriers have been identified in the audiovisual and 
intellectual property areas.  Spain has a system of screen quotas and 
"dubbing licenses" which increase costs and limit access of U.S. film 
distributors.  Piracy of audiovisual products (principally through 
unregulated "community video" cable television networks) and of computer 
software are of concern here.

Customs Valuation

Spanish Customs values shipments at C.I.F. prices.  For American 
products the tariff rate averages 5 percent.  A shipment has to be 
cleared through customs by a registered customs agent. Usually, total 
costs to clear customs fall in the range of 20 to 30 percent of the 
shipments's C.I.F. value.  This includes tariffs, value added tax (16 
percent), custom agent and handling fees. 

Import Licenses

Spain was obligated under its EU accession agreement to transform its 
structure of formal and informal import restrictions for industrial 
products into a formal system of import licenses and quotas.  While 
Spain does not enforce any quotas on U.S.-origin manufactured products, 
it still requires import documents, which are described below.  Neither 
of these documents constitute a trade barrier for U.S.-origin goods. 

- Import Authorization, (Autorizacion Administrativa de Importacion - 
AAI) is used to control imports which are subject to quotas.  Although 
there are no quotas against U.S. goods, this document may still be 
required if part of the shipment contains products or goods produced or 
manufactured in a third country. In essence, for U.S.-origin goods, the 
document is used for statistical purposes only or for national security 

- Prior notice of imports (Notificacion previa de importacion) which is 
used for merchandise that circulates in the EU Customs Union Area, but 
which is controlled for statistical purposes only.  The importer must 
obtain the document and present it to the General Register. 

Importers apply for import licenses at the Spanish General Register of 
Spain's Department of Commerce or any of its regional offices.  The 
license application must be accompanied by a commercial invoice that 
includes freight and insurance, the C.I.F. price, net and gross weight 
and invoice number.  Customs accepts commercial invoices by fax.  The 
license, once granted, is normally valid for 6 months but may be 
extended if adequate justification is provided. 

Goods that are shipped to a Spanish customs area without proper import 
licenses or declarations are usually subject to considerable delay and 
may run up substantial demurrage charges. U.S. exporters should ensure, 
prior to making shipment, that the necessary licenses have been obtained 
by the importing party.  Also, U.S. exporters should have their importer 
confirm with Spanish customs whether any product approvals or other 
special certificate will be required for the shipment to pass customs. 

Export Controls

Spain has been a member of COCOM since 1985, and is active in the 
creation of the New Forum that will replace COCOM.  Spain is also a 
member of the  Australian Group for Chemical Products Controls and a 
signatory of the Chemical Weapons Convention which will be effective in 

Exports controls are regulated by Organic Law 3/1992 and Royal Decree 
824/1993.  The Royal Decree establishes both the regulations and the 
COCOM lists applicable, as well as the procedures to follow.

Import/Export Documentation

Several different forms of documentation may be required for shipments 
to Spain.  Exporters are required to present one commercial invoice, one 
bill of lading, and three copies of a certificate of origin for all 
shipments.  Other certificates are needed for exporting pharmaceutical 
goods, perishable foods, live animals and some medical goods. 

Sanitary Certificates:

U.S. Animal and Plant Health Inspections certificates are required from 
the U.S. Animal and Plant Health Inspection Service (APHIS) for 
importation of living plant material (including plants, plant products, 
and seeds) into Spain.  Health inspection requirements also govern the 
importation of animals and parts of animals (including meat  products, 
skins, hides, and similar products), marine mammals, fish, crustaceans, 
or mollusks and parts. 

Spanish regulations are subject to provisions of the Spanish Ministry of 
Agriculture. Inspections usually are carried out in local offices of 
APHIS, which are located in major U.S. ports and airports.  Export 
agents or brokers may present products for inspection. Inspection of air 
shipments may be handled by the airlines. 

Pharmaceutical Certificates:

These are required by Spanish Customs for drugs and certain sanitary 
items.  A standard analysis bulletin issued by the manufacturer, listing 
product composition is acceptable for customs purposes. 

Other certificates:

Sea vessels require a certificate of compliance from the Marine 
Authority (Ministry of Transport) to bring boats ships into Spain.  In 
order to acquire this certificate, the manufacturer has to demonstrate 
the vessels sea-worthiness.  The National Marine Manufacturers 
Association issues a sea-worthiness affidavit that is accepted by the 
Spanish authorities for the certificate of compliance.   

Fines and Penalties:

Regulations establish fines for whatever actions delay the normal 
customs procedure.  Fines are not very big, usually around $30 or 40.  
These do not include fraudulent actions. 

Anti-dumping and Countervailing Duties:

As a signatory to the Anti-dumping and Countervailing Duty Codes of the 
GATT, Spain, through the EU Anti-dumping Committee, penalizes products 
imported at less than their normal value which cause injury to domestic 
industry.  The anti-dumping duty will be the difference between the 
dumped price and comparable domestic price of the exported product.  The 
duration of the countervailing duty imposition varies from case to case 
and the duty imposed currently ranges from 5 to 33 percent.

Temporary Entry

The Spanish reexport system is regulated by Order of July 24, 1987, 
conforming to EU regulations.  Reexport inquiries must be addressed to 
the port's Customs Director. Re-exports of U.S. goods from Spain follow 
the same procedures as exporting Spanish products.  Goods reexported to 
other EU member states are subject to statistical surveillance. 

Reexports outside the European Union not covered by specific EU 
regulations are exported with an accompanying Customs Export Declaration 
at the exit point.  A limited number of goods require a Prior Notice of 

Exporters of high-technology goods subject to U.S. export control 
procedures must ensure that Spanish clients and subsidiaries are aware 
of U.S. export controls requirements.

There are four types of procedures for handling the re-export of goods:

1) Temporary Imports -- Goods imported for a limited period of time 
under an ATA carnet.  A bank guarantee in the form of a bond equivalent 
to duties owed must be provided to Customs, which will be refunded once 
the goods leave the country.

2) Temporary Admission -- Goods which will be incorporated into a final 
product for export.  Prior approval by the Ministry of Commerce is 
necessary.  The same procedure as for temporary imports applies for re-

3) Replacement Goods -- Companies with continuing needs for primary 
materials, commodities, or intermediates can request prior approval from 
the Ministry of Commerce for replacement goods after the second year of 
operation.  They must deposit a bond with Customs on the compensatory 
tax only.  Replacements for defective goods destroyed under Customs 
supervision are also admitted duty-free, but requires extensive 
supporting documentation. 

4) Drawback -- Duties are paid simultaneously with presentation of a 
list of the products to be re-exported eventually.  Later, a rebate 
(drawback) is made upon customs clearance out of Spain.  This procedure 
also requires prior approval by the Ministry of Commerce.

Companies are advised to use the carnet procedure to temporarily bring 
goods into Spain for demonstration purposes without paying duties or 
posting bond.  The carnet must be presented to the customs authorities 
whenever entering or leaving the country.  Consumable items and give-
away samples are not included under carnet procedures.  ATA carnets are 
predominantly used for commercial samples, tools of trade, advertising 
material or cinematographic, audio visual, medical, scientific, or other 
professional equipment that will be imported for a period of less than a 
year.  The advantage of the ATA carnet is that it allows exporters to 
avoid normal customs clearance formalities. 

The carnet also provides a financial guarantee to foreign customs 
officials that, if the goods are not re-exported, the duty will be paid.  
A bond equivalent to the duty is charged.

The ATA carnet is used internationally and should be distinguished from 
the EU carnet, sometimes referred to as the ESC carnet.  Introduced in 
July 1985, this carnet is used for the temporary movement of certain 
types of goods between EU countries, usually equipment and working 
materials.  Unlike the ATA carnet, it does not require posting a bond.

Carnet applications are available from all district offices of the U.S. 
Department of Commerce, most U.S. chambers of commerce, and authorized 
export insurance companies.  They are also issued by the U.S. Council of 
the International Chamber of Commerce in New York.   

Advertising material, catalogs, price lists, and similar printed items 
are admitted duty free.  However, to avoid any problems such items 
should always be labeled, "no value."  Otherwise, a customs duty is 
likely to be levied on the sample. 

As a signatory to the International Convention to Facilitate the 
Importation of Commercial Samples and Advertising Matter, Spain admits 
samples of negligible value duty free.  Those items of commercial value 
and not covered under carnet procedures may be imported for up to a year 
by business people upon payment of bond.  Upon presentation of the 
customs receipt and re-export, the deposit is refunded.

Qualifying business people bringing commercial samples should come 
equipped with a letter from his or  her principals attesting to this 
status, identifying the samples, and certifying that the samples are not 
for sale.  The letter should be certified by the nearest Spanish 

Labeling, Marking Requirements

In view of the complexity and rapid change in marking, labeling, and 
testing requirements in Spain, U.S. exporters should request pertinent 
instructions from their importers prior to shipment. In general, special 
requirements exist for foodstuffs, beverages, textiles, drugs and 
pharmaceutical, fertilizers, precious metals, tires, and firearms. 

