Brazil’s chemicals unions join companies demanding higher tariffs on ‘unprecedented’ crisis

SAO PAULO (ICIS)–Brazil’s chemicals producers, represented by trade group Abiquim, have gotten on board with peer groups and trade unions in their lobbying for higher import tariffs for dozens of products as the government’s decision looms.

Led by Abiquim, a total of 28 trade groups, trade unions, industrial development groups, one professional association and one company have signed a manifesto pleading for higher import tariffs to safeguard an industry which, in their view, is being threatened by lower priced imports which are produced with lower environmental standards.

“The Brazilian chemicals input production chain, fundamental to the country’s economic and technological development, faces unprecedented challenges that threaten its very existence and the future of sustainable solutions for Brazilian industry,” said the manifesto.

“Ensuring measures to protect the trade balance is vital to maintain the operation of the chemical chain and attract new investments.”

In May, chemicals producers – via Abiquim but also as individual companies – proposed increasing tariffs in more than 100 chemicals, most of them from 12.6% to 20%, in a public consultation held by the Brazil’s government body the Chamber of Foreign Commerce (Camex). A decision is expected in August as the latest.

Other trade groups in the chemicals chain, such as Abiplast, representing plastics transformers, do not support higher tariffs as most of their members import product to meet their demand, and are doing their own lobbying not to increase tariffs.

ABIQUIM LOBBYING GETS PARTNERS
As well as Abiquim, other trade groups within chemicals signed the document, such the Brazilian Association of Alkali, Chlorine, and Derivatives Industry (Abiclor); the Brazilian Association of Fine Chemical, Biotechnology and Specialty Industries (Abifina); and the Brazilian Association of Artificial and Synthetic Fiber Producers (Abrafas) also signed the document.

In total, 11 trade groups and 12 trade unions signed the document, as well as industrial development groups and other players in the chemicals chain. See bottom for full list of signatories.

The backing of the unions is important because it is likely to resonate in the corridors of power in Brasilia, where the left-leaning government of President Luiz Inacio Lula da Silva got into office thanks in part to the votes of the industrial workers constituency who voted for Lula’s Workers Party (PT) in 2023 under the promise of more and better paid industrial jobs.

“The Brazilian chemicals input production chain, fundamental to the country’s economic and technological development, faces unprecedented challenges that threaten its very existence and the future of sustainable solutions for Brazilian industry. Ensuring measures to protect the trade balance is vital to maintain the operation of the chemical chain and attract new investments,” said the manifesto.

“What we are witnessing by allowing a surge in imports of products without environmental commitments is the failure to comply with a global agenda, with negative contributions to the fight against climate change.”

As the left-leaning Lula cabinet aims to increase public spending, the manifesto also touches on Abiquim’s calculations in the decrease in tax receipts by the Brazilian Treasury in 2023, as a consequence of lower imports – the trade group said the state’s receipts decreased during that year by Brazilian reais (R) 8.0 billion ($1.45 billion).

“[The decrease in tax receipts] directly impacts investments in the production sector and in several other areas of public policy. Continuing to allow the unbridled entry of chemical products is a paradox for the policy that Brazil has planned in the context of neo-industrialization, while imports already account for 50% of demand in the chemicals industry,” said the manifesto.

“Because of this, some plants are idle, with preventive maintenance anticipated, while others are hibernating plants. And this affects not only the production of chemical inputs, but an entire broad supply chain of raw materials, services, and energy supply related to the sector.”

The Abiquim-led manifesto was also signed by several trade unions in some of Brazil’s key petrochemicals hubs, such the Chemists Union of Sao Paulo; the Union of Chemical Industries of Rio Grande do Sul (Sindiquim), and the Union of workers in the chemical, petrochemical, plastic and pharmaceutical industries of the State of Bahia (Sindiquímica Bahia).

According to Abiquim’s figures, Brazil’s chemicals production and related chain employs around 2 million workers, representing 12% of the country’s industrial GDP.

Earlier in June, the director general at Abiquim said in an interview with ICIS that the request for higher tariffs was only one of the proposals presented to the government to safeguard producers’ global competitiveness.

“What we have presented to the government is the need to undertake action on three main fronts: in the short term, import tariffs, but in the medium and long term we also need a structural plan to address natural gas prices, which are seven times higher in Brazil than in some other jurisdictions, as well as a stimulus plan covering the whole chemicals production chain,” said Andre Passos.

The list of signatories to the manifesto also includes one company, one professional association, and two industrial development groups:

TRADE GROUPS

1. Chemical Industry Association (Abiquim)

2. Association of Piped Gas Distribution Companies (Abegas)

3. Association of Alkali, Chlorine, and Derivatives Industry (Abiclor)

4. Association of Fine Chemical, Biotechnology and Specialty Industries (Abifina)

5. Association of Pharmaceutical Inputs Industry (Abiquifi)

6. Association of Glass Industries (Abividro)

7. Association of Independent Oil and Gas Producers (ABPIP)

8. Association of Artificial and Synthetic Fiber Producers (Abrafas)

9. Association of Campos Elíseos Companies (Assecampe)

10. Association of Natural Gas Pipeline Transportation Companies (Atgás)

11. Federation of Industries of the State of Alagoas (FIEA)

TRADE UNIONS

12. Federation of Chemical Workers of the CUT of the State of Sao Paulo (Fetquim – CUT SP)

13. Single Federation of Oil Workers (FUP)

14. Unified Chemical Union

15. Chemists Union of Sao Paulo

16. Plastic and Paint Industries Union of the State of Alagoas (Sinplast-AL)

17. Industry Union of Chemical Products for Industrial Purposes of the State of Rio de Janeiro (Siquirj)

18. Industry Union of Chemical Products for Industrial Purposes, Petrochemicals and Synthetic Resins of Camaçari, Candeias and Dias D’Avila (Sinpeq)

19. Industry Union of Chemical Products Chemicals for Industrial and Petrochemical Purposes in the State of Sao Paulo (Sinproquim)

20. Union of Chemical Industries of Rio Grande do Sul (Sindiquim)

21. Union of Chemists of ABC (Sao Paulo state region)

22. Union of workers in the chemical, petrochemical, plastic and pharmaceutical industries of the State of Bahia (Sindiquímica Bahia)

23. Union of Workers in the Chemical, Pharmaceutical and Fertilizer Industries of Baixada Santista (coastal Sao Paulo area)

24. National Confederation of the Chemical Branch of CUT (CNQ-CUT)

INDUSTRIAL DEVELOPMENT GROUPS

25. Camacari Industrial Development Committee (Cofic)

26. Industrial Development of the Rio Grande do Sul Pole (Cofip RS)

PROFESSIONAL ASSOCIATIONS

27. Federal Council of Chemistry (CFQ)

COMPANIES

28. Forca Quimica

($1 = R5.51)