The effects of protectionism
28 May 2008A recent edition of La Conceria talks about protectionism in the Brazilian leather industry. The tax on wet-blue bovine and calf exports was established at 9% in December 2000. The Italian leather industry and Cotance have tried to persuade the world's largest producer of hides to reverse its decision, but to no avail.
Four years later when export revenues stagnated, a decision was taken to reduce the tax to 7% and 4% the following year. However, the reduction was postponed for two consecutive years and, in December 2006, when wet-blue exports saw a slight increase, the duty returned to the 9% level. Brazilian footwear association Abicalçados is a particularly fierce defender of the tax, claiming that while wet-blue exports are increasing, national footwear production is in constant decline. This has meant that some footwear producers have entered into partnerships with Chinese companies, and some have relocated production to Argentina. In this context an increase to 18% is being mooted. However, the large groups, such as Bertin, which have slaughterhouses, meatpacking operations and tanneries, are against the move. These giants have invested in crust production and are looking to increase their export market share. Between January 2007 and August 2007 Italian imports of wet-blue from Brazil were down 28%. It seems that tanners in Arzignano are not worried by the developments and have merely sought other south American suppliers such as Colombia. Some believe it is merely a question of domestic politics in Brazil and that little has changed as the large tanning groups have started to produce crust, and that the price of crust will soon not be much higher than that of wet-blue when you include the tax on the latter. This will be great for the large groups but have a devastating effect on smaller tanners who are unable to invest in the facilities needed to produce crust. But, say La Conceria, Brazil is not the only country ‘guilty' of protectionism:
- Argentina 15% on raw and wet-blue
- Bangladesh prohibits exports of raw and wet-blue
- Brazil 9% on raw and wet-blue
- China 20% on raw goatskins
- India 60% on raw, wet-blue and crust (15% on East Indian) and quotas
- Morocco quotas on raw and wet-blue
- Nigeria prohibits raw exports
- Pakistan 20% on raw and wet-blue
- Russia €500/tonne on raw, 10% on wet-blue
- Tunisia prohibits raw exports
- Ukraine 30% on raw, min. €400/tonne on bovine and €1/skin on sheep
- Uruguay 5% on raw