Following are specific categories of goods, for which marking, labeling, 
and/or testing requirements are applicable: 

Foodstuffs -- The Directorate General of Health sets human consumption 
standards for the preparation, residual content, and storage media for 
virtually all classes of foodstuffs.  The labels on the container must 
include the product designation, list of ingredients, weight or volume, 
dates (manufacturing, packing, minimum shelf life, and expiration 
dates), directions for food preservation (if applicable), identification 
of the firm involved (manufacturer, packer, or importer), and country of 
origin.  If the original label is not in Spanish, a similar one must be 
prepared in Spanish, firmly affixed to the container.  Milk products, 
margarine, chocolate, and soaps have other, more technical labeling 
requirements.  Wines and other alcoholic beverages must meet Spanish 

Textiles -- Customs and point-of-sale regulations require that all 
textile goods and ready-made clothing have a Spanish label. Standard 
Spanish textile nomenclature and content requirements must be stated on 
the label. Requirements relating to textile content, labeling, and 
packaging are specific and extensive.  They are regulated by R.D. 
928/1987, dated June 5, 1987. Manufacturers' trademarks, duly 
registered, are permitted on textile products.

Drugs, Pharmaceutical, and Cosmetics -- These goods are subject to 
technical inspection and registry by the Directorate General of Health 
prior to entry.  There are also detailed marking and labeling 
requirements, somewhat similar to those for foodstuffs, but which also 
include detailed chemical composition. 

Fertilizers and Fungicides -- Imported fertilizers must be registered 
with the local Agriculture Department Office.  Inspection and analysis 
will be performed prior to customs clearance.  All printed advertising 
and publicity materials must be approved by the Department of 
Agriculture, and labels must be in Spanish and include detailed 

Firearms -- All firearms must be cleared by the Spanish Government 
Proving Grounds and bear the stamp of that organization. 

Metals -- The Spanish Guaranty Bureau provides assay services and 
affixes its hallmark for all imported precious metals. 

Motor Vehicles -- Each vehicle will be inspected for engraved serial 
numbers on both the engine and chassis.  If one of these is not 
available, Spanish customs levies a special charge for stamping the same 

Tires and Tubes -- All tires and inner tubes must be marked with a 
serial number. 
For agricultural products, labeling requirements are fully harmonized 
with the EU labeling system, however, label must be in Spanish. 


In March of 1992, the EU Council approved law 880/92, establishing a 
community-wide system for granting eco-labels (green label) to products 
that satisfy environmentally conscious standards.    

The EU's objectives for setting up a system for issuing green labels are 
twofold. To inform consumers of products that are environmentally safer 
than others in all aspects of a product's life-cycle and to improve the 
design, production, marketing and increase the use of products that have 
low or non-adverse effects on the environment, and that use natural 
resources wisely.  

In all, it is hoped that these objectives will increase the standards of 
health, security, and the condition of the environment of the eu 
countries. Products imported into the eu that wish to obtain a green 
label must follow the same strict criteria as eu members.

Spain will introduce this piece of legislation sometime during 1995.  
Companies that want to qualify their products as environmentally 
friendly must acquire this label.  The Spanish Association for Quality 
Standards (AENOR) will be issuing them. 

Prohibited Imports

Spanish regulations ban the import of illicit narcotics and drugs.  They 
also set up very restrictive regulations for imports of explosives, fire 
weapons, defense equipment and material in general, tobacco, and 
gambling material.  

EU regulations on hormones ban U.S. beef and beef products from entry 
into the EU. In addition, EU health regulations on live cattle ban U.S. 
high genetic cattle imports. 


At present there are no requirements for either ISO 9000 certification 
or its EU equivalent.  Nonetheless, demand for products that meet these 
standards is growing. 

Spain has established specific certification for certain products. This 
certification procedure is referred to as "homologation" and involves 
cumbersome product testing by approved laboratories. Although most of 
the local homologation requirements and testing standards are gradually 
disappearing as Spanish legislation conforms to EU directives, certain 
homologation and other special requirements remain for some products. 

Generally, a product that meets the standards and certification 
requirements of any other EU country can be imported and sold in Spain 
without further testing.  Spanish homologation requirements remain in 
force for computer keyboards and screens, dot matrix printers, 
teleprinters, medical equipment, electric typewriters, 
telecommunications equipment, motor vehicles, bicycles, pleasure boats, 
gas connectors, etc. 

Applications for homologation are processed by the  Ministry of Industry 
and Energy and by the Ministry of Transport and Telecommunications.  
These  national standards will be phased out as EU norms take effect. 

The Spanish Standards Certification Association (AENOR - Asociacion 
Espanola de Normalizacion y Certificacion) is responsible for developing 
voluntary standards and certification programs.  It represents Spain in 
international standards bodies. The Spanish Government publishes a list 
of approved laboratories for testing and certification each year. 

Electrical products which operate in a voltage range of 50 to 1,000 
volts alternating current or 75 to 1,500 volts direct current have to 
meet the EU low voltage directive.  There are three accepted forms of 
proofs of conformity with this regulation: a mark issued by an 
authorized EU agency; a certificate issued by an approved EU authority; 
or a declaration issued by the manufacturer.  In the latter, the 
manufacturer self-certifies that the product, manufactured with good 
engineering practices, will not endanger the safety of persons, domestic 
animals, or property when properly installed and maintained and used in 
applications for which it was made. 

Spain now allows the entry of used equipment, material, and goods.  
However, they are subject to the same standards concerning safety as 
apply to any new import.  Additionally, there may exist regulations 
specific to the particular type of equipment, such as computers and 
peripherals, that is being imported. 

Free Trade Zones/Warehouses

There are three different customs regulations in Spain.  The EU common 
customs apply to the mainland and Balearic Isles.  The Canary Islands, 
previously a customs free area, is undergoing a transition period 
(expected to last until the end of the century) to meet EU customs 
regulations.  There is a customs free trade area in the two northern 
Africa enclaves of Ceuta and Melilla, which are under Spanish 

Both in the mainland and islands there are numerous free trade zones (in 
most of Spanish airports and sea ports) where manufacturing, processing, 
sorting, packaging, exhibiting, sampling, and other commercial 
operations may be undertaken free of any Spanish duties or taxes.  The 
largest free trade zones are the ones in Barcelona, Cadiz and Vigo.  
Others vary in size from a simple warehouse to several square 
kilometers.  Spanish customs legislation allows for companies to have 
their own free trade areas.  Duties and taxes are payable only on those 
items imported for use in Spain. 

Special Import Provisions

Goods are cleared by customs agents or brokers who handle the necessary 
formalities on behalf of the importing firm or individual.  A bill of 
lading, an original invoice with a copy, a certificate of origin, and an 
import declaration are required for most clearances through Customs for 
products which will remain in Spain.

Import declarations are made at the Secretariat of Commerce or its 
branch delegations in major port cities throughout the country.  
Declarations must use the exact terminology of the tariff classification 
under which the goods are being imported. A 3-month grace period is 
allowed for U.S.-origin goods arriving without proper documentation, 
subject to a written guarantee by the customs agent.

Goods in transit need only be listed on the vessel or aircraft manifest 
and do not have to be unloaded.  Transit goods may also be unloaded for 
shipment to a Customs-approved warehouse prior to reshipment from Spain 
or to another customs house in Spain for declaration or further 

Membership in Free Trade Arrangements.

Spain has been a member of the European Union since 1986, allowing for 
free trade with fellow members: Austria, Belgium, Denmark, Finland, 
France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, 
Portugal, Sweden, and the UK.  The EU's European Economic Area Agreement 
in turn provides a high level of mutual market access with the European 
Free Trade Association states (Iceland, Liechtenstein, Norway and 


Openness to Foreign Investment

The Spanish Government is interested in attracting new foreign 
investment to modernize the economy.  It has come up with new 
regulations for investment and foreign exchange to make the country more 
attractive to new investors.  Spanish law permits foreign investment of 
up to 100 percent of equity, except in a small number of strategic 
sectors.  Capital movements have been completely liberalized.

The 1991 Budget Act (law 31 of December 27, 1990), established that EU-
resident companies receive the same treatment as Spanish companies in 
strategic sectors (national defense, radio and TV broadcasting, air 
transportation, and gambling).  Previously, non-Spanish companies 
required prior authorization from the Executive for investments in these 
areas and some foreign ownership ceilings existed.  Most of these 
barriers were lifted except investment by foreign investors in munitions 
companies and telecommunications service which still require prior 

Remaining foreign exchange and capital controls were eliminated by royal 
decree 1816/1991 which came into force on February 1, 1992.  This 
legislation provides complete freedom of action in financial 
transactions between residents and non-residents of Spain.  Previous 
requirements for prior clearance of technology transfer and technical 
assistance agreements were eliminated. The liberal provisions of this 
law apply to payments, receipts or transfers generated by foreign 
investments in Spain. 

