The Brazilian government is mulling changes in the country’s payback export program, the Reintegra, in a move that is expected to help the local steel industry to cope with a still sluggish domestic demand, the country’s president, Michel Temer, said on Tuesday, during the Brazil Steel Congress, held in Brasilia from August 22-23.
The Brazilian steel industry has longed for increased rates for the Reintegra program, as Brazilian mills have turned their focus to the export market amid a weak domestic market.
Currently, the Reintegra rate is at 2 percent, however, the Brazilian steel segment asks for a 5 percent rate.
“The Brazilian government is sensitive to the needs of the country’s steel industry,” Temer said, while recognizing the hurdles the local steel segment faces, with increased imports and idle use of capacity.
“We already talked about the Reintegra program in my office and there are a lot of challenges. First, we wanted to eliminate the 2 percent rate, but then we decided to keep it. But we’re now talking to the local steel segment and to our economic team as well to see if there’s a chance we can change that,” Temer said, without promising an increase in the rate.
Alexandre Lyra, the president of the directing council of Brazil’s steel association, IABr, said the short-term solution for the local steel industry is the export market.
“We are not asking for subsidies or incentives. If we’re reimbursed for the export taxes we pay, we’ll be just receiving what is our right. It’s a mistake to consider that the Reintegra program is a subsidy or a tax break,” Lyra said.
Temer’s remarks were welcomed by the attendees of the conference as well as by Brazilian steel executives, who see a stronger relationship between the local steel sector and the government.
“You have a partner in the government,” said Temer. “I know and recognize the strategic importance of the steel segment to Brazil, as well as the key role it has for the industry and the nation’s economy.”
Temer said Brazilian diplomats are also advised to defend fair trade conditions and consider the topic a key priority.
“I’m going to China on August 29, and I’ll bring this concern of the [Chinese steel glut]. China has been an extraordinary partner as an importer of our products [such as Brazilian iron ore],” Temer said.
“Our goals are crystal clear: to comply and demand the fulfillment of the international rules, to avoid arbitrary measures,” Temer said.
The president also said the Brazilian steel industry now has a seat at a consulting committee that provides feedback and helps the government to elaborate foreign trade policies.