Brazil sets safeguard rules for trade deals as Mercosur-EU pact moves forward

Brazil’s government has issued a decree establishing rules for applying safeguard measures to protect domestic producers under international trade agreements, on the same day Congress completed the internal approval of the Mercosur–European Union trade pact.

The decree, signed by President Luiz Inácio Lula da Silva and published in an extra edition of the country’s Official Gazette on Wednesday (March 4), allows bilateral safeguards to be triggered when imports of a product benefiting from preferential terms under a trade agreement increase to levels that cause or threaten serious injury to domestic industry.

The measures may be applied to both industrial and agricultural sectors.

According to the government, safeguards could include temporarily suspending the negotiated tariff-reduction schedule or reinstating the tariff that applied before the trade agreement entered into force.

Authorities may also impose tariff-rate quotas, setting a threshold for import volumes that can continue benefiting from preferential tariffs. Once the quota is exceeded, imports could be subject either to the suspension of tariff reductions or to the reinstatement of previously applied duties.

Under the decree, Brazil’s Foreign Trade Chamber (Camex) will be responsible for adopting safeguard measures following an investigation conducted by the Trade Defense Department of the Foreign Trade Secretariat at the Ministry of Development, Industry, Trade and Services (MDIC).

Domestic industries will be able to request safeguard investigations, and in exceptional circumstances the Foreign Trade Secretariat (Secex) may also open investigations on its own initiative.

The mechanism had been announced last week by Vice President and Development Minister Geraldo Alckmin and was particularly sought by Brazil’s agricultural sector.

Late last year, the European Parliament approved stricter rules governing agricultural imports linked to the Mercosur agreement. Those measures allow safeguards to be activated if high volumes of imports cause or threaten serious damage to European producers.

Brazil’s agribusiness sector had pushed for the government to adopt a similar safeguard mechanism in case imports of competing European products increase significantly.

Source: Pedro Rafael Vilela – Reporter of Agência Brasil

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