Brazil Initiates Multiple Sunset Reviews on Various Products

Starting this month, Brazil announced that, it would initiate Sunset Reviews regarding anti-dumping duties on flat rolled steel made from China, South Korea and Taiwan and table fans from China. Sunset Reviews regarding Chinese-made car tires and stainless steel will begin at the end of this week. A Sunset Review is an investigation requested approximately six months before the expiration of anti-dumping duties. The investigation decides whether to continue the anti-dumping duties, normally for five more years or to reduce the duties completely. The original anti-dumping investigations occurred in 2013 under the Rousseff administration, which had a strong policy of protecting domestic producers and limiting foreign competition. Conducting these reviews under a completely different political context will be an opportunity, now that the country is stabilizing and developing economically. Companies that have been affected by these anti-dumping cases will now have more tools to access the Brazilian market, potentially allowing for more free market competition in Brazil.

The main topic currently under discussion is whether to consider China a market economy. In previous anti-dumping investigations, Brazil has not regarded China as a market economy, making it harder for companies to amount a defense. Considering China as a market economy has been a challenge for most WTO members. If China is considered a market economy, it is harder for countries to impose higher duties against the Chinese companies. However, for Chinese companies, the movement for considering China as a market economy is definitely a priority. Many of them see these anti-dumping duties as unfair and directly targeted at preventing their business, as opposed to offsetting injury. Brazil is slowly taking steps to recognize China as a market economy, which is great news for Chinese businesses in Brazil. Constructing the Chinese normal value for the process initiation, as opposed to using exports from a surrogate economy to a third economy, meaning more free market competition. China is Brazil’s biggest trading partner, and commerce between the two countries is important for economic development in the near future. The Brazilian economy cannot depend on exports alone; having imports and trade partners are vital for economic growth. Protectionism will only do harm to Brazil’s economic growth and scare away potential investors. China has invested $60 billion alone in Brazil[1] and fostering these international relationships will be vital for future.

In conclusion, these Sunset Reviews will be a major determining factor of how Brazil will perceive the world market. Brazil is one of the fastest growing economies in the world, which presents a great opportunity for international business. The country is moving towards the direction of not only recognizing China as a market economy, but also reducing cost of entry for businesses from Europe, the United States and Mexico. Access to the MERCOSUR market is a great opportunity for foreign investment or trade due to the combined population size of 264,347,820 in Argentina, Brazil, Paraguay and Uruguay. The MERCOSUR receives nearly 50% of all FDI going into South America,[2] making it one of the fastest growing common markets in the world. Sidera can help access this rapidly growing economic entity and discover new investment opportunities in the Latin America region.

-Benjamin Tracy

[1] http://publications.atlanticcouncil.org/china-fdi-latin-america/

[2] http://www.itamaraty.gov.br/en/politica-externa/integracao-regional/6347-mercosur-en

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