ANNOUNCED AS TEMPORARYNo
On 31 July 2015, Brazil's development bank BNDES and the Funding Authority for Studies and Projects (Finep) announced the 'Development and Innovation Plan for the Chemical Industry' (PADIQ). The plan will be granted 2.2billion real (about USD 660 million) for projects in 2016 and 2017.
PADIQ represents the first initiative of the second phase of the Business Innovation Plan (Plano Inova Empresa) which was launched in 2011. PADIQ's goals are to increase industry competitiveness, reduce sectoral trade balance deficit, incentivize FDI and to develop goods of higher aggregated value.
Beneficiaries of PADIQ are projects in the field of food additives for animals, silicon derivatives, carbon fibers, chemicals for the extraction and production of petroleum, raw material for cosmetics, and chemicals obtained from biofuels. Projects are required to represent a minimum value of 1 million real (USD 300'000) for technological development and 20 million real (USD 6 million) for the installation of plants.
State support and national content
The measure is considered discriminatory since, in general, the Brazilian Development Bank provides credits with below-market interest rates only to legal persons (private or public) based in Brazil. Besides this, the bank imposes local content requirements on goods (mainly capital goods), services and software financed through its credit lines.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.
Affected tariff lines
The announcement by BNDES did not state the tariff lines of the affected products. For this reason, the GTA reverted to approximate tariff lines and thus researched for goods that are representative for the abovementioned chemicals.
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