Camex defines a 10% drop in capital goods imports in four years

To come into effect, the reduction in rates will still have to be ratified at a new meeting, already under the command of Paulo Guedes

Source: O Estado de S.Paulo

The trade liberalization process, interrupted since the 1990s, was resumed by the Michel Temer government. The Chamber of Foreign Trade (Camex) approved the gradual reduction of tariffs on imports of capital goods, information technology and telecommunications, told the Minister of Finance, Eduardo Guardia, in an interview with the podcast of the Estado de São Paulo newspaper.

According to him, the eight ministers who make up the body responsible for preparing foreign trade policy unanimously decided that, over a period of four years, the average rate will drop from the current 14% to 4%. This average of 4% is the one practiced by the member countries of the OECD (Organization for Economic Cooperation and Development), a group of the most developed countries in the world.

To take effect, however,  the measure will still have to be endorsed at the next Camex meeting, already under the command of the future Minister of Economy, Paulo Guedes. But Guardia says he believes Guedes will continue the decision. The new minister's team had already announced that it will have a policy of gradually opening up imports.

According to Guardia himself, this is a measure that aims to reduce expenses, especially for industries. In the case of capital goods, for example, it can make imports of machinery and equipment cheaper, enabling the modernization of factories and increasing productivity.

Reducing import tariffs, however, has not been a simple responsibility for governments, because of the strong pressure exerted by the affected sectors. That  The tension dates back to the 1980s, when national production of goods was privileged rather than integration into universal production chains. For some analysts, this ended up making national production more expensive and harming the development of the country's own economy.

For this very reason, Guardia himself agrees that the  measure will have to be applied little by little. “You can't do it overnight. We are doing it gradually, so that those affected have time to adapt”, he says.

Entrepreneurs, however, have already expressed concern about this opening. “We are not against a greater opening of the Brazilian economy, but before that it is necessary to correct the competitive asymmetries”, said the president of the Instituto Aço Brasil, Marco Polo Mello Lopes, in an interview with the newspaper Estado de São Paulo.

Among the points that need to be changed before opening the economy, according to him, are the “stratospheric” tax burden, very high interest rates and more expensive energy than in other countries. According to him, Guedes promised to carry out the reforms before this measure.

According to Welber Barral, former Secretary of Foreign Trade, the  affected sectors are extremely important for the Brazilian economy. “None of these sectors survive if it makes a radical opening. But the period of four years is compatible, if reforms, such as the tax, are carried out”, he said.