Alexandre Rocha
São Paulo – The Brazilian government is putting into practice eight measures that will speed up commercial defense of the country, under the responsibility of the Brazilian Department of Commercial Defense (Decom), connected to the Development, Industry and Foreign Trade Ministry.
The actions, announced in September by minister Luiz Fernando Furlan, were detailed on October 22 by foreign trade secretary Ivan Ramalho, and by the head of the Decom, Armando de Mello Meziat. This took place in a seminar "The New Commercial Defense Strategy", at the head office of Federation of Industries of the State of São Paulo (Fiesp).
One of the main measures, says Ramalho, will be "ample announcement" to commercial defense organisms – there to protect the Brazilian industry from disloyal practices by other countries – and to organisms in the area, such as Decom.
"These organisms are not very well known. In the eight years of Decom existence, there have only been two safeguard requests. The initiative for these actions must come from the interested party", stated Ramalho. The two cases mentioned involved the toy industry and the grated coconut industry.
He believes that with the recovery of the Brazilian economy, there will be greater demand for imported products, mainly capital goods for industrial use. The Foreign Trade Board (Camex) believes that the volume of imports is set to reach US$ 90 billion by 2007. "With this growth, the possibility of disloyal practices rises too", points out Ramalho.
In this line, talks and seminars to businessmen and other members of the society, such as judges, are scheduled. These seminars will be in the same line as the one that took place on October 22. According to Meziat, occasionally foreign companies and Brazilian importers organize triangular operations, attempting to overcome barriers imposed by Brazilian authorities. They finally succeed to free the products in the judicial system.
Another point defined by the government is the speeding up of procedures for starting these investigations, which currently take on average 12 months. For this, says Meziat, electronic forms are being developed, making it possible for businessmen to send their complaints via the Internet. Decom can then rapidly analyze the complaints and decide "whether or not there is a case".
The government also wants to reduce case duration to 10 months. Currently cases take a year, and may be extended to a year and a half.
Another action, says Ramalho, will be greater application of the so-called "temporary rights", i.e., anticipation of a decision that will probably be taken at case closing. This is possible if there are "concrete facts" proving the existence of dumping or subsidies.
Meziat also says that in dumping cases, the government is adopting "specific rights" for neutralization, as opposed to the "ad valorem" calculation. For example, if 50% dumping is identified, an overcharge is added to product value so as eliminate the dumping. The problem with this, says Ramalho, is that the foreign producer or exporter may reduce product prices even more, killing the effect of this barrier. The idea is to create a "table". Product values will be stipulated, and the overcharge will be applied to this value.
The Foreign Trade Secretariat (Secex) will go on aiding class entities that are interested in studying the performance of import in their sector. Statistics used will be produced by the secretariat. "This will help associations to conclude whether or not there are problems", stated Ramalho.
In the same line, Decom is monitoring import in areas that have already suffered commercial investigation.
Finally, the government is going to increase the support it gives to Brazilian exporters being commercially investigated abroad. "We will work together with the exporter, orienting him and also acting together with the country involved, questioning methods used whenever possible", says Ramalho.
"With export growth, our exporters will certainly face commercial defense cases", he concluded.
What are dumping, subsidies and safeguards?
The defense instruments were created to repress disloyal international trade practices. Decom deals with antidumping, subsidies and safeguards. These are formal investigations involving judicial and administrative processes in which the parties involved are given the right to denial of accusations and ample defense.
Dumping takes place, basically, when product prices in the original market are greater than those offered internationally. For example, North American exporters sell bicycles to Brazil at much cheaper prices than they charge in the United States.
In the antidumping plea, though, that the fact occurs is not enough. It is necessary to prove that Brazilian industry in the sector is being harmed, and that there is a cause and effect relation between the abusive practice and this harm. "The objective of this process is neutralization of dumping. If the product is sold in the country of origin for 100, and in Brazil the product is sold for 60, then dumping is 40. There will therefore be an overcharge of 40", explained Meziat.
At the end of the process, if the case is considered valid, then Decom suggests steps to be taken. Camex executes the action.
Subsidies occur when a certain government provides financial contribution or incentives resulting in benefits to the producer and favoring export. In the same way, for the government to be able to take actions neutralizing the practice, it is necessary to prove a subsidy, that it causes damage to the sector involved, and that there is a cause and effect relationship.
Safeguards, in turn, serve the purpose of protecting a specific sector that is at risk due to, for example, a sudden growth in import. The government may increase import taxes over these products, or establish import quotas. "The government may protect the sector temporarily, but the sector must adjust itself and become more competitive", stated Meziat.
Criticism
Despite these measures, some businessmen present at the event demonstrated skepticism with regard to government action. The president of the Brazilian Foreign Trade Association, Benedicto Fonseca Moreira, said that "on the international scenery those who do not grow are not respected". He goes on to say that the country is "playing with foreign affairs", in a very "professional" world. It is not possible to constantly show that you are weak.
To Moreira, Brazilian authorities are excessively stuck to formalities and lack a little malice in international negotiations.
According to him, while Brazil shows great worry in obeying the rules, the United States, Japan and Argentina subsidize their products and create barriers against foreign products. "The government has not yet noticed how important foreign trade is to development", he says.
Moreira added that the main barrier to Brazilian export is in the country. "There are two thousand products being internally controlled", he stated. "The government has not noticed that it is necessary to be coherent externally", criticized the businessman, stating that different government sectors have their own policies and rules about export.
In turn, Meziat answered that the government must play according to the rules. In a commercial investigation, for example, if Decom ignores the treaties the country signed when it entered the World Trade Organization (WTO), the party that feels offended may go to court, with great chances of winning.
Apart from that, he pointed out that Brazil does not have the economic weight of the United States to impose barriers and then resist possible retaliation.
