04/21/2024 – 8:08
The federal government is preparing an intermediate proposal for the steel industry's demands to surcharge steel imported into Brazil by up to 25%, according to the report. Estadão/Broadcast (Grupo Estado’s real-time news system).
According to interlocutors, the idea is to define an import quota for certain steelmaking items – which would be the average of purchases from 2020 to 2022. Current import rates would apply to whatever is imported within this volume. If purchases exceed this quota, the import tax would be 25%. The expectation is that the topic will be analyzed next Tuesday, 23rd, by the Chamber of Foreign Commerce (Camex).
With the plan, which should involve 15 items from the NCMs (Common Mercosur Nomenclature), the government wants to move forward with a solution that does not cause inflationary impacts or a geopolitical problem, especially with China. Inflationary risk is one of the factors that government technicians have focused on most in recent months.
Interlocutors interviewed by the report during this period pointed out that a simple increase to 25% would be impractical in Brazil. The economic team also expressed concerns. Given this, the government is trying to reach a consensus on an intermediate proposal. The gavel will be struck at a meeting at the Civil House next Monday, on the eve of the meeting of the Camex executive board – made up of ten ministries.
Pressure from the steel industry for the government to surcharge foreign steel by up to 25% – against an average of around 10% – has been growing since the middle of last year. The Executive took a first step to meet the activity when, in September, it excluded twelve steel products from the list of items that suffered a 10% reduction in import tax in June 2022. Since then, however, plants have complained that the measure is insufficient and threaten that they will need to review the strategy in Brazil if the scenario continues.
Despite the more protectionist profile, the government found itself at a crossroads because it could not ignore the inflationary impacts of a possible increase in import taxes. Therefore, technicians have spent the last few months analyzing the real situation of each specific area of the steel industry, in order to determine which products there is, in fact, a worrying increase in imports – as there are items that have seen a reduction in entry into the country.
With the strong movement of the steel industry, the chain affected by a possible tax increase also began to move. As shown by the Estadão/Broadcasta coalition of 16 entities warned of the risk of deindustrialization if Brazil were to increase taxes on steel imports from approximately 12% to 25%.
Formed by representative entities that have a strong consumption of steel for their activities, the coalition warned of an increase in inflation and loss of competitiveness of the industry if there is an increase in taxes and imports of the product.
In addition to inflationary pressure, another fear that surrounds the government is the risk of worsening diplomacy with China, precisely in the year in which the countries complete 50 years of bilateral relations and the Executive celebrates several expansions and market openings. The fear is that China, just as it did with the United States, will impose reprisals on the import of Brazilian products, especially minerals and agricultural commodities.
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