EU Enter Trade Battle with Brazil Over High Taxes: Daily

The EU accuses Brazil of levying high import taxes that are "protectionist" and "incompatible" with WTO objectives.

By William Jones, Contributing Reporter

RIO DE JANEIRO, BRAZIL – The European Union took legal action against Brazil’s high taxes imposed European imports. After lengthy negotiations at the World Trade Organization (WTO) headquarters in Geneva, Switzerland, the EU feel that they have been left with no option but to take on South America’s biggest economy in a trade dispute.

EU Enter Trade Battle with Brazil, Rio de Janeiro, Brazil News

President Dilma Rousseff with the President of the EU, José Manuel Barroso, photo by Wilson Dias/ABr.

The EU is Brazil’s first trading partner and the European Union is struggling to find a resolution to the conflict, which, according to members of the European parliament, has led to a drop in EU car exports to Brazil this year. The EU accuses Brazil of protectionism, claiming that that the South American giant does not comply with WTO objectives.

The EU claims that Brazil’s taxation policy is “incompatible with its WTO obligations, and provides advantages to domestic industries, sheltering them from competition,” an EU official said in a statement. One German lawmaker referred to Brazil’s tax policies as not only protectionist but also “discriminatory.”

“These tax measures have a negative impact on EU exporters, whose products face higher taxes than domestic competitors,” the EU said. “The measures also result in Brazilian consumers facing higher prices, less choice and lower access to innovative products.”

Furthermore, the EU is mostly allegedly upset over the fact that the thirty percent tax on imported vehicles is inconsistent with domestically-produced vehicles that are not included in the same tax bracket. Brazil also heavily taxes electronic equipment, such as smartphones and computers from Europe.

Brazil’s Foreign Minister, Luiz Alberto Figuereido, rejected Europe’s charges. “We have solid arguments to show that we are complying with international trade rules,” Figuereido said in a statement. The EU commission will allow sixty days for the debate to reach a conclusion before threatening to impose restrictions on the Brazilian economy.

In 2011 car manufacturers using a minimum proportion of components made in Brazil in their vehicles, and also invest in innovation within the country, started paying a lower rate of IPI – the tax paid on industrialized products. Those failing to meet the requirements faced thirty percentage points added to their rate of tax.

At the time Finance Minister Guido Mantega said, “Brazil has been harassed by international industry. Consumption for vehicles has increased but imports have filled this extra demand. There’s a risk that jobs could go overseas.”

Read more (in Portuguese).

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4 Responses to "EU Enter Trade Battle with Brazil Over High Taxes: Daily"

  1. Mike in São Paulo  December 20, 2013 at 4:03 PM

    Only 30%? I bought a Samung Galaxy Tab2 through the US Walmart site awhile ago and had my mother send it to me from the States. With the 3 year advantage warranty, I paid just under $300US, plus another $30 in shipping.

    When I got the telegram from the import taxation bureau (or whatever it’s called), they wanted almost $R1500 to release it, which is more than it would have cost for me to go to Carrefour and purchase the next model up in capacity and more than 2.5 times what I paid for it. Thankfully I have a friend who works for an airline that brought it for me. And all I had to pay her was buy her a beer.

  2. John  December 26, 2013 at 7:45 PM

    Now I wonder what happened to that impounded Galaxy Tab 2???

    Could some “import taxation bureau” official have received a new gift for Christmas. Probably, with the blatant corruption that appears to exist.

  3. Mike in São Paulo  December 29, 2013 at 2:40 PM

    Nope. I told them to return it to the sender (my mother) immediately as I was not going to pay more than double in taxes than what I originally paid. It was returned and delivered to me through other means that didn’t require a tribute.

  4. Pingback: After U.S. Spying Allegations, Brazil and EU Agree to Telecomm Cable: Daily Update | The Rio Times | Brazil News

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