The adoption of royal decree 671/1992 of July 2, 1992, reduced the types 
of foreign investment requiring previous government authorization.  At 
present, previous authorization is required only in the following cases:

1)  Direct investments over 500 million pesetas if the foreign holding 
exceeds 50 percent of the capital stock of the Spanish company; 

2) Certain forms of investments made by parties in tax havens; 

3) Real estate investments in rural land, urban land or business 
premises if the investment exceeds 500 million pesetas; and

4) Various forms of joint investments which exceed 500 million pesetas.

Under the new regulation, previous authorization for all forms of 
portfolio investments have been eliminated.

After the investment is made, the law establishes that it must be 
registered.  Registration requirements are simple and straight forward, 
except in sectors subject to special consideration.  The aim is to 
verify the purpose of the investment.  This procedure does not block any 
investment whatsoever.

The law regulates specific safeguards for investments that may be 
considered to go against the interests of Spain because of its size, 
nature of the investment or financial aspects of such investment.  
Depending upon the size of the investment, either the Minister of 
Economy or the Council of Ministers will invoke these safeguards.

This regulation brings Spain in line with EU directive 88/361 which 
classifies investors according to residence rather than nationality.  
However, EU-resident companies will not be exempt from existing 
authorization requirements if it is controlled, directly or indirectly, 
by a non-EU resident.  There is effective control if it holds more than 
5 percent of the EU company's  capital or directly participates in the 
firm's management.

Conversion and Transfer Policies

There are no controls of capital flows.  Capital controls on 
transferring funds outside of the country were abolished in 1991. 
Remittances of profits, debt service, capital gains, royalties from 
intellectual property can all be effected at market rates using 
commercial banks. 

Expropriation and Compensation

Spanish legislation sets up a series of safeguards that almost prohibit 
the nationalization or expropriation of foreign investment. No 
expropriations or nationalizations have taken place in recent history. 

Dispute Settlement

There have been no major disputes involving foreign investment interest 
and the Spanish Government in recent history.  In any case, legislation 
establishes mechanisms to solve such disputes if they ever arise. The 
Spanish judiciary system is independent from the executive, and the 
Government is obliged to follow court rulings.  Prosecution and criminal 
investigation is also carried out by judges, which allows for greater 
independence.  The Spanish prosecution system allows for successive 
appeals to a higher Court of Justice; the final appeal is heard by the 
European Court of Justice.  The Government of Spain also abides by some 
of the rulings of the International Court of Justice at The Hague.

Political Violence

The Government of Spain is involved in a long-running campaign against 
Basque Fatherland and Liberty (ETA), a terrorist organization founded in 
1959 and dedicated to promoting Basque independence.  ETA regularly 
targets Spanish Government officials, members of the military and 
security forces, and moderate Basques for assassination.  The group has 
carried out numerous bombings against Spanish Government facilities and 
economic targets.  In recent years, the Spanish Government has had more 
success in controlling ETA due in part to increased security cooperation 
with French authorities. 

There is another smaller leftist terrorist group, called GRAPO that acts 
occasionally, mainly against Government interests.

Performance requirements/incentives

Performance requirements are not used in determining the eligibility or 
level of incentives granted to investors.  There exist a whole range of 
investment incentives in Spain.  Types of incentives that exist in Spain 
are provided on the following criteria:
-  According to the authorities granting incentives;
-  According to the type and purpose of the incentives.

Authorities that provide incentives in Spain: 

- European Union

The European Union provides incentives in the form of subsidies in 
general development programs such as FEDER, F.S.E. FEOGA- Guarantee.  
They also provide programs targeting specific sectors such as SPRINT, 
etc.  These incentives are managed locally by the Government of Spain.

- The central government

These incentives are granted by the central government out of its annual 
budget.  Usually, these incentives match EU financing. Central 
government incentive programs are easily available for direct investment 
plans.  Both the Ministry of Industry and the Ministry of Commerce play 
an active part in granting them.

The Foreign Investment Directorate under the Ministry of Commerce 
counsels new to market investors in the proceedings to apply for 
government incentives.  The Ministry of Industry's sectorial departments 
negotiate directly with the old to market investors the incentives 
available for new investment. 

- Regional government

Regional governments, called Autonomous Communities, also have specific 
programs to attract investment.  Often, they are designed to complement 
central government incentives.
- Municipal aid

Municipal corporations offer incentives to direct investment usually in 
the form of facilitating infrastructure needs, granting licenses, 
operation and transaction of permits.  Usually they are designed to 
facilitate a direct investment's initial operations.

There is a trend to leave management of each type of incentive to 
regional governments.  This benefits investors since each Autonomous 
Community is especially interested in attracting investment that 
enhances its economy. 

Types of incentives available:

- Financial subsidies

- Exemption of certain taxes

- Preferential access to official credit

- Reduction of burdens, as well as discounts of social security to 

- Bonuses for acquisition of certain material

- Exemption from customs for import of certain goods

- Real estate grants and land granted gratuitously or in especially 
favorable conditions

- Guarantees granted in credit operations 

- Loans with low interest and long maturities and grace periods 

- Guarantee of dividends

- Professional training and qualification

- Indirect aid by means of supplying infrastructure facilities 
(accesses, services, communications, etc.)

Incentives granted by national, regional, or municipal governments and 
the EU are granted to Spanish and foreign companies alike without 

Right to Private Ownership and Establishment

Private ownership is protected by the Constitution.  Spanish law 
establishes clear rights to private ownership.  Except for some 
limitations in "strategic" sectors (national defense, radio and 
television broadcasting, air transportation, and gambling), foreign 
firms receive the same legal treatment as Spanish companies.

Competitive equality exists between public and private sector firms with 
respect to local access to markets, credit, licenses, and supplies.  
Foreign firms have participated in the privatization process on equal 
footing with Spanish buyers. 

Protection of Property Rights

Property rights are protected by law.  Enforcement is carried out at the 
administrative and judicial level.  Any decision pertaining to a 
property right by the Administration can be appealed first at the 
administrative level, and then can be taken to the judiciary system, 
which has three levels of court appeals. Property protection is 
effective in Spain, although the system is slow.  Certain property 
rights, because of their complexity, are more difficult to protect than 
other, i.e. intellectual property rights.

Public and private sector enforcement actions (especially private sector 
initiatives), using Spain's new patent, copyright, and trademark legal 
framework, have increased sharply the number of criminal and civil 
actions taken against intellectual property pirates.  Pirated video 
cassettes at present are only 25 percent of the market compared to 85 
percent just five years ago.  Spain's annual video cassette retail 
market, which is heavily
dominated by U.S. production, is estimated at $200 million. 

Overall, Spain's illegal market for videos, records, and tapes has 
declined sharply.  In 1984, according to trade association sources, 
illegal videos, records, and tapes constituted 50 percent of Spain's 
market.  In 1990, according to the same source, illegal products in this 
market declined to 5 percent. Trade associations attribute this decline 
to the application of Spain's new intellectual property laws; 
particularly successes in some criminal cases, and enhanced efficient 

Despite overall improvement, software piracy remains a serious problem 
in Spain; the Business Software Alliance (BSA) estimates that eighty 
percent of PC software in use has been copied illegally.  An amendment 
to the law in December 1993 allows unannounced civil search procedures 
that permit software developers having a reasonable suspicion of an 
infringement of their copyright to get a judge to allow a search of the 
alleged wrongdoers' premises without warning.  This measure has already 
produced two well publicized searches and prosecution of software 
pirates.  This amendment which was previously called for by U.S. 
software developers, should help decrease software piracy. 

The United States has held informal consultations with Spain regarding 
the importance the United States attaches to the protection of 
intellectual property.  In 1989, Spain was one of the countries placed 
on the "watch list" under the "special 301" provision of the 1988 trade 
act, and has continued on the "watch list" every year since then. 

Regulatory System: Laws and Procedures

Spain has modernized its commercial laws and regulations following its 
1986 entry into the EU.  Local regulatory framework compares favorably 
with other major European countries. Bureaucratic procedures have been 
streamlined and most red tape eliminated.  Labor law and regulations are 
the exception; although there has been new legislation implemented in 
May 1994 liberalizing some labor procedures,  there are still many old 
labor regulations that inhibit the rational utilization of labor. 

Bilateral Investment Agreements

Spain has concluded bilateral investment agreements with Argentina 
(1991), Bolivia (1990), the Czech Republic (1990), Chile (1991), China 
(1992), Hungary (1989), Morocco (1989), Tunisia (1991), Russia (1990), 
and Uruguay (1992). 

OPIC and Other Investment Insurance Programs

As Spain is a member of the European Union, OPIC insurance is not 
applicable, nor are other insurance programs.  Various EU directives, as 
adopted into Spanish law, adequately protect the rights of foreign 


The Active Population Survey (EPA) indicated over 15 million Spaniards 
in the work force at the end of 1993.  National Employment Institute 
(INEM) unemployment figures for year-end 1994 (the most recent 
available) reveal a static employment situation, with unemployment 
hanging at about 18 percent.

