VI. TRADE REGULATIONS AND STANDARDS - Tariffs and Import Taxes Brazil import duties range from 0 to 35 percent, with a few items as high as 40 percent. The average duty is 14 percent. Brazil also assesses the following taxes and fees on imports: The Merchant Marine Renewal Tax is assessed at 25 percent of ocean freight charges on import by sea, payable by the importer. Syndicate Fee -- 2.2 percent of c.i.f. value Brokerage Fee -- 1 percent of c.i.f. value Warehouse Tax -- 1 percent of the import duty Fee for Handling Charges -- varies according to value of produce from $20 to $100 Administration Commission -- currently fixed at $50 Import License Fee -- approximately $100 Additional Port Tax -- two fees totalling 3 percent of c.i.f. value - Internal Taxes The internal Brazilian taxes of consequence to U.S. exporters are the Industrial Products Tax (Imposto Sobre Produtos Industrializados, or IPI) and the Merchandise Circulation Tax (Imposto Sobre Circula o de Mercadorias, or ICM). The Industrial Products Tax (IPI) is a federal tax levied on most domestic and imported manufactured products. It is assessed at the point of sale by the manufacturer or processor in the case of domestically produced goods, and at the point of customs clearance in the case of imports. The tax rate varies by product and is based on the product's c.i.f. value plus duties; it normally ranges from 0 to 15 percent. In general, a relatively low tariff rate carries a lower IPI tax rate and a relatively high tariff rate carries a correspondingly higher IPI rate. As with value-added taxes in Europe, IPI taxes on products embodying several stages of processing can be adjusted to compensate for IPI taxes paid at each stage. IPI taxes have been temporarily waived for a wide range of capital goods and industrial inputs. Exports from Brazil are exempt from the IPI tax. The regulations dealing with the IPI tax are detailed in Decree Number 87.981, of December 23, 1982. The Merchandise Circulation Tax (ICM) is a state government value-added tax applicable to both imports and domestic products. The ICM tax on imports is assessed ad valorem on the c.i.f. value, plus duties, plus IPI. Effectively, the tax is paid only on the value- added as the cost of the tax is generally passed on to the buyer in the price charged for the merchandise. The ICM tax due to the state government is based on taxes collected on sales, minus those paid in purchasing raw materials and intermediate goods. The ICM tax is levied on both intrastate and interstate transactions and is assessed on every transfer or movement of merchandise. The rate varies among states, with the predominant rate currently at 17 percent. On interstate movements, the tax will be assessed at the rate applicable in the state of destination. Some sectors of the economy, such as construction services, mining, electrical energy, liquid and gaseous fuels, and locally produced machinery and equipment, are exempt from the ICM tax. For the most part, Brazilian exports are exempt. - Customs Valuation On January 1, 1989, Brazil implemented the Brazilian Tariff Nomenclature, known as the NBM (Nomenclatura Brasileira de Mercadorias), consistent with the Harmonized System (HS) for tariff classification, as authorized by the Brazilian Nomenclature Committee (CBN), Resolution Number 76, of August 31, 1988. Since January 1, 1989, the HS has been the basis for tariff schedule classification and the compilation of statistical data in Brazil. Duties are levied ad valorem on the c.i.f. value of the import. The rates of duty range from zero to 40 percent. Brazil has implemented the Customs Valuation Agreement of the General Agreement on Tariffs and Trade (GATT), but with certain reservations. The agreement distinguishes five methods for determining customs valuation -- a primary basis and four additional methods that must be applied in hierarchical order. The primary basis is based on "transaction value", the price that is actually paid or payable for goods by importers, plus certain costs and expenses. - Advance Rulings on Classification Based on a complete product description, a logical HS tariff classification can often be determined by the company agent in Brazil or the U.S. exporter's nearest U.S. Department of Commerce district office, located in most major cities throughout the United States. Brazilian customs brokers are another valuable source for classification information. However, the ultimate authority is Brazilian customs. If there is doubt about the classification, a request for advance ruling may be presented to the Internal Revenue Department (COSIT) of the Ministry of Finance, preferably through a Brazilian representative. Samples and specifications should be included with the application. A ruling in response to such requests may take months. An inquiry presented to SECEX is probably preferable, but this does not ensure that COSIT, through customs, will necessarily accept the DECEX classification. - Import Licenses The import permit (guia de importa o) is the single most important document required for exporting goods to Brazil. An import permit must be obtained from SECEX by the importer for all but a very limited list of products. Most of the information required for the permit must be provided by the foreign supplier. DECEX Portaria Decree No. 8 of May 1991 established the degree of import regulation applied to specific products by categorizing them: 1. Imports exempted from the import permit requirement are listed in Annex A of the appropriate DECEX Portaria No. 8; 2. Imports under legislative or regulatory prohibition; 