Brazil WT/TPR/S/21
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III. TRADE MEASURES DIRECTLY AFFECTING IMPORTS
(1) Registration, Customs Valuation, Rules ofOrigin andLicensing
(i) Registration anddocumentation
1. Nomajor changes have been made since 1992 totheadministrative treatment ofimports
(containedinDirectiveDECEXNo.8of13May1991)nortocustomsprocedures(NormativeInstruction
SRFNo.40/74).Documentsgenerallyrequiredtoclearimportsfromcustomsincludeanimportlicence,
copies ofthecommercial invoice andthebilloflading, andanimport declaration. Consular visas
arerequired forthedirect importation ofmotor vehicles byproducers ortheirrepresentatives (Directive
MICT No.360of23November 1994).
2. Under consolidated registration procedures (Directive MICT No.280of12July1995), firms,
public entities andnatural persons mustbeinscribed inasingle Register ofImporters andExporters
toundertake foreign trade operations. Registration istheresponsibility oftheSecretary ofForeign
Trade (SECEX).
3. Anewmanagement system, MANTRA, wasintroduced in1995, initially covering aircargo
only, toimprove customs services byconsolidating procedures, inorder tomaintain better control
ofshipments toreduce handling andstorage costs andthetimerequired torelease imports. Testing
oftheimport module ofthecomputerized system SISCOMEX began inApril 1996; fullimplementation
isexpected during thesecond halfof1996. Thenewsystem willeliminate theuseofimport licences,
foreign exchange contracts andimport declarations except forspecial products subject toprior
authorization(e.g.,weaponsandcontrolledmedicines).Asubstantialreductioninpaperworkisexpected,
thenumber ofimport documents required falling fromthecurrent 30toonlyone. According tothe
Secretary oftheFederal Revenue Secretariat, thesystem willallow astricter control ofimports, reduce
theincidence ofunder-invoiced goods, andgivefaster release oftrade data.1
(ii) Customs valuation
4. BrazilimplementedtheTokyoRoundCustomsValuationAgreementin1986;valuationpractices
followed Article VIIoftheGATT, withcertain reservations. TheWTO Customs Valuation Code
wasadopted withtheratification oftheWTO Agreements in1994 and,asaresult, allreservations
disappeared.
5. Customs valuation legislation distinguishes sixmethods fordetermining thecustoms value that
mustbeapplied inhierarchical order, asestablished intheTokyo Round Customs Valuation Agreement.
When thedeclared value isnotaccepted, theimporter has30daystocontest theadjusted value; a
decision mustberendered within another 30days(while awaiting adecision, theimporter 'sdeclared
value isprovisionally accepted forthepurpose ofclearing thegoods). Appeals concerning valuation
ofimported merchandise aremade totheContributors 'Council; negative decisions bytheCouncil
maybeappealed tothecourts.
6. ThepracticalimplementationoftheWTOCustomsValuationAgreementistotakeplacethrough
theimplementation oftheimport module ofSISCOMEX. Themodule hasbeendesigned tousethe
rulesembodied inthatAgreement forthecomputation ofimport duties. Thesystem should allow the
1Gazeta Mercantil ,30April 1996.WT/TPR/S/21
Page 36Trade Policy Review
authorities todetect instances ofunder- orover-invoicing andofdumped orsubsidized imports. To
complement thesystem, thedevelopment ofadatabase containing anhistorical priceseries forproducts
considered especially sensitive isbeing given priority.
7. TheauthoritiesindicatedthatBrazildoesnotapplyminimumimportpricesforcustomsvaluation
purposes. Import prices formotor vehicles aresetbytheSECEX according tocriterion established
inDirective No.360/94 of25November 1994. Factory listprices areusedinthecaseofdirect
purchases fromthemanufacturer, while published prices inthesecond-hand market areusedasreference
prices forother, indirect purchases. Nodiscounts ofanytypeareaccepted inthecomputation ofthe
import price.
(iii) Rules oforigin
8. Acertificate oforigin isnotrequired form.f.n. imports, although theorigin mustbeindicated
onthecommercial invoice.
9. Tariffexemptionsorreductionsgrantedtospecificcountriesrequiretheoriginofthemerchandise
tobedetermined using thesubstantial transformation criterion (Decree No.91.030 of4March 1985).
Preferential imports fromLAIA countries aregoverned bytheprovisions ofspecific agreements. The
Economic Complementarity Agreements signed byBrazil withBolivia andPeruin1993 aswellas
thefree-trade agreement signed withChile in1996, include specific provisions tocontrol theauthenticity
ofcertificatesandsanctionmechanisms,alongthelinesadoptedbyMERCOSUL.Nosignificantchanges
havebeenmade since 1992 totherules oforigin applying toother extra-MERCOSUL imports, but
suchrules aretobealigned withMERCOSUL regulations.
10. Extensive modifications weremade toBrazil 'srules oforigin aspartoftheestablishment of
aMERCOSUL régime, implemented inBrazil through Decree No.1568of21July1995. Ingeneral,
MERCOSUL origin alsorequires substantial transformation criterion (i.e.theend-product tofallunder
adifferent MERCOSUL Common Nomenclature position thantheinputs usedinitsproduction). When
thiscriterion isnotmet,thec.i.f. value ofinputs from thirdcountries must notexceed 40percent
ofthef.o.b. value oftheproduct inquestion. Specific criteria define theproducts covered bythe
MERCOSUL régime (which include those undergoing aprocess ofconvergence orforwhich
MERCOSUL members haveagreed toapply non-regional trademeasures). Specific provisions apply
tochemical, steel, telecommunications, andinformatics products.
(iv) Import licensing
11. Mostimports intoBrazil aresubject toimport licences, mostly forstatistical purposes. Licences
areissued automatically unless theproduct inquestion issubject toprior authorization from the
authorities (e.g., Ministry oftheArmy, National Council forNuclear Energy) orwhen special criteria
must bemet.Licences areissued bytheBanco doBrasil butother institutions willbeadded when
theimport module ofSISCOMEX isfullyimplemented. Licences must generally beissued before
goods areshipped from abroad andrequire thepayment ofaprocessing feeofR$66.70 perlicence.
12. Theauthorities indicated thatthemost significant modifications since 1992 tothelicensing
régime consisted ofthestreamlining ofprocedures, sothatlessthanonedayisnowneeded toprocess
alicence. However, in1995 theperiod oflicence validity wasreduced from 90to60days, except
forcustom-made capital goods, parts, accessories, toolsandmoulds; provisions forextensions beyond
60dayswereeliminated (Directive SECEX No.3of16June1995), except forpartscovered bylicences
issued jointly withanExport Register document (Directive SECEX No.14of2October 1995).Brazil WT/TPR/S/21
Page 37
13. Import licences arenotrequired forcertain goods listed inAnnex AoftheAdministrative Rules
forImports (Directive DECEX No.8of13May1991). Thelistincludes books, newspapers, journals,
certain medicines, samples, returned goods andarticles forpersonal use.Import procedures forthese
products werestreamlined through aseries ofdirectives issued from1992bytheDepartment ofForeign
Trade (DECEX), theSecretary ofForeign Trade andtheMinistry ofIndustry, Trade andTourism.
14. Incertain cases, aprior import authorization isrequired before animport licence isissued
(Table III.1). Prior authorization requirements forcomputer programmes usedinmicro-computers
andworkstations wereeliminated through Decree No.1207of1August 1994. Programmes forother
usesoroutside thescope oftheSoftware Law must stillberegistered before marketing inBrazil.
(Other conditions applying tosoftware imports, including changes under consideration inearly 1996,
arediscussed inSection V(3).)
Table III.1
Products subject toprior import authorization
Product description Authorizing agency Implementing legislation
Human blood andderivatives Ministry ofHealth LawNo.4701 of28.6.65
Tissues andhuman substances Ministry ofHealth LawNo.6360 of23.9.76
Products causing physical dependence Ministry ofHealth LawNo.6360 of23.9.76
Products usedinclinical research Ministry ofHealth LawNo.6360 of23.9.76
Bovine semen National Secretariat of LawNo.6446 of5.10.77
Agricultural Defence (SNDA)
Defoliant herbicides andpesticides Ministry ofAgriculture Directive No.326of16.8.74
(known as"Agent Orange")
Sugars andalcohol Secretariat ofthe Decree 99508 of5.9.90
Presidency forRegional
Development (SDR)
Rawhides, skins, leather and Brazilian Institute of LawNo.5197 of3.1.67
products thereof, ofwildanimals theEnvironment andNatural
Renewable Resources (IBAMA)
Ecology damaging products IBAMA Directive No.1197 of16.7.90
Petrochemical products National FuelDepartment Decree No.66556 of11.5.70
(DNC)
Metallic mercury Ministry oftheArmy Decree No.97634 of10.4.89
Arms andammunition Ministry oftheArmy Decree No.55649 of28.1.65
Nuclear material National Commission for LawNo.6189 of16.12.74
Nuclear Energy (CNEN)
Computer hardware Secretariat forScience Decree No.99541 of21.9.90
andTechnology (SCT)
Aircraft Commission forthe Decree No.94711 of31.7.87
Coordination ofCivil
AirTransport (COTAC)
Postage machinery Secretariat forScience LawNo.6538 of22.6.78
andTechnology (SCT)
Source: DECEX Decree No.8.WT/TPR/S/21
Page 38Trade Policy Review
15. Before granting licences, theauthorities givecareful consideration totheimpact ofcredit terms
oncertain imports; highrealinterest ratesinBrazil make itpossible forforeign exporters tooffer
Brazilian buyers relatively inexpensive credit, anadvantage seenasunfair. Asaresult limits have
beenimposedoncreditperiodsfortextiles.Foragriculturalcommodities,considerationsforthegranting
oflicences include themarketing period forharvests, stock levels aswellassanitary andphytosanitary
regulations (Chapter III(3)(5)).
(2) Tariffs
16. Import andexport taxesareusedprimarily asinstruments oftradepolicy, thefiscal contribution
oftrade taxes being ofminor importance: import taxes accounted forsome 3percentoftotalfederal
revenue in1994 andexport taxes werenegligible. Import andexport taxes together amounted toan
average ofonly0.45percentofGDP between 1991 and1994 (Table III.2).
Table III.2
Gross fiscal revenue, 1992 and1994
(Million US$andpercentofGDP)
1992 1994
Value Percent Value Percent
Federal revenue 59,778.9 14.6 94,635.0 16.8
Taxes ofwhich: 29,953.3 7.3 44,918.3 8.0
Import duties 1,672.4 0.4 2,822.7 0.5
Export taxes 0.8 0.0 0.5 0.0
Income tax(IR) 15,835.4 3.9 20,657.8 3.7
TaxonIndustrialized Products (IPI) 9,810.0 2.4 11,894.9 2.1
Provisional TaxonFinancial
Movements (IPMF)notapplied notapplied 5,778.4 1.0
Other contributions ofwhich: 29,825.6 7.3 49,716.7 8.8
Social Investment Fund (FINSOCIAL) 4,159.5 1.0 13,482.8 2.4
Programme forSocial Integration
(PIS/PASEP)4,471.2 1.1 5,906.9 1.1
Contribution onNetProfit (CSSLL) 3,016.7 0.7 5,094.2 0.9
State revenue ofwhich: 29,412.0 7.2 41,510.8 7.4
Services andMerchandise Circulation Tax
(ICMS)28,364.5 6.9 40,255.9 7.1
Municipalities 4,076.8 1.0 7,064.0 1.3
Source: Ministry ofFinance, Federal Revenue Secretariat.
(i) Recent developments affecting Brazil 'stariff structure
(a) Brazil 'stariff before 1995
17. Theprogramme oftariff reductions scheduled tobecarried outbetween 1990 and1994, was
accelerated andcompleted inJuly1993. Asaresult, between January 1992andJuly1993, theaverageBrazil WT/TPR/S/21
Page 39
tariff dropped from 21.2to14percent(Table III.3). Tariff dispersion wasalsoreduced during that
period. Most goods became dutiable atratesranging fromzeroto20percent,although higher rates
werelevied oncertain goods, including alcoholic beverages, certain electrical andelectronic equipment,
carsandtoys. Between 1992andtheendof1994, tariffchanges weretheresponsibility oftheForeign
Trade Secretariat anditspredecessor, theDepartment ofForeign Trade (DECEX).
Table III.3
Evolution oftariff rates, 1990-1995
Period Average Range Standard Deviation
1990 32.2 0-105
19.6
February 1991 25.3 0-85 17.4
January 1992 21.2 0-65 14.2
October 1992 16.5 0-55 10.7
July1993 14.0 0-40
8.2
July1995a12.6 0-20 9.0
January 1995b12.5 0-70 9.6
a Excludes automobiles andelectric domestic appliances, subject toatariff of70percent, andsport shoes, subject toatariff of
62percent.
b WTO Secretariat estimates.
Source: Brazilian authorities; andWTO Secretariat.
(b) Brazilian implementation oftheMERCOSUL Common External Tariff.
