MercoPress. South Atlantic News Agency

Brazil after Mercosur waiver to hike tariffs on shoes and textiles

Brazil is considering requesting a waiver from Mercosur with the purpose of hiking the common external tariff (AEC) on shoes and textiles from 20 to 35%, if Uruguay refuses to accept the proposal, reports the Sao Paulo press.

Mercosur decisions must be adopted in consensus by the four country members, (Brazil, Argentina, Uruguay and Paraguay) although the waiver mechanism enables one of the members to adopt an autonomous decision as long as the remaining consent. Brazil's Planning, Industry and Foreign Trade Minister Miguel Jorge said during a Brazil/Mexico business meeting that President Lula da Silva administration could request a special waiver from Mercosur to up the AEC on foot wear and textiles. "Paraguay has already accepted to hike the AEC. Uruguay is considering it. But we can apply a waiver during the negotiation process, independently of whether Uruguay accepts it or not", said Jorge, quoted by Brazilian daily "O Estado de Sao Paulo". So far the Uruguayan government has not taken a definitive position on the issue. Regarding textiles the Uruguayan government is working out a system of fiscal compensations for its industry and in footwear, even when there's a favorable approach from the Ministry of Industry to hike tariffs, there's fear that the situation could lead to a general increase in the price index. Brazilian businessmen from the footwear and textiles sectors requested an increase of the AEC to stop the massive influx of Chinese imports. Lula da Silva administration took the proposal to Mercosur country members. Paraguay accepted and Argentina also but suggested that the hike should not be higher than 28%. Last week Brazil's Deputy Development, Industry and Foreign Trade minister Ivan Ramalho visited Uruguay to insist on the issue.