MDIC regulates fragmented industry participation in trade defense investigations

Yesterday, the Brazilian Secretariat of Foreign Trade published, in the Official Gazette, Ordinance No. 41/2018, which foresees the required information for the domestic industry to be qualified as fragmented and to initiate trade remedies investigations. This industry is formed by a large and sprayed number of domestic producers in certain segments.

Initially, the fragmented industry should obtain the qualification authorization from the authority. For the qualification request, it must present information related to the previous fiscal year, specified in its ordinance, such as: (i) detailed description of the product; (ii) number of producers and their domestic production and sales volume; (iii) the geographical distribution of domestic producers and by size, or their estimation; (iv) listing of known domestic producers.

The request should also indicate the corresponding investigation period, contain an explanation about the industry’s fragmented nature and the difficulties in filing a petition, as provided for in the procedure for non-fragmented industry.

The Brazilian Trade Remedies Department (Decom), from the Ministry of Industry, Foreign Trade and Services (MDIC), is responsible for assessing data and evidence presented at the request, also including public data and the possibility of on the spot verification being carried out to substantiate its decision. If positive, the domestic industry qualified as a fragmented industry shall file a trade remedy petition within the time-limits established by the authority, but never over a 10-month period in relation to the investigation period indicated in the qualification request.

According to the MDIC itself, the regulations for the qualification of the fragmented industry are part of an expanding process on trade remedies mechanisms, as foreseen in its Strategic Planning 2016-2019. It is expected that smaller productive sectors, yet formed by producers spread all over the country, mainly those agricultural-related, should now more easily file their requests for dumping investigation.