18. On1January1995,Brazil'sadoptedMERCOSULCommonExternalTariff(CET),implemented
inBrazil through Decree No.1343 of21December 1994, asamended. Under theCET, alltariffs
areadvalorem andapplied onthec.i.f. value oftheproduct. TheCETisbased ontheHarmonized
Commodity Description andCoding System (HS).
19. Brazil 'stariffcontains 9,107 eight-digit tarifflines. TheCETprovides fortariffratestorange
between zeroand20percentinsteps oftwopercentage points. However, departures fromtheCET
arepermitted forthree types ofproduct: those inabasic national list,capital goods, andinformatics
items. Tariffs forsuchproducts maybeabove orbelow theCET, progressively approaching theagreed
common ratethrough periodic linear andautomatic changes.2
20. ThelistofBrazil 'sexceptions forcapital goods includes about 900items, withtariffratesabove
thecommon level; ratesshould converge totheCETrateof14percentbytheyear2001. Thelist
ofexceptions forinformatics andtelecommunications products includes some 200items, withtariff
ratesconverging totheCET rateof16percentbytheyear2006.
21. Apart fromcapital goods, informatics andtelecommunications products, Brazil wasallowed
toidentify upto300national exceptions totheCET. Thisbasic listofexceptions initially included
175items; inmid-1996 itcovered 233products, including chemicals, petrochemicals, food, textiles,
construction materials, cleaning andhygienic goods andleather andwood products. Thetariffs on
2Exceptions toduty-free treatment within MERCOSUL arediscussed inChapter II.WT/TPR/S/21
Page 40Trade Policy Review
the233items onthebasic listaregenerally below thecommon rateandshould converge withtheCET
on1January 2001.
22. Brazil wassubsequently permitted toexempt fromtheCETafurther listupto150items for
aperiod ofoneyearexpiring on28April 1996(Decree No.1427of29March 1995). This"additional"
listwasintroduced aspartofBrazil 'slatest economic stabilization programme, inparticular forprice
control anddomestic supply reasons. Theadditional listoriginally included 109items; 50oftheitems
could bechanged every three months while theremainder could beremoved butnotreplaced. The
initial listcovered items inproduct-categories suchasmeat, cheese, rice,barley, preserved fruit, soaps
andtoothpastes, fertilizers, insecticides, steelproducts anddurable consumer goods. Thehighest
tariff intheadditional list,ofupto70percent, affected textile products.
(c) Tariff changes in1995 andthefirst-half of1996
23. Decree No.1427 of29March 1995 increased to70percenttariffs onconsumer products,
including motor vehicles. Decree No.1471 of27April 1995 republished thelistsofexceptions to
theCETandreduced thetariff ratesoncertain products inDecree No.1427 tothebinding levels in
Brazil 'sschedule ofconcessions. Further tariffchanges resulted fromProvisional Measure No.1024
of13June 1995, which alsointroduced quantitative import limitations forwhich Brazil sought
justification onbalance-of-payments grounds (section (6)(iv)).
24. Amodified "additional" listwaspublished inFebruary 1996including 67products: 38with
ratesabove theCETand29below it.Products added tothelistincluded butter, oilandwine; according
totheSecretariat forEconomic Surveillance intheMinistry ofFinance, these products were added
tothelistinorder topreclude "undesirable" imports. Thetariffontextiles wasmaintained at70percent
toaddress complaints bythetextiles industry, which faced strong competition fromChinese products.
Import duties onwines wereincreased from20to35percenttohelptheBrazilian wineindustry meet
competition from imported products.
25. Decree No.1848 of29March 1996 eliminated petrochemicals from Brazil 'sbasic listof
exemptions. Italsoreduced tariffs on122products inthatlist:white goods (large domestic electrical
appliances) were subject tothe30percentrate,while the35percentrateapplied toelectronic and
other domestic electrical goods, bicycles andmotorcycles. These ratesshould converge to20percent
byJanuary 2001, asshould the40percenttariff onfootwear.
26. Theexpiry ofthe"additional" listinApril 1996ledtotheintroduction ofalternative measures
tooffset theexpected fallintariff protection (from upto70percenttoamaximum of20percent).
Forexample, safeguard measures weretaken inMay1996concerning textiles (Section (4)(ii)), while
import taxes ontoyswere increased to70percentinJune1996 (Section (6)(ii)).3
27. There havebeennoconversions ofnon-tariff barriers totariffs since thelastTPR, including
foragricultural products (Chapter VI).
3BesidesthetariffincreasesmentionedelsewhereinthisChapteraffectingtextiles,toysandwine,pressreports
have noted higher tariffs onfootwear, gypsum, paper, peaches, rice, andanimpending tariff riseonpencils
(Financial Times, 30July1996, andTheEconomist, 3August 1996).Brazil WT/TPR/S/21
Page 41
(ii) Brazil 'stariff structure
(a) Tariff profile
28. Brazil 'ssimple average applied tariff was12.5percent. Thisisbased onMERCOSUL 's
common external tariff, asmodified byBrazil 'slistsofconvergence andnational exemptions inforce
inJanuary 1996. Compared withthestructure inplace inJuly1993 (pre-MERCOSUL structure -
Table III.3), tariff dispersion, asmeasured bythestandard deviation, hasincreased slightly to
9.6percent. Larger increases occurred intherelative dispersion around themean, measured bythe
coefficient ofvariation (standard deviation divided bythemean), which increased from 59percent
to77percent.
29. Brazil 'stariff distribution isslightly skewed towards thehigher endofMERCOSUL 'stariff
range (Chart III.1). Thetendency ismagnified byBrazil 'sexceptions totheCET. Thisisparticularly
truegiven thelargeproportion ofimports, relative tothenumber oftarifflinesinvolved, thatactually
enter thecountry atthehighest tariff rates. InJanuary 1996, tariff peaks ofmore than55percent
affected various fabrics andmade-up textiles, footwear, non-electric andelectric machinery, aswell
asmotor vehicles; however, according totheauthorities, several peakrateswerereduced during 1996,
e.g.,therateonelectrical andnon-electrical machinery stood at40percentinmid-1996, while the
rateoncomputer hardware was32percent.
(b) Tariff escalation
30. Average nominal applied tariffs show considerable disparity across product groups defined
attwo-digit HSlevel. Some categories haveaverages oflessthan3percent, e.g.,liveanimals and
plants, oresandfertilizers, while, attheother extreme, some haveaverages of20percentandmore,
e.g.,beverages, leather articles, clothing, footwear andtoys(Table III.4).
31. Tariff variations across products reflect mostly thesubstantial tariff escalation bystage of
processing present inBrazil 'stariff structure. Calculations forthe1996 applied tariff show thatthe
simple average forallrawmaterials was6.5percent,compared with9.2percentforsemi-processed
goods and15.7percentforfinished goods (Table III.5).
32. Tariffescalationisevidentinallindustries,exceptpetroleumrefiningandchemicals(ChartIII.2).
Itisparticularly marked inthebasicmetals, andwood andwood products industries, where theaverage
tariff onfinished products isabout seven times higher thanthetariff onrawmaterials.WT/TPR/S/21
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Brazil WT/TPR/S/21
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Table III.4
M.f.n. tariff andbindings, byHSchapter
(PercentandUS$million)
M.f.n. rate
(January 1996)Bindings
(atendof
implementation period)
HS
(2digit)Description 1995 Imports
(%oftotal)Simple
averageRange Simple
averageRange
Total 100.0 12.5 0-70 30.8 0-55
01 Liveanimals 0.4 2.5 0-4 24.9 0-35
02 Meat andedible meat offal 0.4 8.7 2-12 38.1 35-55
03 Fish&crustacean, mollusc &other
aquatic invertebrate0.8 9.0 0-10 33.2 0-35
04 Dairy prod; birds eggs; natural honey;
edible prodnes1.3 16.3 0-30 46.3 0-55
05 Products ofanimal origin, nesorincluded 0.1 6.0 0-8 33.9 0-35
06 Livetree&other plant; bulb, root; cut
flowers etc0.0 2.9 0-10 32.2 0-35
07 Edible vegetables andcertain roots and
tubers0.8 8.3 0-35 32.7 17.5-35
08 Edible fruitandnuts; peelofcitrus fruitor
melons0.6 9.9 6-10 35.9 15-55
09 Coffee, tea,matû andspices 0.0 10.0 10 35.1 27-45
10 Cereals 1.1 8.3 0-22 47.8 27.5-55
11 Prod millindust; malt; starches; inulin;
wheat gluten2.5 10.5 10-14 46.0 9-55
12 Oilseed, oleagi fruits; miscell grain, seed,
fruitetc0.5 4.6 0-10 28.8 0-35
13 Lac;gums, resins &other vegetable saps
&extracts0.1 7.0 2-14 34.0 13.5-45
14 Vegetable plaiting materials; vegetable
products nes0.0 6.0 6 35.0 35
15 Animal/veg fats&oils&theircleavage
products, etc0.7 9.1 2-12 34.8 20-35
16 Prepofmeat, fishorcrustaceans, molluscs
etc0.1 16.0 16 45.8 35-55
17 Sugars andsugar confectionery 0.1 16.7 16-20 34.8 25-35
18 Cocoa andcocoa preparations 0.3 15.8 10-20 30.9 25-35
19 Prepofcereal, flour, starch/milk;
pastrycooks products0.1 16.6 14-18 36.8 10.8-55
20 Prepofvegetable, fruit, nutsorother parts
ofplants0.4 14.8 4-45 35.9 20-55
21 Miscellaneous edible preparations 0.1 15.6 14-18 32.6 22-35
22 Beverages, spirits andvinegar 1.4 17.8 6-20 40.9 35-55
23 Residues &waste from thefoodindust;
prepr anifodder0.1 6.5 2-14 35.3 13.5-55
24 Tobacco andmanufactured tobacco
substitutes0.1 15.6 10-20 38.4 18-55
25 Salt;sulphur; earth &stone plastering mat;
lime&cem0.4 3.7 0-6 34.2 0-35
26 Ores, slagandash 0.8 2.6 2-4 35.0 35
27 Mineral fuels, oils&products oftheir
distillation etc11.6 6.5 0-16 34.4 15-35
28 Inorgn chem; compds ofprecmet,radioact
elements etc1.4 6.1 1-41 19.7 0-35
29 Organic chemicals 6.3 6.4 0-18 23.0 0-35
30 Pharmaceutical products 1.0 8.8 0-14 34.9 30-35
31 Fertilizers 1.3 1.8 0-6 12.8 0-15
Table III.3 (cont'd)WT/TPR/S/21
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M.f.n. rate
(January 1996)Bindings
(atendof
implementation period)
HS
(2digit)Description 1995 Imports
(%oftotal)Simple
averageRange Simple
averageRange
32 Tanning/dyeing extract; tannins &derivs;
pigm etc.0.9 10.8 2-14 20.0 20
33 Essential oils&resinoids; perf,
cosmetic/toilet prep.0.4 13.1 2-18 22.6 20-25
34 Soap, organic surface-active agents,
washing prep, etc.0.3 12.1 2-16 22.5 22.5
35 Albuminoidal subs; modified starches;
glues; enzymes0.2 13.4 2-16 19.6 13.5-20
36 Explosives; pyrotechnic prod; matches;
pyrop alloy; etc.0.0 12.0 4-14 20.0 20
37 Photographic orcinematographic goods 0.5 9.0 0-14 18.6 0-20
38 Miscellaneous chemical products 1.0 10.3 2-18 21.7 5-35
39 Plastics andarticles thereof 3.0 11.8 2-18 22.7 17.5-35
40 Rubber andarticles thereof 1.7 11.8 0-16 34.2 22-35
41 Rawhides andskins (other thanfurskins)
andleather0.4 5.8 1-10 35.0 35
42 Articles ofleather; saddlery/harness; travel
goods etc.0.1 20.0 20 35.0 35
43 Furskins andartificial fur;manufactures
thereof0.0 12.7 3-20 33.4 0-35
44 Wood andarticles ofwood; wood charcoal 0.1 7.4 1-14 18.6 12-35
45 Cork andarticles ofcork. 0.0 6.9 2-10 35.0 35
46 Manufactures ofstraw, esparto/other
plaiting mat;etc.0.0 12.0 12 35.0 35
47 Pulpofwood/of other fibrous cellulosic
mat;waste etc.0.3 3.6 2-4 30.9 20-35
48 Paper &paperboard; artofpaper pulp,
paper/paperboard1.7 11.5 2-16 33.9 10-35
49 Printed books, newspapers, pictures &
other product etc.0.4 6.9 0-16 27.6 0-35
50 Silk 0.0 12.5 4-18 35.0 35
51 Wool, fine/coarse animal hair,horsehair
yarn&fabric0.1 10.7 2-18 33.7 15.3-35
52 Cotton 1.8 15.7 3-18 35.6 35-55
53 Other vegetable textile fibres; paper yarn
&woven fabric0.2 9.6 2-18 35.0 35
