International Trade Newsletter No. 9

The International Trade and Customs Newsletter aims to provide information about recent news, trends and government guidelines in Brazil and abroad in connection with international trade, market access, trade remedies, import tariffs and competitiveness. This material is intended for informational purposes and should not be used for decision-making. Specific legal advice can be provided by our lawyers.

Enjoy reading!

International Trade Team

SECEX initiates new dumping investigation

On January 05, 2024, the Brazilian Foreign Trade Secretariat (“SECEX”) published Circular No. 1/2024 in the Federal Official Gazette of Brazil, initiating a new dumping investigation on imports of Polyether Polyols, commonly classified under the tariff code 3907.29.39 of the MERCOSUR Common Nomenclature (“NCM”), originating in China and the United States. The investigation is also aimed at assessing the impact of such practice to the Brazilian industry.

Polyether polyols are used in the manufacture of polyurethans that, depending on the specifications of the polyol used, are intended for the production of rigid and flexible foams, and serves as components for various applications relating to coatings, adhesives, sealants, and elastomers.

Decree enacting Bolivia’s Mercosur accession protocol is published

On December 11, 2023, Decree No. 11,817 was published, enacting Bolivia’s Accession Protocol to the Southern Common Market (“MERCOSUR”).

The enactment followed the approval of Draft Legislative Decree No. 380/2023, on November 28[1].

The approved text considers the Accession Protocol of the Plurinational State of Bolivia to MERCOSUR, signed by Bolivia on July 17, 2015, in Brasilia, through which Bolivia acceded to the Treaty of Asunción and thus initiated the process of joining MERCOSUR.

According to the document, the new member’s accession will take place gradually, and a period of four years has been set from the implementation of the protocol for Bolivia’s full integration into MERCOSUR’s current legal framework. During this period, Bolivia will have to adopt the NCM, the Common External Tariff (“TEC”), and the MERCOSUR Origin Regime.

On the same occasion, the Plenary of the Brazilian Federal Senate approved Request No. 1067, which establishes the creation of a temporary commission, formed by five permanent members, with the task of assessing Bolivia’s political and social situation on site within 180 days, in compliance with MERCOSUR’s democratic clause.

MERCOSUR approves LETEC flexibilization

Through CMC Decision 12/23, of December 06, 2023, the MERCOSUR Common Market Council (“CMC”) approved the suspension of the rule limiting changes to the List of Exceptions to the Common External Tariff (“LETEC”) to 20% of its items on a biannual basis, which will remain in force until December 2025.

LETEC can hold up to 100 NCM items, on which import taxes other than the TEC agreed between MERCOSUR member countries can be applied to purchases made from countries outside the bloc.

Once suspension is approved, the inclusion and exclusion of items on this list will become more flexible. As mentioned above, changes to the items on the list were previously restricted to a biannual limit of 20%. Now, countries will be free to modify 100% of the list in 2024 and 2025, including new products of national interest.

MERCOSUR signs free trade agreement with Singapore

On December 07, 2023, on the occasion of the LXIII MERCOSUR Summit, the Free Trade Agreement between MERCOSUR and Singapore was signed.

This is the first instrument of this nature to be signed between MERCOSUR and a country from the Asia-Pacific region. The agreement aims to expand trade and investment opportunities, with specific chapters and commitments on these topics. The economic importance of the agreement is worth highlighting, as Singapore is one of MERCOSUR’s main export destinations and, in 2022, was Brazil’s 7th main export destination, with sales of approximately USD 8.4 billion.

Below are some of the main aspects of the agreement:

• Services and investment: provides for greater transparency and predictability in market access conditions and the treatment of foreign service providers between the countries.
• E-commerce: for the first time, MERCOSUR members have included a chapter focused on e-commerce in an agreement with an extra-regional partner. This chapter establishes guidelines to support the growth of e-commerce, as well as provisions relating to electronic authentication, online consumer protection, e-invoicing, among others.
• Government procurement: the chapter on government procurement establishes transparency and equal treatment commitments for foreign suppliers among the participating countries.
• Customs procedures and trade facilitation: provides for the adoption of international standards and the intensive use of information technology to simplify bureaucratic procedures.
• Trade defense: the parties are guaranteed the right to adopt the trade defense measures provided for by the World Trade Organization (anti-dumping, compensatory and safeguard measures). The text also provides for the use of bilateral safeguards, a mechanism that can be used for both industrialized and agricultural products.
• Sanitary and phytosanitary measures: provisions have been established to ensure greater predictability, agility, and mutual knowledge between sanitary systems.
• Intellectual property: covers topics such as copyrights, patents, trademarks, industrial designs, geographical indications (GIs), and protection of undisclosed information.
• Micro, Small and Medium-sized Enterprises (MSMEs): provides for greater cooperation across the areas of internationalization; development of entrepreneurial capital and culture; digital transformation; fostering access to financing and guarantees; use of regulatory frameworks as well as information and communication technology tools to facilitate access to international markets; and encouraging women’s participation and entrepreneurship.

