INTERNATIONAL BUSINESS

WORKSHOP: PROTECTIONISM VS FREE TRADE

Juan David Amaya
201317069
The Brazilian Automotive Industry is one of the world's five biggest auto markets, with
operations for Fiat Chrysler Automobiles NV, Volkswagen AG, General Motors Co and
Ford Motor Co. Heavy government incentives and Protectionism had made this
industry able to compete against other markets and prevent the invasion of low cost
Chinese brands. The crisis battered global carmakers but Brazil still has remained
competitive and the steady development of the industry is attracting billions in
investments to the country.

Representing 5.2% of the GDP, the car industry is fueled by heavy incentives
announced by Plano Brasil Maior in addition to an increase protectionism in order
to prevent an invasion of low cost Chinese brands. At least 65% of the car
content should be local or originating from Mercosul to be considered locally
produced. Otherwise it is taxable as an imported vehicle, adding another 30% on
the top of the IPI rate.
(The Brazilian Business)
By 2017, it is expected that 10 out of the 12 production steps must happen within the
Brazilian territory, the Brazilian government strongly incentives the industry with tax
benefits and huge barriers for foreigner countries. Perhaps the stronger argument to
support the automotive protectionism in Brazil is that thanks to this strategy the Brazilian
automotive industry has been a world leader for many years making it an important
source of money for development and employment, also by having such a big market
and this kind of policies, Brazil by their own is making their own competitive advantages
opening opportunities for future development.
Bibliography
http://www.reuters.com/article/us-eu-brazil-wto-idUSBRE9BI0I320131219
http://www.economist.com/node/21530144
http://thebrazilbusiness.com/article/the-brazilian-automotive-industry-in-a-nutshell
http://www.reuters.com/article/brazil-autos-idUSL1N10H21N20150806