Brazil tire industry association seeks gov’t to reconsider zero import rate

Brazil’s tire industry association ANIP is pushing to open a dialogue with the Ministry of Economy to review the import tariff levied on tires, which was brought to zero in January 2021.

Tire producers argue that the measure causes local industries to experience losses in terms of revenue and new attractiveness to new investments in the country. Also, the sector members claim that the current tax policy increases environmental liabilities since importers do not carry out reverse logistics, meaning they do not participate in collecting and disposing of waste tires.

Data show that sales of domestic cargo tires to the replacement market in 2022 are well below those recorded in 2021. The year-to-date result for the last four months (June to September) was the worst in the previous seven years. In the same period, the import of cargo tires accumulated the highest value in the last 22 years.

See below the track record of Brazilian tire exports (hs codes 4011, 4012) from Jan 2019 to Oct 2022, according to the DataLiner data service.

Brazilian tire exports | Jan 2019 – Oct 2022 | TEUs

Source: DataLiner (click here to request a demo)

“The Brazilian government’s zero-interest-rate policy is incomprehensible. Instead of stimulating production, employment, and investment, the Ministry of Economy pursues a strategy that exacerbates the country’s deindustrialization,” says Klaus Curt Müller, president of ANIP.

According to public government data, in August 2022 alone, 432,000 tires were imported, the highest volume in the last 12 years, while in all of 2016, 835,000 units were imported.

“At the current rate, the sector estimates a drop in domestic cargo tire sales of around 503,400 units in 2023, representing a revenue loss of around R$500 million for the industry,” says the executive. In 2021, the loss in unit sales due to import competition was 300 thousand units.

According to ANIP, the zero rates on cargo tires create unfair competition in the industry. “While extra-factory production costs increased by 28% in 2021 for industries that produce in Brazil, import costs decreased by at least 17% during the same period,” says the ANIP president.

“If the import tax remains zero and the current import surge continues, the scenario becomes quite complex, and revisions to production and productive investments are unavoidable,” Müller says.

The situation also caused the sector’s export trade balance to overturn. Brazil was a net tire exporter until 2021, meaning it exported more cargo tires than it imported. However, the situation was reversed in 2021, and the country entered a trade balance deficit condition for the product.

Source: Comex do Brasil

To read the full original article, please go to: https://www.comexdobrasil.com/anip-quer-que-governo-reveja-tarifa-de-importacao-de-pneus-de-carga-que-teve-aliquota-zerada-em-2021/

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