Monday, September 10, 2012

Import restrictions in Brazil, Argentina and Venezuela

Brazilian restrictions on imports
The Brazilian government has imposed 25% customs tariff on 100 itmes imported from outside Mercosur since September 2012. They propose to add another 100 items soon. The proposal to impose extra tariff was approved in the Mercosur summit in end 2011. The Brasilian government has taken recourse to this measure to protect local industries who could not compete with the less expensive imports. The strong Real has made imports cheaper while the domestic cost of production remains high.

Argentine government imposes more stringent restrictions on imports from 1 February 2012
As part of the strategy to reduce outflow of foreign exchange and to encourage domestic production, the government has imposed these measures in addition to the already existing restrictions since 2010. Under the new system, before placing import orders, the importers have to file an Anticipated Import Affidavit Declaracion (Jurada Anticipada de Importacion) to the Tax Authority AFIP, who are expected to take a decision in 72 hours. After this, the same information should be sent by email to the Secretary of Domestic Trade, who is expected to decide in 15 days. The import request can be approved, delayed or rejected or negotiated by the authorities. In general, the government insists that for every dollar of import, importers should export a dollar worth of goods. In some cases, import permission is not given on the ground that the products should be made domestically and cannot be imported. The importer might also be asked to reduce prices or quantity of imports. The import authorization process is arbitrary, non-transparent and personalized by Mr Moreno, the Secretary for Trade.
These restrictions applies to all imports and all countries including Mercosur partner countries.
In addition to these import restrictions, there are also severe foreign exchange restrictions, which has given rise to a  growing black market ( the Argentines call it as Blue market ). The official rate in September 2012 is 4.65 pesos to a dollar while the black market rate is 6.33 pesos to a dollars.
The forex restrictions has become one more hurdle for Argentine importers, already facing import restrictions.

Venezuelan restrictions on imports
The Venezuelan government has a system of complete control of foreign exchange. The government releases foreign currency for imports only for such items and quantities it thinks are needed for the Bolivarian socialist economic system. Any company or importer not in the good books of the government cannot get foreign exchange or import anything.

How long will these restrictions stay?
The Venezuelan restriction is ideology-based and is likely to stay as long as President Chavez stays in power. The Argentine restrictions might be removed when the foreign exchange situation improves, although President Cristina also likes to use the restrictions to control private sector. Brazilian restrictions on selected items are temporary and might be removed when the domestic production becomes competitive.

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