Spain's two unemployment indexes (EPA and INEM) vary by as much as five 
percentage points and neither is generally accepted as precisely 
accurate.  What is clear is that Spain continues to have a real 
unemployment that is among the worst in the European Union.

Employers have long criticized Spanish labor law (much of which 
originated in the Franco era) as unusually inflexible and with very high 
severance payments, thus discouraging new hiring.  Labor market reform 
legislation introduced in 1993 and passed in 1994 over the objection of 
the unions, liberalizes old work rules and makes the transfer of workers 
from one task to another easier.  The legislation went into effect on 
June 12, 1994 and the Government hopes it will boost hiring and reduce 
lay offs. 

Every four years Spanish workers elect delegates to represent them to 
management.  If a certain proportion of those delegates are union-
affiliated, those unions form part of the workers' committees.  Dues-
paying union membership is among the lowest in the EU (generally 
estimated at about 10 percent of the work force), but unions are 
involved in negotiating collective agreements for over half of the work 

Large employers generally have individual collective agreements, but in 
industries characterized by smaller companies, collective agreements are 
often industry-wide or regional. 

The right to strike is guaranteed in the constitution and has been 
interpreted to include general strikes called to protest Government 
policy.  There have been several such strikes in recent years, the most 
recent being a one-day nation-wide strike held collectively by Spanish 
trade unions on January 27, 1994 to protest the Government's proposed 
labor market reform legislation. 

Foreign-Trade Zones/Free Ports

Free ports, Foreign-Trade Zones and other customs-free areas are used 
basically by manufacturers for exporting purposes.  Manufacturers that 
set up an operation in this area enjoy the advantages of importing their 
supplies without any customs duties.  These companies do have to abide 
by Spanish labor laws.

Capital Outflow Policy

The Government has encouraged greater Spanish investment abroad as a way 
to diversify the Spanish industrial base.  The public sector has taken 
the lead with investments in companies being privatized in Latin 
America; Iberia, the Spanish flag air carrier, has bought into carriers 
in Argentina, Chile, Venezuela, and the Dominican Republic; RENFE, the 
national railroad, has made investments in Argentina; Telefonica, 
Spain's semi-public phone company, has bought portions of local 
companies in Chile and Argentina and has recently won a bid to operate 
in Peru.  Spanish banks are the largest foreign investors with branches, 
subsidiaries, and representation offices throughout the Americas, and to 
a lesser degree in larger European capitals. 

Investments outside these sectors are infrequent, with most in the food 
and beverage industry.  The Spanish Government has frequently supported 
investments in developing countries through use of tied-aid credits or 
development assistance programs. 

Major Foreign Investors

The largest investors during 1993 in Spain were the Netherlands, France, 
the United States, The United Kingdom and Germany.  According to Spanish 
statistics, in the period between January to November 1993, direct 
investment from the Netherlands amounted to $2.7 billion,  22.3 percent 
share of total foreign investment in Spain during that period.  French 
direct investment's share was 11 percent during this period and amounted 
to $1.4 billion.  Direct investment from the U.S. amounted to $975 
million, a 7.9 percent share of total direct investment.  British direct 
investment share is 7.4 percent and amounted to $908 million.  German 
direct investment was only 6.6 percent of total direct investment during 
January - November 1993 and reached $812 million. 

The European Union is by far the largest investor in Spain. Overall, its 
member countries invested $6.7 billion between January and November of 
1993, a 54.68 percent share of total direct investment. 


Banking System

Spain has a diversified modern financial system which is integrated with 
international financial markets.  The system comprises credit, stock and 
money markets together with derivative markets.

Operators in the Spanish financial system can be classified as follows:

1. The central issuing bank: Bank of Spain

2. Banks:

- Spanish and foreign banks
- Savings banks
- Credit cooperatives-rural savings banks

3. Financial entities:

- Leasing, factoring and installment sale finance companies
- Mortgage loan entities

4. Investment institutions:

- Collective investment entities
- Venture capital funds and companies
- Other investment entities

5. Brokers:

- Stock market
- Money market
- General

6. Insurance and re-insurance companies

A) Banks

Private banks and savings banks are very important because of the volume 
of their business and because they are active in every segment of the 
economy.  Currently, there are over 150 officially registered private 
banks in Spain with close to 17,000 branch offices within Spain.  Many 
of them have an international presence as well.

Most Spanish banks provide a full range of services and operations for 
corporate and private customers, including the handling of collections 
and payments outside of Spain through their organizations abroad.  
Around 50 foreign banks have offices in Spain.

There are close to 60 confederated savings banks, with over 13,700 
branch offices.  They attract a substantial portion of the volume of 
private savings in Spain, and they tend to lend their funds preferably 
to private customers (mortgage, loans, etc.). However, they  are very 
active in financing major public and private projects by subscribing and 
purchasing fixed-interest debt securities.

Foreign companies established in Spain have access to the Spanish 
financial system under the same conditions as Spanish companies. 

B) Investment and brokerage entities

Prospective investors can call on the expertise of numerous investment 
and brokerage entities that ensure ease and flexibility in making the 
investment and achievement of risk/return ratios to meet the investor's 
requirements.  New regulations governing collective investment operators 
have been enacted in the last few years to strengthen the requirements 
for financial reporting to the public in this field, and new kinds of 
investment organizations (most notably venture capital funds and 
companies) were officially recognized, with tax relief measures to 
eliminate the extra costs involved in using this medium  for 

These tax relief measures have led to a notable increase in number of 
these institutions and in the volume of their investment.  Property 
investment funds are also developed in Spain, thus completing the 
process of adaptation to and standardization with collective investment 
instruments in the EU. 

C) Credit market

The Spanish credit market is structured around the private banks, which 
attract most private and corporate savings and use their funds to 
provide financing for the private sector.  The banks also operate as 
investors and underwriters in the stock market, and adjust their 
liquidity by interbank and money market transactions. 

The process of liberalization of capital movements in the EU is making 
it easier for Spanish companies to obtain finance from abroad.

D) Stock market

Following a period when stock exchanges in Spain dealt only in share and 
bond issues, the stock market has undergone a process of renovation 
during the last few years which has brought new ways of operating and 
new types of financial assets. 

The issuers are mainly leading Spanish private companies and banks.  
Guaranteed bills, promissory notes issued by the Spanish branches of 
foreign banks, and some foreign companies' shares are also listed on 
Spanish stock exchanges.  Certain non-resident entities may also issue 
bonds denominated in pesetas (matador bonds) in the Spanish market, 
subject to certain conditions. 

Market regulation has established a market based on the British/US 
model, aimed at protecting small investors and the market itself.  A 
single computerized and centralized continuous stock market has been 
created, insider trading is penalized, and a National Stock Exchange 
Commission supervises the system and cooperates in developing its 

The more competitive securities market has a new 7-day settlement 
system.  Trading on credit and new hedging instruments (including index 
and warrant options) are available while stricter and more comprehensive 
regulations for takeover bids have been enacted.

Other positive developments for the stock market in Spain have included 
the establishment of markets for options and futures and an unofficial 
second market for trading in fixed-income assets. All these advances 
have made the  securities market in Spain more transparent, safer and 
more liquid.

E) Money market

The money market is based fundamentally on the issuance of short-term 
securities by the Bank of Spain, which are taken up by banks, finance 
companies and money market operators that place a portion of them with 
individuals and corporations with cash surpluses for short-investment. 

In a broader sense, the money market covers also interbank deposits (the 
interest rates for which are used as benchmark for other transactions) 
and trading in short-term corporate securities (although these are dealt 
through stock exchanges). 

The money market has become increasingly important as a result of the 
liberalization and greater flexibility of the Spanish financial system 
as a whole in recent years.  This is evident from the fact that interest 
rates are ordinarily higher than the rate of inflation and from the 
substantial volume of trading in money market securities.

The Government debt market is important in Spain and used by both 
resident and foreign investors.  Favorable tax arrangements for 
investments by non-residents in these securities is making this market 

F) Pension plans and insurance companies

Development of security investment companies and funds in Spain has 
taken place during the last five years. 

The Pension Plans and Funds Law introduced a new form of saving in 
Spain, trying to create a sound instrument for long term financing.  
This law contemplates the existence of pension plans promoted by 
employers, certain associations and financial entities.  These plans 
include favorable tax treatment and restriction on use of the funds 
until the underlying contingency (retirement, death or disability) takes 

The life assurance market in Spain has also grown substantially in 
recent years, mainly because of the similarity of survival insurance 
contracts to traditional saving formulae and the more favorable tax 
treatment of the former.  The sale of short-term survival insurance with 
scant actuarial content is prohibited. 

In recent years major international insurance companies have set up 
operations in Spain, either by forming subsidiaries or branches here or 
by buying existing companies, and in most cases have achieved profitable 
results and excellent positioning in the market.

