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Brazil's textile sector plans new measures for 2012
Dec '11
Brazil's textile industry is planning to initiate new measures next year, in its effort to halt the import of low-priced items, particularly from China.

The Brazilian Textile and Apparel Industry Association (ABIT) has prepared a report with inputs from textile manufacturers associations in Mexico and the United States.

Based on the study, ABIT is planning to initiate a request for "compensatory measures" (fines and compensation) against China, citing the Government of China's support to its exporters by introducing 27 various schemes to provide subsidies to them.

The request for compensatory measures has been rarely approved by the World Trade Organization (WTO) against unfair subsidies to exports.

Brazilian textile importers have also criticized the recent announcement by Guido Mantega, Minister of Finance, to substitute the import tax regulation for textiles and garments.

The Minister said he intends to replace existing tariffs "ad valorem" (percentages of the value of products) by specific rates "ad rem" (values in dollars applied to each kilo of goods).

Criticizing the step, the Brazilian Association of Textile Retail Sector (ABVTEX) said it will mean low-priced products that are normally purchased by middle-and lower-income groups, would have to spend a proportionately higher amount of tax than luxury items.

Since the tax ad rem will be equal on all products in the same tariff classification, a suit of the Italian brand Armani, for instance, will be taxed at the same value as other made of low quality material, although the prices of both are very different, it explained.

On the other hand, the Minister justified his decision to tax ad rem to deter imports of items like suits into the country at very low prices.

Industry experts find the Minister's argument strange as the Government can monitor and issue license for import of a textile product only if the import prices are above a certain limit.

They say the worst distortion in textile import policy can be seen in ten Brazilian States, which grant tax incentives in the Circulation of Goods and Services (ICMS) for imported products as a way to attract business to their ports.

The policy has resulted in an increase of 1,500 percent in textile imports since 2001 in eight of these States, including Parana, Santa Catarina, Goias and Alagoas.

ICMS offers a price advantage with the discount between 6-11 percent and this has resulted in the ten States accounting for 44 percent of the volume of total textile imports of Brazil.

However, imported apparel sales constitute only 8 percent of Brazil's total apparel sales. Hence, import of apparels is not a big threat to the country's domestic industry.

Fibre2fashion News Desk - India

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