Brazilian President Dilma Rousseff unveiled plans on Tuesday for a range of tax breaks and incentives to help domestic industry cope with competitiveness lost from the surging real. "Today more than ever, it is imperative to protect Brazilian industry and our jobs from unfair competition and the currency war, which hurts our exports and, worse, affects our domestic market" with a flood of imports, said Rousseff. The moves unveiled by Rousseff, largely in the technology sector, call for tax breaks of some $US16 billion ($A14.63 billion) over two years, export incentives and measures to curb imports that benefit from unfair competition.
"This is a predatory, competitive world stage," said Finance Minister Guido Mantega, who has argued that currency manipulation by larger economies has hurt Brazil's economy and its exports.
Industry and Foreign Trade Minister Fernando Pimentel said the plan calls for "zero tolerance for any kind of fraudulent importation, counterfeiting or piracy of origin."
"We shall defend our local production, our domestic market," he vowed.
Recent studies by the National Confederation of Industry show that 48 per cent of Brazilian firms lost market or stopped exporting in 2010 and many are hurting from competition from Chinese imports.
Brazil remains one of the fastest growing economies with 7.5 per cent growth in 2010, but some sectors are ailing. Industrial production fell 1.6 per cent in June.
The Brazilian real has been hovering at its highest level in the 12 years since it adopted a free exchange system in January 1999.
Brazil has accused the United States and China of artificially lowering the value of their currencies, driving up the value of the real.
The stronger real undercuts the competitiveness of Brazilian exports while fuelling imports. In response, the government plans to unveil a policy this week aimed at stimulating the country's industrial sector.
Mantega has promised "rigourous regulation" of imports entering the country at artificially low prices, and charged that many countries with which Brazil has anti-dumping agreements were routing their exports through third countries.
© 2011 AFP