3. Imports under special control. Import permit requests must be accompanied by the foreign manufacturer's catalogs or price lists covering the goods to be imported, unless such material has already been filed with SECEX. A local agent of a foreign firm should update the information on file with SECEX regardless of whether a shipment is pending. If there are no published catalogs or price lists, SECEX will accept a notarized statement by the exporter on the pro forma invoice of the wholesale price. An import permit specifies the period during which it is valid. It establishes the maximum time for embarkation of merchandise, or in certain cases, for registering the Import Declaration. Although the validity period of an import permit generally ranges from 60 to 180 days, SECEX will examine petitions for extensions required by special operations or pre-defined exceptions. Goods usually facing limits of 60 days include those subject to special price controls imposed by SECEX, particularly on food and agricultural products, metal, and other products with periodic and/or seasonal price fluctuations, and display items imported under special restrictions for exhibition. Limits of 90 days are imposed on raw materials and food items not under SECEX special price controls, and 180 days are provided for other imports. Under no circumstances should an exporter ship goods to Brazil without an import permit. The shipment could be impounded by Brazilian customs authorities and may not be returned to the United States without payment of fines equaling 20 to 100 percent of the c.i.f. value of the goods. In addition, to avoid clearance problems, any discrepancy between the actual composition of a shipment and the terms of the corresponding import permit should be immediately transmitted to the importer so that the importer can request amendment of the permit prior to arrival of the goods in Brazil. - Pro Forma Invoice In order to apply for an import permit, the Brazilian importer will require a pro forma invoice (fatura proforma) and a published list of prices or sales catalog from the supplier (if such exist). The original copy should be notarized, but need not be accompanied by a chamber of commerce certification or consular visa. The document must contain the following: 1. The name and address of the manufacturer or exporter; 2. A signed statement by the exporter or manufacturer verifying that the prices are current export market prices for destination to any country; 3. If applicable, the name and address of the agent distributor, representative, or concessionaire in Brazil, and a statement of commission due. This is not necessary when the agent has filed a general statement with DECEX of fees collected from a particular foreign firm. If no representative exists, this must be so stated; 4. Total f.o.b. price, unit price, gross and net weight, itemized freight and all other expenses, and total c.i.f. or c.i.f. value; 5. If applicable, a statement declaring that published catalogs or price lists do not exist for the invoiced products. Pro forma invoices issued by commercial enterprises, such as an export trading company, can be used in lieu of a manufacturer's invoice for the importation of parts, accessories, and other small articles. - Export Controls Exporters must be registered with SECEX. Normally, there are no restrictions on exports, but export licenses are required. Some commodities, such as coffee and timber may be subjected to export quotas or other controls. - Import/Export Documentation Documents required by Brazilian laws and regulations for cargo shipments to Brazil are the commercial invoice and bill of lading (or air waybill). Inspection or sanitary certificates are also required for shipments of certain goods. These documents must carry the number of the DECEX-issued import permit. Generally, the document itself does not accompany the shipment. Commercial Invoice -- This document should give full details about the merchandise shipment. It should be prepared by the manufacturer or the seller in the country of origin, not by a seller who is not established in the country of shipment, or a buying agent of the Brazilian importer. Good business practice dictates that a commercial invoice include the full address of the shipper, seller, and consignee, if other than seller; the import permit number; other reference numbers; date of the order; shipping date; delivery and payment terms; a complete description of the merchandise; and export markings. A declaration of origin that is combined with a declaration of correct prices should be made on the commercial invoice, which in turn should be certified by the foreign exporter or local chamber of commerce. For a letter of credit or other contractual agreement, chamber of commerce certification is not required, but may be requested. When in doubt, exporters should contact their Brazilian importers. A notarized declaration, as follows, should be made on the extra copy of the commercial invoice, which the exporter or the chamber of commerce retains. I (name, title, name of company), hereby, swear that the prices stated in this invoice are the correct market prices for any country for the merchandise described herein, and the origin of these goods is the United States of America, and I accept full responsibility for any inaccuracies or errors herein. Legalized commercial invoices are not required. To correct errors in commercial invoices, the exporter should make out new invoices. A detailed letter of explanation stating corrections should be attached to the new invoices, which should