Abimaq, Brazil’s association for the machinery industry, has opposed the Brazilian government’s proposal to increase the import tariff for steel as a way to strengthen the struggling steel sector.
In a letter to the nation’s minister of foreign trade, Armando Monteiro, Abimaq said the move, if confirmed, will be a blow to the “already struggling competitiveness of the transforming industry, which uses the steel to manufacture its products.”
Carlos Pastoriza, president of Abimaq’s administration council, said the proposed increase in the imports tariff for steel products will go in the “wrong direction” when compared to what the developed and industrialized economies do.
The executive said such countries usually have “scalable” imports tariffs, “since raw materials always have a smaller aliquot than the products of higher added value, just to give competitiveness to the industries that aggregate more value and generate more technological development.”
Pastoriza noted output of machines, cars and trucks as well as other segments which use steel have been declining sharply. “In the specific case of the machinery industry, the accumulated fall in revenues, from January 2012 to October 2015, reaches 30 percent, a decline with no precedents, which caused the dismissal of more than 60,000 workers.”
The Abimaq representative said Monteiro expressed the cost of raw materials could be more competitive internationally.
Brazil is expected to increase the import tariff for steel products to up to 20 percent, from duties currently ranging from 8 to 14 percent.
Earlier in November, during the Alacero conference, Jefferson de Paula, the association’s new president, defended more protection for what he labeled as “unfair trade.” Talking to SteelOrbis and other reporters in the sidelines of the conference, the Brazilian executive said IABr, Brazil’s steel institute, was already working with local government to protect the domestic steel segment.
“We need to have a provisional protection for the nation’s steel industry. I’m not defending a country, which is closed to global trade, but I support the idea that we need sometimes to protect our markets,” he said.
When asked by SteelOrbis what IABr is doing in terms of negotiations with the government, Paula, who is also part of the council of the trade group, said it is “urging for measures to protect the country against the unfair trade.” “If the trade isn’t far, then we’ll keep working. If I’m going to export just to lose money, then I won’t export at all. Our strongest competitor in Latin America is the Chinese government, which is working through Chinese steelmakers,” he argued.
“The government should take actions. We can’t do anything. It’s the government the one who should take action. We never asked that and we don’t need to. Brazil’s steel industry is competitive,” he said.
Monteiro said earlier this year during the Brazilian Steel Congress that the nation had at that time no stimulus package for the country’s steel industry, despite declining sales and rising concerns about the loss of competitiveness of the segment.
“We have no stimulus packages [for Brazil’s steel industry]. What we have are channels that could stimulate the industrial activity such as the exports,” Armando Monteiro, the minister of development, industry and foreign trade, told reporters during a press conference at the IABr conference in Sao Paulo.