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July 28, 1997 02:00 AM

BRAZIL CHANGES TERMS OF IMPORT FINANCING

Bill Bregar
Senior Staff Reporter
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    Brazil's government tapped the brakes on imports with an April 1 rule changing import financing.

    The government took action to slow consumption and reduce Brazil's trade deficit, which totaled $4.25 billion from January to May. The deficit cooled soon after the rule — from $951 million in April to $271 million in May. June figures were not available.

    U.S. plastics industry sources said Provisional Measure 1569 has made it more difficult to import some goods into Brazil.

    Daniel Ebel, who builds auxiliary machines in Brazil and imports equipment from the United States and Europe, said the measure has not hurt his businesses.

    Ebel, president of DNMAIP, the Brazil Plastics Machinery Association in SÃŒo Paulo, declined to speak for the entire industry.

    Augusto Candido, business manager at Ticona Polymers Ltda., a Brazilian compounder that also imports compounds, said it is too early to see changes because of the rule.

    ``Since the measure was adopted, three months have gone by, which is not a sufficient time to notice different inventory positions on the part of resin importers,'' Candido said.

    The import financing measure was enacted to eliminate the use of extended financing to gain profit by exploiting the difference between Brazilian and foreign interest rates. Before the change, Brazilian companies could import products using lines of credit with the seller. The buyer could make payments over time, in effect postponing the closing date.

    The new measure obligates Brazilian importers with payment terms of up to 180 days to make the currency exchange for payment with the Central Bank of Brazil upon receipt of merchandise. For imports financed for 180-360 days, the exchange must occur six months before the payment due date. The rule exempts goods financed for more than 360 days, although they must be registered with the Central Bank.

    Dave Smith, sales director at Amtopp Corp., said he is frustrated with the change. His firm, which sells biaxially oriented polypropylene film to Brazil, is part of film extruder Inteplast Corp. of Livingston, N.J.

    ``Brazil has chosen to enact legislation that makes sales of our BOPP films more difficult, if not impossible,'' Smith said, adding that Amtopp has worked hard to develop Latin American business.

    ``We have attempted to elevate our sales activity above the `spot market' selling that is commonplace in these regions,'' he said.

    ``It is frustrating to have much of this effort evaporate by protectionist trade barriers being put up as we see in Brazil today. It is especially frustrating because we daily encounter suppliers from those same regions actively seeking new business here in the United States.''

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