Brazil Toughens Actions Against Illegal Imports

"We will improve the process, reduce delays and boost our foreign trade analyst team", announces the Director of International Negotiations of the Ministry of Development, Daniel Godinho. He coordinates six investigations that should give results right now in the first half of 2012, and analyzes three requests for actions against other products. "Some will have stronger impact. The trend is dumping cases growing exponentially and with them cases of a false origin declaration", says the Director.

In 2011, six cases were concluded, and in at least one of them, which barred imports of ferrite magnets primarily used in loudspeakers, the measure against the imported item was crucial for the survival of Brazilian companies. As in the case of pencils (falsely informed as Chinese, when in fact were made in Taiwan), the amounts involved are small, compared with the total volume of imports from Brazil, nearly US$ 225 billion, but it is significant to the companies involved.

Of the six cases investigated in 2011 by false origin declaration, one of them, involving a manufacturer of brushes, did not yield the results by expected Brazilian competitors. The Taiwanese company managed to prove to be the actual manufacturer of the product to Brazilian researchers, who stayed for three days at the premises of the company and even perused their accounts. Godinho was careful to seek Taiwan authorities in this and in other cases to inform that there was not a Brazilian offensive against the country, but the legitimate self-defense against an illegal practice. The initiative allowed the Brazilian government to have the cooperation of local authorities in searching for documents and information.

Until last year, the research of declarations of origin was made only in the case of products coming from countries with which Brazil has tariff reduction agreements and preferential trade agreements. From 2011 onwards, Brazilian took the practice to investigate also fraudulent declarations of origin on products subject to anti-dumping measures. The government has also taken the initiative to investigate some products even before the Brazilian competitors claim to be affected. The experience in exploration of this new commercial defense field is complemented by the action of the Brazilian Revenue Department, which acting with the Ministry of development, opens investigations to assess whether the Brazilian importers were deluded or acted in bad faith.

This case is a good example of good experience acquired by Brazil in actions against unfair or illegal imports: investigations are made in cooperation with several government agencies by following technical criteria, virtually invulnerable to contestation by the countries affected by barriers in Brazil raised against imported items, and meet the concerns of Brazilian companies at a disadvantage.

Contrary to what some Brazilian authorities seem to believe, however, actions like this will hardly have significant impact on the total volume of imports from Brazil, and little or nothing they can do against cheap products that come into the country benefited by large countries' exporting aggressiveness and competitiveness.

Brazil cannot confuse industrial policy with trade defense nor impair the quality and honesty of the work that is being done in this field to compensate for the lack of appropriate conditions for domestic producers to sell to overseas buyers, and conquer and defend their position in the coveted Brazilian market.

The actions against false declarations of origin show that Brazil should strengthen, as it has been doing, its mechanisms against unfair and illegal competition. This strengthening must be accompanied, however, by a clear and coherent policy of removal of barriers to investment and production.

The above summary reflects the reporting and opinions expressed by the cited news media. Candex does not independently verify information, nor do the reports necessarily reflect the opinion or reporting of the board of Candex.