54 Man-made filaments 1.2 18.2 2-65 35.0 35
55 Man-made staple fibres 0.6 18.2 2-70 35.0 35
56 Wadding, felt&nonwoven; yarns; twine,
cordage, etc.0.1 16.3 2-18 34.8 25-35
57 Carpets andother textile floor coverings 0.0 20.0 20 35.0 35
58 Special woven fab;tufted texfab;lace;
tapestries etc.0.1 18.0 18 35.0 35
59 Impregnated, coated, cover/laminated
textile fabric etc.0.1 15.9 14-16 33.9 20-35
60 Knitted orcrocheted fabrics 0.1 18.0 18 35.0 35
61 Artofapparel &clothing access, knitted
orcrocheted0.2 20.0 20 35.0 35
62 Artofapparel &clothing access, not
knitted/crocheted0.5 21.3 20-70 35.0 35
63 Other made uptextile articles; sets;worn
clothing etc.0.1 22.3 2-70 35.0 35
Table III.3 (cont'd)Brazil WT/TPR/S/21
Page 45
M.f.n. rate
(January 1996)Bindings
(atendof
implementation period)
HS
(2digit)Description 1995 Imports
(%oftotal)Simple
averageRange Simple
averageRange
64 Footwear, gaiters andthelike;parts of
sucharticles0.3 31.8 18-56 35.0 35
65 Headgear andparts thereof 0.0 19.4 18-20 35.0 35
66 Umbrellas, walking-sticks, seat-sticks,
whips, etc.0.0 19.3 18-20 35.0 35
67 Prepr feathers &down; artiflower;
articles human hair0.0 16.0 16 35.0 35
68 Artofstone, plaster, cement, asbestos,
mica/sim mat0.2 8.5 2-14 35.0 35
69 Ceramic products 0.1 11.8 0-20 34.8 15-35
70 Glass andglassware 0.4 12.3 1-18 34.9 25-35
71 Natural/cultured pearls, precstones &
metals, coinetc.0.2 9.7 0-18 35.0 35
72 Ironandsteel 0.6 10.2 0-14 34.8 30-35
73 Articles ofironorsteel 0.7 15.4 10-20 34.3 20-35
74 Copper andarticles thereof 1.1 11.2 0-16 32.4 10-35
75 Nickel andarticles thereof 0.1 10.3 2-16 32.0 10-35
76 Aluminium andarticles thereof 0.8 11.5 2-16 22.2 15-25
78 Lead andarticles thereof 0.1 9.3 4-16 35.0 35
79 Zincandarticles thereof 0.1 8.7 2-16 35.0 35
80 Tinandarticles thereof 0.0 9.6 2-16 35.0 35
81 Other basemetals; cermets; articles thereof 0.1 3.8 2-8 33.0 5-35
82 Tool, implement, cutlery, spoon &fork,
ofbasemetetc.0.4 17.8 16-18 33.3 25-35
83 Miscellaneous articles ofbasemetal 0.2 15.7 4-16 35.0 35
84 Nuclear reactors, boilers, mchy &mech
appliance; parts13.2 16.5 0-62 32.5 0-35
85 Electrical mchy equip parts thereof; sound
recorder etc.11.1 18.9 0-62 32.0 0-35
86 Railw/tramw locom, rolling-stock &parts
thereof; etc.0.0 18.0 18 33.9 20-35
87 Vehicles o/trailw/tramw roll-stock, pts&
accessories14.8 35.4 0-70 33.5 20-35
88 Aircraft, spacecraft, andparts thereof 0.5 2.2 0-20 33.5 2-35
89 Ships, boats andfloating structures 0.0 17.6 2-20 33.6 13-35
90 Optical, photo, cine, meas, checking,
precision, etc.3.0 13.5 0-27 32.4 0-35
91 Clocks andwatches andparts thereof 0.3 18.9 18-20 35.0 35
92 Musical instruments; parts andaccess of
sucharticles0.1 16.7 10-18 34.8 25-35
93 Arms andammunition; parts and
accessories thereof0.0 20.0 20 34.2 25-35
94 Furniture; bedding, mattress, mattsupport,
cushion etc.0.2 17.7 14-18 34.2 1-35
95 Toys, games &sports requisites; parts &
access thereof0.3 20.0 20 35.0 35
96 Miscellaneous manufactured articles 0.2 17.9 14-08 34.6 20-35
97 Works ofart,collectors pieces and
antiques0.0 4.0 4 35.0 35
Note: M.f.n. ratesreflect Brazil 'simplementation oftheMERCOSUL 'sCET; bindings arebased onBrazil 'sschedule ofconcessions
annexed totheMarrakesh Protocol.
Source: WTO Secretariat based ondataprovided bytheGovernment ofBrazil..WT/TPR/S/21
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Table III.5
Simple average applied m.f.n. tariff, bystage ofprocessing, January 1996
(Percent)
Primary products Semi-processed products Fully-processed products
Tariff lines 828 3,361 4,918
Simple average 6.5 9.2 15.7
Tariff range 0-3 0-70 0-70
Standard deviation 4.7 6.6 10.7
Imports 1995 (percentoftotal) 15.5 22.7 61.7
Source: WTO Secretariat calculations, based ondataprovided bytheGovernment ofBrazil.
Brazil WT/TPR/S/21
Page 47
(iii) Tariff bindings
33. BeforetheconclusionoftheUruguayRoundnegotiations,Brazilhadbindingsonsome6percent
oftariff lines(Table III.6), equivalent tosome 10percentof1995 non-oil imports. Brazil bound its
entire tariffschedule intheUruguay Round negotiations, withthevastmajority oflinesbound atceiling
rates. Between 1995and2000, thegeneral levelofbound ratesonmanufactured goods istobereduced
to35percentinfivestages. There arecertain exceptions, which include products tobebound athigher
rates, suchasbeverages, tobacco andcotton, aswellasanumber ofitems (e.g., fertilizers, certain
chemicals, photographic goods) setatlower rates, usually bound inearlier negotiations (Table III.4).
Regarding agricultural items, finaltariff bindings willrange from zeroto55percent, mostly tobe
fullyimplemented intheyear2004, although finalbound ratesforsome agricultural products willbe
applied from 1995 or1999.4
Table III.6
Tariff bindings inBrazil
(US$ million andpercent)
Pre-Uruguay Round Post-Uruguay Round
1995 imports Tariff lines 1995 imports Tariff lines
Value Percent Number Percent Value Percent Number Percent
Allproducts (excluding petroleum
Total 23,177.7 100.0 12,381 100.0 23,177.7 100.0 12,381 100.0
Bound 2,558.8 11.0 785 6.3 23,177.7 100.0 12,381 100.0
Fully bound 1,714.4 7.4 432 3.5 23,177.7 100.0 12,381 100.0
Partially bound 844.4 3.6 353 2.9 0.0 0.0 0 0.0
Unbound 20,618.8 89.0 11,596 93.7 0.0 0.0 0 0.0
Allagricultural products (HS01-24)
Total 3,069.3 100.0 1,548 100.0 3,069.3 100.0 1,548 100.0
Bound 324.7 10.6 75 4.8 3,069.3 100.0 1,548 100.0
Fully bound 243.1 7.9 55 3.6 3,069.3 100.0 1,548 100.0
Partially bound 81.6 2.7 20 1.3 0.0 0.0 0 0.0
Unbound 2,744.5 89.4 1,473 95.2 0.0 0.0 0 0.0
Industrial products (HS25-97)
(excluding petroleum products )
Total 20,108.4 100.0 10,835 100.0 20,108.4 100.0 10,833 100.0
Bound 2,234.1 11.1 710 6.6 20,108.4 100.0 10,833 100.0
Fully bound 1,471.4 7.3 377 3.5 20,108.4 100.0 10,833 100.0
Partially bound 762.7 3.8 333 3.1 0.0 0.0 0 0.0
Unbound 17,874.3 88.9 10,125 93.4 0.0 0.0 0 0.0
Source: WTO Secretariat calculations.
4Brazil 'sWTO Schedule III,PartISection, I-A.WT/TPR/S/21
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34. Brazil 'stariffbindings intheUruguay Round weremade onthebasisoftheBrazilian national
tariff, consisting ofmore than12,000 ten-digit items (based ontheHS). Inmid-1996, theBrazilian
authorities wereworking onthetransposition ofBrazil 'sbinding commitments (Schedule III)intothe
MERCOSUL CET. Thepossible needforArticle XXVIII renegotiations ofbinding commitments
wasunder consideration byMERCOSUL andmayberesolved through ajointdecision. Theauthorities
indicated thatinthemeantime Brazil isapplying thebound ratewhenever itisexceeded theCET;5
theonlyexception concerns thebinding onthezero-rated tariff quota onwheat (section (2)(vii)).
35. Thetime-limit forthecompletion ofnegotiations orconsultations ontheadoption ofBrazil 's
GATT Schedule IIItotheHarmonized System, wassuccessively extended from 1985 until
December 1993. Thefinalversion ofSchedule IIIwascommunicated toGATT contracting parties
inlate1993, Brazil having reserved therighttomodify theschedule during athree-year period beginning
on1January 1994 asprovided forinArticle XXVIII:5 ofGATT.
(iv) Temporary tariffs
36. Inthepast,temporary rates, established under various ministerial decrees, wereusedtoprovide
duty-free orreduced-duty access foravariety ofproducts. More recently, aseries ofdirectives have
allowed theduty-free importation, forspecific periods, ofcapital goods notmanufactured inthe
MERCOSUL region (seenextsub-section).
37. Brazil doesnotuseseasonal tariffs, although some tariff quotas onpreferential imports apply
during particular periods (section (2)(vii)).
(v) Concessional entry
38. Most ofthepreviously numerous import tariff concessions, notably those granted topublic
enterprises, wereeliminated in1990. Limited dutyexemptions orreductions wereretained forimports
underthedrawbackscheme(ChapterIV(4)),importsintotheManausfree-tradezone(ChapterV(1)(vi)),
andotherspecified imports suchasthose byinternational organizations, andscientific andtechnological
institutes.
39. Themostsignificant modification since 1992tothelegislation onconcessional entry involved
thetariff concessions granted in1995totheautomotive industry, including reductions ofupto90per
centoncapital goods, production inputs, andpartsusedbyautomakers aswellasonvehicles imported
byassemblers. These concessions areconditional onmeeting local-content, export-performance and
trade-balancing requirements (BoxIII.1). Thequantitative import limitations initially accompanying
suchconcessions wereconsidered byWTO members tobeunjustified onbalance-of-payments grounds,
while theconditions imposed forgranting tariff concessions have raised questions about Brazil 's
compliance withtheAgreement onTrade-Related Investment Measures (section (6)(iv)).
5Based onatentative correspondence between nomenclatures, tariffs would exceed bound rates forsome
40ten-digit tariff lines ifBrazil were toapply theCET.Brazil WT/TPR/S/21
Page 49
BoxIII.1: Tariff concessions intheautomotive industry
Tariff concessions were granted in1995 totheautomotive industry through aseries ofProvisional
Measures, regulated byDecree No.1761 of26December 1995.
TheDecree grants tocapital goods atariff reduction of90percentuptotheendof1999; inputs, which
include rawmaterials andauto-parts (such asparts, components, assemblies andtyres), benefit from
tariff reductions of85,70,55and40percentin1996, 1997, 1998 and1999, respectively. Reductions
should notresult inequivalent import duties below 2percent.
Assemblers andmanufacturers ofmotor vehicles areallowed tariff reductions of50percentonimported
vehicles andparts until theendof1999; reductions should notresult inimport taxes below theCET.
Until theendof1997 andforanygiven calendar year, thevalue ofcapital goods manufactured inBrazil
must beatleast equal tothevalue ofimports ofsimilar products subject totariff concessions; after
1997, such proportion istobenohigher than1.5times. Theproportion maybechanged byagreement
between manufacturers ofcapital goods andusers, subject toapproval bytheMinistry ofIndustry, Trade
andTourism.
Thevalue ofBrazilian-made rawmaterials should beatleast equal tothevalue ofsimilar imported
products subject totariff concessions inanygiven calendar year. Imports ofrawmaterials and
automotive products (including vehicles, tractors, parts andcomponents) from MERCOSUL members,
added toimports ofinputs andvehicles under tariff concessions, must notexceed thevalue of"net
exports", withslight variations allowed until theendof1998.
"Net exports" aredefined astheaggregate ofexports ofautomotive product, exports bytrading firms and
"additional exports" minus thevalue ofimports subject todrawback, commissions paidtoagents abroad
andexports paidinnational currency. "Additional exports" aredefined asgiven percentages ofthe
value ofautomotive products made in-house, thevalue ofnew, imported machine-tools andaccessories,
orpurchases ofBrazilian-made capital goods.
Imports ofautoparts granted tariff concessions must notexceed twothirds ofthevalue ofnetexports in
anygiven calendar year.
The"average nationalization index", theproportion between thevalue ofBrazilian-produced inputs and
thattothevalue ofallinputs used byafirmduring agiven year, must beatleast 60percent. Inthis
respect, inputs produced inMERCOSUL members andoffset byequivalent exports areconsidered tobe
Brazilian-made.
