Brazil unilaterally lowers Mercosur’s Common External Tariff again

RIO DE JANEIRO, BRAZIL – The Brazilian government has again unilaterally approved a 10% cut for 6,195 products included in Mercosur’s Common External Tariff (GATT), the Brazilian Economy Ministry said in a communiqué released Monday.

With this, 87% of the products in the Mercosur Common Nomenclature (NCM) will see a 20% tariff reduction, including “beans, meat, pasta, cookies, rice and construction materials,” the government said.

The previous cut had been announced jointly by Argentina and Brazil, and Brazil then decided to apply it unilaterally without reaching a consensus in the group. This decision killed Uruguay’s chances of linking Community flexibility to the reduction of the common external tariff. Now the Brazilian government is again making a unilateral decision.

The new discount was approved by the Executive Committee of the Brazilian Chamber of Foreign Trade (Camex) in an extraordinary meeting and announced Monday at a press conference held by the Ministry of Economy and Camex.

It is a temporary measure that will last until 2024. “It will help make almost all imported goods cheaper, directly benefiting the population and the companies that consume these inputs in their production process,” the federal government said.

“The government’s goal is to mitigate the negative economic consequences of the Covid-19 pandemic and the war in Ukraine – especially the high cost of living for the low-income population and the increase in costs for companies that consume these inputs in the production and distribution of goods,” the Brazilian government’s statement Monday said.

The previous 10% cut was also decided unilaterally in November 2021 – albeit with the agreement of Argentina – a decision taken by Uruguay in its intention to make Mercosur’s foreign trade more flexible with Brazil as an ally.

In late November, the other member countries asked Uruguay to approve the tariff reduction after the decision, but Uruguay *wanted to discuss it along with the flexibilization and rejected the reduction in the face of refusal.