Hike in polymer, tyre import tariffs to ‘restore’ Brazil’s competitiveness – trade group
SAO PAULO (ICIS)–A hike in Brazilian imports tariffs for some polymers and tyres will “restore” competitiveness to the country’s chemicals sector, trade group Abiquim said on Tuesday.
The Brazilian Foreign Trade Chamber (Camex) has hiked import tariffs, saying that pervious low tariffs for some plastics had “harmful consequences” for the chemical sector because imports were rising and domestic prices were falling.
In a written response to ICIS on Tuesday, the executive president of Abiquim said the hike will “restore the real competitive conditions” to Brazil’s chemicals industry in global terms, but asked the government to go further.
Andre Passos also said the chemical sector needs to re-implement the Special Regime of the Chemical Industry (REIQ) and tax imports of thermoplastic resins by removing them the List of Exceptions to the Common External Tariff (LETEC).
REIQ lowered tax rates that the chemical industry paid for some imports, but the regime was suspended by the Brazilian Congress in 2022. At the time, Abiquim said the suspension of REIQ would cost the sector nearly Brazilian reais (R) 2.0bn ($380m).
The new Brazilian government said it aims to keep REIQ, and on 15 December Congress agreed, although the executive still must pass regulation to implement it.
“Brazil has an important window of opportunity to attract a significant amount of investments in decarbonisation, but for this it is essential to build an environment of political, legal and regulatory stability,” said Passos.
“Reinvigorating REIQ and resuming the import tariffs on thermoplastic resins are emergency and indispensable measures to re-establish the legal security needed… to guarantee the preservation of the domestic market from external vulnerabilities at this moment.”
However, some players in the sector, notably in distribution, are not happy about the decision.
NOT TO EVERYONE’S
On Tuesday, Abiquim did not respond to questions about how the import hike will affect smaller players in the sector, such as distributors who often turn to Asia for cheaper material.
Abiquim has not shied away from praising the new cabinet presided over by Luiz Inacio Lula da Silva who they see as more inclined to protect domestic producers – three of the largest Brazilian producers Braskem, Unigel, and Unipar are Abiquim members.
A source that imports a large amount of polymers from Asia said the measure had been expected but the timing of its implementation had come as a “negative surprise” before adding that more clarity in tax policy would benefit smaller players.
“The previous government believed in more in open trade. The current one has a different mindset and they think they must protect domestic producers. They think imposing higher tariffs on imports will benefit the Brazilian economy in the longer term,” added the source.
($1 = R5.24)
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