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3. Barriers to trade
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3.1 Tariff and tariff administrative measures

CETs significantly influence agricultural products, distilled spirits, and computer and telecommunications equipment from China. The additional import duties imposed by Brazil have significantly increased the cost of imported textile products. In addition, high tariffs le vied on IT products have impeded the market access of foreign personal computers. A 25 percent merchant marine tax imposed on freights at certain ports has put imports at a competitive disadvantage. Brazil applies a 60 percent flat import tax on most manufactured retail goods imported by individuals that go through the simplified customs clearance procedures called RTS (simplified tax regime). In August 2005, Brazilian Foreign Trade Commission adopted a measure to raise import tariff on rubber shoes, plastic shoes, leather shoes and sports shoes from 14 percent to 35 percent, whose imports had surpassed the average import volume in the trade. Though the increased import tariff expired at the end of 2005, it brought about a most adverse impact on footwear imported from China.

3.2 Import restrictions

All importers must register with the Secretariat of Foreign Trade (SECEX) to access the SISCOMEX computerized trade documentation system. SISCOMEX registration requirements are onerous, including a minimum capital requirement. In addition, fees are assessed for each import statement submitted through SISCOMEX.

Most imports into Brazil are covered by an "automatic import license" regime. Brazil's non-automatic import licensing system includes imports of products that require authorization from specific ministries or agencies such as beverages (Ministry of Agriculture), pharmaceuticals (Ministry of Health), and arms and munitions (National Defense Ministry). Although a list of products subject to non-automatic import licensing procedures is published on the Brazilian Ministry of Development, Industry and Trade website, specific information related to non-automatic import license requirements and explanations for rejections of non-automatic import license applications are lacking. These measures have made importing into Brazil less transparent and more cumbersome for China's exporters.

3.3 Barriers to customs procedures

In December 2005, a meeting held at the Brazil's Presidential House came to an agreement on the problems faced by Brazilian footwear manufacturing and the measures to settle the crisis, including the "gray passage" administration over footwear imported from China, by which Brazilian customs will exercise more stringent supervision on import documents and goods so as to discover and penalize the intended discrepancies between goods and documents or low-priced customs declaration. Moreover, there are possibilities of taking anti-dumping measures against footwear imports from China.

3.4 Technical barriers to trade

In June 2005, Brazilian Ministry of Mining and Energy drafted a bill on the energy efficiency of three-phase induction motors, dictating the lowest energy efficiency standards for the described motors. The changes in the standards will most likely bring adverse effects on China's exports to Brazil.

In July 2005, another bill was drawn up specifying conformity assessment procedures for the certification of single-phase voltage regulators. This has aroused deep concern of relevant Chinese parties.

3.5 Sanitary and phytosanitary measures

In April 2005, Brazilian Health Inspection and Supervision Administration drafted a bill on specific standards and quality requirements for the goods to be steeped or decocted. The bill specifies the minimum quality and labeling requirements for tea, roasted coffee, Paraguay tea, barley tea and dissolvable products. China has expressed its deep concern over this bill.

In June 2005, Brazilian Secretariat of Animal and Plant Health released a quarantine requirement for imported wood products and byproducts for consumption and commercial use. This has raised the export threshold of relevant Chinese products to Brazil.

3.6 Trade remedies

Since its first anti-dumping investigation in December 1989 on products from China, Brazil has filed 21 anti-dumping investigations on Chinese imports up to the end of 2005. More than ten lines of products have been subjected the said investigations, among which are electromechanic products, hardware, chemicals, light industrial products, textiles and foodstuffs.

3.6.1 Anti-dumping measures

In July 2005, Brazilian Foreign Trade Commission ended the review of anti-dumping investigation on Chinese thermos and decided to continue levying an anti-dumping duty of 47 percent. In August 2005, the Commission decided at its meeting to implement another anti-dumping measure against Chinese bicycle tires by imposing an anti-dumping additional tax of $0.15/kg. In August 2005, Brazilian Foreign Trade Commission decided that the coverage of the metallic magnesium products made in China subject to additional anti-dumping duties be extended to include the products with magnesium content lower than 99.8 percent, the rate being US$1.18/kg. this measure came into effect as of the date of promulgation and expires on 10 October 2009.

The review of Glyphosate case was the first anti-dumping claim that Chinese enterprises responded to since Brazil recognized China's market economy status in December 2004. The involved Chinese enterprises had submitted all necessary documents a year before; however, no decision has been made against Chinese parties' application for a review. China has repeatedly demand that Brazil bring the case to an end as soon as possible, and has urged Brazil to recognize the market economy status of Chinese enterprises involved by carrying out its commitment in this case.