be sent at once to the exporter's principal in Brazil. Commercial invoice forms are available form commercial stationers. Bill of Lading -- Attached to each copy of the commercial invoice is a nonnegotiable copy of a numbered and dated bill of lading. This may be an ocean bill of landing or air waybill, depending on the mode of transportation and/or terms of sale. There are two basic types of bills of lading: nonnegotiable and negotiable, or "shipper's order" bills of lading. The latter is used for sight draft or letter of credit shipments. When shipments originate abroad and are cleared through the United States in transit to Brazil, either an authentic copy of the "through" bill of lading issued by the foreign carrier for the voyage from port of origin to the United States must be attached to one copy of the invoice prior to shipment from the United States. Bills of lading and air waybills no longer required the carrier's signature. Consular registration and chamber of commerce certification are not required. The import license number and its expiration date must be shown on the bill of lading or air waybill. In rare cases, when no import permit is required, the exemption should be clearly stated. Freight charges must also be clearly indicated in words and numbers. Noncompliance with this regulation will prevent the importer from closing or liquidating foreign exchange contracts, and failure to detail information on import licensing will result in considerable delays. According to International Chamber of Commerce rules governing foreign trade terms and documents, the only bill of lading that is acceptable on draft or letter of credit shipments is one marked "Clean on Board". This means that the carrier has not taken any exception to the condition of the cargo or packing and that the merchandise has actually been loaded aboard the carrying vessel. Special Documentation -- Various special documents are required on shipments of certain commodities. These special documents include sanitary certificates from the Ministry of Agriculture for shipments of live plants or parts thereof; health certificates for shipments of live animals and animal products capable of transmitting disease; inspection certificates for shipment of used merchandise, machinery, and equipment; and Ministry of the Army authorization for armament shipments. Industry-specific import and documentation requirements are detailed in a separate section of this report entitled "Imports Subject to Special Control". In order to clear goods through customs without difficulty, Brazilian importers must have all necessary documents with them. Documents are often delivered to importers against their acceptance of the exporters' bank collection draft, as in open account shipments, unless otherwise contracted. When documents are sent by means other than the carrier on which goods are shipped, they should be forwarded soon enough thereafter to ensure timely arrival. To clear merchandise through customs, importers or their agents must present copies of the commercial invoice (fatura comercial), which includes a declaration of origin of the merchandise (a separate certificate of origin is acceptable but not required), the bill of lading, and the import permit (guia de importa o). It cannot be overemphasized that the documentation must be complete and correct in all requirements in order to avoid heavy fines and penalties. Exact weight and quantity of goods, including parts and accessories for machines and apparatus in general, must be accurately and completely supplied by the exporter to the importer on either the pro forma invoice, the commercial invoice, or the price list. The import license must contain the accurate weight and quantity specifications. While the importer may clear merchandise through Brazilian customs following the steps outlined above, this job is often turned over to a "despachante," or freight forwarder. Despachantes are often quite large organizations that provide a wide range of services to anyone wanting to expedite their dealings with the government. The customs clearance fees charged by such an organization are controlled by the Union of Despachantes. Despachantes are employed not only because they can clear goods through customs faster than an importer, but also because they eliminate the need for permanent staff in the importing firm to handle such matters. - Temporary Entry The tariff law provides that goods in transit through Brazilian national territory, enroute to another country via customary channels of international trade, are exempt from the payment of import duties. Goods in transit are granted maximum storage periods of three months in the case of perishables and one year for other merchandise, extendable for an additional six months. The following Brazilian ports have been designated as transit zones for the specified neighboring country. Bel m, for Peru and Bolivia; Corumb , for Bolivia; Manaus, for Ecuador; Paranagu , for Paraguay; Porto Velho, for Bolivia; and Santos for Bolivia and Paraguay. Other seaports or airports where federal customs officials are stationed may also be used as transit zones for countries contiguous to Brazil even though no special facilities have been created for transit shipments. - Abandoned and Reexported Goods Goods imported into Brazil may be expressly or tacitly abandoned. They may be expressly abandoned in writing at any time prior to customs clearance. Tacit abandonment occurs when the merchandise is not withdrawn within the permissible warehousing period. Although customs laws permit the reexportation