Valor Econômico, 30/03/2005

The Federation of Industries of the State of São Paulo (Fiesp) intends to request the government soon to institute safeguards against imports of some Chinese products. "Imports are growing aggressively and at very low prices," says Paulo Skaf, president of Fiesp. The entity is monitoring the flow of foreign purchases in some sectors and preparing the necessary technical work for the opening of safeguard processes. Starting next week, Fiesp will have a permanent commercial defense committee.

Roberto Gianetti da Fonseca, director of foreign trade at the entity, believes that there is an “import surge” in some sectors. He states that the segments most affected are clothing, footwear, optics and electronics.

Fiesp argues that safeguards, which may be tariffs or quotas, are applied only against China. “We are not interested in a general safeguard, because that would affect other countries,” explains Skaf. To impose safeguards only against Chinese products, the private sector needs specific federal government regulation.

Upon entering the World Trade Organization (WTO), China accepted that other member countries apply specific safeguards against their products. However, it is necessary that the mechanisms are regulated according to the internal legislation of each country.

Brazil has so far failed to regulate safeguards against China and the issue is controversial within the government. Officials at the Ministry of Development, Industry and Foreign Trade have not yet officially commented on the matter, but private sector sources say that the Mdic supports the safeguards regulation and will discuss the matter with the Foreign Trade Chamber (Camex). Itamaraty, on the other hand, fears that the safeguards institution will damage the bilateral relationship with China, considered a strategic partner.

Skaf also does not rule out using the Chinese trade defense mechanism known as dumping against Chinese products, pending recognition of China as a market economy. "And we hope it will never be made official, because China is not a market economy," he says.

Dumping occurs when a country exports at a price below that practiced in its domestic market. The status of market economy, promised by President Luiz Inácio Lula da Silva during the visit of Chinese President Hu Jintao to the country, hinders the opening of dumping proceedings. When recognizing China as a market economy, Brazil is obliged to consider the price practiced by the country in its domestic market. Brazilians claim that domestic prices in China are distorted by state support and use an international average. (RL)