After a Couple of Bad Years Brazil’s Footwear Industry Is Bullish

Shoe factory in BrazilBrazil and Argentina are expected to gather early February in Buenos Aires to assess how bilateral trade has been evolving and to plan the next steps to keep improving trade relations between Mercosur senior members.

The two countries have repeatedly clashed over the so-called non automatic import licenses, contemplated under World Trade Organization and which Argentina has stamped on several Brazilian sectors that complained bitterly to government demanding “reciprocal measures.”

According to Ivan Ramalho head of Brazil’s Development, Industry and Foreign Trade office a first meeting of technical staff will take place February 4 and the following day a ministerial meeting with the head of Finance, Guido Mantega and Foreign Affairs Celso Amorim.

“My perception is that there have been improvements in the issue of the of licenses for all sectors. There will be an assessment in February,” said Ramalho following the opening of the Skin and Leather fashion show in São Paulo.

Precisely the Brazilian footwear sector was one which suffered the most given the delay from the Argentine government in liberating the automatic import licenses, which according to WTO rules have a maximum time of 60 days, but Buenos Aires authorities in some cases went as far as 240 days.

The bureaucratic problem together with Chinese competition, have made Brazil loose foot in Argentina’s footwear market.

However following months the emission of licenses was normalized.

“We verified a greater expediency in Argentina. We can’t say it’s extensive to all sectors, but there has been a significant improvement,” said Ramalho.

According to the Brazilian Footwear Industry, Argentina purchased 12.9 million pairs of shoes in 2009 (up 10.2% from 2008) for which it paid US$ 142.4 million (10.5% over the previous year). Argentina is the second most important market for Brazilian footwear.

Brazilians have a strong leverage over Buenos Aires since they are the main trade partner for Argentina.

Meantime the Brazilian shoe sector is waiting for the final ruling regarding dumping claims against Chinese footwear.

“This is the final process which will then be assessed by the Chamber of Foreign Trade, probably in February. The sector has already managed to have a provisional anti dumping levy of US$ 12.47 stamped per pair of shoes. We want the levy increased to US$ 18.47 and have the levy extended for a five year period,” said Milton Cardoso president of the Brazilian Footwear Industry.

Ramalho said that normally when a decision is taken to apply provisional levies, “officials from the fair trade area usually have already concluded there are serious indications of dumping, with the possibility of serious damage for Brazilian industry.”

Ramalho said that the common external tariff on footwear imports to Brazil has been risen to 35%.

Cardoso claims the footwear sector in Brazil lost 42.000 jobs in the last quarter of 2008 because of Chinese imports. However in 2009, 30.000 jobs were recovered.

“The reaction has been so strong and prospects so good that we estimate that by 2011 we will have 400.000 jobs in the shoe industry,” added Cardoso.

According to Brazil’s Ministry of Labor, the shoe industry employed 327.000 people at the end of December 2009. This year the sector should expand 7.5%.

Mercopress

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