São Paulo – A study by the Institute of Applied Economic Research (Ipea) shows that exchange depreciation in some countries, like China and the United States, may affect Brazil and cancel trade protection tariffs negotiated at the World Trade Organisation (WTO).
“Tariffs, a basic instrument for trade protection, negotiated over decades, are cancelled by exchange rate disparities. Furthermore, exchange rate disparities directly affect the levels of concessions offered in negotiations and the levels of trade opening negotiated at the WTO,” said the Ipea, in a study disclosed on Thursday (11), in the city of São Paulo.
Ipea shows that exchange rate depreciation also serves as subsidies to the exports of these nations and as surcharges to their imports, becoming “much more efficient trade barriers than the tariffs applied”.
The bottlenecks in the Doha Rounds, for example, according to the study, may be caused by exchange matters. “The WTO needs to face the question of exchange effects on the regulation system developed in recent decades. In the face of the current situation in the Doha Rounds, you may ask whether exchange matters are not behind the impasse faced.”
The study shows, for example, that depreciation of 30% in exchange rates in China represents a subsidy to exports and would bring damaging effects to Brazil. This depreciation would not just cancel tariffs consolidated by Brazil at the WTO, but would also make the tariffs applied into incentives to Chinese imports. "In synthesis, to Brazil, the appreciation of its currency practically cancels the tariff instrument and represents incentives to imports in general.”
*Translated by Mark Ament
