On April 30, the US government announced that an agreement in principle was reached regarding restrictions on steel and aluminum imports from Brazil.
2. Since the beginning of the US Department of Commerce’s investigation, in the first semester of 2017, the Brazilian government, in coordination with the domestic productive sector, sought to avoid the application of restrictive measures on Brazilian exports. In addition to the permanent work done by the Embassy in Washington, several Brazilian authorities were engaged in this process, including Ministers Aloysio Nunes and Marcos Jorge. There were successive meetings and demarches with American representatives of the Executive branch, the Congress and the private sector. This process resulted in the inclusion of Brazil, on March 23, in the group of countries for which the application of the additional tariffs of 25% on steel and of 10% on aluminum imports was provisionally suspended, in order to enable negotiations that could result in the global exclusion of Brazilian products from US measures.
3. In all occasions, Brazil clarified to the American government and to other relevant actors in the USA that the Brazilian products do not pose threats to the American national security. In the contrary, the industries of both countries are integrated and complementary. Around 80% of steel exports from Brazil to the United States are intermediate products, which are used as inputs by the US steel industry.
4. Brazilian companies have been making huge investments in the US, and now they account for a considerable part of the American production and jobs in the US steel sector. Furthermore, Brazil is the largest importer of metallurgical grade coal from the US (around US$ 1 billion in 2017), an input that is mainly directed to the Brazilian production of the steel that is exported to the US.
5. Brazil also pointed out that Brazilian exports of aluminum are not significant in terms of volume and that, in recent years, the US has been achieving surpluses in the aluminum trade with Brazil. Furthermore, Brazil recalled that the industries of both countries are complementary, since Brazil provides raw materials to the US aluminum sector.
6. Moreover, Brazil explained that, given the vertical integration of its production, the logistical costs and the trade remedies that have been adopted, there was no risk of Brazil becoming a platform for transshipment of third party steel and aluminum products into the American market.
7. In general terms, Brazil contended that the measures would eventually restrain access conditions to the US market and harm Brazilian exports of steel and aluminum, with a negative impact on bilateral trade flows, which in the last ten years have largely favored the US with a surplus of around US$ 250 billion.
8. Nevertheless, on April 26, US authorities announced the decision to interrupt the negotiating process and to apply immediately to Brazil the additional tariffs that were temporarily suspended or, alternatively and without any possibility of further negotiation, unilateral restrictive quotas.
9. Faced with the decision announced by the US, the representatives of the aluminum sector indicated that the less harmful alternative to their interests was to endure the additional tariffs of 10% that were originally foreseen. On the other hand, the representatives of the steel sector informed that the imposition of quotas would be less restrictive than the 25% tariff.
10. It is important to stress that any restrictive measure to be adopted will be under the sole responsibility of the US government. The Brazilian government and the Brazilian productive sector did not take part – nor will take part – in the design and the implementation of restrictions to Brazilian exports.
11. The Brazilian government regrets that the negotiating process was interrupted and reaffirms that it remains open to develop reasonable solutions for both countries. Moreover, the Brazilian government reiterates its belief that the restrictive measures are neither necessary nor justifiable under any point of view. Further, it is convinced that, besides the negative impacts on the Brazilian exports and on the bilateral trade, the measures will harm the integration of both countries’ productive sectors and sectors of the American economy that use high quality inputs from Brazil.
12. The Brazilian government maintains its expectation that the US will not implement the restrictions, thereby preserving current bilateral trade flows in the steel and aluminum sectors. In any case, the Brazilian government remains ready to adopt, both in the bilateral and in the multilateral contexts, all necessary actions to preserve its rights and interests.