Brazil Poised to Increase Forced Localization, Says Brazilian Trade Expert
The strengthening Brazilian real is limiting exports from the country and encouraging government action to restore trade balance, said a Brazilian trade expert in an Integration Point Feb. 26 webinar on trade in Brazil. The shifting balance is leading the Brazilian government to begin to ramp up enforcement of special customs regimes and implement forced localization barriers, said Flavio Nicoletti Siqueira, Business Development and Trade Advisory Manager for Sandler & Travis Trade Advisory Services Brazil.
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“Brazil intends to raise its local content in the production process at any stages, therefore reducing imports for production or consumption,” said Siqueira “The currency issues have been affecting Brazil’s exports significantly, so what we have seen from both trade authorities and the executive branch in Brazil, is to somehow tackle this issue or at least have it discussed with the U.S., European [authorities] and mainly China in order to get to a point where the currency issue would be no longer an issue for exports.”
The predicted increase in difficulty for those exporting to Brazil is compounded by complicated regulations for foreign trade partners, said Siqueira. License exemptions apply to only 10 percent of the Brazilian tariff schedule, said Siqueira, requiring exporters to develop particularly strong compliance programs. The Foreign Trade Department also requires automatic import licenses, which must be completed prior to registering import declaration, and non-automatic licenses, which must be completed prior to shipment from an overseas port. The non-automatic licenses may take 60 days to process. Fines for customs violation also range from 1 percent to 100 percent of the value of the shipment. Misclassification of the product may result in a one percent fine, while special customs regime fraud will require a 100 percent fine, according to Siqueira.