quarta-feira, 26 de junho de 2013

Brazil Imposes Higher Tariffs on Foreign Trade



clip_image002The U.S. goods trade surplus with Brazil was $11.6 billion in 2012, an increase of $413 million from 2011. U.S. goods exports in 2012 were $43.7 billion, up 1.8 percent from the previous year. Corresponding U.S. imports from Brazil were $32.1 billion, up 1.1 percent. Brazil is currently the 7th largest export market for U.S. goods.

U.S. exports of private commercial services (i.e., excluding military and government) to Brazil were $21.7 billion in 2011 (latest data available), and U.S. imports were $6.9 billion. Sales of services in Brazil by majority U.S.-owned affiliates were $29.9 billion in 2010 (latest data available), while sales of services in the United States by majority Brazil-owned firms were $1.3 billion.

The stock of U.S. foreign direct investment (FDI) in Brazil was $71.1 billion in 2011 (latest data available), up from $64.2 billion in 2011. U.S. FDI in Brazil is led by the manufacturing and finance/ insurance sectors.



Brazil is a member of the MERCOSUR customs union, formed in 1991 and comprised of Argentina, Brazil, Paraguay, Uruguay, and Venezuela. Venezuela was admitted as a full member in July 2012. MERCOSUR maintains a Common External Tariff (CET) schedule with a limited number of country-specific exceptions, with most favored nation (MFN) applied rates ranging from zero percent to 35 percent ad valorem. Brazil’s import tariffs follow the MERCOSUR CET, with few exceptions. Brazil’s MFN applied tariff rate averaged 11.6 percent in 2012. Brazil’s average bound tariff rate in the WTO is significantly higher at 31.4 percent. Brazil’s maximum bound tariff rate for industrial products is 35 percent, while its maximum bound tariff rate for agricultural products is 55 percent. Given the large disparities between bound and applied rates, U.S. exporters face significant uncertainty in the Brazilian market, because the government often changes tariffs to protect domestic industries from import competition or to manage prices and supply.

Brazil imposes relatively high tariffs on U.S. imports across a wide spread of sectors, including automobiles, automotive parts, information technology and electronics, chemicals, plastics, industrial machinery, steel, and textiles and apparel. Brazil is permitted by MERCOSUR to maintain 100 exceptions to the CET until December 31, 2015. Using these exceptions, Brazil maintains higher tariffs than its MERCOSUR partners on certain goods, including cell phones, telecommunications equipment, computers and computer printers, wind turbines, certain chemicals and pharmaceuticals, sardines, and mushrooms. At the MERCOSUR Common Market Council (CMC) ministerial meeting in December 2011, MERCOSUR members agreed to allow member countries to increase import duty rates temporarily to a maximum rate of 35 percent on 100 items per member country. In October 2012, Brazil issued its list of 100 products subject to this tariff increase, which will remain in effect through the end of 2013 and may be extended until the end of 2014. Exports of U.S. products in the categories affected by these tariff increases totaled approximately $1 billion in 2011. In June 2012, the MERCOSUR CMC authorized each member country to increase tariffs on an additional 100 products. Brazil’s increases are expected to be announced and take effect in the first half of 2013.

In August 2010, MERCOSUR’s CMC advanced toward the establishment of a Customs Union with its approval of a Common Customs Code and decision 5610 (December 2010) to implement a plan to eliminate the double application of the CET within MERCOSUR. The plan was to take effect in three stages with the first phase to have been implemented no later than January 1, 2012, but the deadline was not met. In November 2012, Argentina became the first MERCOSUR member to ratify the CCC. The CCC still must be ratified by the other MERCOSUR member countries.

As part of its Uruguay Round commitments, Brazil agreed to establish a 750,000 metric ton tariff-rate quota (TRQ) for wheat. Brazil has never opened the TRQ, and therefore no wheat has been shipped under the TRQ. In an April 1996 notification to the WTO, Brazil indicated its intent to withdraw the wheat TRQ and initiated the Article XXVIII process under the GATT 1994. Brazil considers the Article XXVIII process to be ongoing. In the meantime, Brazil continues to not allow imports of wheat under the TRQ. The United States will continue to engage Brazil on this issue.