Where thelevel ofimports injures, orthreatens toinjure domestic producers, theMinistry ofIndustry,
Trade andTourism maysetadditional limits totheimports ofcapital goods andinputs benefiting from
tariff concessions.
Under Provisional Measure No.1272 of12January 1996, companies setting upnewplants orexpanding
production capacity maybegranted transitional periods tocomply withtheproportions mentioned above.
New companies inBrazil orthose already established andsetting upnewcapacity have three years from
start-up tomeet local content requirements. TheProvisional Measure alsomade provision forthe
accelerated depreciation ofcapital goods acquired between January 1996 andtheendof1997.
Trade within MERCOSUL issubject tospecial rules.WT/TPR/S/21
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(vi) Tariff preferences
40. Tariff preferences aregranted byBrazil under various international agreements, ofwhich the
broadest istheLatin American Integration Association. Since 1992, onlyrelatively minor alterations
havebeenmade toBrazil 'sLAIA preferences. In1995, negotiations began between MERCOSUL
members asagroup andother LAIA members toreplace preferences previously agreed onabilateral
basis.
41. MERCOSULisconsideredtobeanarrangementfallingunderthegeneralumbrellaoftheLAIA.
Intra-regionaltradebetweenBrazilanditsMERCOSULpartnershasbeenduty-freesince1January1995,
except for29tariff items subject totheprogramme ofadaptation totrade liberalization (Régime de
Adequa ção),which should becompleted bytheyear1999.
42. Brazil grants concessions under theGlobal System ofTrade Preferences Among Developing
Countries (GSTP), covering 98items andunder theProtocol Relating toTrade Negotiations Among
Developing Countries covering only12tariff lines(seealsoChapter II(1)(iv)(d)).
(vii) Tariff quotas
43. Brazil doesnotusetariffquotas torestrict imports under general m.f.n. rates. Notariffquotas
were introduced aspartofBrazil 'sUruguay Round commitments inAgriculture.6
44. Long-standing tariff quotas apply onapples andpears. Forthetwofruits, them.f.n. tariff
rateof32percentisreduced to15percentonaglobal quota of10,000 tonnes between 1August
and31December; thequota isnowoflittlesignificance asthem.f.n. applied tariff isunder 15per
cent. Atariff quota wasapplied untilrecently towheat, reducing thetariff rateof45percenttozero
onanannual quota of750,000 tonnes. Theauthorities indicated thatBrazil hadwithdrawn thequota
andthatnegotiations would beconducted withtherelevant trading partners; theyalsonoted that,in
practice, nowheat imports hadtaken place under theparticular HStariff linecovered bythequota.
45. Tariff quotas arealsoemployed under various preferential agreements. Forthose under LAIA,
themostimportant changes since1992related tothePartial-Scope Agreement No.3withChile. Under
thisagreement Brazil nowgrants apreferential quota formethanol; ithasended safeguard quotas
applied tocopper cathodes andcables. Modifications were made totariff quotas granted byBrazil
forpeach conserves andhighquality wineunder MERCOSUL. Other tariffquotas withMERCOSUL
countries wereeliminated from1January 1995. Tariff quotas areusedforpreferential imports under
theGSTP foressential oilsofcinnamon, androller bearings; nochanges havebeenmade tothese
since 1992.
(viii) Variable import levies
46. According totheBrazilian authorities, since 1992 variable levies haveonlybeenusedonce,
between March 1994 andMarch 1995, when theyapplied towheat.
6Brazil 'sWTO Schedule III,PartI,Section I-B.Brazil WT/TPR/S/21
Page 51
(3) Non-Tariff Levies andCharges
47. Besides import duties, anumber ofother taxesandcharges apply exclusively toimports (Table
III.7). Aservice feeiscollected bythebanks issuing import licences (section (1)(iv)). Other charges
described intheprevious TPRofBrazil nolonger seem toapply orarecharges forservices rendered
(e.g.brokerage fee,feeforprinted forms, forwarder 'scommission andadministration commission).
Table III.7
Other charges affecting exclusively imports
Tax/charge Rate Purpose
Import licence fee R$66.70 perlicence Payment fortheprocessing of
import licences
Document Surcharge forNon-
preferential Customers
(Taxa deemissãodeG.I.paraclientes
nãopreferenciais )R$66.70 pertransaction Service feepaidtoBanco doBrasil
Additional Document Surcharge for
Non-preferential Customers
(Taxa deemissãodeG.I.paraclientes
nãopreferenciais -Anexo aouaditivo )R$50.00 pertransaction Service feepaidtoBanco doBrasil
PortWarehousing andAdministration
Contribution (Taxa deArmazenagem e
Capatazia Portuária )Varies according toport Charge forportservices
PortTariff Surcharge
(Adicional daTarifa Portuária -ATP)25percentofthePortWarehousing and
Administration Contribution; only
long-distance operations aresubject tothe
ATPImprovement ofharbour installations
Freight Surcharge forRenovation ofthe
Merchant Marine Fleet
(Adicional aoFrete paraaRenova çao
daMarinha Mercante -AFRMM)25percentoffreight charges onthefirst
landing inBrazilModernization andimprovement of
theBrazilian merchant fleet
Surcharge FeeforSelf-Employed Dock
Workers
(Adicional deIndeniza çãodo
Trabalhador Portuário Avulso -AITP)General cargoes: 0.6UFIR pertonne;
Solid bulkcargoes: 0.7UFIR pertonne;
Liquid bulkcargoes: 1.0UFIR pertonne
(UFIR -Unidad Fiscal deReferencia)Identify workers whose registration
iscancelled
AirWarehousing Contribution
(Taxa deArmazenagem Aérea )Upto5days: 1percent;
6to10days: 1.5percent;
11to20days: 3percent;
Each additional daythereafter: 1.5percent
(cumulative)
TaxfortheOrganization andRegulation
oftheRubber Market
(Taxa deOrganiza çãoe
Regulamenta çãodoMercado da
Borracha -TORMB )Chapter III(3) 5percent
AirAdministration Contribution
(100kgsminimum weight)
(Taxa deCapatazia Aérea )US$0.015 perkg
Airport FeeSurcharge
(Adicional deTarifa Aeroportuária )50percentoftheAirWarehousing plusthe
AirAdministration ContributionsImprovement andexpansion of
airports andauxiliary services
Source: Brazilian authorities.WT/TPR/S/21
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48. No"other duties orcharges" wererecorded inBrazil 'sWTO Schedule IIIwithrespect toany
bindings, except inthecaseofcertain navigational instruments (HS9014.80.0400).
49. Until 1995, theTaxfortheOrganization andRegulation oftheRubber Market (TORMB) was
based onthedifference between thedomestic andworld prices, operating ineffect asavariable levy.
Since 1996, theTORMB hasbeencollected atafixed rateof5percentofthevalue ofimported rubber
(Provisional Measure No.1264 of12January 1996); theratemaybemodified through directives
fromtheBrazilian Institute oftheEnvironment (IBAMA). According tothepresident oftheIBAMA,
thetaxisaprotective tooltosupport therubber industry, which accounts fornumerous jobsinthe
northern region ofBrazil; TORMB revenues support, among other activities, 13rubber processing
co-operatives.7(Rubber production isalsoprotected through import quotas, section (4)(ii)).
50. Inaddition, domestic andimported goods andservices aresubject toacomplex array ofinternal
taxes imposed bytheFederal andState Governments aswellasbymunicipalities (Box III.2). Itis
likely thatthetaxsystem hasledtosignificant re-allocation ofresources within theeconomy, astaxes
varyconsiderably across products, substantially increasing thedomestic price ofimports andraise
production costs forexporters. Theauthorities consider thattheprevailing taxsystem ishindering
theirefforts tostabilize theeconomy andaregiving priority totaxreform. However, thisprocess
iscomplicated byconstitutional andpolitical/legislative constraints.
51. Themostimportant internal taximposed ongoods andservices istheServices andMerchandise
Circulation Tax(ICMS), ataxcollected attheStatelevel, followed bythefederal Industrialized Products
Tax(IPI)(BoxIII.2). TheICMS collected anamount equivalent to42percentoftotalfederal revenue
in1994, while theIPIaccounted forsome 13percentofsuchrevenue (Table III.6). Thetwotaxes
together amounted toabout 9.2percentofGDPin1994. Theauthorities indicated thatnomajor changes
affected theiroperation during theperiod since 1992, although minor alterations weremade torates,
calculation methods, collection periods andexemptions.
7Gazeta Mercantil ,17January 1996.Brazil WT/TPR/S/21
Page 53
BoxIII.2: Structure ofdomestic taxes
TheConstitution gives theFederal Government, theStates, theFederal District andthemunicipalities
powers toimpose avariety oftaxes. TheConstitution spells outingreat detail thesharing oftax
revenue between theUnion, States andmunicipalities.
Inaddition toimport andexport taxes, other charges collected during theperiod since 1992 bytheUnion
were: Income Tax(IR), Industrial Products Tax(IPI), TaxonFinancial Operations (IOF), Rural Land
Tax(ITR), TaxonLarge Fortunes (IGF), Provisional TaxonFinancial Movements (IPMF), Social
Investment Fund (FINSOCIAL), Contribution toFinance Social Security (COFINS), Contribution onNet
Profit (CSLL), Programme forSocial Integration (PIS/PASEP), andPayroll Contributions.
TheStates imposed thefollowing taxes during thelastfouryears: Services andMerchandise Circulation
Tax(ICMS), TaxonMotor Vehicles Ownership (IPVA), TaxonTransfers -Causa Mortis (ITCD), and
Additional TaxonState Revenue (AIRE). Taxes collected bymunicipalities included theTaxonUrban
Land Property (IPTU), TaxonServices (ISS), TaxonTransfers -Inter Vivos (ITBI), andTaxonFuel
Retail Sales (IVVC).
Regulations were never issued fortheIGF. TheIPMF wascollected during 1994, collections during the
previous year having been ruled unconstitutional. TheCOFINS replaced FINSOCIAL in1992. A
Constitutional amendment abolished theIVVC andtheAIRE from 1996.
Theauthorities consider thatthereform ofthetaxsystem isessential fortheeffective stabilization ofthe
economy. Themain structural problems ofthesystem areconsidered toberelated to:
- anexcessive cumulative incidence thatraises input costs toexporters andother domestic
producers;
- thedirect taxation ofexport products (ICMS onprimary andsemi-manufactured goods);
- increased production andemployment costs from taxation ofcapital goods and
significant payroll contributions;
- fiscal inequities such astheheavy taxation ofsalary earners;
- reduced taxincome fortheFederal Government;
- inadequate access toinformation forthefiscal authorities;
- highnominal rates butloweffective rates; and
- substantial scope forfiscal evasion.
Federal taxes remained approximately constant during theperiod 1991 to1994 atabout 8percentof
GDP. Thecontribution ofCOFINS, PIS/PASEP, CSLL, andPayroll Contributions experienced a
gradual butconstant increase, from 6.3percentofGDP in1991 to8.4percentin1994. State taxes
remained uniform atabout 7percentofGDP, based onpartial statistics, municipal charges appear to
have risen from about 0.6percentto1.2percentofGDP.
Source: Brazilian authorities .WT/TPR/S/21
Page 54Trade Policy Review
BoxIII.3 TheIPIandICMS taxes
TheIndustrial Products Tax(Imposto Sobre Produtos Industrializados, IPI)isaFederal taxestablished
byArticle 153oftheConstitution. TheIPIismeant tobeselective, based ontheeconomic importance
ofaproduct; inpractice, itislevied onawide range ofindustrial products.
TheIPIislevied onmost imports atthesame rateasBrazilian made products. Itislevied atthepoint of
salebythemanufacturer orprocessor inthecase ofdomestic products andatthepoint ofcustoms
clearance inthecaseofimports. Thetaxonimports isassessed onthecustoms value (c.i.f.) plusthe
import duty. Brazilian exports areexempt from IPIpayment.
IPIrates varyfrom zeroto220percent, depending upon thenature oftheindustrialized product. Most
goods arecharged atrates between 10to20percent. Themain contributing sectors toIPIrevenue are
tobacco andtransport equipment, followed farbehind bybeverages, chemicals andmetallurgy. Certain
products, whether domestically produced orimported, areexempt from payment oftheIPI,such as
agricultural andfood items, mineral products, fuels, chemicals, pharmaceuticals, fertilizers, hides and
skins, wood intherough, printed matter andmost textiles andclothing.
TheServices andMerchandise Circulation Tax(Imposto sobre Circula çaodeMercadorias ePresta çaode
Serviços,ICMS) isestablished byArticle 155oftheConstitution. TheICMS islevied bytheStates on
both domestically produced andimported goods. Itislevied onboth intra-State andinter-State
transactions, andisassessed onevery transfer orphysical movement ofmerchandise, aswell ason
transport andtelephone services. Inter-State transactions exempt from theICMS include those involving
oil,construction services, mining, electric energy, liquid andgaseous fuels, andlocally produced
machinery andequipment. ICMS rates vary among States; ingeneral rates aresetateither 7or
12percentforinter-State transactions and17to18percentforintra-State transactions. Thetaxrate
depends onthedegree towhich affected products aredeemed "essential". Goods considered
"superfluous" aretaxed at25percentinsome States, while certain products such asfoodstuffs aretax
exempt.
