On Thursday, July 21, Mercosur will announce the permission for Brazil to keep the 10% reduction of the Common External Tariff (TEC) until December 2023.
The meeting of economy ministers and central bank presidents from the bloc countries is being held on July 20 and 21. The event is the 60th Mercosur Summit. They dealt with the sustainability of public finances in the post-pandemic period of covid-19 and fiscal risks at the meeting.
Brazilian President Jair Bolsonaro (Liberal Party – PL) will participate from Brasilia by videoconference on Thursday, July 21.
The CMC (Common Market Council) approved the 10% reduction of the TEC. The bloc will also reduce by 10% the TEC, which is charged by all countries and applied to imports. The approval of the reduction in Brazil and countries is seen as a measure to reduce inflation.
The government decided on May 23 the horizontal reduction of 10% in the import tax on products bought abroad. According to estimates by the Ministry of Economy, the positive impact estimated at the time was R$533.1 billion (US$97.9 billion) in the GDP (Gross Domestic Product).
Brazil’s Economy Minister Paulo Guedes defends the measure. His team says that the TEC has had the same structure since 1995 when it was created and that it will be the first horizontal tariff revision in the bloc’s history.
In addition, the lower tariff brings the country closer to developed countries and facilitates Brazil’s access to the OECD (Organization for Economic Cooperation and Development). The international entity gave its approval for Brazil to join the group. The decision was taken at a ministerial meeting on June 10 in Paris.
The 10% tariff reduction is aimed at 87% of the goods imported by the country. Among the products are beans, meat, pasta, cookies, rice, construction materials, and others. The tax reduction is in effect until December 31, 2023.
SINGAPORE
The bloc has also decided to have a goods and services trade and investment agreement with Singapore. The document should be signed by the end of this year. The first round of negotiations was in 2019, and the conclusion was made in July 2022.
It includes a commitment to trade facilitation, intellectual property, government procurement, and e-commerce.
Singapore has a high average income and essential participation in the international market. In the trade balance, it was the sixth main destination of Brazilian exports and Asia’s second main trade partner, only behind China.
With information from Poder360