Nontariff Barriers

Brazil applies to imports federal and state taxes and charges that can effectively double the actual cost of imported products in Brazil. The complexities of the domestic tax system, including multiple cascading taxes and tax disputes among the various states, pose numerous challenges for U.S. companies operating in and exporting to Brazil. For example, in December 2011, Brazil raised the Industrial Products Tax (IPI) by 30 percentage points on vehicles that do not meet a 65 percent local content requirement (defined as content from MERCOSUR countries and Mexico) and certain other investment and production requirements. Effective January 1, 2013, Brazil instituted a revised but similar version of this “temporary” regime that will remain in effect for at least four years. Although the new plan eliminates the 65 percent local content requirement, locally produced vehicles continue to be taxed at preferential rates assuming manufacturers comply with a series of requirements. As part of the new program, the baseline IPI on all vehicles will be revised upward by 30 percentage points, which is equivalent to the level applied to imported vehicles under the prior regime. However, it allows those meeting certain levels of local content, fuel efficiency and emissions standards, and required levels of local engineering, research and development, or labeling standards to receive tax breaks that may offset the full amount of the IPI. Imported automobiles continue to face a potential 30 percentage point price disadvantage vis-à-vis equivalent vehicles manufactured in Brazil even before import duties are levied.

Brazil also prohibits a number of imports, including some blood products and all used consumer goods, such as automobiles, clothing, and tires, as well as used medical equipment and information and communications technology (ICT) products. Brazil also restricts the entry of certain types of remanufactured goods (e.g., earthmoving equipment, automotive parts, and medical equipment). In general, Brazil only allows the importation of such goods if an importer can provide evidence that the goods are not or cannot be produced domestically. A 25 percent merchant marine tax on ocean freight plus port handling charges at Brazilian ports puts U.S. products at a competitive disadvantage vis-à-vis MERCOSUR products. Brazil applies a 60 percent flat import tax on most manufactured retail goods imported by individuals via mail and express shipment, which go through a simplified customs clearance procedure called RTS (simplified tax regime). Goods with a value of over $3,000 cannot be imported using this regime.

Import Licenses/Customs Valuation

All importers must register with the Secretariat of Foreign Trade (SECEX) to access the Brazilian Secretary of Foreign Trade’s computerized documentation system (“SISCOMEX”). SISCOMEX registration requirements are onerous, including a minimum capital requirement. Fees are assessed for each import statement submitted through SISCOMEX.

Brazil has both automatic and non-automatic import license requirements. Brazil’s non-automatic import licensing system covers imports of products that require authorization from specific ministries or agencies, such as beverages (Ministry of Agriculture), pharmaceuticals (Ministry of Health), and arms and munitions (Ministry of National Defense). Although a list of products subject to non-automatic import licensing procedures is available on the SISCOMEX system, specific information related to non-automatic import license requirements and explanations for rejections of non-automatic import license applications are lacking. The lack of transparency surrounding these procedures can create additional burdens for U.S. exporters.

U.S. footwear and apparel companies have expressed concern about the extension of non-automatic import licenses and certificate of origin requirements on non-MERCOSUR footwear to include textiles and apparel. They also note the imposition of additional monitoring, enhanced inspection, and delayed release of certain goods, all of which negatively impact the ability to sell U.S.-made and U.S.-branded apparel, footwear and textiles in the Brazilian market.

In May 2011, the Brazilian government imposed non-automatic import licensing requirements on imported vehicles, including those originating in MERCOSUR countries. The delays in issuing non-automatic import licenses negatively affect U.S. automobile manufacturers that export vehicles to Brazil, particularly those that manufacture vehicles in Argentina for export to Brazil.

U.S. companies continue to complain of burdensome documentation requirements for the import of certain types of goods, even on a temporary basis. For example, the Ministry of Health’s regulatory agency, ANVISA, must approve product registrations for imported pharmaceuticals, medical devices, health and fitness equipment, cosmetics, and processed food products. Currently, the registration process at ANVISA takes from three to six months for new versions of existing products, and can take more than six months for new products. Registration of certain pharmaceutical products can take more than a year, since ANVISA requires that a full battery of clinical testing be performed in Brazil, regardless of whether or not the drug has already obtained approval from the U.S. Food and Drug Administration.

