05/25/2024 – 7:54
The replacement of Brazilian products with imported ones negatively affected the production of the manufacturing industry in 2023, according to an analysis by the National Confederation of Industry (CNI). In just the first seven months of last year, Brazil imported 3.3 billion items with an average price of US$50, according to research by the National Confederation of Commerce in Goods, Services and Tourism (CNC). China is the main country of origin for these imports, with almost 40% of the total.
Although there was an increase in demand for consumer goods, in 2023, industrial entrepreneurs recorded a drop in production. This is because, according to the CNI survey, this demand was not directed to Brazilian industry. “Consumers have been purchasing more imported products due to the price, which is cheaper than that of items produced by the national industry”, says the confederation.
Data from the Federal Revenue show that purchases in international e-commerce continued at full steam this year. In January alone, the declared value of these purchases reached R$943 million. At the same time, according to the CNI Industrial Survey, complaints of unfair competition, one of the main problems faced by the industry, grew from 16.3% to 20%. Competition with imports increased from 6.1% to 11.6%, in the transition from 2022 to 2023.
For CNI’s Director of Industrial Development, Rafael Lucchesi, it is impossible to compete in such a hostile environment. “High interest rates and the tax system impose a series of costs on national production, whether for inputs or for the final good, whether when looking to invest or innovate. What’s more: the industrial base is also dissatisfied with the lack of supervision and the practice of dumping. These are not recent issues, but they are increasingly intense and damaging to Brazilian industry,” he says.
IBGE’s Monthly Commerce Survey (PMC) and the Ipea indicator of Apparent Consumption of Industrial Goods show that sales in retail trade and demand for consumer goods grew in 2023. According to Lucchesi, insufficient domestic demand, identified as one of the problems faced by the industry in 2023, cannot be justified by a drop in Brazilian consumption, but by the difficulty of competing with imported products.
Unequal taxation is a focus of dissatisfaction
Another demand from the confederation is the reversal of inequality in taxation between national production and imports of up to US$50, via international e-commerce platforms. According to the institution, paying an average of 45% in federal taxes embedded in prices makes it impossible for national industry and commerce to compete with imported products, which pay much less.
The discussion surrounding the import tax for purchases on international websites, such as Shein and AliExpress, is in the Chamber of Deputies. According to the CNI, the production sector strongly supports the review of the exemption range for international retail. If the project passes the Chamber, it will have to be approved by the Senate. Interested in increasing revenue, the federal government even supported the tax review, but backed down due to the political impact.
The CNI considers it wrong to say that correcting this distortion will harm the Brazilian population. “The same people who today buy imported products with less taxation could be the unemployed tomorrow, when the industries and businesses in which they work close. It is worth mentioning that small and medium-sized companies are the ones that employ the most and the first to close”, said the confederation, through a press office.
The ICMS rate on imports up to US$50 is 17%; national products have ICMS of 21%. This percentage, however, does not guarantee equality, according to the industry confederation. “It would be necessary to institute an import tax of at least 40% to equalize the federal tax cost on our products made in Brazil.”
In 2023, in five months, the States raised R$632 million from ICMS taxation on these products. With the inclusion of the import tax and the increase in ICMS, revenue from these imports should exceed R$5 billion per year. In addition to the CNI, the CNC and the Brazilian Agriculture and Livestock Confederation (CNA) support the end of the exemption. The project is about to be voted on in Congress.
‘The industry has to raise its head’, says Mercadante
The president of the National Bank for Economic and Social Development (BNDES), Aloizio Mercadante, said that the Brazilian industrial sector needs to react to the protectionism currently practiced by other countries, including the most developed ones.
“The industry has to raise its head and defend itself”, he commented. “What we are seeing is growing protectionism, including from the most industrialized countries.”
Mercadante recalled that when the Brazilian government decided to tax imported electric cars “it was an outcry”. However, he said, the United States has already announced a 100% tax on Chinese vehicles imported into the country.
In the case of Brazil, said Mercadante, the decision to tax was followed by an announcement by the Chinese industry to make investments to produce electric cars in Brazilian territory. He highlighted that the same happened with the steel industry, which announced investments of R$100 billion.
The president of the development bank also defended Brazil’s entry into the development and production of renewable fuel for navigation. “This market is gigantic.”
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