Foreign Exchange Controls Affecting Trading

Adoption in recent years of EU regulations has brought major change and 
liberalization to the Spanish financial sector.  Exchange controls have 
been virtually eliminated.  Freedom of action is the basic principle 
applied in international transactions.  Informational requirements have 
been established with regard to large cash transactions.  The processing 
of foreign payments has been speeded-up as a result of this 

General Financing Availability

Spanish importers generally obtain finance from commercial banks. The 
most important types of short-term financing are made through loan 
agreements (polizas de credito), discounting of commercial bills, and 
loans made against bills drawn on the borrowing company to the order of 
the bank (efectos financieros). 

Under a "poliza de credito", whose usual term is six months, the 
borrower has access to credit up to the maximum negotiated in the loan 
agreement.  Spanish borrowers prefer "polizas" to loans made against 
bills (efectos financieros or letras financieras), because the latter 
are subject to stamp tax.  Commercial bills and other trade paper are 
generally discounted under an overall credit line agreed upon between 
the bank and its client. 

Banks usually offer these lines for one year and prefer that short term 
paper (30, 45 or 90 days) be passed through the line. Local companies 
that wish to raise their discount ceilings can normally do so by opening 
term or savings accounts equal to 5-20 percent of their drawings. 

Opening irrevocable letters of credit is a straightforward process in 
Spain.  Importers can insure exchange risk at their banks.

How to Finance Exports/Methods of Payment

Payment deferrals are normal in Spain.  Usually importers wait a 
considerable amount of time (up to one year in some cases) until their 
customer pays them.  This usually happens to agents/distributors that 
supply goods and equipment to the Administration or to large 
distribution chains.  Importers will want certain credit from the U.S. 

Nonetheless, U.S. exporters need to weigh carefully the credit or 
financing they extend to Spanish importers.  Exporters are advised to 
follow the same careful credit principles they follow for domestic 
customers.  Services of credit reporting agencies such as Dun and 
Bradstreet are available; World  Traders Data Reports (WTDR's) are also 
a useful tool.  This service is under consideration for privatization.

Available Export Financing and Insurance

Apart from Commercial Banks and other financial private sources such as 
factoring, forfeiting and confirming services, there are some Government 
programs available to the U.S. exporter.  Several federal government 
agencies, as well as a number of state and local ones, offer programs to 
assist exporters with their financing needs.  Some are guarantee 
programs that require the participation of an approved lender; others 
provide loans or grants to the exporter or a foreign government. 

Government guarantee and insurance programs are used by commercial banks 
to reduce the risk associated with loans to exporters.  Lenders 
concerned with an exporter's ability to be paid, often use government 
programs to reduce the risk that would otherwise prevent them from 
providing finance.

For assistance in determining which financing options may be available, 
the following sources may be consulted:

- The Exporter's international or domestic banker.
- The Exporter's state export promotion or export finance office.
- A Department of Commerce district office.
- The Export-Import Bank of the United States (Eximbank).

Project Financing Available

The Export-Import Bank of the United States is the federal government's 
trade finance agency, offering numerous programs to address a broad 
range of financial needs.  Other agencies fill various market niches.  
The Department of Agriculture offers a variety of programs to foster 
agricultural exports.  The Trade and Development Agency provides grant 
financing for project planning activities conducted by U.S. firms.  The 
Small Business Administration offers programs to address the needs of 
smaller exporters.  The Overseas Private Investment Corporation provides 
specialized assistance to U.S. firms.  The Agency for International 
Development provides grants to developing nations that can be used to 
purchase U.S. goods and services. 

Banks with U.S. Banking Arrangements

All the banks listed in Appendix E have agreements with one or several 
U.S. banks.


Business Customs

There is no substitute for face-to-face meetings with Spanish business 
representatives to break into this market.  Spaniards expect a personal 
relationship with suppliers.  Initial communication by phone or fax is 
far less effective than personal meetings.  Mail campaigns generally 
yield meager results.  Less than thirty percent of local managers are 
fluent in English.

Spaniards are more formal in personal relations than Americans but much 
less rigid than they were ten years ago.  The biggest mistake a U.S. 
business person can make is to assume that doing business in Spain is 
comparable to business practices in Mexico and Latin America; Italy or 
France would be better comparisons.  A hand-shake is customary upon 
initiating and closing a business meeting, accompanied by an appropriate 
greeting.  Professional attire is expected.  Business dress is suit and 
tie and business cards are required.   
Spaniards tend to be "conservative" in their buying habits.  Known 
brands do well.  Large government and private sector buyers appear more 
comfortable dealing with other large, established organizations or with 
firms that are recognized as leaders within their sectors.

Travel Advisory and Visas

Spain is a developed and stable democracy with a modern economy. Tourist 
facilities are widely available. 

Entry requirements: a passport is necessary but a visa is not required 
for tourist or commercial stays of up to three months; visitors may 
subsequently apply for an extension of stay at a Spanish immigration 
office.  Holders of official or diplomatic passports need a visa.  For 
further information concerning entry requirements for Spain, travellers 
may contact the Embassy of Spain at 2375 Pennsylvania Avenue NW, 
Washington, DC 20037, tel: (202) 728-2330, or the nearest Spanish 
consulate in Boston, Chicago, Houston, Los Angeles, Miami, New Orleans, 
New York, San Francisco, or San Juan.

Medical facilities: good medical care is available.  U.S. medical 
insurance is not always valid outside the United States. Travelers have 
found that in some cases, supplemental medical insurance with specific 
overseas coverage has proved to be useful.  Further information on 
health matters can be obtained from the Centers for Disease Control's 
international travelers hot line on (404) 332-4559.

Crime information: Spain has a very low rate of violent crime. 
Nevertheless, minor crimes such as pick-pocketing, robbery, and theft 
from cars are a problem and are often directed against unwary tourists.  
Thieves often attempt to distract their victims by squirting mustard on 
their clothing, asking for directions on the street, or otherwise 
diverting attention from an accomplice.  Theft of small items like 
radios, luggage, cameras, briefcases, and even cigarettes from parked 
cars is a common problem.  

This Embassy has issued a notice to U.S. citizens stating that it 
frequently receives reports of roadside thieves posing as "good 
samaritans" to persons experiencing car and tire problems.  The thieves 
typically attempt to divert the driver's attention by pointing out a 
mechanical problem and then steal items from the vehicle while the 
driver is looking elsewhere.  The problem is particularly acute with 
vehicles rented at Madrid's Barajas Airport.  The Embassy notice advises 
drivers to be extremely cautious about accepting help from anyone other 
than a uniformed Spanish police officer or civil guard.  Travelers who 
accept unofficial assistance are advised to protect their valuables by 
keeping them in sight or locking them in the vehicle.

The loss or theft abroad of a U.S. passport should be reported to the 
nearest U.S. Embassy or consulate.  U.S. citizens may refer to the 
Department of State's pamphlet "A safe trip abroad" for ways to promote 
a more trouble- free journey.  It is available from the Superintendent 
of documents, U.S. Government Printing Office, Washington DC 20402.

Drug penalties: U.S. citizens are subject to the laws of the country in 
which they are traveling.  In Spain, penalties for possession, use, or 
dealing in illegal drugs are strict, and convicted offenders can expect 
jail sentences and fines. 

Terrorist activities: civil disorder in Spain is rare.  Although a few 
small terrorist groups, including ETA (Basque separatists) and GRAPO (a 
marxist group) are occasionally active, their efforts are primarily 
directed against police, military and other Spanish Government targets.  
Americans have not been targets of these attacks. 

Registration: U.S. citizens who register in the consular section at the 
U.S. Embassy or consulate may obtain updated information on travel and 
security within Spain.

Embassy and consulate locations: The U.S. Embassy in Madrid is located 
at Serrano 75 from 9:00am to 6:00pm; telephone (34-1) 577-4000.  There 
are U.S. consulates in Barcelona, at Paseo Reina Elisenda 23, telephone 
(34-3) 280-2227; and in Bilbao, at Lehendakari Aguirre 11, telephone 
(34-4) 475-8300 both open from 9:00am to 6:00pm.  There are also 
consular agencies in the following locations:

- Malaga, at Centro Comercial "Las Rampas" Fase 2, Planta 1, locales 12-
G-7 and 12-G-8, Fuengirola, telephone (34-52) 474-891, hours 10:00 a.m. 
to 1:00 p.m.; 

- La Coruna, at Canton Grande 16-17, telephone (34-81) 213-233, hours 
10:00 a.m. to 1:00 p.m.; 

- Las Palmas, at Franchy y Roca 5-5, no. 13, telephone (34-28) 222-552, 
hours 10:00 a.m. to 1:00 p.m.; 

- Palma de Mallorca, at Av. Jaime 111, 26 entresuelo, telephone (34-71) 
725-051, hours 4:00 p.m. to 7:00 p.m.; 

- Seville, at Paseo de las Delicias 7, telephone (34-54) 231-885, hours 
8:30 a.m. to 1:30 p.m. and 2:30 p.m. to 4:30 p.m.

