MercoPress. South Atlantic News Agency

“Buy Brazil Act” and Super Real are here to stay, says Minister

Pimentel said recent industry production data was “very bad”

Brazil's strong currency (the so-called Super Real) is here to stay, and businesses have to get used to this new environment, said Trade and Industry Minister Fernando Pimentel a day after the government announced a massive industry support program which was described is the equivalent of the US “Buy America Act”

The Super Real has gained almost 50% against the dollar over the last three years, and the government of President Dilma Rousseff on Tuesday unveiled a batch of measures, equivalent to 16bn dollars, to help industries cope with the appreciation.

“The currency isn't going to change in the short term, we will have a strong currency for a long period of time, Brazil has moved into the group of countries with a strong currency and with balanced fiscal accounts” Minister Pimentel told foreign correspondents in Sao Paulo. “Businessmen will have to get used to that.”

To contain the effects of the Super Real on Brazil’s beleaguered manufacturers the government announced temporary tax cuts for select sectors increased lending for industry and a government purchasing program that will favor Brazilian products over less-expensive imports.

Pimentel said that recent data for industrial production had been “very bad” and had caused deep concern in the government.

Pimentel rejected accusations that the plan to favor local products in government purchases was a protectionist move, and said neighboring countries that are considered full members of the Mercosur free trade pact--Argentina, Paraguay and Uruguay--will also benefit. The government will pay up to 25% more for local goods which contain 40% local content from Brazil and any Mercosur country.

“The criticism of protectionism is a very easy criticism to make and can be leveled at any measure,” Pimentel said. “We're implementing, with many years of delay, the Buy America Act. That isn't protectionism”.

The Buy America Act was signed into law in the U.S. by President Franklin Roosevelt in 1933.

“Protectionism would be if we prohibited imports. For example, we aren't going to prohibit car imports, but we are going to encourage those that produce locally,” Pimentel said.