Brazil denies provisional antidumping duties on Argentine, Uruguayan powdered milk imports

The Foreign Trade Secretariat of the Ministry of Development, Industry, Trade and Services (MDIC) has preliminarily denied the application of provisional antidumping duties on powdered milk exports from Argentina and Uruguay to Brazil. The investigation into possible harm to Brazilian dairy farmers was launched at the end of last year at the request of the Brazilian Confederation of Agriculture and Livestock (CNA) following a surge in imports of the product from Mercosur countries.

The CNA will appeal the decision, which was published in a circular from the secretariat on Tuesday (August 12). The ministry has until November to issue a final ruling, according to the schedule published in the document. Lawmakers from the rural caucus are urging the government to make a “political decision” on the case, arguing that the imports continue to undermine domestic dairy production.

On Wednesday (August 13), deputies and CNA technical representatives met with the MDIC’s Executive Secretary, Márcio Elias Rosa, and the Secretary of Foreign Trade, Tatiana Prazeres, to discuss the matter. In the ministry’s view, the domestic product comparable to the one under investigation is industrialized powdered milk, not raw milk. Therefore, any impacts or potential harm should be demonstrated in relation to the Brazilian powdered milk industry, not to dairy farmers.

Bruno Lucchi, Technical Director of the CNA, explained that the MDIC has changed the way it evaluates economic impacts when deciding whether to impose measures against unfair trade practices. According to him, until now, dairy farmers have been the primary sector affected, as there is a competitive impact on the primary product from the field. Now, the ministry indicates that the powdered milk industry must demonstrate any potential harm.

“This has always been the understanding—that rural producers could represent the national industry in challenging unfair trade practices. The comparison used to be between rural producers and powdered milk, but now it’s between the powdered milk industry and imported products. In this case, there’s a big conflict of interest because many of the importers are themselves part of the powdered milk industry,” Lucchi told reporters after the meeting.

Lucchi said the sector wants to know if there are exceptions to the new rule, as the Brazilian milk industry has no incentive to oppose the imports because it benefits from them. “If an entity like CNA loses its ability to defend milk producers, we won’t just lose now—we’ll lose every time there’s an unfair trade practice in the future,” he argued.

The CNA will file an appeal in the coming days, seeking to preserve the previous interpretation. The organization says it was not informed of the change during the public hearings held as part of the ongoing investigation.

Lucchi noted that the ministries responsible for agriculture had politically supported CNA’s request for the investigation last year, but the entity understands that the decision now rests on technical grounds.

“There was political support at the height of the discussion—support for filing the case. However, we now fully understand that MDIC is a technical agency responsible for conducting a technical review of the facts we’ve presented. So we’ll go ahead and submit our arguments and try to reverse this interpretation,” he said.

“We were caught off guard by a Secex circular announcing that, preliminarily, they would reject our request. So we’re now gathering political support to urge the government to be sensitive to the situation. Millions of people in Brazil rely on dairy farming, which is present in nearly all of the country’s municipalities. We want the antidumping request to be approved so that bilateral trade can happen—but on fair terms,” said Deputy Pezenti (MDB-SC). “There’s an openness to reconsidering the decision,” he added.

“We want the government to make a political decision in favor of the dairy production chain—not just a technical one. The antidumping trigger exists to protect the domestic market, and we want that tool to be used to safeguard the livelihoods of family farmers in the dairy sector,” said Deputy Lúcio Mosquini (MDB-RO). “We came here with all the technical documentation, fully substantiated, but many of these decisions are not purely technical,” added Marcelo Bertoni, president of the Federation of Agriculture and Livestock of Mato Grosso do Sul (Famasul).

Identification of producers
In the circular, the secretariat states that the key issue is correctly identifying which producers fall under the concept of “domestic industry” that would have been harmed by dumped imports. MDIC argued that World Trade Organization (WTO) rules require investigating authorities to analyze data from “domestic producers” and that this term should be interpreted as “all producers of a similar domestic product.”

“It is clear that there are Brazilian producers of powdered milk, a product similar to the powdered milk from Argentina and Uruguay, under investigation. Therefore, without data from these producers, the legal requirement for minimum representativeness outlined in Article 37 of the Antidumping Regulation, as well as the injury and causality analyses described in Chapter III of Decree No. 8,058 of 2013, cannot be fulfilled,” the circular states.

Because the ministry sees the comparable domestic product as industrialized powdered milk rather than raw milk produced by farmers, the circular notes that there is no evidence in the case file to assess the impact of dumped imports on domestic market prices for the similar product or the resulting effects on domestic producers.

“It was concluded that it is not possible to determine whether powdered milk imports from Argentina and Uruguay caused injury to domestic powdered milk producers, as the examination of the price effects of allegedly dumped imports and the resulting impact on the domestic industry was impaired by the lack of relevant data on economic factors and indicators related to the national powdered milk industry,” MDIC added in the circular.

Source: Globo Rural

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