The success obtained by Brazilian shoe manufacturers with the imposition of anti-dumping duties on Chinese footwear at the end of 2009 has led other interest groups to wonder whether they could do the same. On Aug. 23, Abit, the Brazilian textile and apparel industry association, filed a petition with the Ministry of Development, Industry and Foreign Trade for safeguard measures on 60 textile products that represent 82 percent of all the clothing imported into the country.
The list of the products will remain confidential for some time, pending discussions between Abit and government authorities, but we understand that they include some types of swimwear, shorts, T-shirts and other types of sports apparel or sports-inspired clothing, but no fabrics. A total of 35 apparel companies participated in the safeguard petition, providing data that are purported to show the damage they have suffered from imports of competing products.
In contrast with the action taken on shoes and components from China, Abit is proposing the imposition of minimum import prices or quotas on imports from all over the world, rather than from any specific countries. Quotas, which can last for up to 10 years, are contemplated in the bylaws of the World Trade Organization, but this kind of mechanism has not been adopted in Brazil for several decades. The idea of imposing minimum import prices – and the related surcharges – could be related to some blatant recent cases of under-invoicing, intended to pay lower import duties, for some types of garments that have nothing to do with sports.
To back up its request, Abit submitted a lengthy document of 2,000 pages of data, subdivided into seven volumes. It showed that the imports of clothing into Brazil rose by 240 percent in the five years through 2011. The growth rate in 2011 alone was 42 percent, probably due in part to the appreciation of the Brazilian currency. However, Abit argued that this was due to the global economic crisis, which caused a fall in imports by major clients in the U.S. and Europe, creating production surpluses in Asian manufacturing plants, which in turn reversed them into alternative markets such as Brazil. The situation persisted in the first seven months of 2012, where the Brazilian trade balance for textiles and clothing had a deficit of US$3 billion, of which US$1.9 billion was accounted for by China.
Abit claims that the low prices of many of the imported products caused serious losses for the Brazilian textile and apparel industry. In terms of volume, its production fell by 11,000 tons and its domestic sales dropped by 9,000 tons in 2011. In the first half of 2012, the industry lost 11,729 direct jobs as the physical production of clothing declined by 13 percent, while imports increased by 30 percent.
There is no deadline for the government to take action on the issue. A more urgent one concerns shoe components. Shortly imposing a 182 percent import duty on the components sourced by a few Brazilian companies accused of dodging the anti-dumping duties on finished shoes from Brazil, the government has proposed punishing the other more labor-intensive Brazilian users of imported footwear components with an increase in the duty on these products from 18 to 25 percent, following a complaint lodged by Assintecal, the Brazilian association of manufacturers of shoe components.
The measure was expected to go into force in the course of the month of September, after approval by the other member governments of Mercosur. MOVE, the association recently established by importers of sporting goods products into Brazil, is understood to be trying to obtain an exception for the very technical components of the most expensive, high-performance sports shoes, which cannot be produced in the country in sufficient quantities. The association is also likely to be involved in the debate over the proposed safeguard measures against some types of clothing at a later stage.
Since July, MOVE has been led by a new 45-year-old executive director, André Raduan, who worked previously for DuPont, Unilever and Colgate-Palmolive. At DuPont, he was responsible for its Coolmax fiber throughout South America. The members of MOVE were originally Nike, Adidas, Asics, Puma, Alpargatas (distributor of Mizuno and Timberland) and Cambuci (Penalty and Stadium brands). New Balance and Skechers joined MOVE later along with Reebok, which remains a property of the Adidas Group in spite of its joint venture with Vulcabras.