CORRECT: UPDATE: Brazil Files Currency-Dumping Proposal In WTO To Protect Against Cheap Imports
("Brazil Files Currency-Dumping Complaint In WTO To Protect Against Cheap Imports," at 10:03 a.m. EST, misstated the nature of Brazil's proposal at the WTO. The error was repeated in an earlier version of the article that ran at 9:00 a.m. EST. The correct version follows:)
(Updates with Brazil's controversial tax boost on imported cars in ninth paragraph, Latin American integration in sixth paragraph, new tax rebate for exporters in penultimate paragraph.)
RIO DE JANEIRO (Dow Jones)--Brazil wants the World Trade Organization to allow countries to protect themselves against imports which are made cheaper by currency manipulation, the country's trade and industry minister Fernando Pimentel said Monday.
The proposal would allow countries to retaliate against any country whose currency is artificially cheap and causes international trade imbalances, Pimentel told reporters at an international steel industry event in Rio de Janeiro. The proposal doesn't specifically target the Chinese yuan, the minister said, although he noted that China has become Brazil's main competitor in all product areas.
If the WTO takes on Brazil's currency-dumping proposal, new tariffs could be applied on all imports which currently benefit from currency factors, the minister said.
"We want the WTO to authorize defense mechanisms," he said.
"Exchange-rate factors are devastating the productive structure of Latin American countries," Pimentel said. "Currency has become a disintegratory factor. Latin American countries on their own are incapable of facing these international changes."
Latin American nations need to integrate in order to overcome the challenges arising from the new world order in which China is the dominant player, Pimentel said. However, the region's countries have a serious deficit in infrastructure which needs to be addressed to boost competitiveness, he said.
The transoceanic highway which has been built between Peru and Brazil, crossing the Andes, and linking the Atlantic and Pacific oceans for the first time, is an example of international cooperation which should help boost some Latin American companies' competitiveness, the minister said. Integration in energy generation and supplies is an area where Latin America needs to advance, he said.
"China manages to get the maximum advantage from its currency. The block of countries led by China manage to produce everything for half international costs. Other countries have to integrate to survive."
Brazil is still forging ahead with its plan to charge higher taxes on imported cars from outside Latin America's Mercosul trade block and Mexico, Pimentel said. The proposed higher tax, which will end up being charged mainly on vehicles of Asian origin, has been questioned by the WTO, which has sought clarification, Pimentel said.
"We gave the clarifications and the new tax should be put into place in December," he said.
Brazil also needs to protect its manufacturing industry by combating incentives given by some Brazilian states to importers via tax rebates, the so-called "tax-war" between states, Currently, state governments give tax breaks to importers of between 3% and 12%.
"The tax war between states is destructuring trade," the minister said. A state resolution to do away with this practice is currently being considered by Brazil's Senate house and may be approved "within a few days," he said.
Under the government's recently introduced "Brasil Maior" plan, designed to boost Brazil's international competitiveness, a new system of tax rebate for exporters is also expected to be introduced within a few days, according to Pimentel.
"This will give a 3% tax rebate on sales to exporters of any manufactured product," he said.
The Brasil Maior program, designed by Pimentel, was introduced earlier this year to help boost the competitiveness of Brazilian automotive manufacturers in view of the real's appreciation, and is now being expanded to help assist other industrial sectors.
("Brazil Files Currency-Dumping Complaint In WTO To Protect Against Cheap Imports," at 10:03 a.m. EST, misstated the nature of Brazil's proposal at the WTO. The error was repeated in an earlier version of the article that ran at 9:00 a.m. EST. The correct version follows:)
(Updates with Brazil's controversial tax boost on imported cars in ninth paragraph, Latin American integration in sixth paragraph, new tax rebate for exporters in penultimate paragraph.)
RIO DE JANEIRO (Dow Jones)--Brazil wants the World Trade Organization to allow countries to protect themselves against imports which are made cheaper by currency manipulation, the country's trade and industry minister Fernando Pimentel said Monday.
The proposal would allow countries to retaliate against any country whose currency is artificially cheap and causes international trade imbalances, Pimentel told reporters at an international steel industry event in Rio de Janeiro. The proposal doesn't specifically target the Chinese yuan, the minister said, although he noted that China has become Brazil's main competitor in all product areas.
If the WTO takes on Brazil's currency-dumping proposal, new tariffs could be applied on all imports which currently benefit from currency factors, the minister said.
"We want the WTO to authorize defense mechanisms," he said.
"Exchange-rate factors are devastating the productive structure of Latin American countries," Pimentel said. "Currency has become a disintegratory factor. Latin American countries on their own are incapable of facing these international changes."
Latin American nations need to integrate in order to overcome the challenges arising from the new world order in which China is the dominant player, Pimentel said. However, the region's countries have a serious deficit in infrastructure which needs to be addressed to boost competitiveness, he said.
The transoceanic highway which has been built between Peru and Brazil, crossing the Andes, and linking the Atlantic and Pacific oceans for the first time, is an example of international cooperation which should help boost some Latin American companies' competitiveness, the minister said. Integration in energy generation and supplies is an area where Latin America needs to advance, he said.
"China manages to get the maximum advantage from its currency. The block of countries led by China manage to produce everything for half international costs. Other countries have to integrate to survive."
Brazil is still forging ahead with its plan to charge higher taxes on imported cars from outside Latin America's Mercosul trade block and Mexico, Pimentel said. The proposed higher tax, which will end up being charged mainly on vehicles of Asian origin, has been questioned by the WTO, which has sought clarification, Pimentel said.
"We gave the clarifications and the new tax should be put into place in December," he said.
Brazil also needs to protect its manufacturing industry by combating incentives given by some Brazilian states to importers via tax rebates, the so-called "tax-war" between states, Currently, state governments give tax breaks to importers of between 3% and 12%.
"The tax war between states is destructuring trade," the minister said. A state resolution to do away with this practice is currently being considered by Brazil's Senate house and may be approved "within a few days," he said.
Under the government's recently introduced "Brasil Maior" plan, designed to boost Brazil's international competitiveness, a new system of tax rebate for exporters is also expected to be introduced within a few days, according to Pimentel.
"This will give a 3% tax rebate on sales to exporters of any manufactured product," he said.
The Brasil Maior program, designed by Pimentel, was introduced earlier this year to help boost the competitiveness of Brazilian automotive manufacturers in view of the real's appreciation, and is now being expanded to help assist other industrial sectors.