Call to act over Brazil’s ship duties

Date: 14/01/1999

By Renée Cordes

SHIPPERS and shipowners are urging the European Commission to step up pressure on Brazil to lift restrictions on European and other foreign vessels.

In a rare display of cooperation, the European Shippers' Council (ESC) along with the European Community Ship-owners' Association (ECSA) have written to Trade Comm-issioner Sir Leon Brittan and Transport Commissioner Neil Kinnock complaining that exemptions from duties and charges for carriers registered in Brazil discriminate against foreign carriers and hamper free trade.

Under a law introduced two years ago, vessels registered in Brazil are exempt from paying certain duties on cargo. The shippers and shipowners claim this gives Brazilian carriers a substantial advantage over other countries using its ports.

“The restrictions imposed by Brazil are indeed to the detriment of European maritime transport,” said Alfons Guinier, ECSA's secretary-general. “We are going to put on some pressure, because Europe cannot accept such a thing.”

A Commission official said the institution had invited Brazil to a new round of talks at the end of this month. However, he added that the institution was not optimistic about the chances of a breakthrough.

The official claimed Brazil's practice of exempting its own vessels from some charges “runs against the general world-wide development in maritime transport, which is pretty much a liberalised service sector”.

He warned that if talks did not eventually produce a satisfactory result, “retaliatory measures” would be considered.

A Brazilian diplomat countered that the duties levied on non-Brazilian registered vessels were not discriminatory. He added that any European firm could set up a subsidiary in Brazil to get around the problem.

But Herman de Meester, ECSA's deputy secretary-general, insisted that this would not be a feasible solution. “If we would buy the whole of Brazil that would not be a problem,” he said. “Do they want us to go back to colonialism?”

Under a so-called 'standstill agreement' adopted at the end of the General Agreement on Trade and Services negotiations more than two years ago, Brazil pledged not to introduce any new measures to protect its own shipping industry.

Europe's shipbuilders and shipowners, who have been campaigning against the Brazilian duties since they were introduced, are anxious for the current dispute to be resolved well ahead of WTO discussions on maritime services which are due to take place next year.