The Brazilian government announced the unilateral reduction of tariffs on certain imports imposed by Brazil, in an attempt by Jair Bolsonaro to contain food inflation, which hits above all the sectors with lower incomes.
With an informal communication to its Mercosur partners, first, and a press conference, later, Brazil announced that it is reducing to zero, until the end of the year, tariffs on imports of beef and chicken, corn, wheat, wheat, bakery items and other farinaceous. Also, strong reductions were applied to imports of steel rods and supplies for the agricultural industry, such as sulfuric acid, key for fertilizers.
At the request of the Brazilian Minister of Economy, Paulo Guedes, the Brazilians implemented this Thursday the tariff reduction through the inclusion of the aforementioned products in the List of Exceptions to the Common External Tariff of Mercosur (Letec). Therefore, Argentina, Paraguay and Uruguay have nothing to object to from the strictly normative point of view.
However, the decision adopted in the face of annualized inflation above 11% aroused uncertainty among the main neighbors and trading partners. The reduction in tariffs levels the playing field between the Mercosur member states and the rest of the economies with a similar exportable supply.
This puts us in an uncomfortable situation,” said a foreign official. “Argentina, Paraguay and Uruguay produce the goods that are now subject to rebates, and that means that we are going to have to compete on equal terms.”
The products whose tariffs drop to zero are boneless beef (the tariff was 10.8%); avian meat offal and foodstuffs (the tax was 9%); wheat flour (paid 10.8%), other wheats and mixtures of wheat with rye (paid 9%); cookies, bakery products, pastries and biscuits (they paid 16.2%), and grain corn (7.2 percent). In March, reductions were also announced for coffee, margarine, cheese, noodles, sugar and soybean oil.
Argentine officials maintain that “it is difficult for Brazil to supply wheat cheaper than Argentine,” due to the logistical costs involved in bringing it from other latitudes. The Argentine government is concerned about a more generalized Brazilian policy of lowering tariffs on industrial products.
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