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ABRAFATI. Brazilian Coatings Manufacturers Association



Negotiation with Government Results in Reduced Costs

ABRAFATI advocates tax cut and dismissal of anti-dumping suit, benefitting the coatings industry and the industries it serves.

The coatings industry got a series of good news at the end of 2013 and will now be more competitive as a result. They were all the product of the consistent, thorough work ABRAFATI has been doing with several agencies in the various spheres of government, occasionally with other industry associations as well, seeking ways of eliminating or mitigating impacts on the industry’s costs.

The first victory was the decision passed by the GCEX (for Foreign Trade Control Management Service, a team consisting of executive secretaries to seven ministries) to cut import duties on titanium dioxide from 12 to two percent. The tax cut will apply to an import quota of 120,000 tons for a period of 12 months. It only needs ratifying by the Mercosur Common Market Group, whose ratification is soon to come through and considered a mere formality, as the pigment is not produced in any of the member states.

Only a few days later, it was announced that an anti-dumping lawsuit concerning epoxy resins had been dismissed, reflecting the intensive effort that the coatings industry put into preventing the related anti-dumping duty from taking effect. The decision was made after Dow Sudeste Industrial Ltda., which was plaintiff in the case, requested that the Secretary of Foreign Trade to the Ministry of Development, Industry and Foreign Trade (MDIC, the acronym in Portuguese) put an end to the investigation on whether there was any dumping practice in liquid epoxy resin exports to Brazil.

At the same time, the reduction of import duties on tinting machines from 12 to two percent was extended. The extension set forth in Resolution no. 121/2013 of the Chamber of Foreign Trade (known for short as Camex) came into effect on December 27 and will end on June 30, 2014.

These tax cuts represent a few dozen million dollars that manufacturers will not pay this year in import duties on raw materials and equipment the domestic production of which is either nonexistent or insufficient to meet the demand.

“They are all very positive decisions for the coatings industry and add to other recent achievements of ABRAFATI, such as the continuation of the IPI (Industrial Product Tax) cut and the reduction of payroll charges and import duties on other raw materials. They prevent an unnecessary burden from falling on the industry, which would otherwise affect areas that are essential for the nation’s economic and social development. These comprise housing projects —including the “Minha Casa, Minha Vida” or “My Home, My Life” program—, the automotive industry, infrastructure projects, plant and equipment protection, and maritime segments,” says Dilson Ferreira, ABRAFATI’s executive president. “Reducing costs means improving competitiveness, thus fostering sustainable growth in the industry, which is our primary aim,” he concludes.