MercoPress. South Atlantic News Agency

Brazil to request additional exceptions from Mercosur common external tariff

Predatory competition and cheap imports threaten Mercosur industry

Brazil will request at least 100 additional exceptions from Mercosur common external tariff, TEC, as part of the program to prop local industry that was announced earlier this week and includes tax relief to the tune of 16 billion dollars.

Under Mercosur rules, Brazil is already allowed 100 exceptions to the common tariff (which averages 14%) from a list of 9000 goods regulated by the regional customs union.

Brazil and other Mercosur partners have complained strongly in recent years of imbalanced foreign trade brought by the effects of heavy global liquidity and a weak US dollar.

“The situation in all of Mercosur has been dramatic because of the entrance of cheap goods from abroad” said Trade and Industry minister Fernando Pimentel.

“The regional economy has been threatened by predatory competition that has taken hold around the globe,” Pimentel added. “Developed countries are those that have industry and we're going to protect our own”.

Pimentel said that the government plans to offer additional incentives for other sectors not considered under the industrial competitiveness plan. Among the sectors mentioned are the semiconductor and telecommunications transmission. Another area refers to regulations for auto-sector tax breaks but linked to local technological development programs.

Tax breaks for industries described as strategic in the plan include the IPI industrial products tax, and PIS-Cofins welfare tax. Pimentel also confirmed that the equivalent of almost a billion dollars, annually, in controversial breaks on corporate social security contributions would be covered by the country's treasury under the package.