- Valencia, at Cl. de la Paz 6-5, local 5, telephone (34-6) 351- 6973, 
hours 10:00 a.m. to 1:00 p.m.


The Government of Spain publishes a list of holidays every year. The 
list for 1996 is not available yet.  In any case, it will not differ 
much from the following 1995 list. 

National Holidays

Jan. 6 (Epiphany);  March 20 (Saint Joseph); Apr. 14 (Good friday);  May 
1 (Labor day); Aug. 15 (Assumption day); Oct. 12 (National day); Nov. 1 
(All saints); Dec. 6 (Constitution day); Dec. 8 (Immaculate conception), 
December 25 (Christmas).

The work-days abutting the Spanish holidays and vacation periods are not 
"prime time" for business meetings; this could include the month of 
August and the several vacation periods between Christmas and Easter.  
Business hours in Spain are generally 9:00 AM to 6:00 PM (banking hours 
8:30AM-2:30PM, Saturdays open in the morning) Monday through Friday 
while stores are generally open 10:00 AM to 8:00 PM, Monday through 
Saturday.  To ensure availability, advance
appointments are recommended.

Business Infrastructure


Telecommunications to and from Madrid compare favorably with those in 
any large U.S. city.  A direct-dial telephone system links Spain to the 
U.S. and most of the world.  Calls to the United States may be charged 
to international telephone cards such as AT&T, MCI and Sprint; 
international directory inquiries may be reached by dialing 900-99-00-11 
(AT&T Direct U.S. operator). Public phones in Spain accept coins and 
pre-paid Telefonica credit cards.  Some public phones also accept 
commercial credit cards.


Frequent direct air service is available to major U.S. from Madrid and 
Barcelona.  Airports in both Madrid and Barcelona have good bus services 
to downtown.  Taxis are easily available at major cities all over Spain.

There is a good highway network linking major cities in Spain.  
Secondary roads are poor in Galicia and Asturias (Northwest of Spain).

The Spanish railway system is slow and old with some exceptions.  There 
is a high speed train line linking Madrid and Sevilla.  There is a very 
good railroad network linking Madrid and Valencia.  Madrid and Barcelona 
enjoy excellent railway systems in their metropolitan areas.

Buses and the Metro (subway) in Madrid and Barcelona may be crowded 
during rush hours but they provide fast and efficient service.

Electrical Characteristics

Electric current in Spain is 220 volts AC, 50 cycles.  A transformer is 
needed for most U. S. electrical equipment and appliances.

Climate and Clothing

Despite differences among various regions, Spain has a typical 
Mediterranean climate.  The weather in the northern coastal regions 
(looking onto the Atlantic and the Bay of Biscay) is temperate and 
generally rainy throughout the year, and temperatures are neither very 
low in winter nor very high in summer.  The climate on the Mediterranean 
coastline, including the Balearic Islands, is mild in winter and hot and 
dry in the summer.  The most extreme differences take place in the 
interior, where the climate is dry, with cold winters and hot summers.  
Finally, the Canary Islands have a climate of their own, with 
temperatures constantly around 20 degree celsius and little difference 
between summer and winter or day or night.


Tipping in Spain is largely optional since a service charge is normally 
included in restaurant bills.  Small, additional tips are often left for  
particularly good service.  Taxi drivers may be tipped by rounding up 
the payment to include up to 10 percent of the fare.  At no time in 
Spain are tips obligatory.

Commercial Language

While Spanish is the official language in Spain, many business people 
speak English.  Product literature, correspondence and negotiations in 
the Spanish language provide a distinct advantage over competitors who 
use only English.  There are certain regions in Spain that have a second 
official language: Catalan in Catalonia, Valencia, and the Balearic 
Islands; Galician/Portuguese in Galicia; Basque in the Basque region.

Hotels and other tourist infrastructure

Spanish hotels are comparable to those found in the rest of the EU.  
Spain has a good network of hotels all over the country.  A hotel is 
always easy to find when traveling in Spain.

Car rental services can be found in major cities, airports and hotels.  
Most of the large U.S. car rental companies are established in Spain.


Appendix A: Country Data

                                    1994    1995    1996
                                            proj.    est.

1. Profile

- Population (million)              39.2    39.3    39.4
- Population growth rate (%)         0.4    0.4      0.4
- Religion                          90% Catholic
- Government System                 Parliamentary Monarchy
- Languages                     Spanish (official), Catalan, Basque
                                and Galician/Portuguese.
- Work week                         40.0    40.0    40.0

Appendix B: Domestic Economy

                                       1994      1995       1996
                                                 proj.  estimate

- GDP current prices (tril. pta)       64.7      68.3       73.4
- GDP current prices ($ bil.)         483.1     546.4      587.2
- GDP growth rate (%) (real)            2.0       3.0        3.5
- GDP per capita ($)                 12,323    13,903     14,904
- Government spending (% GDP)           6.7       6.0        4.4
- CPI (% chg. Dec/Dec)                  4.3       4.0        4.0
- Unemployment (Avg.)                  24.3      24.0       23.0 
- Foreign Exchange reserves ($ bil.)   44.5      45.0       45.0
- Avg. Exch. rate (pta/$)             133.9     125.0      125.0
- Foreign debt                          N/A       N/A        N/A
- Debt service ratio                    N/A       N/A        N/A

Appendix C: Trade

                                       1994      1995       1996
                                                 proj.  estimate
(USD bil.)

- Total Spanish exports                73.3      85.0      105.0
- Spanish exports to U.S.               3.6       4.2        5.1
- Total Spanish import                 92.7     110.0      130.0
- Spanish imports from U.S.             6.8       8.0        9.5
- U.S. share of total exports           4.9       4.9        4.9
- U.S. share of total imports           7.3       7.3        7.3

Appendix D: Investment Statistics

                               Investment (US$ millions)

                                    1992   1993    1994

Tot. foreign dir. investment      13,386  8,063    9,780
U.S. direct investment             1,057    628      674
U.S. direct investment (pct.)        7.9    7.8      6.9
Spanish Investment in U.S.         438.8  183.9    399.9  
Spanish invest. (pct. of total)      8.6    5.3      5.3

- Foreign Direct Investment:  Geographic Breakdown

European Union:            63.2 percent

Of which: 
   The Netherlands          39.6%      
  France                    24.4%
  United Kingdom            11.4%
  Germany                   11.2%
  Italy                      6.0%
  Other EU countries         7.4%   

- Foreign Direct Investment: Breakdown by sector (percent)

Manufacturing                     37.4%
Financial & other Services        33.7%
Commerce & Hotels                 12.0%
Extraction & Chemical Industries  10.8%
Other                              6.1%

Source: Bank of Spain. 

Appendix E -  U.S. and Country Contacts

United States Embassy in Spain

Address:  Serrano 75
          28006 Madrid
          tel: (34-1) 577-4000
          fax: (34-1) 577-5735

Mailing Address:    American Embassy
(from the U.S.) PSC#61
                APO AE 09642

Ambassador:  Richard N. Gardner
Deputy Chief Of Mission:  David N. Greenlee
Counselor for Agricultural Affairs:  Franklin Lee
Counselor for Cultural Affairs:  Brian Carlson
Counselor for Economics Affairs:  Emil Castro
Counselor for Political Affairs:  Harry Jones
Defense Attache:  Capt. James Tinsley III
Office of Defense Cooperation:  Col. Judy George


- Madrid:

Address:    Serrano 67, 4th floor
            28006 Madrid, Spain
            tel: (34-1) 576-0602
            fax: (34-1) 575-8655

Mailing Address: American Embassy
(from the U.S.)  FCS Madrid
                 PSC#61, Box 21
                 APO AE 09642

Counselor for Commercial Affairs:  Emilio Iodice
Commercial Attache:  Rajendra Dheer
Assistant Commercial Attache:  (vacant)


Address:  P. Reina Elisenda de Montcada 23
    08034 Barcelona, Spain
    tel: (34-3) 280-2227
    fax: (34-3) 205-7705

Mailing Address: American Consulate General
(from the U.S.)  Commercial Section
                 PSC#61, Box 0005
                 APO, AE 09642

Commercial Consul:  Dorothy Lutter

USDOC Country Desk:

Ann Corro
Spain and Portugal Desk Officer
U.S. Department of Commerce
tel: (202) 482-5341
fax: (202) 482-2897

TPCC Trade Information Center: 1-800-USA-TRADE



American Embassy
Serrano 75 (Box 20)
28006 Madrid
Tele: (34-1) 431-2998
Fax:  (34-1) 576-8063

Mailing Address from the United States:
Office of Agricultural Affairs
American Embassy-Madrid
PSC-61 (Box-20)
APO AE 09642

American Officers:
Agricultural Counselor:      Franklin D. Lee 
Agricultural Attache:        Hugh J. Maginnis 

Area Officer    

Philip A. Letarte
Southern Europe Area Officer
U.S. Department of Agriculture
Foreign Agricultural Service
Room 5092 South Bldg..
14th and Independence Ave. S.W.
Washington, D.C. 20250
Tele: (202) 720-2144
Fax: (202) 690-1149