of merchandise that has entered the country legally, foreign trade controls make reexport difficult. Imported goods not cleared through customs require authorization for reexport. On goods already cleared through customs, for which foreign currency payments were made, reexportation will not be authorized without reimbursement of the foreign currency paid. Once goods have been cleared through customs, they are considered nationalized, and import duties are not refunded if goods are reexported. Goods shall be considered to be abandoned if they remain on customs premises 90 days after discharge; 60 days after the date on which clearance procedures were halted because of an action or failure to act on the part of the importer; and 45 days after the date of notification from customs. - Labeling, Marking Requirements Labeling. The Brazilian Customer Protection Code, in effect since September 12, 1990, requires that product labeling provide the consumer with correct, clear, precise, and easily readable information about the product's quality, quantity, composition, price, guarantee, shelf life, origin, and risks to the consumer's health and safety. Imported products should bear a Portuguese translation of this information. Since metric units are the official measuring system, products should be labeled in metric units or show a metric equivalent. The United States Senate Concurrent Resolution No. 40, adopted July 30, 1953, invited U.S. exporters to inscribe, on external shipping containers in indelible print of a suitable size: "United States of America". Although such marking is not compulsory under law, U.S. shippers are urged to follow this procedure in publicizing American-made goods. Marking. The essential identifying marks -- shipping marks, port of destination, and package number (when required) -- must be prominently shown on the shipping case and situated so that they will not be covered by any later strapping. Any other markings should be placed in a less prominent place and should be limited as much as possible to essential data. Identifying marks used in the bill of landing should be shown on the shipping case. A number may be used as an identifying mark, provided that it is placed within a geometric figure, i.e., a triangle, square, etc. - Prohibited Imports The Brazilian Government has eliminated import prohibitions. However, it places special controls in certain imports. Please refer to item "Imports Subject to Special Control". - Standards Brazil uses metric system of measurements and weights. Pharmaceutical and cosmetics products are regulated by the Ministry of Health, which requires registration of laboratories and laboratory products before relevant products can be launched in Brazil. Brazil generally accepts U.S. product standards, and accepts U.S. testing laboratory certifications, such as those of Underwriters Laboratory. - Free Trade Zones/Warehouses There are four free trade zones in Brazil -- Manaus, Macap /Santana, Tabatinga, Guajari -- and three others are authorized -- Bofim, Pacaraima and Brasileia. The Manaus Free Trade Zone is the extensevely developed. It was created in 1967, in a 10,000 square kilometer area surrounding the city of Manaus, in the State of Amazonas, in the north of Brazil. However, it was in fact inaugurated by decree ten years later. This decree established special incentives for a period of 30 years for the creation of an industrial, commercial and agricultural center in the heart of Brazilian Amazonia. Later, these incentives were extended to all western Amazonia, comprising the states of Amazonas, Rond nia, Acre and Roraima, an area of 2.9 million square kilometers, equivalent to 26 percent of the entire territory of Brazil. The Brazilian Constitution of 1988 endorsed the fiscal benefits of the Manaus Free Trade Zone and extended their applicability to the year 2013. Free Trade Zone status implies that goods of foreign origin may enter into the Manaus free port without payment of customs duties or other federal, state or local import taxes. In addition, the Industrial Product Tax on certain commodities and the ICMS sales tax on most items are not applied. Imported products used for processing, reexport or transshipment and which are subsequently shipped to other parts of Brazil also qualify for these tax exemptions (unless they are among a small group of exceptions). The ICMS sales tax is imposed on items produced in the free port when shipped out of the free zone into Brazil. Law No. 8387 of December 30, 1991, modified the regulations for the Manaus Free Trade Zone by eliminating the previously existing import quota. Now, importers may bring in whatever they need, provided prior notification is made to the Superintendent of the Manaus Free Zone (SUFRAMA). The law also allows free zone importers to supply foreign goods from their stock in Manaus to other parts of the country regardless of quantity. These goods, however, are subject to all duties assessed under normal importation. SECEX import licenses must be issued prior to shipment of goods destined for the Brazilian marketplace. These licenses are additionally subject to authorization by the Superintendent of the Manaus Free Trade Zone (SUFRAMA), the Manaus free zone authority. Commercial invoices and bills of landing must have "Free Zone of Manaus" typed on the, and one of the following statements: "Zona Franca de Manaus para Consumo" (Manaus Free Zone for Consumption) or "Zona Franca de Manaus para Reexporta o" (Manaus Free Zone for Reexport). Brazilian restrictions on the informatics sector no longer apply to the Manaus