Forimports, theICMS isassessed onthec.i.f. value plusanyother import taxes, including theimport
dutyandtheIPI; thetaxispaidtotheState where theimporting firmisestablished. TheICMS does
notapply toexports ofservices ormanufactured (industrialized) goods. However, itislevied onexports
ofrawmaterials andsemi-manufactured products.
Therates applying tointer-State andexport transactions andrendering ofservices areestablished by
resolutions oftheFederal Senate, ontheinitiative ofthePresident oftheRepublic orofone-third ofthe
Senators, approved bytheabsolute majority ofitsmembers. The"domestic" orintra-State ratefor
transactions concerning thecirculation ofgoods andservices maynotbelower thanthose established for
inter-State transactions.
(4) Quantitative Controls andRelated Measures
(i) Import prohibitions
52. Thelistofprohibited products isbased onAnnex BtotheAdministrative Rules forImports
(Directive DECEX No.8/91). Atthetimeoftheprevious TPRofBrazil, thislistincluded variousBrazil WT/TPR/S/21
Page 55
types ofmedicaments, detergents, andluxury boats. Since 1992, thefollowing items havebeenadded
tothelistofprohibited orconditional imports (HScodeinparentheses):
- Certain organic chemicals (2918.1999 and2920.1001) -Directive No.82/92, Minister of
Agriculture;
- Ironandsteelscrap (7204.4900) subject toapproval bytheMinister oftheEnvironment -
Directive IBAMA No.138-N/92 andIBAMA No.40/93;
- Toys (9501.00, 9502 and9503) asproducts subject tocertification -Directives INMETRO
No.47of13March 1992, No.127of25August 1995andSECEX No.13of30August 1995;
and
- Fescue,andseedsofforageplants(1209.2300and1209.2900),exceptforresearch,iforiginating
inNorth America, Asia, Africa orOceania -Directive SNDA No.82/92.
Items eliminated from thelistofprohibited goods since 1992 are(HScodeinparentheses):
- Luxury boats (8903) -LawNo.9075 of7July1995).
- Cotton (5201), forwhich the30-day limitapplied toimport licences nolonger applies -Directive
DECEX No.366of25November 1994.
Imports ofused(second hand) consumer goods arealsoprohibited (with thepossible exception of
donations). Theprohibition extends tousedcarsandusedtyres. Import prohibitions apply equally
toallsources.
53. Inaccordance withUnited Nations resolutions, Brazil applies anumber oftrade embargoes
(Chapter IV(3)(i)). Brazil alsoapplies import prohibitions inconformity withinternational agreements
suchastheConvention onInternational Trade inEndangered Species ofWildFauna andFlora (CITES).
Brazil supported Resolution II/12 oftheSecond Conference ofParticipants intheBasel Convention
(1994), resulting intheimmediate prohibition ofexports ofdangerous wastes from OECD members
toother countries forfinaldisposal, andtheprohibition, from theendof1997, ofsimilar trade
undertaken forindustrial recycling.
54. PriortothesignatureoftheBaselConvention,Brazilhadalreadyprohibitedimportsofdangerous
wastes forfinaldisposal, andadopted customs andenvironmental regulations concerning imports of
waste, including metallic scrap, forindustrial recycling. Environmental controls areregulated inBrazil
byResolution No.37/94 oftheNational Council fortheEnvironment; thisresolution incorporates
theannexes oftheBasel Convention establishing import prohibitions orrestrictions inproportion to
thehazard totheenvironment orhuman health.
(ii) Import quotas
55. Imports benefiting fromspecial import régimes maybesubject toannual quotas, forexample,
goods imported dutyfreeforuseinscientific andtechnological research, imports intofree-trade zones
(Chapter V(1)(vi)) orimports under preferential agreements (section (2)). Quotas arealsousedin
relation totemporary tariffs (Section (2)). Quantitative limitations onimports ofmotor vehicles were
inforce between 13June1995and26October 1995although thequota limitwasnotreached (section
(6)).
56. Rubber imports arelimited byquotas linked topurchases ofdomestically produced rubber
(Chapter VI(2)); Brazilian rubber mustconstitute 44percentoftotalrubber purchases byimporters.
Only domestic rubber purchased attheofficial minimum price counts towards thequota.WT/TPR/S/21
Page 56Trade Policy Review
57. Thelimit onthemaximum value ofmailimports byindividuals washalved toUS$500 in
February 1996, andtariff exemptions forpurchases ofuptoUS$50 wereeliminated. Itisestimated
thatthevalue ofmailimports amounted tosome US$300 million in1995, buttheyarenotincluded
inofficial trade statistics.8
58. Theauthorities noted thatasaparty totheAgreement onTextiles andClothing (ATC) Brazil
wasentitled toestablish quantitative safeguards, although non-tariff measures tocontrol imports of
textile products werenotinuseinearly1996. However, inJune1996, import quotas oncertain textiles
were announced (section (6)(ii)). Thisaction followed theending oftheadditional tariff protection
granted totextiles under the"additional" listofexceptions totheCET (section (2)(i)). Thequotas
tooktheform ofvolume limits tobeprogressively expanded asestablished inBrazil 'ssafeguard
regulations (Decree No.1488-Annex III.1). Fivepartners wereaffected: China, Hong Kong, Republic
ofKorea, Panama andChinese Taipei.
(iii) Import surveillance
59. Accordingtotheauthorities,Brazilmaintainsnoformalimportsurveillancemechanism,although
import licensing requirements andthesimilarity testsprovide means tomonitor imports.
60. The"Law ofSimilars" isatestintended toprevent, under defined circumstances, imports of
similar goods produced domestically. Thecircumstances covered bythevarious regulations which
constitute thelaw,mainly affect: (i)imports bytheFederal, State, ormunicipal administrations, (ii)
imports withfiscal benefits, and(iii)second-hand goods. TheLawofSimilars covers inprinciple
allproducts, butforimports falling under (ii)or(iii)itisnotapplied ifthefirms electtoforgo fiscal
benefits. Nochanges havebeenmade tothatlawintheperiod since 1992.
(iv) Import cartels andState-trading enterprises
61. The1988 Constitution granted theState amonopoly ontheimportation ofhydrocarbons,
including natural gas,petroleum andpetroleum products. Inmid-1996 suchactivities werestillbeing
carried outonbehalf oftheStatebyPETROBRAS, thenational oilcompany, although important steps
toliberalize these arrangements havebeentaken since 1995 (Chapter VI(2)). Theauthorities were
notaware ofanyother import cartel.
62. Theprevious TPRofBrazil noted thatone"State-trading company" wasinfulloperation in
1992: theconglomerate Companhia ValedoRioDoce.Information onthatandother Stateenterprises
isprovided inChapter V(1), which alsodescribes Brazil 'sprivatization efforts overthelastfouryears.
(5) Standards andOther Technical Requirements
63. Compulsory technical regulations inBrazil cover health, safety environment andconsumer
protection. Compulsory requirements areapplied equally todomestic andimported products. Brazilian
norms aremainly based oninternational standards (e.g., ISO,IECandCodex Alimentarius). Brazil
wasamember oftheGATT Committee onTechnical Barriers toTrade. InBrazil, thenational enquiry
point foreseen inArticles 10.1and10.3oftheWTO Agreement onTechnical Barriers toTrade is
CIDIT/INMETRO (Centro deInforma çãoeDifusãoTecnológica/Instituto Nacional deMetrologia,
Normaliza çãoeQualidade Industrial ).
8Gazeta Mercantil, 28December 1995.Brazil WT/TPR/S/21
Page 57
(i) Standards, testing andcertification
64. TheNational Council ofMetrology, Normalization andIndustrial Quality (CONMETRO) is
theagencyresponsibleforpoliciesrelatedtonormalization,regulation,testingandconformitycertificates.
TheNational Institute ofMetrology, Normalization andIndustrial Quality (INMETRO) istheexecutive
agency ofCONMETRO. Alistofother organizations involved instandards, testing andcertification
isgiven inTable III.8. Numerous modifications have been made since 1992 totheoperation of
CONMETRO, INMETRO andagencies accredited byINMETRO aswellastotechnical regulations
(BoxIII.4). Ingeneral, activities weredecentralized, leading tothecreation ofasystem ofagencies
representing individual sectors. Newprocedures, regulations andcriteria adopted byINMETRO and
accredited agencies havesought tofollow ISO/IEC guidelines.
65. Forimported goods Brazil recognizes testing procedures performed intheexporting country,
provided imports areaccompanied bythecorresponding certificates. Certain products aresubject to
priorapproval bytheauthorities before theycanbeimported (Table III.1). Medical equipment classified
asofmedium orhighriskmusthaveaconformity certificate andberegistered bytheMinistry ofHealth
(Ministerial Order No.2663/95); suchimported equipment requires proof ofregistration inthecountry
oforigin.
66. Brazil hassought agreements withitsmajor trading partners concerning theacceptance oftesting
procedures performed inBrazil. These efforts haveintensified since 1992 within theframeworks of
theInternational Auditor andTraining Certification Association, thePacific Accreditation Conference
andMERCOSUL.Braziliancertificationlaboratoriesareintheprocessofestablishingmutualrecognition
agreements withtheircounterparts inseveral countries.
67. Formostproducts certification isvoluntary; compulsory certification isrestricted toproducts
orservices thatmayaffect health, safety ortheenvironment. Foreign products subject tocompulsory
certification must besubmitted tothesame testing orother procedures asdomestic products.
68. Compulsory certification maybedelegated toaccredited agencies, which, under CONMETRO
Resolutions Nos.8and10provided thereisamutual recognition agreement withacertified Brazilian
agency. TheBrazilian System ofCertification (SBC) allows forforeign firms tobeaccredited asofficial
certification organisms. TheSBCestablishes thepriority useofBrazilian norms, thepromotion of
theBrazilian system ofcertification, andtheuseofthepurchasing power ofpublic andprivate agencies
toencourage certification.
69. Guidelines forelaboration, revision, revocation anddissemination oftechnical regulations were
issued byCONMETRO inResolution No.05/95 of4September 1995, which requires thatallfederal
agencies withcompetence toissue regulations provide INMETRO withaprior notification ofrules
affecting producers andconsumers. Theresolution provides forthepossibility ofpublic consultation
onthose rules. CONMETRO alsodirected theBrazilian Committee onCertification, CBC (Table
III.8)toestablishasystemofconformityassessmentsforenvironmentalmattersfollowingISOguidelines
(Resolution No.03of4September 1995). Asaresult CBChascreated aCommission ofEnvironmental
Certification.WT/TPR/S/21
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BoxIII.4: Organizational changes affecting standards, testing andcertification
Bymeans ofthedecentralization ofSINMETRO, CONMETRO hascreated asystem ofagencies
representing individual sectors (acronyms aredefined inTable III.8). Theprocess ofdecentralization
sought todevelop units with sector-specific technical expertise, giving each unitresponsibility for
normalization andproduct certification intheir particular area. Decentralization isalsointended to
restrict State involvement instandards, testing andcertification, restricting such involvement tosafety,
health, theenvironment andconsumer protection.
Other major changes introduced byCONMETRO since 1992 include the:
- New Model fortheElaboration ofTechnical Norms (Resolutions Nos. 6and7of
28August 1992);
- New Model for the Brazilian Certification System (Resolution No.8 of
24August 1992);
- NewModel forBrazilian Networks ofCalibration andTesting Laboratories (Resolutions
Nos. 9and10of24August 1992);
- Disposition onaBrazilian System ofQualification, Certification andRegistry for
Quality Auditors (Resolution No.04of4September 1995); and
- Creation oftheBrazilian Committee ofScientific, Industrial andLegal Metrology
(Resolution No.02of19May 1995).
Theauthorities noted thatthechanges listed above involved participation byindustrialists, consumers and
scientific organizations, thuspromoting thetransparency andobjectivity oftheprocess. Implementation
ofsuch changes included thecreation offour committees incorporating public andprivate sectoral
organizations (CBC, CBM, CNN, andCONACRE). Those committees were charged withsubmitting to
CONMETRO recommendations onnational policies, promotion programmes, andactivity plans foreach
sector.
CONMETRO wasstreamlined in1995 (Decree No.1422 of20March 1995). TheCouncil presently
focuses ontheformulation ofobjectives, policies andpriorities forstandards, testing andcertification,
leaving their execution tothesectoral committees described above. CONMETRO 'smembership has
been sharply reduced. Inearly 1996, itincluded representatives from theMinistries ofIndustry, Trade
andTourism; Science andTechnology; Health; Labour; Environment; External Relations; aswell
asthepresident ofINMETRO.
INMETRO hasseenitsrôleenhanced byitsdesignation astheBrazilian technical organism within the
MERCOSUL framework; insuch capacity, itisresponsible fortheharmonization oftechnical
regulations elaborated byMERCOSUL 'sWorking Sub-group No.3.Aprivate forum hasalsobeen
created within MERCOSUL, theMERCOSUL Committee onNormalization, where voluntary norms are
established andharmonized forthesub-region.