Once signed, the agreement will be submitted to the parliaments of Singapore and the MERCOSUR countries for approval, ratification, and entry into force.

Committee approves Brazil’s accession to WTO civil aircraft agreement

On November 17, 2023, the signatories to the World Trade Organization (“WTO”) Agreement on Trade in Civil Aircraft (“TCA”) approved the terms of Brazil’s accession to the agreement.[2]

The TCA, which has been in force since January 01, 1980, and has 14 signatory members, provides for the elimination of import tariffs for civil aircraft and certain products intended for civil aviation, as well as the elimination of export subsidies and non-tariff barriers, which has the potential to attract investment in the civil aviation sector to Brazil. In addition, by joining the agreement, Brazil will be able to fully integrate the TCA Committee, on equal terms with other major world producers, such as the United States (US) and the European Union (EU).

Brazil’s application for membership was submitted in June 2022, by means of a proposal for tariff commitments, and it is the first accession to be analyzed by the committee’s signatories. All other members joined the agreement as soon as they acceded to the WTO’s multilateral agreements. Once the WTO negotiations are concluded, Brazil’s accession instrument will be submitted to the National Congress for consideration.

Strategic Council of the Brazilian Chamber of Foreign Trade establishes working group to review TEC

On December 27, 2023, CEC Resolution No. 6 was published, establishing the Working Group for the Review of the Common External Tariff (“GT TEC”) and providing for its responsibilities, organization and operations.

The TEC is the set of tariffs applied to imports of products from countries outside MERCOSUR, adopted by the bloc’s member countries. The working group was created to formulate proposals for reviewing MERCOSUR’s tariff structure, in order to increase Brazil’s competitiveness.

The GT TEC will be formed as described below, and its representatives and alternates will be appointed by its respective bodies:

“I – a representative of the President’s Chief of Staff;

II – a representative of the Ministry of Development, Industry and Foreign Trade;

III – a representative of the Ministry of Foreign Affairs;

IV – a representative of the Ministry of Finance;

V – a representative of the Ministry of Agriculture, Livestock and Food Supply;

VI – a representative of the Ministry of Planning and Budget;

VII – a representative of the Ministry of Management and Innovation in Public Services;

VIII – a representative of the Ministry of Defense;

IX – a representative of the Ministry of Mines and Energy;

X – a representative of the Ministry of Agrarian Development and Family Agriculture;

XI – a representative of the Executive Secretariat of the Brazilian Chamber of Foreign Trade (“CAMEX”);”

The GT TEC will hold ordinary meetings on a monthly basis, and extraordinary meetings whenever convened by the Coordination Committee.

GECEX appoints civil society representatives to the private sector advisory council

By means of Resolution No. 548, of December 20, the Executive Management Committee of the Brazilian Chamber of Foreign Trade (“GECEX”) announced the civil society representatives who have been appointed to the Private Sector Advisory Council (“PSAC”).

Representatives from various industrial sectors, consumers, research groups and think tanks were appointed for a two-year term, as of January 01, 2024. The full list of appointed representatives is included in Resolution No. 548.

The PSAC is part of CAMEX and was created to encourage discussions on improving foreign trade policies, investments, and export financing and guarantees.

[1] Senado Notícias. Aprovado ingresso da Bolívia no Mercosul; texto vai à promulgação. Available at : https://www12.senado.leg.br/noticias/materias/2023/11/28/aprovado-ingresso-da-bolivia-no-mercosul-texto-vai-a-promulgacao#:~:text=Aprovado%20ingresso%20da%20Bol%C3%ADvia%20no%20Mercosul%3B%20texto%20vai%20%C3%A0%20promulga%C3%A7%C3%A3o,-Compartilhe%20este%20conte%C3%BAdo&text=O%20Plen%C3%A1rio%20aprovou%20nesta%20ter%C3%A7a,%2F2023)%20segue%20para%20promulga%C3%A7%C3%A3o. Accessed on December 28,  2023.

[2] World Trade Organization. Committee agrees to Brazil’s terms of accession to Civil Aircraft Agreement. Available at : https://www.wto.org/english/news_e/news23_e/air_17nov23_e.htm. Accessed on December 28, 2023.