Electronics & Electricals

As reported elsewhere in this issue, Mercosur’s Common Market Council issued on 19 December 2011a decision that allows Brazil to maintain the 20 percent to 35 percent duty on toy imports it adopted about a year ago and authorises Argentina to implement such an increase if it deems it necessary. The decision also indicates that Paraguay and Uruguay will keep their current duties on toys unchanged. Shortly after the issuance of this decision, the Brazilian government adopted a resolution extending through 31 December 2012 the application of the 35 percent MFN duty on toys, but Argentina has so far kept its duties on toys at 20 percent. Toys subject to 35 percent MFN duties in Brazil are classified under NCM 9503.00.10, 9503.00.21, 9503.00.22, 9503.00.31, 9503.00.39, 9503.00.40, 9503.00.50, 9503.00.60, 9503.00.70, 9503.00.80, 9503.00.91, 9503.00.97, 9503.00.98 and 9503.00.99. The resolution maintainsa reduced duty rate of two percent for toy parts and accessories suitable for use solely or primarily with toys of subheading 9503.00.99.

Brazil’s decision to increase its duties on imported toys did not appear to negatively impact Brazilian demand for mainland Chinese toys last year. Brazil’s heading 9503 toy imports from the mainland increased 28.9 percent to US$314.2 million during January-November 2011 and accounted for an overwhelming 85.1 percent of all heading 9503 toy imports, up from 83.4 percent during January-November 2010. By comparison, imports of mainland Chinese heading 9503 toys dropped 13.6 percent to US$203.6 million in 2009 and rose 28.7 percent to US$262.1 million in 2010.Toy imports from Hong Kong also did well last year, growing by 22.9 percent to US$7.9 million during January-November 2011 and accounting for 2.2 percent of all heading 9503 toy imports.

Brazil also recently announced the addition of 395 new items to a list of foreign capital goods and information and telecommunications goods that benefit from reduced or duty-free treatment. This list is frequently modified and saw the addition of some 3,000 new items during calendar year 2011. Capital, information and telecom goods may qualify for this special duty reduction only if there is no domestic production of the subject goods.

Lastly, Brazil has established tariff-rate quotas for imports of the following products to correct a lack of supply in the Brazilian market.

• Certain Rutile Pigments. A maximum of 95,000 tonnes of certain rutilepigments and preparations based on titanium, classified under NCM 3206.11.19, will benefit from a reduced rate of two percent from 26 December 2011 through 25 December 2012. Out-of-quota merchandise will be subject to a regular MFN duty rate of 12 percent.
• Certain Poly(vinyl chloride). A maximum of 12,000 tonnes ofpoly(vinyl chloride) obtained through an emulsion process, classified under NCM 3904.10.20, will benefit from a reduced rate of two percent from 26 December 2011 through 25 December 2012. Out-of-quota merchandise will be subject to a regular MFN duty rate of 12 percent.