TheGovernment hasformally recognized theBrazilian Association ofTechnical Standards (ABNT) as
thenational forum forthecreation ofvoluntary norms, using asguidelines ISO/IEC, theCodex
Alimentarius, etc.Brazil WT/TPR/S/21
Page 59
Table III.8
Organizations involved instandards, testing andcertification
Acronym Name Remarks
ABNT Brazilian Association ofTechnical Standards
(Associa çãoBrasileira deNormas Técnicas )Private entity; formulates, revises andpublishes
technical norms
CBC Brazilian Committee onCertification
(Comitê Brasileiro deCertifica ção)Committee created byCONMETRO toplanand
evaluate activities related toconformity
certification inBrazil; presided byINMETRO
CBM Brazilian Committee onMetrology
(Comitê Brasileiro deMetrologia )Committee created byCONMETRO toprovide
advice andformulate policies onmetrology,
promote theco-ordination oftheprivate andpublic
sectors, andpropose support andplans inthearea
CNN National Committee onNormalization
(Comitê Nacional deNormaliza ção)Committee created byCONMETRO toprovide
advice on,andformulate plans fortheBrazilian
Sysem ofNormalization
CONACRE National Committee onAcreditation
(Comitê Nacional deCredenciamento )Committee created byCONMETRO toco-ordinate
andplantheaccreditation ofcalibration andtesting
laboratories
CONMETRO National Council ofMetrology, Normalization and
Industrial Quality
(Conselho Nacional deMetrologia, Normaliza çaoe
Qualidade Industrial )Government agency responsible forestablishing
industrial standards andcertification policy (see
alsoBoxIII.4)
INMETRO National Institute ofMetrology, Normalization and
Industrial Quality
(Instituto Nacional deMetrologia, Normaliza çaoe
Qualidade Industrial )Management andoperation ofSINMETRO (see
alsoBoxIII.4)
SEMA Special Secretariat ontheEnvironment Formulation ofnational policy intheareaof
pollution control andmanagement oftheuseof
natural resources
SINMETRO National System ofMetrology, Normalization and
Industrial Quality
(Sistema Nacional deMetrologia, Normaliza çãoe
Qualidade Industrial )Government forum responsible fortheformulation
andimplementation ofnational policies on
metrology, normalization andquality certification
Source: Brazilian authorities.
70. TheNational Traffic Department issued adirective inFebruary 1996 making acertificate of
compliance with Brazilian standards mandatory toobtain animport licence formotor vehicles.
Requirements include a17-digit chassis number incorporating thevehicle 'syearofmanufacture, rather
thanthemore common "model-year". Anyrequired modifications must bemade inthecountry of
manufacture, withimporters barred fromcarrying outmodifications inBrazil. AlsoinFebruary 1996
INMETROannouncedplanstoinspect,togetherwiththeFederalRevenueSecretariat,alltextileimports;
according totheauthorities, themeasure sought toenforce forforeign products similar requirements
asareimposed onBrazilian exports.
(ii) Sanitary andphytosanitary regulations
71. Strict sanitary andphytosanitary regulations areenforced bytheBrazilian authorities inorder
toprevent theimportation anddissemination ofplantandanimal diseases. Quarantine requirements
varyaccording totheriskassessment oftheimported product taking intoaccount factors suchasthe
nature oftheproduct, itsorigin andintended use.Sanitary andphytosanitary requirements establishedWT/TPR/S/21
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bytheMinistry ofAgriculture apply toimports ofliveanimals andplants, meat, fish,dairy products,
eggs, vegetables, fruit, maize, rice,oilseeds andoleaginous fruit, prepared foodstuffs, beverages, and
others. Imports anddomestic production aresubject tothesame requirements.
72. Themainchanges affecting sanitary andphytosanitary legislation overthelastfouryears are
shown inTable III.9. Theauthorities pointed outthatDecree No.1662 establishes anup-to-date
mechanism toensure thesafety ofproducts usedforanimal production andtomonitor theirresiduals
infood. Oneofthemainobjectives ofthedecree istopre-empt thepossible useofnon-tariff barriers
byother countries against Brazilian exports ofanimal products.
Table III.9
Selected newsanitary andphytosanitary regulations, 1992-1995
Regulation Date Subject Comments
Directive DDIV No.072 21/8/92 Seeds forcereals Prohibits theimportation ofwheat, triticale, rye,oats
andbarley seeds
Directive DDIV No.248 28/9/92 Fruit Establishes theconditions toimport fruit
Normative Instruction
DDA No.124/11/92 Animals andanimal
productsProhibits entry ofproducts from countries withhigh
incidence ofbovine spongiform encephalopathy (BSE).
Directive DDIV No.136 20/4/93 Peaseeds Establishes theconditions toimport peaseeds.
Joint Ministerial Order
SVSNo.0117/5/93 "Correlated" products -
apparatus usedinmedicine,
odontology, physical
education, etc.Classifies products inthree categories according tothe
risktousers. Applies equally todomestic andimported
goods. Forimported products, proof ofregistration in
thecountry oforigin isrequired
Directive DDA No.248 17/12/93 Beesandagricultural
productsTemporarily suspends imports from countries where
"Loque Americana" ispresent.
Directive DDA No.083 9/5/94 Animals andapicultural
productsEstablishes criteria toimport products from areas where
"Loque Americana" ispresent.
LawNo.8918 14/7/94 Production, distribution and
marketing ofbeveragesImporters andforeign products must comply with
equipment andproduct standards established for
domestic producers andgoods; imports withspecial
characteristics must beapproved formarketing inthe
country oforigin. Compliance tobecertified bythe
Ministry ofAgriculture
Directive DDIV No.128 18/7/94 Banana trees Restricts theimportation ofseedlings andother
propagation material.
Directive DDIV No.130 20/7/94 Apples, pears, plums,
nectarines, peaches,
marmelos andnutsRestricts imports.
Directive SVSNo.108 26/9/94 Cosmetic products Defines requirements fortheestablishment and
operation offirms andtheregistration ofproducts. For
imports, establishment requires details onthelegal
representative andresponsible technical person;
registration requires proof ofregistration inthecountry
oforigin. Labels must include theplace oforigin.
Directive DDA No.176 27/10/94 Chicks andfertilized eggs Establishes criteria forimportation.
Table III.9 cont'dBrazil WT/TPR/S/21
Page 61
Regulation Date Subject Comments
Directive No.146 22/3/95 Corn Establishes quarantine criteria.
Directive DDIV No.147 22/3/95 Citrus fruits Establishes conditions forimportation.
Directive No.30,
Ministry ofHealth6/4/95 Cosmetic products Disclosure oftheterms ofcivilandcriminal
responsibility forproducers of"low risk" goods.
Directive No.209
approving Resolution
62/MERCOSUL12/4/95 Sunflower, soybeans, wheat,
alfalfa andcolzaHarmonizes quarantine requirements.
Directive No.641
adopting standards
approved byCOVASE3/10/95 Vegetables, phytosanitary
productsEstablishes quarantine criteria andtechnical
requirements fortheregistration ofvarious products.
Directive No.644 3/10/95 Place oforigin and
destinationAdopts standards forverification andcertification
Directive No.645 3/10/95 Vegetables Establishes norms andprocedures forsanitary inspection
inports.
Directive No.645 3/10/95 Coconut
(Cocus nucifera )Setscriteria forimportation
Decree No.1662 6/10/95 Inspection ofveterinary
productsRegulates establishments importing anddistributing
veterinary products, requiring them tohaveaveterinary
doctor asatechnical responsible person. Gives the
Ministry ofAgriculture competence toauthorize the
importation anduseofveterinary products inresearch
ortheimportation ofstock fortheelaboration of
veterinary products.
Directive No.627 27/10/95 Information points Establishes points required bytheWTO Committee on
Sanitary andPhytosanitary Measures.
Notes: DDA -Animal Defence Department (Departamento deDefesa Animal ).
DDIV -Plant Defence andInspection Department (Departamento deDefesa eInspeçãoVegetal ).
SVS-Sanitary Surveillance Secretariat (Secretaria deVigilancia Sanitaria ).
Source: Brazilian authorities.
73. Based onMinistry ofAgriculture Directive No.643of10October 1995, newphytosanitary
ruleswereexpected tocome intoforceinearly1996covering some 100agricultural products, including
cereals, vegetables, grains andfruit. Work wasalsoinprogress tobroaden thenumber oftechnical
rules toprevent residues, impurities andcontaminating substances infoodproducts. Imports ofthe
products covered bythedecree require aquality certificate indicating thattheyarefreefrom the
prohibited substances. Directive No.643alsoliststhediseases notpermitted inimported wheat.
74. According totheheadoftheSanitary Surveillance Department oftheMinistry ofAgriculture,
thenewphytosanitary measures allow Brazil forthefirsttimetoprotect itselfagainst harmful imports,
Brazilian production ofcotton andporkhaving beenseriously affected inthepastbyimported disease.
Healsorecognized thattherewasincreasing pressure fromwheat growers forprotection against wheatWT/TPR/S/21
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imports (thepresident oftheBrazilian Wheat Association calling fornewsanitary measures tolimit
wheat imports).9
75. Brazilhassignedorisnegotiatingbilateralphytosanitaryagreementswithanumberofcountries,
including Bolivia, China, Japan, India, ItalyandtheUnited States. Itishoped thattheagreement with
Indiawillhelpregularize illegal imports ofbovine semen andembryos intoBrazil andfacilitate Brazilian
agricultural exports toIndia.
(iii) Marking, labelling andpackaging
76. Ingeneral, there arenospecific requirements regarding themarking, labelling andpackaging
ofmerchandise imported intoBrazil, orconcerning country oforigin markings. Exceptions include
special labelling requirements foranimal products andderivatives, medicines, pharmaceuticals, and
certain foodstuffs including alcoholic beverages; therequirements fortobacco products andalcoholic
beverages include health warnings.
77. In1992, CONMETRO issued modified regulations ontheuseoffibres intextile products;
suchproducts maybemarketed inBrazil onlyiftheycomply withtheregulations (Resolution No.
04of8January 1992). Under theseregulations, bothimported anddomestic products mustbelabelled
withthename andpercentage weight ofthefibres theycontain; minimum lettering sizes arealso
established. INMETRO maydefine other technical requirements, including thelocation oflabels on
aproduct; specific regulations inthislastregard wereissued in1995 (Ministerial Order No.116of
31July1995).
78. INMETRO hasbeenworking onregulations relating tothecontents ofpre-packaged goods,
work thathasbeenaccelerated byharmonization within MERCOSUL. Oneofthemain objectives
ofsuchefforts istoreduce thevariability inthepresentation ofgoods byrequiring theuseofpre-defined
values. Thus, since 1992 INMETRO hasintroduced regulations fixing specific permitted weights or
volumes fortheretail saleofproducts suchascooking oilsandfats,beans, rice,other cereals, flour,
sugar, salt,coffee, pasta, milk, yeast, toiletries andveterinary products; incertain cases, specific
labelling requirements arealsorequired. Allpre-packaged products must include labels indicating
thenetquantity andmustcomply withstandards forlettering size(Ministerial Order No.077of14
April 1993). Theauthorities indicated thattolerances andsampling systems forquality control follow
recommendations bytheInternational Organization ofLegal Metrology.
(6) Contingency Trade Measures
(i) Anti-dumping andcountervailing measures
(a) Legal framework
79. Brazil wasaparty toboththeTokyo Round Agreement onImplementation ofArticle VIof
theGATT (theAnti-Dumping Code) andtheAgreement relating totheInterpretation andApplication
ofGATT Articles VI,XVIandXXIII (theSubsidies Code). Domestic legislation wasintroduced in
1987 toensure conformity withthose agreements. Rules fortheimposition ofcountervailing duties
onagricultural products were established inDecree No.174ofJuly1991.
9Gazeta Mercantil ,26December 1995.Brazil WT/TPR/S/21
Page 63
80. Administrative procedures fortheapplication ofanti-dumping andcountervailing measures
contained inResolution No.00-1227, asamended byResolution No.00-1582, havebeenaltered to
takeaccount oftheUruguay Round results. Theearlier procedures nowapply onlytoapplications
foranti-dumpinginvestigationsmadebeforetheincorporationoftheUruguayRoundresultsintodomestic
legislation,orinvestigationsregardingtheapplicationofcountervailingmeasuresortheirrevisioninitiated
before 30December 1994.
81. Provisional Measure No.926of1March 1995 wasintroduced toreflect theincorporation
oftheWTO Agreements intotheBrazilian legalsystem. Thatprovisional measure severed thelink
between import taxes andanti-dumping orcountervailing duties. Itmade theMinistries ofFinance
andofIndustry, Trade andTourism jointly responsible fortheimposition ofanti-dumping and
countervailing measures. ItalsogavetheForeign Trade Secretariat (SECEX) competence toinitiate
andconduct investigations, andtoterminate themwithout theimposition ofmeasures. Theprovisional
measure wassubsequently republished asLawNo.9019 of30March 1995.
