On August 2, 2011, the president of Brazil, Ms. Dilma Rousseff, unveiled a new industrial plan named “Bigger Brazil” (“Brasil Maior” in Portuguese). Issued in response to mounting pressure from various sectors seeking improved conditions to compete amid steady appreciation of the Brazilian currency since the beginning of the year, the plan encompasses a wide array of international trade, industrial and technological measures aimed at increasing the competitiveness of Brazilian exports as well as making the domestic industry better-equipped to step up its fight against rising imports.
International Trade Policies
The plan includes a number of measures aimed at protecting the industry from unfair imports, such as:
- Reducing the average time Brazil’s Department of Commercial Defense (DECOM) currently takes to conclude trade remedy investigations (to date, primarily anti-dumping investigations) from 15 to 10 months;
- Reducing DECOM’s time limit for applying provisional trade remedy measures (from 240 to 120 days) upon initiation of the investigation;
- Intensifying combat against imports attempting to circumvent existing trade remedy measures (new anti-circumvention regulations entered into force last year);
- Stepping up of border enforcement against customs fraud and imports that infringe intellectual property rights;
- Supporting Mercosur efforts to raise import tariffs in the region and suspension of certain tariff concessions to imports of used machinery; and
- Increasing the number of investigators at DECOM.
The plan also provides for specific measures to boost the competitiveness of Brazilian exports, including the creation of a new fund to finance exports by large companies and the acceleration of export credit concessions.
Other Key Investment Policies
Also included in the plan are measures aimed at promoting investments and preventing deindustrialization in Brazil, such as:
- Reducing payroll taxes for the software, footwear, furniture and clothing sectors;
- Granting tax incentives for the automotive sector;
- Creating new rules on government procurement that allow the government to pay up to 25 percent more for certain Brazilian-made products and services;
- Granting a 12-month extension of certain tax cuts for capital goods, construction materials, trucks, and vehicles and acceleration of tax credit returns for capital goods; and
- Expanding various financing programs by Brazil's state development bank (BNDES) to promote investments and technological innovation projects.
It is yet to be seen how the Brazilian government will choose to implement some of the announced measures and, most importantly, whether the measures will have the desired impact. In any event, businesses, investors and others that may be affected by the “Bigger Brazil” plan should follow this issue closely while further details continue to be unveiled by the Brazilian government. In the meantime, the mere existence of the plan may encourage Brazilian producers to ramp up anti-dumping and other trade remedy complaints.
For more information about “Bigger Brazil” or any other matter raised in this Legal Update, please contact Duane W. Layton at +1 202 263 3811, Paulette Vander Schueren at +32 2 502 5517 or Felipe Berer of Tauil & Chequer Advogados at +55 11 2504 4289.
Learn more about our Global Trade practice.
*Observations in this article about Brazilian law are by Tauil & Chequer Advogados.