Brazil has launched a probe into potential dumping practices in imports of fiber cables and related optical equipment from China.
The investigation was announced by the foreign trade department of the industry, trade and development ministry (MDIC), following complaints from three companies from Japan, Mexico and Italy about illegal export subsidies from China, according to BNamericas.
“Prysmian Group celebrates the acceptance, by the federal government’s trade defense agencies, of the investigation request filed by the main manufacturers of the sector installed in Brazil, including Prysmian itself, regarding the possible practice of dumping in imports of fibers and optical cables of Chinese origin,” Marcelo Andrade, Latin American telecoms VP at Prysmian, said in a statement sent to BNamericas.
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Europe and the US have already imposed restrictions on this type of Chinese equipment imports. The restrictions could be generating excess supply from Chinese producers, who may be redirecting the shipments to Latin America.
According to BNamericas, the probe was ready to be launched before the Brazilian President´s state visit to China last month, but MDIC waited to move ahead with the probe, likely opting to avoid diplomatic frictions during the Lula-Xi Jinping meeting.
Chinese companies are the main suppliers of fiber and optical equipment for small operators and internet service providers, mainly due to their competitive prices.
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The MDIC’s announcement in the official gazette said that “sufficient elements were presented that indicate the practice of dumping in exports from China to Brazil of the products subject to this order, with damage to the domestic industry resulting from such a practice.”
The “damage analysis” period is from July 2017 to June 2022, according to the ministry. Brazil bases the investigation on GATT and WTO guidelines.
The government saw “solid evidence” that public policies and Chinese government programs deem the fiber optics cable a strategic sector that deserves preferential treatment.
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The MDIC also saw concrete elements of “government intervention in the sector, in the form of financial subsidies and others, not only in companies that export to Brazil but in a considerable number of companies in the sector.”
It also mentions incentives by China for developing raw materials for optical cables.
The Brazilian government also saw “state interference in companies operating in that sector, so that the decisions of private entities do not seem to reflect purely market dynamics, but the constant guidelines of the plans established by the government.”
Parts of the investigation order are confidential, especially those that mention strategic market data and the names of the Chinese companies that are the main target of the investigation.
The document, however, cites Chinese state influence in the fiber optic cable sector through firms such as the Jiangsu Zhongli Group, which has two state-owned companies among its shareholders: China Development Bank Guokai Finance and ChangShu Development and Investment.
Other companies cited as having state-owned shares were Shenzen Tefa Information, Changfei Optical Fiber & Cable (YOFC), Tianjin Futong Xinmao Technology, Jiangsu Zhongtian Technology (ZTT) and Fiberhome Communication Technology.