São Paulo – Cotton imports have been entering the Brazilian market with zero tariff since last month. The Foreign Trade Board (Camex) measure cancels the import tax on 175,000 tonnes of the product for clearance between October this year and May next year. The measure was taken to solve the problem of lack of raw material for the Brazilian textile sector and, according to the superintendant at the Brazilian Textile and Apparel Industry Association (Abit), Fernando Pimentel, the main supplier of cotton with zero tariff should be the United States, the main global exporter.
Egypt, in Africa, also supplies cotton for Brazil, but at much lower volume than the United States, for example. "Egypt is a great producer of long-fibre cotton, which is more expensive, and Brazil needs medium-fibre cotton. And Egypt is not a great exporter of cotton, but of thread," said Pimentel, adding that the greater demand in Brazil is not for long-fibre cotton. In September, Egypt supplied 137 tonnes of cotton to Brazil, for the value of US$ 360,000.
Exports from Egypt, however, should also be benefited by import tax. The initiative came from a proposal sent by the Abit, the Brazilian Association of Cotton Producers (Abrapa) and the Brazilian Association of Cotton Exporters (Anea) and was approved by the Camex in September. In late October regulations for import were published. Initially, explained Pimentel, 175,000 tonnes were freed of the tax, but there is a technical reserve of another 75,000 that may also be used in the period. Before the tax was cancelled, cotton entered the country with 10% tax.
Each Brazilian importer may call for the import of a quota of 10,000 tonnes free of tariffs. But after this volume reaches the importer, he may not receive another. The mechanism was established by the government, stated the Abit superintendant, so that the tax-break may benefit from large to small companies. Apart from solving the problem of supply, the lower tariff should also help companies in the sector to reduce their costs a little, as cotton is at its highest price in history.
Quotas rose due to crop problems faced by global producers. The main producers of the commodity are, in order, China, India, the United States, Pakistan and Brazil. India even suspended imports to protect its industry. In Brazil, the crop this year was 1.07 million tonnes, against 1.3 million tonnes a year.
*Translated by Mark Ament