U.S. Department of Agriculture
Foreign Agriculture Service
Trade Assistance and Promotion Office
tel: (202) 720-7420

Spanish Government Organizations 

Ministerio de Agricultura, Pesca y Alimentación
Paseo de la Infanta Isabel, 1
28014 Madrid
Phone (1) 347 5000

Secretaría General de Producciones y Mercados Agrarios
Ministerio de Agricultura, Pesca y Alimentación
Jose Abascal, 4 
28003 Madrid
Phone(1) 347 66 00

Direccion General de Sanidad Agraria 
Velázquez, 147
28002 Madrid
Phone (1) 347 82 33/4 Fax 577 62 32

Dirección General de Salud Pública
Paseo del Prado, 18
28014 Madrid
Phone (1) 596 20 38
Fax (1) 596 20 47

Subdirección General de Comercio Exterior de
Productos de Origen Animal y sus Derivados 
Ministerio de Comercio y Turismo
Phone (1) 349 37 80
Fax (1) 349 38 06

Secretaria de Estado Para las Comunidades Europeas
Ministerio de Asuntos Exteriores
Maria de Molina, 39 Pta 10
28006 Madrid
Phone (1) 41163 41/ 563 71 10 

Instituto de Comercio Exterior (ICEX)
- Spanish institute for Forign Trade
P. de la Castellana 14
28046 Madrid, Spain
Phone: 34-1-431-1240
Fax: 34-1-431-6128

Direccion General de Inversiones Exteriores
- Directorate General of Foreign Investment
P. de la Castellana 162
28046 Madrid, Spain
Phone: 34-1-583-7400
fax: 34-1-583-5329



(Higher Council of Chambers of Commerce)
Contact: Mr. Guillermo de la Dehesa
Claudio Coello 19
28006 Madrid
Tel: (34-1) 575-3400
Fax: (34-1) 435-2392

Contact: Mr. Adrian Piera Jimenez
Huertas 13
28012 Madrid
Tel: (34-1) 538-3500
Fax: (34-1) 538-3677

Antoni Negre
Avda. Diagonal 452-454
08006 Barcelona
tel: (34-3) 416-9300

Patricio de la Sota
Avda. de Recalde 50
48008 Bilbao
tel: (34-4) 410-4664

Mr. Jose A. Manrique
Executive Director
Av. Diagonal 477
08036 Barcelona
tel: (34-3) 405-1266
fax: (34-3) 405-3124


Mr. Andrew Whist
Spain U.S. Chamber of Commerce, Inc.
500 Fifth Avenue
New York, N.Y. 10110
Tel: (212) 354-7848

Mr. Kevin Callahan
Executive Director
Spain U.S. Chamber of Commerce, Inc.
500 Fifth Avenue
New York, N.Y. 10110
Tel: (212) 354-7848


Raimundo Fdez. Villaverde 65
28003 Madrid
tel: (34-1) 597-0000
fax: (34-) 556-6469

General Peron 40-A
28020 Madrid
tel: (34-1) 597-3375
fax: (34-1) 555-4531

Castellana 31
28046 Madrid
Tel: (34-1) 319-9796
fax: (34-1) 310-2292

Alcala 95
28009 Madrid
tel: (34-1) 520-6100
fax: (34-1) 520-6222

Salvador de Madariaga 1
28027 Madrid
tel: (34-1) 377-9100
fax: (34-1) 377-9101

Torre Picasso
28020 Madrid
tel: (34-1) 572-7200
fax: (34-1) 572-7427

Castellana 43
28046 Madrid
tel: (34-1) 308-3500
fax: (34-1) 308-3566


Corporacion Bancaria de Espana
Contact: Mr. Francisco Luzon
Paseo de Recolestos, 10
28004 Madrid
Tel: (34-1) 537-7000

Contact: Mr. Alfredo Saenz
Paseo de la Castellana, 7
28046 Madrid
Tel: (34-1) 338-1000

Contact: Jose María Amusategui
Alcala, 49
28014 Madrid
Tel: (34-1) 522-4040
Fax: (34-1) 521-9703

Contact: Mr. Luis Angel Rojo
Alcala, 50
28014  Madrid
Tel: (34-1) 338-5000

Contact: Mr. Jose Maria Aguirre
President Paseo de la Castellana 77
28046 Madrid

Contact: Mr. Carlos Llara
Director General
Paseo de Recoletos, 10
28001 Madrid
Tel: (34-1) 575.46.00

Contact: Mr. Emilio de Ybarra
Paseo de la Castellana, 81
28046 Madrid
Tel: (34-1) 374 80 00

Contact: Mr. Jose Luis Fominaya
Carrera de San Jeronimo, 13
28014 Madrid
Tel: (34-1) 429-2443

Contact: Mr. Luis Valls Taberner
Alcala, 26
28014 Madrid
Tel: (34-1) 435-3620

Contact: Mr. Emilio Botin Sainz de Sutuola
Paseo de la Castellana 75
28046 Madrid
Tel: (34-1) 435-0455

Contact: Mr. Jaime Terceiro Lomba
Plaza de Celenque, 2 - 2da.
28013 Madrid
Tel: 532-0000


Contact: Mr. Ralph Schauss
President and Director General
Capitan Haya 1
28020 Madrid
Tel: (34-1) 455-6600

Contact: Mr. Angel Garcia Altozano
General Manager
Paseo de la Castellana 31
28046 Madrid
Tel: (34-1) 538-7500

Timothy W. Davis
General Director
C/ Peonias 2, planta 7
28042 Madrid
Tel: (34-1) 321-9100

Jose Conti
Regional Director
Passeig de Gracia, 60
08007 Barcelona
tel: (34-3) 487-1050

Amador Huertas y Ortega
President for Spain and Portugal
Jose Ortega y Gasset 29
28006 Madrid
Tel: (34-1) 431.3479

Enrique Santamaria
Diagonal 427 bis-429
08036 Barcelona

Mr. Rafael Gil Tienda
Country Corporate Officer
Avenida de Europa, 19
Parque Industrial La Moraleja
Tel: (34-1) 663-1100

Contact: Mr. Jose A. Garay
Manager Director
Paseo de la Castellana 51
28046 Madrid
Tel: (34-1) 349-2800

Contact: Ms. Amparo Garcia De Cuadro
Vice President (Representative Office)
Paseo Castellana, 51
28046 Madrid
Tel: (34-1) 349-2800

Morgan Guaranty Trust of New York
Contact: Mr. Victor Arbulu
General Manager & Vice President
Jose Ortega y Gasset, 29
28006 Madrid
Tel: (34-1) 435-6041
Fax: (34-1) 577-5814

Agricultural Associations

Asociación Espanola para el Comercio 
Exterior de Cereales
Pedro Muguruza, 3 
28036 Madrid 
Phone (1)350 31 60/3503093/Fax 345 05 27

Dry Miller Association
Felix Boix 7-Tercero F
28036 Madrid
Phone(1) 345 16 85

Asociación de Industrias de la Carne
General Rodrigo, 6-Planta 12
2803 Madrid
Phone (1) 554 70 45/46/
Fax   (1) 554 78 49

Asociación Espanola de Empresas de la Carne (ASOCARNE)
Infanta Mercedes, 13-4
28020 Madrid
Phone (1) 571 68 55/53/04/56
Fax   (1) 571 68 54
Telex 43950 ASOC-E

Federación Catalana de Industrias Cárnicas (FECIC)
Via Layetana, 36
08003 Barcelona
Phone (3) 268 26 31
Fax   (3) 268 03 90

Confederación Espanola de Alimentos Compuestos
para Animales
Gran Via, 68
28014 Madrid
Phone (1)542 05 05/Fax 248 02 17

Federación de Industrias Lácteas
Ayala, 10
28001 Madrid
Phone 5762 100

Asociación Espanola de Productores de
Ganado Vacuno de Carne (ASOVAG)
Cambios Viejos, 15 entresuelo
08003 Barcelona
Phone (3) 310 17 00/Fax 310 03 48

Asociación Nacional de Productores de Ganado Porcino
Juan Brabo, 69 Entreplanta
28006 Madrid
Phone 402 22 72/Fax 402 22 68

Asociación Nacional de Productores de Pollos
Diego de leon, 33-Cuarto
28006 Madrid
Phone 562 24 88/561 44 71/Fax   261 31 76

AFOEX - Oilseed Crushers Assn.
Principe de Vergara, 80-1ºA
Phone: 563 10 33
Fax:   262 14 24

Flora, 3
28013 Madrid
Phone:547 97 45
Fax:  547 39 80

Asociación de Investigaciones de Industrias de la Madera y el Corcho
Flora, 3
28013 Madrid 
Phone:542 58 64
Fax:  559 05 12

APROSE (Seed Producers Assn.)
Desengano, 10 
28004 Madrid
Phone: (1)521-5517
Fax:   (1)521-1238

