Brazil Believes China is Cheating to Inundate the Country with their Cheap Goods

Sandals made in China Earlier this year, in March, Brazil slapped a surtax of US$ 13.85 on each pair of shoes imported from China under antidumping legislation because in 2009 over 21 million pairs of shoes poured into Brazil from China at prices below market prices. In 2010, after the surtax, those imports fell to 7 million.

 However, during the same period, as footwear imports from China fell, imports from Vietnam and Indonesia skyrocketed. In 2009, Brazil imported 4 million pairs of shoes from Vietnam and in 2010 that had almost doubled to over 7 million. At the same time, shoe imports from Indonesia jumped from 1.7 million pairs to 7 million.

The Ministry of Development, Industry and Foreign Trade (MDIC) believes something is amiss and it is called triangulation: a bit of international commercial legerdemain in which one country exports goods to other countries and the same goods are exported again to a third country as if they did not originate in the first country.

In this case, shoes from China go to Vietnam and Indonesia where they are exported to Brazil as if made there and, therefore, do not have to pay the Chinese-shoe surtax.

Besides the Chinese shoes from Indonesia and Vietnam, the MDIC is also looking into another possibility. There is the fact that shoes can be broken down into parts (soles, heels, upper part) and the shoe parts exported separately.

The plot thickens because shoe parts are exempt from import surtaxes. The MDIC suspects that China is exporting shoe parts to Brazil where they are put together and then sold. Without paying import surtaxes, of course.

The ministry has begun an official investigation, which is to be concluded in nine months. During that period, suspect shoe and shoe part imports will be removed from the automatic import license list, which means that importation of those goods will be delayed for up to 60 days.

Another MDIC investigation of suspected Chinese imports circumventing Brazilian antidumping efforts concerns blankets coming into Brazil from Paraguay and Uruguay. That investigation, based on provisions in the Circumvention Law, is scheduled to conclude this month.

Renault

Renault Brazil issued a statement providing details on the investment announced on the 1st of this month by the brand’s global chairman, Carlos Ghosn, at a meeting with president Dilma Rousseff.

The automaker announced that it will invest another 500 million Brazilian reais (US$ 264.7 million) in addition to the 1 billion reais (US$ 529.4 million) previously forecasted for the 2010-2015 period, thus raising the total investment to 1.5 billion reais (US$ 794 million).

Thus, the automaker is expecting to increase its production capacity to 383,000 vehicles per year, 100,000 more than the current capacity. During his meeting with Dilma, Ghosn also announced that it will build a new Nissan plant in the state of Rio de Janeiro. The two brands maintain an international partnership and both are headed by the executive.

The new investment in Renault will include a new engineering center, a training center, and a logistics area. The company announced that 1,000 new jobs will be created, in addition to the 1,000 new employees being hired this year.

“Renault Brazil ranks among the priorities of the brand’s global growth strategy, and should become the second leading market for the Renault Group by 2013,” said Ghosn, according to the statement issued by the company. The leading market is France. The automaker has been operating in Brazil for 15 years.

ABr/MP

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