MercoPress. South Atlantic News Agency

Rousseff administration will promote “buy Brazilian” policy to defend industry

Minister Fernando Pimentel argues that the policy was started by Japan and the US in 1930 and 1940

“As of this year Brazil will follow the US example giving a 25% margin of preference to local goods in government procurement”, said Fernando Pimentel, Minister for Development, Industry and Foreign Trade.

The announcement follows the release of stats indicating that the Brazilian economy expanded 2.7% in 2011 compared to the 7.5% of 2010.

Pimentel denied that the promotion of such a policy ‘violates’ World Trade Organization rules.

President Dilma Rousseff named a task force headed by Economy minister Guido Mantega and Pimentel to organize the defence of Brazilian industry threatened by the devaluation of the US dollar and an ‘invasion’ of (‘cheap’) imports, mostly from China.

Last week Pimental headed a delegation to Mexico to negotiate bilateral trade relations which concluded with an agreement on a cap for car exports to Brazil, which had threatened to drop the auto industry accord from 2003.

“Since 1930 and 1940 the US and Japan respectively support and sustain policies that promote buying domestic production”, said Pimentel in an article published in a leading Sao Paulo newspaper.

Brazil has been the target of at least 15 claims of non respecting free trade rules in the framework of WTO. Last September Brazil was warned several times precisely for having substantially increased the Industrial Production tax which it charges on all imported vehicles.

Pimentel insisted that Brazil abides all WTO rules but in its struggle to defend the domestic market will appeal “to all mechanisms” contemplated in the multilateral organization to respond to a crisis “triggered by the US in 2009 and by the European Union in 2011”.