Trade Zone. License and authorization requirements for health/sanitary controls, national security interests, and environmental protection remain in effect. Each passenger leaving Manaus is allowed a quota of $2,000 (FOB value) of goods of foreign origin. Products manufactured in Manaus are not subject to the quota In July 1988, the Brazilian Government approved legislation to establish export processing zones (ZPEs) -- free trade areas -- to encourage production of goods for export in the northeast and other priority development areas. Law 8037 of December 30, 1991, created a ZPE in the new state of Amap . The free trade area is considered a comparable area of free trade for imports and exports. It operates under the control of the Superintendent of the Manaus Free Trade Zone. Legislation regarding ZPEs establishes requirements that firms operating in the zone export at least 90 percent of production. Up to 10 percent of production can be sold in the domestic market, and is subject to a duty of 75 percent ad valorem on the final price, minus the cost of imported inputs. Normal corporate income taxes apply to profits generated in the zones. Firms operating in the zones will be exempt from foreign exchange regulations and will maintain dollar and local currency accounts; the official Brazilian exchange rate must be used to convert dollar accounts for local purchases. Foreign firms established in the zones may use their own hard-currency resources for tax-free imports of machinery and raw materials from abroad. Firms in the ZPE may not produce goods subject to export quotas. License and authorization requirements remain in effect in ZPEs for health/sanitary controls, national security interests, and environmental protection. - Special Import Provisions Brazil imposes fines and penalties for violation of customs, exchanges, and consular regulations. These fines and penalties are severe, especially in cases of fraud, and where the complicity of the exporting firm is proven. Fines may be incurred for violations or errors in preparation of document preparation. When goods that require import permits are imported without this documentation, there is a fine of up to 100 percent of the c.i.f. value of the merchandise. When a commercial invoice is absent, the fine is equal to the customs duty. If the original commercial invoice is not available for presentation at customs, the importer can sign a guaranty of responsibility that it will be presented within 120 days. Failure to present the invoice before expiration of the guaranty of responsibility could result in a fine equal to the customs duty. For under-invoicing, over-invoicing, or otherwise misrepresenting the value of an import, there is a fine of up to 100 percent off the excess or deficiency. If the value declared by the importer is judged to be false, there will be a fine of at least 50 percent of the difference between the duty declared by the importer and that verified. If the appraised value exceeds the invoice value by more than 10 percent, there is a fine of 100 percent of the value of misrepresentation; the fine is 5- percent if the value of misrepresentation is between 5 and 10 percent. There is no fine in cases of error in weight or quantity, but rules are strict. Currency indexation of the amount of fines levied and not paid effectively preclude the payer of a fine from taking advantage of high inflation in order to profit from currency devaluations. In addition, the Central Bank does not allow remittance of foreign exchange to cover the exceed except in special cases. It is essential that shippers prepare documents completely and carefully. For instance, failure to make a separate declaration on the invoice of the net weight and value of drums or other containers that have been used in shipping the merchandise may subject Brazilian importers to heavy fines. When customs officials challenge the declared value of imported goods, they have eight days to establish a new valuation. The importer then has 30 days during which to protest the new value, and a decision must be rendered within another 30 days. while the value is in dispute, the importer's declared value is provisionally accepted for the purpose of clearing the goods, but the importer must post bond or make a deposit covering the claimed differences, pending a final determination of the dutiable value. Appeals concerning the valuation of imported merchandise are heard by SECEX. If the final decision is against the importer, a fine amounting to between 50 and 100 percent of the difference between the declared value and the verified value must be paid by the importer. - Imports Subject to Special Control Import of Used Material. In accordance with provisions of SECEX Portaria 8, of May 14, 1991, SECEX will accept for consideration requests covering the importation of used machinery equipment or instruments providing the following requirements are met in full: 1. The equipment is intended for the importer's own use and will play a direct role in the production process; 2. The goods are not of a type that can be produced within Brazil and cannot be substituted by other machines or equipment of Brazilian manufacture; 3. The goods are considered by the Brazilian Government to be of interest to the Brazilian economy and can be applied in hastening the expansion of internal production programs or the rapid increase of exports; 4. The equipment is not intended for quality control; 5. The equipment has less than 10 years at the date of the request for importation in the following cases: precision instruments intended for mass