International Trade and Customs Newsletter – No 2

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 and Customs Team

Trade Remedies: SECEX opens consultation on public interest assessments

The Brazilian Secretariat of Foreign Trade (“SECEX”) of the Ministry of Development, Industry, Commerce and Services (“MDIC”) published Circular No. 12/2023, which initiated a public consultation to update rules regarding public interest assessments in trade remedies investigations. Contributions, comments, and suggestions can be submitted by May 16, 2023.The consultation aims to foster greater rationality and efficiency to the Brazilian trade remedies system, as well as to simplify procedures and increase predictability, transparency, and legal certainty to interested parties. SECEX found that Brazil is one of the few countries in the world that have specific rules for public interest assessments and has recently recorded a significant number of interventions in trade remedies due to public interest.

Thus, the current regulation on public interest assessment, provided for by SECEX Ordinance No. 13/2020, was considered to impose a heavy burden on users of trade remedies and on investigating authorities of the federal government, and, for this reason, it should be revised.

The new suggested regulation establishes 3 distinct categories of public interest:

• Political-Strategic: aims to assess the importance of a certain anti-dumping or countervailing measure to the targets and goals established by the Brazilian Government. It must be appreciated by the members of CAMEX, and the parties affected by the trade remedy may not be required to comment;
• Economic and Social Issues: aims to analyze the positive and negative effects of the anti-dumping or countervailing measure on the Brazilian economic agents regarding production, distribution, sale, and consumption. The procedure may be initiated at the request of interested parties or by the Brazilian government within 30 days after the imposition, extension or amendment of the measures;
• Shortages: aims to analyze the need for suspension of trade remedies in case of changes in the product’s supply conditions, which can lead to a shortage in the Brazilian market. The measure can be suspended after an expedited procedure, in which domestic producers shall be consulted. The public interest assessment can be requested at any time, as long as the change in market conditions persists.

Furthermore, according to the suggested regulation, the participation of foreign governments and companies in public interest assessments will not be accepted.

Click here to see the Portuguese version of the Draft Ordinance subject to consultation.

European Union announces new trade remedy instrument

On March 28, 2023, the European Parliament and the Council of the European Union reached a political agreement on a regulation for the protection of the European Union and its Member States from economic coercion by third countries (Anti-Coercion Instrument – ACI).

This is a new trade remedy instrument, not provided for in the World Trade Organization (WTO) Agreements, which aims to expand the tools available to the European Union (“EU”) to defend its interests within the context of increasing unilateral measures with potential impacts on international trade.

According to the EU regulation, “measures of economic coercion” will be considered as such whenever third countries:

• interfere in legitimate sovereign choices of the EU or its Member States by seeking to prevent or obtain the cessation, modification or adoption of a particular act by the EU or a Member State;
• apply or threaten to apply measures affecting trade or investment.

In order to determine whether such conditions are met, the Commission will take into consideration, among other aspects:

• the intensity, severity, frequency and duration of the measure taken by the third country;
• the extent to which the third-country measure encroaches upon an area of the Union’s or a Member States’ sovereignty;
• whether the third country is engaging in a pattern of interference seeking to obtain results or trigger specific actions from the EU, a Member State, or other countries;
• whether the third country is acting based on a legitimate, internationally recognized concern;
• whether and how the third country, prior to the imposition of the coercive measure at issue, carried out attempts in good faith to settle the matter by way of international cooperation or adjudication.

If the measure of economic coercion is proven, the Commission can engage in direct negotiations with the third country, as well as through mediation, conciliation or international adjudication proceedings. If these cooperation instruments do not achieve the expected results, the Commission can adopt economic retaliation measures, according to specific criteria, such as:

• non-performance of applicable international obligations as regards any tariff concessions, as necessary, and the imposition of new or increased customs duties;
• introduction or increase of restrictions on the import or export of goods, whether enforced through quotas, import or export licenses or other measures, or on the payment for goods;
• introduction of trade restrictions on goods enforced through measures applicable to transiting goods or internal measures applicable to goods;
• non-performance of applicable international obligations concerning the right to participate in tender procedures in the area of public procurement

United Kingdom joins the Comprehensive and Progressive Agreement for Trans-Pacific Partnership

On March 31, 2023, the government of the United Kingdom (“UK”) announced the conclusion of negotiations for the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”), a free trade agreement that currently includes 11 members: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The official announcement can be accessed here.

Combined with the UK GDP, the CPTPP GDP will reach around USD 13.7 trillion (according to 2021 data). Trade with CPTPP countries accounts for approximately 6.8% of the UK’s total trade.

The UK’s accession to CPTPP is in line with the trade policy adopted by the country after the Brexit, which allowed independent negotiations. From the UK’s perspective, accession to CPTPP is considered strategic because ensures access to dynamic markets, especially as the global economy becomes increasingly focused on the Indo-Pacific region.