U.S. companies have also reported that customs officials often apply a higher dutiable value based on a retail price rather than recognizing the company’s stated transaction value.


The Plano Brasil Maior (“Greater Brazil Plan”) industrial policy offers a variety of tax, tariff, and financing incentives to encourage production for export and to spur domestic manufacturing, regardless of whether the company is Brazilian or foreign-owned. The Reintegra program, launched in December 2011 as part of Plano Brasil Maior, exempts from certain taxes exports of goods covering 8,630 tariff codes. It also introduced a tax credit for exporters of industrialized goods equal to 3 percent of the value of their exports. To qualify, the imported content of the exported goods must not exceed 40 percent, except in the case of high-technology goods such as pharmaceuticals, electronics, and aircraft and parts, which are permitted to have imported content of up to 65 percent. In 2012, the Reintegra program resulted in approximately R$1.5 billion (approximately $750 million) in refunds to exporters; in 2013, the Ministry of Finance estimates Reintegra refunds will total approximately R$2.2 billion (approximately $1.1 billion). Plano Brasil Maior also calls for the creation of funds designed to aid small and medium sized exporters and to cover non-payment by customers in countries where the risk of non-payment is high.

Brazil’s National Bank for Economic and Social Development (BNDES) provides long-term financing to Brazilian industries through several programs, such as the R$44 billion (approximately $22 billion) Investment Maintenance Program (PIS). At between 3 percent and 5.5 percent, the interest rates charged on financing under this program are substantially lower than the prevailing market interest rates for commercial financing. One BNDES program, FINAME, provides preferential financing for the purchase, sales operations and exports of Brazilian machinery and equipment, as well as imports of the same types of goods produced abroad. These programs can be used for financing capacity expansions and equipment purchases in industries such as steel and agriculture.

Brazil’s Special Regime for the Information Technology Exportation Platform (REPES) suspends PIS and COFINS taxes on goods imported and information technology services provided by companies that commit to export software and information technology services to the extent that those exports account for more than 50 percent of their annual gross income. The Special Regime for the Acquisition of Capital Goods by Exporting Enterprises (RECAP) suspends these same taxes on new machines, instruments, and equipment imported by companies that commit for a period of at least two years to export goods and services such that they account for at least 50 percent of their overall gross income for the previous calendar year.

Brazil also provides a broad range of assistance to its agricultural sector in the form of low interest financing, price support programs, tax exemptions and tax credits. An example of such assistance is the Premium for Product Flow Program (Prêmio para Escoamento de Produto, or PEP), which offers a payment through an auctioning system to purchasers of certain agricultural commodities including corn, wheat, and rice, from a rural producer or cooperative, based on the difference between the minimum price set by the government and the prevailing market price. Each PEP auction notice specifies the commodity to be tendered and the approved destinations for that product, including export destinations. Another example is financing provided by BNDES. Of the R$156 billion (approximately $78 billion) BNDES allocations to the various sectors of the Brazilian economy in 2012, R$18 billion (approximately $9 billion) was set aside for the agriculture and livestock sectors, up 74 percent from 2011. In 2012, BNDES announced the Prorenova credit line of R$4 billion (approximately $2 billion), available for the calendar year to finance the renewal and/or expansion of approximately 2.5 million acres (1 million hectares) of sugarcane fields. BNDES has already announced the extension of Prorenova for 2013.


U.S. companies without a substantial in-country presence regularly face significant obstacles to winning government contracts and are often more successful in subcontracting with larger Brazilian firms. Regulations allow a Brazilian state enterprise to subcontract services to a foreign firm only if domestic expertise is unavailable. Additionally, U.S. and other foreign firms may only bid to provide technical services where there are no qualified Brazilian firms.

