The Government of Brazil has temporarily removed the tax on import of cotton for a period of three months from May 1 to July 31, 2013. At a meeting of the Foreign Trade Commission (CAMEX) and the Ministry of Development, Industry and Foreign Trade (MDIC), it was decided to reduce the duty from the existing 10 percent to zero percent on import of cotton, classified in product codes 5201.00.20 and 5201.00.90 of the Mercusor Common Nomenclature (NCM), CAMEX said in a statement. The tariff cut would be valid for a quota on 80,000 tons for import of cotton during the period between May 1 and July 31, 2013, the statement added.
Generally, prices of cotton rise in the inter-harvest period that begins with the onset of Southern Hemisphere winter in June. The aim of the new measure is to avoid interruption in the supply of cotton to the domestic textile and clothing industries during the off-season. Brazilian cotton imports have declined sharply from US$ 932 million in 2011 to US$ 361 million in 2012, according to the data from the Brazilian MDIC. In January-February 2013, Brazil's cotton imports declined 21 percent year-on-year to US$ 54.2 million. During the two-month period, the import of cotton from China and Pakistan dropped significantly, while imports from the US rose slightly, and imports from India and Egypt increased sharply. Mercusor free trade bloc comprises of Paraguay, Venezuela, Brazil, Argentina and Uruguay.