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Brazil Enhances Special Import Regime for Capital and IT Goods, Seeks to Facilitate Use of Trade Remedy Mechanisms by SMEs

Brazil’s Foreign Trade Chamber (CAMEX) has approved a proposal to provide duty-free treatment, rather than a reduced two percent duty, to foreign capital goods and information technology and telecommunications goods that are included in the Ex-Tarifario regime. Aimed at fostering investment in Brazil, this action will apply to any new items added to the Ex-Tarifario list.

The Ex Tarifario regime allows Mercosur members to individually reduce import duties on pre-determined lists of capital goods and IT and telecom equipment without a domestically produced equivalent. Rates are typically reduced to two percent for a period of two years, down from 14 percent in the case of capital goods and 16 percent in the case of IT and telecom goods. Besides the lack of equivalent domestic production, Brazilian decisions on the granting of import duty reductions take into account other considerations, such as adoption of new technologies, investment in infrastructure improvements and complexity of the imported good. CAMEX approved 3,270 applications for Ex-Tarifario tariffs in 2016.

Separately, the Brazilian government has issued a regulation intended to facilitate the use of trade remedy mechanisms by micro and small- and medium-sized enterprises. The regulation sets forth new procedures concerning the treatment of fragmented industries in trade remedy investigations. A fragmented industry is defined as a sector with a particularly large number of domestic producers.

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