Mr. Fernando Pimentel, the Brazilian Minister of Development, Industry and Foreign Trade (MDIC), confirmed on May 11, 2011, the adoption of a new customs policy that will affect car imports into Brazil. Beginning on May 10, 2011, car imports became subject to non-automatic import licenses, which may take up to 60 days to be granted by Brazilian customs authorities. This new policy also means importers will need to obtain an import license registration prior to the shipment of cars into Brazil.

Government sources had previously stated that imports of automotive parts would also be subject to said barriers. However, it was later clarified that such imports will not be affected by such new measures.

According to Mr. Pimentel, the new measures were not designed against imports from any particular origin. Yet, many in Brazil are arguing these new restrictions were indeed a retaliation against similar trade barriers recently adopted by Argentina against various imports from Brazil. In fact, the numbers speak for themselves. Nearly half of all cars imported into Brazil come from Argentina, and roughly 80 percent of all cars made in Argentina in 2010 were exported to Brazil. The new measures will also affect car imports from the United States, Japan, South Korea, and Mexico.

At this time, no specific regulations or guidelines have been officially enacted, nor has a press release been made public by MDIC. Importers registered with SISCOMEX (Brazil’s computerized trading system) noticed the policy change on May 10, 2011, which was later confirmed by Mr. Pimentel.

In any event, these measures are a significant step by the Brazilian government, and businesses involved in the production, exportation, or importation of cars and auto parts into Brazil should follow this issue closely. A similar incident occurred in January 2009. At the time, Brazil adopted a similar measure and decided to require import licenses for a wide array of imports into Brazil, only to suspend it 2 days later amid growing debate over its trade flow consequences and mounting industry opposition.

For more information about this matter, please contact Duane W. Layton at +1 202 263 3811 or Felipe Berer of Tauil & Chequer Advogados at +55 11 2504 4210.

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