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United States Imposes Quotas, and Brazilian Steel Makers Accept them

05/03/2018 - 12h38

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NICOLA PAMPLONA
FROM RIO
MARIANA CARNEIRO
FROM BRASÍLIA

After an ultimatum from Donald Trump's administration, Brazilian steel mills will have to deal with steel export quotas to the United States. The measure will effectively mean a reduction of 20% in Brazilian sales to the US.

The establishment of quotas was the final offer from the American government, which has decided to restrict steel import purchases in order to stimulate local production. Brazil was trying to work through negotiations but was surprised last Thursday (the 26th) with a unilateral American suspension of the talks.

The United States is the second largest market for Brazil abroad. Only China purchases more. Steel represents 10% of total Brazilian exports to the US.

In a joint written communique, the Ministers of Industry, Foreign Trade & Services and Foreign Relations lamented the restrictions raised by the US and said that "any restrictive measures wouldn't be necessary, and they aren't in any way justified".

"The Brazilian government regrets that the negotiating process has been interrupted and reiterates that it remains open to constructing reasonable solutions for both sides", reads the text.

Industry representative Mello Lopes said that the sector prefers to accept the quotas rather than risk a further reduction in the steel mills' capacity utilization rate which today is at 68% of installed capacity.

The alternative to the quotas would be the imposition of an additional tariff of 25% on Brazilian exports, which has already been stipulated for other countries.

Translated by LLOYD HARDER

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