In addition, by joining CPTPP, the UK expects to:

• strengthen services exports: In 2022, services accounted for 43% of the UK’s trade with CPTPP members.
• modernize supply chains: UK companies will be able to diversify their supply chains, creating opportunities for increased competitiveness and exports;
• receive new Investments: in 2021, the UK received USD 226.4 billion in investment from CPTPP members and its accession to the agreement could unlock new investments;
• improve E-Commerce: CPTPP establishes modern rules for e-commerce, which enables the alignment of these rules among members;
• access new markets: with CPTPP, the UK will have a Free Trade Agreement with Malaysia for the first time.

The UK’s accession to CPTPP will become effective when all steps towards the implementation of the agreement in Member States (including the UK) have been completed.

GECEX extends the Covid List

On March 29, 2023, the Executive Management Committee of the Brazilian Chamber of Foreign Trade (“GECEX”) published Resolution No. 467/2023 in the Federal Official Gazette, extending, until March 31, 2024, tariff reductions under Article 50, paragraph “d”, of the 1980 Montevideo Treaty, seeking to improve actions taken to combat and prevent the spread of the coronavirus/COVID-19 (known as “Covid List”).

Among the goods included in the list with a reduced import tariff are medical and hospital products, such as medications, diagnostic equipment, virus detection tests, and vaccines against Covid.

However, the Resolution excluded certain products from the Covid List, such as automatic respirators, nonwovens used in the manufacture of masks and uniforms, and some medications.

The Portuguese version of GECEX Resolution No. 467/2023, with the complete list of goods included in the Covid List, can be accessed here.

New trade Remedies Investigations: Recent SECEX Publications in the Official Gazette” para “New trade Remedies Investigations: Brass Keys, Metallic Magnesium, LWC Paper and Syringes

The Brazilian Secretariat of Foreign Trade (“SECEX”) of the Ministry of Development, Industry, Commerce and Services (“MDIC”) has published the following new trade remedies investigations and the respective deadlines for exporters and importers to submit responses to questionnaires:

• Antidumping Investigation on Brass Keys from China, Colombia, and Peru: SECEX Circular No. 8/2023 initiated an antidumping investigation on Brazilian imports of Yale or Tetra-type unsealed brass keys, for general-purpose cylinders, with or without plastic resin applied to the head, originated in China, Colombia, and Peru and commonly classified under tariff code 8301.70.00 of the Mercosur Common Nomenclature (“NCM”). The Petitioner is JAS Indústria e Comércio S.A.

Deadline for Response to Questionnaires:
Producer/Exporter (Non-selected for mandatory response): May 02, 2023
Producer/Exporter (Selected for mandatory response): May 19, 2023
Importer: April 26, 2023

• Sunset Review of the Antidumping Measures on Metallic Magnesium from Russia: SECEX Circular No. 10/2023 initiated the sunset review of the antidumping duties levied on Brazilian imports of metallic magnesium (containing 99.8% or more magnesium by weight), originated in Russia and commonly classified under tariff code 8104.11.00 of the NCM. The review will assess the likelihood of continuation or recurrence of dumping and injury to the domestic industry if the antidumping duties expire. The Petitioner is Rima Industrial S.A.

Deadline for Response to Questionnaires:
Producer/Exporter: May 10, 2023
Importer: May 05, 2023

• Sunset Review of Antidumping Measures on Light Weight Coated (LWC) Paper from Germany, Belgium, Finland, and Sweden: SECEX Circular No. 11/2023 initiated the sunset review of the antidumping duties levied on Brazilian imports of LWC paper, originated in Germany, Belgium, Finland, and Sweden and commonly classified under tariff code 4810.22.90 of the NCM. The review will assess the likelihood of continuation or recurrence of dumping and injury to domestic industry if the antidumping duties expire. The Petitioner is BO Paper Brasil Indústria de Papéis Ltda.

Deadline for Response to Questionnaires:
Producer/Exporter: May 19, 2023
Importer: May 17, 2023

• Request for Reapplication of Antidumping Measures on Syringes from China: SECEX Circular No. 13/2023 announced the request for reapplication of antidumping duties levied on Brazilian imports of disposable general-use plastic syringes, of 1ml, 3ml, 5ml, 10ml or 20ml, with or without needles, originated in China and commonly classified under tariff codes 9018.31.11 and 9018.31.19 of the NCM. Brazil has suspended the duties for public interest reasons, especially regarding actions taken to combat and prevent the spread of the coronavirus/COVID-19. Interested parties may comment on the request within 30 days from the date of publication (April 17, 2023).

The Portuguese versions of SECEX publications in the Brazilian Federal Official Gazette  can be accessed in the following links: brass keys, metallic magnesium, LWC paper and syringes.