3.6.2 Safeguard measures

On 1 January 2004, Brazil extended the implementation of a safeguard measure for toys, which was initiated in 1996, to 31 December 2004. And upon expiration, the validity was further extended to 30 June 2006. Although 101 countries and regions are affected by this measure, China and several other major exporting countries are the targets. In addition to a MERCOSUR CET of 20  percent, Brazil imposes an additional duty of 9 percent on all toys involved before 31 December 2005, and the rate stays at 8 percent from 1 January to 30 June 2006. China has launched negotiations with Brazil on the safeguard measures within WTO and on other occasions, but no obvious progress has been made. China requests that Brazil restrains itself from implementing safeguard measures against Chinese products.

3.6.3 Special safeguard measures

In October 2005, the Brazilian President signed two bills of special safeguard measures against Chinese products. The special safeguard measure against Chinese textiles is to be valid until 31 December 2008, and that against other Chinese commodities valid until 11 December 2013. According to the bills, the Brazilian government shall process the application for special safeguard measures filed by enterprises or industries within 30 days by negotiating with relevant Chinese parties with a view to reaching agreements on avoiding or mitigating injuries possibly caused to related Brazilian sectors. If the negotiations lead to no agreements, Brazil is to conduct investigations. As far as textiles are concerned, Brazil wishes China to restrict its textile exports to Brazil immediately and to guarantee the export increase of no more than 7.5 percent within 12 months.

3.7 Government procurement

Brazilian federal, state and municipal governments, as well as related agencies and companies, in general, follow a "buy national" policy. Law 8666 (1993), which covers most government procurement other than informatics and telecommunications, requires non-discriminatory treatment for all bidders regardless of the nationality or origin of the product or service. However, the law's implementing regulations allow consideration of non-price factors giving preferences to certain goods produced in Brazil and stipulating local content requirements for eligibility for fiscal benefits. Decree 1070 (1997), which regulates the procurement of information technology goods and services, requires federal agencies and parastatal entities to give preferences to locally produced computer products based on a complicated and nontransparent price/technology matrix.

Brazil is not a signatory to the WTO Agreement on Government Procurement. Some enterprises have complained about practices that lead to non-transparent preferences for Brazilian products in procurement bids for government and non-profit hospitals, including favoring domestically produced "similars" over imported refurbished medical equipment. Limitations on foreign capital participation in procurement bids reportedly impair access for potential service providers in the energy and construction sectors.

3.8 Export subsidies

The Government of Brazil offers a variety of tax, tariff, and financing incentives to encourage production for export and the use of Brazilian-made inputs in domestic production. For example, Brazil's National Bank for Economic and Social Development (BNDES) provides long-term financing to Brazilian industries. The interest rates charged on this financing are generally lower than the interest rates on alternative domestic financing. BNDES provides capital financing to Brazilian companies for, among other things, expansion and modernization projects as well as acquisition or leasing of new machinery and equipment. The goal is to support the purchase of domestic over imported equipment and machinery.

3.9 Barriers to trade in services

3.9.1 Audio-visual services

Foreign ownership of cable companies is limited to 49 percent, and the foreign owner must have a headquarters in Brazil and have had a presence in the country for the prior 10 years. Foreign cable and satellite television programmers are subject to an 11 percent remittance tax; however, the tax can be avoided if the programmer invests 3 percent of its remittances in co-production of Brazilian audio-visual services. Law 10610 (2002) limits foreign ownership in Brazilian media to 30 percent, including the print and "open broadcast" (non-cable) television sectors. Open television companies also have a regulation requiring that 80 percent of their programming content be domestic in origin.

3.9.2 Banking and other financial services

Brazil has not yet ratified its commitments from the 1997 Financial Services negotiations or taken the necessary steps to make them binding under the GATS (accept the Fifth Protocol). Brazil is potentially South America's largest insurance market. However, foreign participation is limited to 50 percent of the capital of a company and to one third of its voting stock. Brazil maintains a government-owned reinsurance monopoly through the Brazil Reinsurance Institute (IRB). If Brazilian shipping companies wish to effect marine insurance with foreign insurers, they must submit information to IRB indicating that the foreign insurance policy is less expensive than that offered by Brazilian insurers.

3.10 Inadequate intellectual property right protection

Brazil's Law 10196 (2001) requires that approval by the Ministry of Health be obtained prior to the issuance of a pharmaceutical patent. This requirement is inconsistent with Article 27 of the WTO's Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS).

In Brazil, unauthorized copies of pharmaceutical products have received sanitary registrations relying on undisclosed tests and other confidential data, in apparent violation of TRIPS Article 39.3.

Brazil's National Institute for Industrial Property (INPI) has amassed a backlog of more than 60,000 patent applications, an estimated 18,000 for pharmaceuticals and 50,000 trademark applications. The Brazilian government plans to take five to six years to work through the backlog of patent and trademark applications. The Chinese side has expressed its deep concern over those issues.

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