Problems relating to Trade and Investment on Brazil
2. Grant of a preferential tariff rates based on increased home production, and/or local procurements |
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Issue |
Issue details |
Requests |
Reference |
| (1) Local Contents Requirement attaching Benefits without Compensation | - Grant of loan by BNDES (The Brazilian Economical and Social Development Bank) is subject to satisfaction of 80% Brazilian products (contents), which requirement, added to protective tariff, form a substantial entry barrier. - To take advantage of the financing under FINAME, maintenance of more than 60% local contents is required. - To acquire incentives in Manaus free zone it is necessary to satisfy the basic productive process criteria. GOB sometimes compels local procurement of items, which are not competitive in terms of quality, volume and prices. For example, recently, whereas GOB mandated the local procurement of the bare board for TV printed circuit board, in reality, multec, the large domestic bare board manufacturer, discontinued its production. - Federal Senate Resolution No.13, designed to curb the so called State-to- State incentive battles, attraction of enterprises and unloading ports, includes a provision that removes incentives from products with less than 60% local contents, beginning January 2013. As shown in the foregoing bare board example, Resolution No.13 totally ignores certain amount of time and investment pre-requisite to increase the local procurement. |
- It is requested that BNDES deregulates the local contents requirements. - While member firm appreciates the needs for nurturing and protecting indirect materials manufacturers, without the improvement in cost competitiveness, investment environment cannot improve. - It is requested that GOB thoroughly hears the manufacturing enterprises' views, before ruling on the local contents requirements. |
- Decree 7716 /2012: 2013-2017 - PPB (Processo Produtivo Basico = Basic Production Process) for each Product Category - Customers' Requirement - Federal Senate Resolution No.13 of 25 April 2012 - Ajuste Sinief No 19 of 7 November 2012 - Ministry for Development of Foreign Trade and Industry Inter-Ministerial Gate No.290 of 16 September 2013 |
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