82. Definitive procedures fortheapplication ofanti-dumping measures wereestablished through
Decree No.1602 of23August 1995, while countervailing procedures arecontained inDecree No.
1751 of19December 1995 (Annex III.1).
83. Theorganizations responsible fortheapplication ofthecurrent legislation areSECEX inthe
Ministry ofIndustry, Trade andTourism, andtheMinistry ofFinance. BothMinistries arecompetent
toestablish anti-dumping duties. Responsibility forcarrying outinvestigations andthetechnical
determination ofdumping, subsidies, causality andinjury restssolely withSECEX through theTrade
Defence Department (DECOM). TheFederal Revenue Secretariat intheMinistry ofFinance ischarged
withcollecting anti-dumping andcountervailing duties.
84. TheConsultative Committee onTrade Defence wascreated through Inter-ministerial Order
No.14of4September 1995 tomake recommendations, based ontheadvice ofDECOM. The
Committee iscomposed exclusively ofrepresentatives ofofficial agencies: theMinistries ofIndustry,
Trade andTourism; Finance; External Relations; Agriculture; Planning andBudget; aswellasthe
Chamber ofForeign Trade.
85. Petitions areaddressed toSECEX, which mayalsoinitiate aninvestigation ofitsownaccord
ifithassufficient evidence ofdumping orsubsidy andinjury. Once aninvestigation isinitiated,
interested parties (petitioner, domestic industry, importers, exporters and,insubsidy investigations,
thegovernment oftheexporting country) arerequested toanswer aquestionnaire; alldocuments and
arguments mustbepresented inPortuguese, andSECEX mayrequest dataincomputer-readable form.
86. Specific timelimits aresetforeachstage oftheprocedure. Ifadomestic industry isbeing
injured, provisional measures canbeimposed before theresponses toquestionnaires arereceived but,
inanyevent, onlyafterinterested parties havebeengiven adequate opportunity topresent theirviews
andallother conditions forapositive preliminary determination havebeencompleted. Provisional
anti-dumping measures generally remain inforce foramaximum ofsixmonths andcountervailing
measures forfourmonths. Ifafinaldecision concludes thatthereis(i)dumping orsubsidy, (ii)injury,
and(iii)acausal linkbetween (i)and(ii),thendefinitive duties areimposed; these remain inforce
forfiveyears initially. Investigations aresuspended without theimposition ofanymeasure when the
authorities accept undertakings toeliminate theinjury.WT/TPR/S/21
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87. Theanti-dumpingandcountervailinglegislationprovidesforappealproceduresatadministrative
andjudicial levels. Appeals maybeinitiated byanyinterested party, including theexporter. Foreign
exporters andgovernments havedirect access toadministrative appeals; theyalsohaverecourse to
judicial appeals ifrepresented byaBrazilian lawyer.
88. FurtherintegrationwithinMERCOSULisexpectedtoleadtothedevelopmentofatraderemedy
system forthecommon market asawhole. Decision No.13/93 oftheCommon Market Group called
fortheadoption ofcommon rules onunfair trade practices bythird countries. TheCommerce
Commission wascharged withdrafting suchrules(Resolution No.108/94), which arecurrently under
discussion intheCommission 'sTechnical Committee No.6.Nodecision hasbeenmade onwhether
thecommon ruleswillbeapplied bynational authorities orbyasupra-national body. Inthemeantime,
MERCOSUL members continue toapply theirnational legislation. Anti-dumping actions onintra-
MERCOSULtradewillcontinuetobepermitteduntilcommonrulesoncompetitionpolicyareapproved.
89. Brazil haspublicly stated thatgiven itsstatus asanetwheat-importing country itwould not
import subsidized wheat, irrespective ofitsorigin, despite thepotential costs involved.10
(b) Trends inanti-dumping andcountervailing cases
90. Inmid-1996, trade remedy measures inforce inBrazil involved 25anti-dumping actions and
seven countervailing actions. Some 15different products were affected, originating in15trading
partners. Inmostcases, duties wereimposed in1992and1993, when therewasasurge inanti-dumping
activity (Table III.10).
91. Anti-dumping activity during theperiod under review wasconsiderably higher thaninthe
period to1992. Theprevious Secretariat report listed onlyoneanti-dumping caseinitiated ineach
of1988and1989(trade defence legislation having beenintroduced in1987); twocases wererecorded
in1990 andeight in1991. Thenumber ofcases initiated between 1992 andFebruary 1996 reached
66,counting separately investigations against thesameproduct fromindividual republics oftheformer
Soviet Union andtheformer Yugoslavia (Annex Table III.1). There were16anti-dumping initiations
in1992, andarecord number of34cases in1993, apparently linked totheeconomic liberalization
programme introduced in1990. Anti-dumping activity tended tofallthereafter, 10cases arising in
1994, fivecases in1995, andonecaseduring thefirsthalfof1996.
10GATT document C/M/259.Brazil WT/TPR/S/21
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Table III.10
Anti-dumping andcountervailing actions inforce
Country orcustoms territory Product Date ofimposition
Anti-Dumping
Bangladesh Sacks andbagsofjute 02.10.92
Bosnia-Herzegovina Ferro-chromium lessthan4%carbon 30.04.96
Canada Anhydrous aluminium chloride 23.01.92
China, P.R. Barium carbonate 08.07.92
Garlic 18.04.96
Padlocks 29.12.95
Table electric fans 21.08.95
Croacia Ferro-chronium lessthan4%carbon 30.04.96
India Bicycle wheels 21.08.95
Sacks andbagsofjute 02.10.92
Kazakhstan Ferro-chronium 28.04.94
Macedonia Ferro-chronium lessthan4%carbon 30.04.96
Mexico Polyvinyl chloride 30.12.92
Russian Federation Mono-ammonium phosphate 18.02.93
Ferro-chronium 28.04.94
Slovenia Ferro-chronium lessthan4%carbon 30.04.96
South Africa Ferro-chronium 19.02.93
Ukraine Ferro-chronium 28.04.94
United States Aluminium chloride anhydrous 23.01.92
Polyvinyl chloride 30.12.92
Diethanolamine 09.09.93
Triethanolamine 09.09.93
Vacuum blood containers 19.10.93
Laboratory reagents 19.10.93
Yugoslavia Ferro-chronium lessthan4%carbon 30.04.96
Countervailing
Indonesia Powdered coconut 21.08.95
Ivory Coast Powdered coconut 21.08.95
Malaysia Rubber thread 01.11.91
Powdered coconut 21.08.95
Philipines Powdered coconut 21.08.95
SriLanka Coconut milk 21.08.95
Powdered coconut 21.08.95
Source: Brazilian authorities.
92. Ofthe66anti-dumping cases initiated between 1992 andFebruary 1996, Government data
indicatethatprovisionalmeasureswereimplementedin28instances,whiledefinitivedutieswereimposed
in26cases. Most investigations involved chemical andmineral products, withasmaller number of
investigations concerning textiles andvarious manufactured products. Agricultural products subject
toinvestigation included powdered coconut, peaches insyrup andgarlic.11
93. Brazil notified theWTO Secretariat that,between 1992 andFebruary 1996, ithadinitiated
13countervailing investigations, most ofthem in1992 and1994 (Annex Table III.2). Provisional
11Areport bytheWorld Bank onagriculture inBrazil raised thepossibility thatashifttotariffs andthe
reduction intheir levels could leadtoincreased useoftrade defence mechanisms inthatsector. (World Bank,
1994, p.36).WT/TPR/S/21
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measures wereimplemented in9cases, anddefinitive duties were alsoimposed in9cases. Except
forcotton yarn, allinvestigations involved agricultural products.
(c) Implementation ofanti-dumping andcountervailing legislation
94. Theintroduction ofnewlegislation andtherestructuring oftheadministrative bodies should
helpBrazil adapt tothemore stringent anti-dumping andcountervailing requirements contained inthe
WTO Agreements. Inthepast, thedelay between theinitiation ofaninvestigation andafinal
determination bytheauthorities hasoften beenmore thanoneyear(Annex Table III.1).
95. Since 1992 Brazil hasbeeninvolved inanumber ofconsultations within theGATT/WTO
framework regarding theapplication ofitsanti-dumping andcountervailing regulations; panels have
been established toreview twocases (Annex II.1). Forexample, theissues oftransparency and
timeliness wereraised intheexamination byaGATT Panel ofBrazil 'scountervailing duties onmilk
powder andmilkfrom theEU. Many ofthearguments presented bythetwoparties tothisdispute
toucheduponBrazil'sproceduralobligationsundertheAgreement.12TheEUarguedthattheinformation
inthepublic notices issued byBrazil didnotconstitute anappropriate basisonwhich toestablish material
injury todomestic producers; Brazil hadprovided forthefirsttimebefore thePanel what theEU
considered important evidence andarguments, notatthetimewhen thepublic notices were issued.
Brazil acknowledged thatthere mayhavebeensome misjudgment onthepartoftheauthorities asto
some procedural matters, andsaidthatstepswerebeing taken toensure thatfuture public notices would
include more details. Nevertheless, Brazil argued, theprocedures employed hadfullycomplied with
thespirit oftheprocedural requirements oftheAgreement.
(ii) Safeguard actions
96. Before 1995Brazil hadnolaws, regulations oradministrative measures relating tosafeguard
measures other thanthetextoftheGATT Agreement onSafeguards, which wasincorporated intothe
Brazilian legislation through Decree No.1355of30December 1994. Administrative procedures for
theapplicationofsafeguardmeasureswereestablishedthroughDecreeNo.1488of11May1995(Annex
III.1). Such regulations arebased ontheWTO Agreement onSafeguards andinclude rules forthe
application oftransitional safeguards fortextiles provided forunder theWTO Agreement onTextiles
andClothing. Decree No.1488 wascommunicated totheWTO inMarch 1996.
97. Decree No.1488wasmodified byDecree No.1936of20June1996. Asaresult, theoption
ofprovisional duties remaining ondeposit asaguarantee waseliminated; provisional measures must
nowtaketheform ofasupplement totheCommon External Tariff.
98. UptoMay1996, Brazil hadnever taken emergency action under Article XIXoftheGATT.
Apetition made in1995 bymatch producers forsafeguard action wasrejected bytheauthorities for
lackofevidence ofinjury. On22May1996, Inter-Ministerial Directive No.7introduced transitional
safeguardmeasuresfrom1June1996toprotectthetextilesindustry,whichhadcomeunderconsiderable
pressure fromimports (Chapter VI(4)(iii)). Themeasures covered synthetic textiles (categories 611,
618,619,620and627)andshirts (category 838)andtooktheformofquotas onimports fromChina,
Hong Kong, Korea, Chinese Taipei andPanama; themeasures affecting WTO members weretaken
under theprovisions oftheAgreement onTextiles andClothing. On21June1996, Inter-Ministerial
Directive No.9introduced provisional safeguard measures toprotect thetoyindustry, which hadfaced
12Report ofthePanel, GATT document SCM/179, 27January 1994.Brazil WT/TPR/S/21
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stronger foreign competition astariffs fellfrom between 50and85percentin1991 to20percent
in1995. Thesafeguard measures consisted ofasupplement totheCommon External Tariff, increasing
import taxes ontoysfrom 20to70percent.
99. Asamember oftheLAIA, Brazil mayapply transitional andnon-discriminatory safeguard
clauses restricting imports toprotect localproducers fromsevere market disruptions caused byimports
under LAIA arrangements; procedures arecontained ineachpartial-scope agreement. Under the
MERCOSULAgreement,safeguardactionsonintra-regionaltradehavenotbeenpossiblesince1January
1995. Previously, Brazil wasallowed toapply safeguard provisions toimports ofproducts covered
bythetrade liberalization programme. Safeguards could beapplied when asurge ofimports fora
specific product caused orthreatened serious injury.
100. Brazil retained itsrighttousethetransitional safeguard mechanism under theprovisions of
theWTO Agreement onTextiles andClothing. Italsosubmitted thelistoftextile andclothing products,
covering nolessthan16percentofthevolume ofimports in1990, which areincluded inthefirst
phase ofintegration intoGATT 1994. Thelistcomprises 30six-digit HSitems, mainly yarns, fabrics
andtextile made-ups; theclothing items inthelistareskisuitsandgloves. (Seesection (4)(ii)) for
developments affecting textile imports.)
(iii) Measures implemented inexporting countries
101. Noexport restraint agreements areinplace withother countries forexports toBrazil.
102. Attheenterpriselevel,BrazilianproducersofPortlandcementhavemaintainedpriceundertakings
withfirms fromArgentina andUruguay since June1991, asaresult ofananti-dumping investigation
initiated bytheBrazilian authorities.
(iv) Balance-of-payments andother measures
103. Brazil disinvoked Article XVIII:B ofGATT 1947on9July1991, withresidual non-tariff import
control measures relating totheinformatics sector tobeeliminated notlaterthanOctober 1992. Prior
to1991Brazil hadheldsixfullconsultations withtheGATT 1947Committee (in1971, 1976, 1978,
1981, 1983 and1987) andfoursimplified consultations (in1978, 1980, 1985 and1989).