522 84 32/531 06 08
Montalban, 11 - 4º piso
28014 Madrid

Castelló, 115-52
28006 Madrid
Phone:564 29 30
Fax:  564 29 28

Grain Marketing

Llotja de Cereales de Barcelona
Lonja de Cereales 
Casa Lonja del Mar
Paseo de Isabel II, 1
08003 Barcelona 
Phone (3) 3 19 65 25/319 24 12/Fax 319 27 80

Appendix F:  Market Research 

A complete list of market research is available on the NTDB

a) International Market Insights

  Title                                       Code

- AT LAST DUNKIN DONUTS IN SPAIN...........    IMI950612
  SPAIN....................................  IMI950609
  (GLOBAL SYSTEM MOBILE)...................  IMI950607
  ON TELECOMMUNICATIONS...................  IMI950524
- WATER TREATMENT PROJECT .................    IMI950413
- DETERGENT MARKET OVERVIEW ...............    IMI950403
- CABLE TELECOM LAW VIEWS .................  IMI950331
- E.U. MACHINE TOOLS PURCHASE .............  IMI950331
- ANDALUCIA ECONOMIC PROFILE ..............  IMI950327
- E.U. COMPUTER PROCESSING PROJ ...........  IMI950327
- PLASTICS MARKET TRENDS ..................  IMI950330
- E.U. TELESCOPE PURCHASE .................  IMI950323
- E.U. AIRPORT SYSTEMS PURCHASE ...........  IMI950322
- E.U. COMPUTER PURCHASE...................  IMI950317
- AIRPORT PROJ.............................  IMI950317
- TELEPHONE COMPANY OVERVIEW ..............  IMI950317
- COGENERATION OVERVIEW ...................  IMI950317
- AIRPORT EQUIPMENT PURCHASE ..............  IMI950317
- AIRPORT PROJ ............................  IMI950317
- ENVIRONMENTAL PROGRAM ...................  IMI950228
- E.U. COMPUTER REPAIR PROJ ...............  IMI950203
- BIOMASS ENERGY RESEARCH .................  IMI950130
- COMPUTER MARKET OVERVIEW ................  IMI950123
- ENERGY PROJ FINANCING ...................  IMI950110
- FRANCHISE JV PROJ .......................  IMI941216
- COMPUTER TRADE SHOW .....................  IMI941209
- ENVIRONMENTAL REGS SUMMARY ..............  IMI941207
- ENVIRONMENTAL CONTACTS ..................  IMI941207
- ENVIRONMENTAL LAWS ......................  IMI941205
- SWIMMING POOL TRADE SHOW ................  IMI941201
- FISH MARKET OVERVIEW ....................  IMI941201
- COAL IMPORT TRENDS ......................  IMI941129
- POWER GENERATION TRADE SHOW .............  IMI941129
- ENERGY PROJ FINANCING ...................  IMI941123
- INK MARKET OVERVIEW .....................  IMI941110
- PAPER INDUSTRY OVERVIEW .................  IMI941028
- MAIL ORDER OVERVIEW .....................  IMI941028
- COMPETITION OVERIVEW ....................  IMI941021
- AUDIO/VIDEO TRADE SHOW ..................  IMI941017

b) Industrial Subsector Analysis

  Title                Code

- VIRTUAL PRIVATE NETWORK ..................... ISA9411
- WIND ENERGY EQUIPMENT ....................... ISA9410
- FRESH AND FROZEN FISH ....................... ISA9411
- PRINTING INKS ............................... ISA9410
- EYE GLASSES FRAMES .......................... 11/94
- HOUSEHOLD AND SANITARY PAPERS ............... 01/95
- CAD/CAM/CAE ................................. 01/95
- CD-ROM (MULTIMEDIA) ......................... 03/95

- CELLULAR TELEPHONE TERMINALS ................ (in draft)
- CABLE TV SERVICES ........................... (in draft)
- DEFENSE ELECTRONICS EQUIPMENT ............... (in draft)
- SOLAR ENERGY ................................ (in draft)
- AIR TRAFFICK CONTROL EQUIPMENT .............. (in draft)
- CONTACT LENSES .............................. (in draft)
- AIR POLLUTION CONTROL ....................... (in draft)
- AIRPORT INFRASTRUCTURE ...................... (in draft)
- EDUCATION IN THE US ......................... (in draft)
- WATER TREATMENT CHEMICALS ................... (in draft)

c) Industrial Subsector Analysis for FY'96


d) Agricultural market research

01/01/95  Fresh Deciduous Fruit - Semi-Annual    SP9509B
01/15/95  Kiwifruit - Annual                     SP9548A
01/31/95   Grain Voluntary - Update              SP9511V
01/31/95  Oilseeds Voluntary - Update            SP9506V
02/01/95  Tree Nuts - Semi-Annual                SP9514B
02/01/95  Livestock - Semi-Annual                SP9552B
02/28/95   Grain Voluntary - Update              SP9511V
02/28/95  Oilseeds Voluntary - Update            SP9506V
03/15/95  Canned Deciduous - Semi-Annual         SP9516B
03/15/95  Seafood - Semi-Annual                  SP9554B
03/15/95  Strawberry - Annual                    SP9532A
03/31/95   Grain Voluntary - Update              SP9511V
03/31/95  Oilseeds Voluntary - Update            SP9506V
04/10/95  Grain & Feed - Annual                  SP9511A
04/10/95  Sugar - Semi-Annual                    SP9519B
04/30/95   Grain Voluntary - Update              SP9511V
04/30/95  Oilseeds Voluntary - Update            SP9506V
05/01/95  Citrus Semi-Annual                     SP9508B
05/01/95  Tobacco Annual                         SP9521A
05/30/95  Tomatoes - Annual                      SP9522A
05/31/95   Grain Voluntary - Update              SP9511V
05/31/95  Oilseeds Voluntary - Update            SP9506V
06/01/95  Oilseeds - Annual                      SP9506A
06/15/95  Asparagus - Annual                     SP9545A
06/20/95  Cotton - Annual                        SP9504A
06/20/95  Poultry - Annual                       SP9553A
06/30/95   Grain Voluntary - Update              SP9511V
06/30/95  Oilseeds Voluntary - Update            SP9506V
07/31/95   Grain Voluntary - Update              SP9511V
07/31/95  Oilseeds Voluntary - Update            SP9506V
08/01/95  Livestock - Annual                     SP9552A
08/20/95  Tree Nuts - Annual                     SP9514A
08/31/95   Grain Voluntary - Update              SP9511V
08/31/95  Oilseeds Voluntary - Update            SP9506V
08/31/95  Planting Seed - Annual                 SP9501A
09/10/95  Fresh Deciduous Fruit - Annual         SP9509A
09/15/95  Canned Diciduous Fruit - Annual        SP9516A
09/15/95  Seafood - Annual                       SP9554A
09/30/95  Annual Situation Report                SP9524A
09/30/95   Grain Voluntary - Update              SP9511V
09/30/95  Oilseeds Voluntary - Update            SP9506V
10/01/95  Sugar - Annual                         SP9519A
10/31/95   Grain Voluntary - Update              SP9511V
10/31/95  Oilseeds Voluntary - Update            SP9506V
11/01/95  Citrus - Annual                        SP9508A
11/30/95  Avocado - Annual                       SP9541A
11/30/95  Dairy - Annual                         SP9551A
11/30/95   Grain Voluntary - Update              SP9511V
11/30/95  Oilseeds Voluntary - Update            SP9506V
12/10/95  Wine - Annual                          SP9549A
12/15/95  Forest Products                        SP9555A
12/15/95  Tomatoes - Semi-Annual                 SP9522B
12/31/95   Grain Voluntary - Update              SP9511V
12/31/95  Oilseeds Voluntary - Update            SP9506V

Appendix G: Trade Event Schedule

Please note that the Embassy's trade event schedule may change, so firms 
should consult the export promotion calendar on the NTDB or contact the 
Post for the latest information.

a) Events organized by the Commercial Service


* DESTINO USA 96 (Tourism)

Barcelona, 24-27, U.S. Pavilion.  (Telecommunications)



* CASE DAYS, and Barcelona, 13-19 (American States in Europe)


* SUNBELT INITIATIVE FOR FRANCHISING, Spain, Portugal, Greece and Italy



* STUDY USA 96, Barcelona

* FLORIDA STATE TM, Barcelona and Madrid

MAY 96




b) Events organized by the Foreign Agricultural Service


* ALIMENTARIA '96 (Barcelona, 4-9) 
Coordinator Madrid: H. Maginnis/M. Escudero
tel: (34-1) 431 2998
fax: (34-1) 576 8063


* Feria del Gourmet (Madrid, 19-22)
Coordinator Madrid: H. Maginnis/M. Escudero
tel: (34-1) 431 2998
fax: (34-1) 576 8063


* EUROFRUIT (Lerida, third week of September)
Coordinator Madrid: H. Maginnis/M. Escudero
tel: (34-1) 431 2998
fax: (34-1) 576 8063
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