production or tooling, and equipment in which normal operation is performed under unfavorable conditions that accelerate its physical deterioration by corrosion, shock or vibration; 6. The equipment has less than 20 years of use at the time of presentation of the request for importation, in the following cases: heavy equipment not used in tooling, and exceptionally large equipment used in tooling, but not for items which are mass produced. In all such requests, SECEX will require the presentation of an inspection and appraisal certificate signed by an international, specialized, and qualified form acceptable to local Brazilian consular authorities. Brazilian consular authorities may in some cases accept a notarized statement by the manufacturer. The certificate should state the following regarding the used equipment: 1. Year of manufacture, reconditioning or overhaul, with indication of substituted parts and accessories and the total value; 2. That the used equipment's operational condition and tolerances that are required by technical norms in effect in the country or origin are identical to those of equipment units when new; 3. The technical differences between new units and those inspected; 4. The life expectancy of the used machinery; 5. The market value of a reproduction of the equipment and that of a similar unit technically updated; 6. Net weight. In the case of imports of reconditioned parts and accessories for airplanes originating in and proceeding from the United States, the inspection and appraisal certificate should be issued by a company authorized by the U.S. Federal Aviation Administration. "Yellow tags" issued by authorized institutions in other countries will be accepted in lieu of a certificate. The requirement for certification may be waived in the following cases: a) imports under the BEFIEX program (a Brazilian export- incentive program); b) imports under temporary admissions; c) imports under leasing, according to Brazilian legislation; d) airplane imports approved by COTAC, Brazilian Air Ministry; e) imports of ships and boats, approved by the National Department of Water Transportation of the Ministry of Transportation and by the Council of the Merchant Marine. Inspection and approval of used machines, equipment, and instruments will be carried out by SECEX. Importation of used consumer goods will not be authorized. Sector Specific Controls. Under the 1991 Informatics Law, prohibitions or requirements for government prior review for imports, investment, or manufacturing by foreign firms in Brazil were eliminated. However, import duties remain high (up to 40 percent) on informatics products, and Brazilian firms receive preferential treatment in government procurement and have access to certain fiscal benefits, including tax reductions. Rules governing computer software are contained in Law 7646 (the "software law") of December 1987 which provides copyright protection and establishes rules for marketing computer software in Brazil. Law 7646 extends existing copyright legislation to cover software. Copyright protection is granted for 25 years from the date a program is first released in any country. Copyright registration in Brazil is administered by the National Industry Property Institute (INPI). The software law requires that all software be "cataloged" by the informatics department of Brazil's Ministry of Science & Technology (DEPIN) prior to its commercialization in Brazil, and that in many cases software must be distributed through a Brazilian firm. The law contains provisions to deny cataloging of foreign software if DEPIN determines there is a similar program of Brazilian origin. However, this provision is no longer applied. A draft law has been introduced into Brazil's Congress to eliminate the requirement for cataloging, the test of similarities, and the requirement that software to run on Brazilian -origin hardware must be distributed by a Brazilian firm. Petroleum Products - Bulk shipments of petroleum products to Brazil are controlled by the DNC -- Departamento Nacional de Combust veis (the National Fuel Department), an agency of the Ministry of Mines and Energy. Authorizations are determined in accordance with national needs assessments conducted biannually by Petrobr s, the country's oil and gas monopoly. Packaged Lubricating Oil and Petroleum - A request to import packaged lubricating oil and petroleum must be submitted by the importer to the DNC (National Fuel Department). In turn, the DNC routes the request to Petrobr s for confirmation that locally produced alternatives at competitive prices are not available before the request if approved. Arms and Ammunition - All imports of firearms, ammunition, and implements of war, whether for personal, commercial, or government use, require a permit issued by the Ministry of the Army. Other Products Requiring Special Approval/Documentation - Imports of soft drinks, flammables, airplanes, dangerous substance, chlorinated pesticides, insecticides, other agricultural chemicals, and animal foodstuffs are also controlled. Imports of ships and boats must be approved by the National Department of Water Transportation of the Ministry of Transportation and by the Council of the Marchant Marine. In the case of the lithium, the GOB has refused to grant an import license for about 2 years. - Membership in Free Trade Arrangements Brazil is a member of ALADI, a Latin American organization providing duty rate reductions to its members. Brazil also is a member of the MERCOSUL -- the Southern Common Market, composed of Brazil, Argentina, Paraguay, and Uruguay.