104. InJune1995, Brazil communicated totheWTO Provisional Measure No.1024 of13June
1995, containing provisions forcertain tariff reductions, including onparts usedinmotor-vehicle
assembly, aswellasquantitative import limitations onvehicles forthesecond halfof1995(Box III.5).
InJuly1995, Brazil notified theWTO thatProvisional Measure No.1024hadbeenadopted forbalance-
of-payments reasons under theprovisions ofArticle XVIII:B ofGATT 1994.
105. On5and9October 1995, theWTO andGATT 1947 Committees onBalance-of-Payments
Restrictions consulted jointly withBrazil. Some Members oftheCommittees found thatthere was
nocritical balance-of-payments situation; others wereoftheviewthattherewasnothreat ofaserious
decline inBrazil 'smonetary reserves. Thus, theCommittees wereoftheview thatthecircumstances
didnotjustify theintroduction oftheimport quotas andBrazil wasrequested towithdraw them. The
provisions forimport quotas were withdrawn witheffect from 27October 1995.WT/TPR/S/21
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BoxIII.5: Measures introduced inJune 1995 onautomobile products
Provisional Measure No.1024 of13June 1995 provided fortariffs tobelowered to2percent on
machines andequipment forassembling andmanufacturing motor vehicles andtheir parts, andonraw
materials andother inputs, including setsandsub-sets.
Atrade-balancing framework wasalsoestablished, linking imports toexport performance. Local content
requirements were introduced. Imports ofmotor vehicles andtheir inputs were linked toexport
performance percompany andperyear, ratios could beestablished bytheExecutive Branch between:
(i) imports ofrawmaterials, parts, components, setsandsub-sets, andnetexports of
passenger vehicles, goods vehicles andbuses byeach company;
(ii) imports byeach company ofeach itemofrawmaterials, parts, components, setsand
sub-sets andthetotalimports ofsuch imports;
(iii) domestic purchases andimports byeach company ofmachinery andequipment usedin
themanufacturing process, their parts, andmoulds; and
(iv) imports andnetexports byeach company ofpassenger motor vehicles, goods vehicles
andbuses.
Companies manufacturing parts, components andtyres inBrazil could usethenetexport value asa
transfer price inselling such parts toassociated manufacturers ofvehicles.
Quantitative limitations andrelated rules forbidding forimport quotas andissuance ofimport licences
were established. Import quotas applied tocompanies thatdidnotmanufacture therestricted items
domestically. Imports forthesecond halfof1995 were limited to50percentofthevalue ofvehicle
imports thathadbeen cleared through customs between 1January and12June1995. Thequotas covered
passenger andcargo vehicles. Bidsforimport quantities were tobemade through public offers.
Specific rules applicable tomotor vehicle trade within MERCOSUL were tobeestablished, withaview
toestablishing theCommon Automotive Régime. According totheBrazilian authorities, motor vehicle
exports from Argentina were notexempt from thequantitative limitations of13June 1995.
106. Asaresult, Brazil 'sincentives régime fortheautomotive industry remained potentially less
attractive thanthatofArgentina, which had"grandfathered" anexception totheAgreement onTrade-
Related Investment Measures (TRIMs) thatallowed ittocontinue local-content andexport-performance
requirements adopted in1991. Brazil attempted again tore-address thissituation byestablishing a
tariff concessions régime fortheautomotive industry similar tothatinArgentina (section (2)). As
thenewautomotive régime mayhave implications forBrazilian commitments under theTRIMs
Agreement, inMarch 1996 Brazil requested awaiver forsuchrégime pursuant toArticle IXofthe
Marrakesh Agreement (decision-making including waiving ofobligations); therequest waswithdrawn
inMay1996.Brazil WT/TPR/S/21
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Annex III.1 Trade Defence Legislation
(1) Anti-Dumping Regulations -Decree No.1602
1. Decree No.1602of23August 1995, regulates theadministrative procedures fortheapplication
ofanti-dumping measures.
2. Requests foraninvestigation bythedomestic industry mustinclude evidence ofdumping and
ofresulting injury; submission mustfollow theformat established bytheForeign Trade Secretariat
(SECEX). TheDecree establishes amaximum period of20daystoverify iftherequest isproperly
presented orifadditional information isnecessary. Petitioners mustbeinformed within 30daysfrom
theofficial acceptance ofarequest ofwhether aninvestigation istobeinitiated. Anotice oftheinitiation
must bepublished intheOfficial Journal andtheknown interested parties informed; other parties
aregiven 20daystojointheprocess. Inexceptional cases, theGovernment mayinitiate exofficio
aninvestigation.
3. TheDecree establishes thatquestionnaires aretobesenttointerested parties, except foreign
governments, forresponse within 40daysoftheirdistribution, withapossible extension of30days.
Where thenecessary information isnotobtained, conclusions aredrawn onthebasis ofthebest
information available. Consumers ofthegood under investigation arealsogiven theopportunity to
provide datarelevant totheinquiry. Interested parties areinformed ofthefactual elements ofa
conclusion inahearing organized bySECEX, andhave15daysthereafter toprovide theirviews.
4. Amaximum period ofoneyearisprovided tofinalize aninvestigation, which maybeextended
to18months inexceptional circumstances. Determinations arepublished intheOfficial Journal and
notified toallinterested parties. Anti-dumping duties maytaketheformoffixedorvariable advalorem
and/or specific charges.
5. Definitive anti-dumping duties expire afterfiveyears fromtheirfirstapplication, orfiveyears
from theirmost recent revision; thedomestic industry mayapply foranextension. Theinterested
parties ortheauthorities mayrequest arevision ofadecision afteroneyearfollowing theimposition
ofanti-dumping duties, orashorter period inexceptional cases.
6. Provisional measures maybeapplied toprevent injury during theinvestigation; suchmeasures
taketheformofeither provisional duties orsecurities. Measures arepublished intheOfficial Journal
andarevalid foruptofourmonths, orexceptionally uptosixmonths.
7. Investigations aresuspended ifexporters agree tovoluntary price undertakings. Agreement
onsuchundertakings isonlypossible following apreliminary determination ofdumping andofresulting
injury. Third countries, through theirauthorities, mayrequest thatBrazil apply anti-dumping measures;
theymustprovide evidence ofdumping andinjury totheirnational industry. IfBrazil decided itwas
prepared toproceed withsuchanaction, theBrazilian Government would request theapproval ofthe
WTO 'sCouncil forTrade inGoods, asrequired byArticle 14.4oftheWTO Agreement onthe
implementation ofArticle VIoftheGATT 1994.
(2) Countervailing Regulations -Decree No.1751
8. DecreeNo.1751of19December1995regulatestheadministrativeproceduresfortheapplication
ofcountervailing measures.WT/TPR/S/21
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9. Under theDecree, subsidies aredefined withreference toArticle XVIofGATT 1994 and
Annexes ItoIIIoftheAgreement onSubsidies andCountervailing Measures; detailed criteria for
defining actionable andnon-actionable subsidies areincluded. Actionable subsidies arelinked toArticle
IIIoftheAgreement andinclude theillustrative listofexport subsidies inAnnex IoftheAgreement.
Annexes arealsoincluded concerning production inputs, agricultural products, engagement toreduce
internal support andguidelines todetermine export subsidies incases ofinput substitution.
10. Special procedures willbeoperative untiltheendof2003formostagricultural products (2004
fordeveloping countries). Forsuchproducts, actionable subsidies mustconform withtheengagements
toreduce internal andexport subsidies contained inthecorresponding listsoftheWTO Agreement
onAgriculture.
11. Requests foraninvestigation bythedomestic industry mustinclude evidence ofsubsidization
andofresulting injury; domestic producers explicitly supporting thepetition mustaccount foratleast
25percentofthetotaldomestic production ofthegoodinquestion. Incertain cases, theGovernment
mayinitiate exofficio aninvestigation.
12. TheDecree contains guidelines forthecalculation ofactionable subsidies andofinjury. A
levelofadvalorem subsidy oflessthan1percentisconsidered tobedeminimis; fordeveloping
countries thecorresponding levelis2percent,and3percentforcountries eliminating export subsidies
(subject toprevious notification totheWTO Committee onSubsidies).
13. TheDecree establishes thatquestionnaires besenttointerested parties, including foreign
governments, forresponse within 40daysoftheirdistribution, withapossible extension of30days.
Additional information maybeprovided orrequested inwriting during aninvestigation, withresponse
periods varying according tothenature oftheinformation. Where thenecessary information isnot
obtained, conclusions aredrawn onthebasis oftheinformation available. Users andconsumers of
thegood under investigation arealsogiven theopportunity toprovide datarelevant totheinquiry.
14. Hearings areheldtoprovide parties withtheopportunity toairtheirviews; attendance is
voluntary. Interested parties areinformed ofthefactual elements ofaconclusion inafinalhearing
organized bySECEX, parties having 15daysthereafter toexpress theirviews. Such elements are
alsocommunicated totheNational Confederations ofAgriculture, ofIndustry andofCommerce as
wellastheBrazilian Trade Association (AEB).
15. Provisional measures maybeapplied toprevent injury during theinvestigation; suchmeasures
taketheformofprovisional duties guaranteed through bonds orcashdeposits. Factual andlegaldetails
concerningmeasuresarepublishedintheOfficialJournal.Requestsforaninvestigationarenotdisclosed
before theinvestigation isformally initiated. Provisional measures maynotbeapplied formore than
fourmonths.
16. Investigationsmustbefinalizedwithinoneyear,butmaybeextendedto18monthsinexceptional
circumstances. Determinations arepublished intheOfficial Journal andnotified toallinterested parties.
Countervailing duties maytaketheform offixed orvariable advalorem and/or specific charges.
Definitive duties mayunder certain circumstances becollected onsubsidized products made available
forconsumption upto90daysbefore theapplication ofprovisional measures.
17. Definitive duties expire afterfiveyears from theirfirstapplication, orfiveyears from their
mostrecent revision; thedomestic industry ortheauthorities mayrequest extensions, tobesubmittedBrazil WT/TPR/S/21
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fivemonths before theduties expire. Interested parties ortheauthorities mayrequest arevision of
adecision oneyearaftertheimposition ofdefinitive duties, orexceptionally ashorter period. Duties
maybesuspended foroneyear, extendable foranequal period, incaseoftemporary changes inmarket
conditions.
18. Investigations aresuspended iftheGovernment oftheexporting country agrees toreduce or
eliminate thesubsidy, eliminate itseffects orifexporters accept voluntary price undertakings, with
theprior consent oftheirGovernment. Sucharrangements mayonlybeagreed toafterapreliminary
determination hasbeenreached ofsubsidy andresulting injury.
(3) Safeguard regulations -Decree No.1488
19. Safeguard measures maybeapplied ifaninvestigation shows thataproduct isbeing imported
insuchincreased quantities andconditions astocause orthreaten tocause serious injury tothedomestic
industry.
20. Requests fortheapplication ofasafeguard measure maybepresented bySECEX, otherFederal
agencies, companies orassociations. Theapplication ofsafeguard measures iswithin thejoint
competence oftheMinister ofFinance andtheMinister ofIndustry, Trade andTourism; investigations
aretheresponsibility ofSECEX. Decisions regarding theapplication, suspension ormodification of
application periods forsafeguards arebased onreports bySECEX, ontheadvice oftheMinistry of
External Relations andother relevant ministries.
21. Decisions regarding theinitiation ofaninvestigation arepublished intheOfficial Journal, the
Ministry ofExternal Relations being responsible fortransmitting thepertinent information totheWTO
Committee onSafeguards. Hearings forinterested parties musttakeplace within 30days. Adequate
opportunity istobegranted forconsultation withother governments seeking tomaintain theequivalent
levelofrights andobligations under theterms ofGATT 1994.
22. Provisional safeguard measures maybeapplied; theyhaveamaximum duration of200days.
Provisional anddefinitive safeguard measures maytaketheform ofanadvalorem orspecific duty,
oracombination ofboth. Provisional duties maybecollected orremain ondeposit asaguarantee.
Definitive measures mayalsotaketheform ofquantitative restrictions. Incases where quotas are
used, agreement must besought withother governments regarding quota distribution, including
consultation under theauspices oftheWTO Committee onSafeguards.
23. Safeguard measures maybeapplied foramaximum period offouryears; however, extensions
arepossible, based ondeterminations bySECEX thatmeasures continue tobenecessary andthatthe
industry isundergoing adjustment. Thetotalduration ofasafeguard measure must notexceed ten
years. Safeguards applied foroveroneyearmustbeliberalized atregular intervals during theperiod
ofapplication.
24. Safeguardmeasuresareappliedonanm.f.n.basisexceptforthetransitionalprovisionsapplicable
totextile products. During thetransition period fortheintegration ofthetextile andclothing sector
intoGATT 1994, established bytheAgreement onTextiles andClothing, "transitional safeguards"
maybeapplied toproducts notintegrated byBrazil intoGATT 1994 andforwhich rights havebeen
retained tousesuchmeasures.