Brazil info- Economy: EXPORT SUBSIDIES

Brazil news : Export subsidies

The Government of Brazil offers a variety of tax, tariff, and financing incentives to encourage production for export and the use of Brazilian inputs in exported products. An export credit program known as PROEX was established in 1991. PROEX is intended to equalize domestic and international interest rates for export financing and to directly finance production of tradable goods. Exporters enjoy exemption from withholding tax for remittances overseas for loan payments and marketing, as well as from the financial operations tax for deposit receipts on export products. Several PROEX programs have been found to be countervailable under U.S. law in the context of specific countervailing duty cases. In 1999, a WTO panel found PROEX interest equalization payments used to finance the sale of regional aircraft manufactured in Brazil to be a prohibited export subsidy. The WTO Appellate Body upheld this finding.

The Government of Brazil states that it has modified PROEX so as to bring it into conformity with WTO subsidy rules. Canada challenged this position in the WTO, but subsequently reached a negotiated settlement with Brazil. Changes to PROEX were announced most recently in 1999, expanding the program. In 2003, roughly $808 million was budgeted for PROEX, with $400 million slated for equalization and $408 million for direct financing. Actual spending on PROEX during 2003 is expected to have been about one-half of the amount budgeted.Brazil cheap hotels