ANNOUNCEMENT 19 Aug 2015

In August 2015, the government of Brazil announced a change in the local input requirements for the participation in certain public purchases.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE



BNDES, 19 August 2015, 'BNDES aprova financiamento de R$ 746 milh?es para VLT no Rio', press release: http://www.bndespar.gov.br/SiteBNDES/bndes/bndes_pt/Institucional/Sala_de_Imprensa/Noticias/2015/Logistica/20150819_vlt.html

Railway Gazette, 20 August 2015, 'Rio light rail receives BNDES funding': http://www.railwaygazette.com/news/news/cs-america/single-view/view/rio-light-rail-receives-bndes-funding.html

Alstom, 9 July 2015, "Alstom delivered the first Citadis tram to Rio de Janeiro", press release: http://www.alstom.com/press-centre/2015/7/alstom-delivered-the-first-citadis-tram-to-rio-de-janeiro/

Alsom, 3 March 2015, 'Alstom inaugurates its first Citadis tramway manufacturing line in Latin America', press release: http://www.alstom.com/press-centre/2015/3/alstom-inaugurates-its-first-citadis-tramway-manufacturing-line-in-latin-america-/


Inception date: 19 Aug 2015 | Removal date: 17 Dec 2016
Still in force

Public procurement localisation

On 19 August 2015, the Brazilian Development Bank (BNDES) announced to finance a light train system in Rio de Janeiro with 746.5 million real (USD 215 million), while 35.3 million real will be drawn from BNDES's climate fund. The sum represents 42% of the total investment of 1.77 billion real.
 
National production
The credit will be granted to the service provider and special purpose entity Concessionária do VLT Carioca S/A. The first phase of the project is supposed to be operable by April 2016 - just ahead of the 2016 Olympic Games in Rio de Janeiro - and the second phase by the end of 2016. The grant is going to finance 32 Alstom Citadis trams, of which 27 are going to be built at Alstom's Taubaté plant in the state of Săo Paulo.
 
Local content requirements
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.
 

Affected by the localization requirements are France and probabely Switzerland and Serbia. First, although Brazil did not import any trams under HS code 8601 in 2014, it did so from Switzerland and Serbia in 2013 at a trade value of USD 45 million and USD 2 million, respectively. Second, Alstom has productions sites in Switzerland and France, while the remaining five Citadis trams for Brazil are being produced in La Rochelle, France.

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