Brazil wants to cut Common External Tariff by 20%, with or without Argentina

The Ministers of Economy and Foreign Affairs of Mercosur have scheduled an extraordinary meeting to define the future of the Common External Tariff (TEC). The in-person meeting should take place on June 8, in Buenos Aires.

Brazil and Argentina disagree head-on.

In an interview with Valor, Lucas Ferraz, Foreign Trade secretary of the Ministry of Economy, said that the Brazilian government would not change its stance on its proposal to reduce TEC by 20%. There will be two rounds of unilateral cuts in import tariffs, a 10% cut immediately and another 10%  cut in December, linearly across all sectors. “We don’t want to choose winners and losers,” he says. In total, there are almost 10,300 common Mercosur nomenclatures (NCMs) that designate products or product groups. Buenos Aires proposes to reduce or eliminate rates on only about 4 thousand tariff lines. Ferraz makes it clear that Brazil refuses to adopt the Argentine idea.

According to Ferraz, the focus is mainly intermediate or manufactured goods that the neighboring country does not manufacture. Many already have TEC of only around 2% that would be reduced to zero. Given these characteristics, in the secretary’s assessment, this would result in little real effort to open up the economy and would be below what was intended by the Jair Bolsonaro government.

Mercosur’s tariffs are relatively high by world standards: 35% for automobiles, buses, textiles, and clothing; 32% for footwear; 27% for wines; up to 16% for machines and equipment; 12% for electrical appliances.

Article source: Valor Econômico

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https://valor.globo.com/brasil/noticia/2021/05/17/brasil-quer-corte-de-20-da-tec-com-ou-sem-argentina.ghtml

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