In 2010, Brazil passed a law giving procurement preference to firms that produce in Brazil, whether foreign-owned or Brazilian, and that fulfill certain economic stimulus requirements such as generating employment or contributing to technological development, even when their bids are up to 25 percent more expensive than bids submitted by foreign firms not producing in Brazil. The law allows for “strategic” ICT goods and services to be restricted to those with indigenously developed technology. In August 2011, this system of preference margins was folded into Plano Brasil Maior. Government procurement is just one of many measures under Plano Brasil Maior intended to promote and protect domestic producers, particularly the labor-intensive sectors facing import competition. In November 2011, the Ministry of Development, Industry, and Commerce implemented an 8 percent preference margin for domestic producers in the textile, clothing and footwear industries when bidding on government contracts. In April 2012, Brazil implemented 5 percent to 25 percent preference margins for domestically produced backhoes, motor graders, and a variety of pharmaceuticals.

Brazil’s regulations regarding the procurement of information technology goods and services require federal agencies and parastatal entities to give preferences to locally produced computer products based on a complicated and nontransparent price/technology matrix. In addition, Brazil has made several attempts over the past decade to enact preferences at the federal, state and local government levels for the procurement of open-source software over commercial products. Most recently, in December 2011, two Brazilian legislative committees approved draft Law PL 2269/1999, which would require all Brazilian federal government agencies and state-owned entities to favor open-source software in their procurement policies. This legislation is subject to further action in the Brazilian Congress. If enacted, this law would put U.S. software providers at a severe disadvantage vis-à-vis Brazilian companies. In addition, in August 2012, the Ministry of Science, Technology and Innovation released a “Bigger IT Plan” intended to bolster the growth and development of the domestic information technology industry. The program focuses heavily on software and related services and establishes a new process for the government to evaluate and certify that software products are locally developed in order to qualify for price preferences that may be as high as 25 percent.

Pursuant to Decree number 2745/98, the state-controlled oil company Petrobras may issue tenders through invitation letters, electronic auctions, or national or international bids. From time to time, however, suppliers have found that Brazil’s Federal Attorney General will question procurement conducted pursuant to these simplified procedures, resulting in delays in tenders from Petrobras.

Petrobras’ local content requirements are currently established and regulated by Brazil’s National Petroleum Agency (ANP), which is gradually introducing higher local content requirements with each bidding round. In addition, local content requirements vary by block (the geographic area that is awarded by the Brazilian government to oil companies for oil exploration), and within that block, the local content requirements differ for equipment, workforce, and services. In the past, local content requirements were as low as 5 percent; however, Brazilian officials have indicated that local content requirements for Petrobras and other oil companies could reach 80 percent to 95 percent by 2020 in certain product categories. Technology-intensive equipment and services will likely be subject to higher local content requirements than low-technology equipment and services. The Oil and Gas Regulatory Framework introduced in December 2010 requires Petrobras to be the majority operator of new projects, and as a result, Petrobras is responsible for ensuring that its workforce and its entire supply chain adhere to these increasingly high local content requirements. ANP fined Petrobras and other oil exploration and production companies over the last few years for noncompliance with local content requirements; in September 2011, Petrobras was fined R$29 million (approximately $16.85 million) for noncompliance. In August 2012, ANP announced that it was reviewing 17 local content waiver requests from five unnamed operators, requiring that a company prove in its waiver request that it is unable to acquire the appropriate goods and services locally or that local prices are not in line with international standards.

The United States continues to urge Brazil to become a signatory to the WTO Agreement on Government Procurement in order to ensure that companies in both countries have access to each other’s’ procurement markets.


Brazil was listed on the Watch List in the 2012 Special 301 report. Brazil has taken steps to address a backlog of pending patent applications, including by hiring more patent examiners, but long delays still exist. Brazil has also continued to make progress in enhancing the effectiveness of intellectual property enforcement, including conducting some notable raids. However, concerns remain with respect to piracy, particularly Internet piracy. Concerns also persist with respect to Brazil’s inadequate protection against unfair commercial use of undisclosed test and other data generated to obtain marketing approval for pharmaceutical products. The United States is also concerned that Brazil’s proposed administrative procedures conflict with opinions by the Attorney General that had clarified that Brazil’s health authority, the National Sanitary Regulatory Agency (ANVISA), does not have the authority to review patentability requirements when analyzing pharmaceutical patent applications.

Font: 2013 National Trade Estimate Report on Foreign Trade Barriers


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