⚙️ Steel stoked

Good morning! Today, the Brazilian steel industry bags a win. Google’s ban on political ads. And Belém’s shortcomings ahead of the COP30 climate conference.

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A win for Brazil’s steel industry

Brazil’s Foreign Trade Chamber (Camex) on Tuesday raised import tariffs on 11 different steel products to 25 percent and set import quotas for the new taxes to be enforced. The decision will take effect in 30 days and be valid for the next 12 months, during which time the government will monitor the market’s behavior.

 Why it matters. Brazilian steel producers have for months urged the government to take such action, claiming that dumping practices from China are creating existential threats for Brazilian steel producers. 

What they are saying. In a statement, the Development and Trade Ministry said the decision only affects products whose imports in 2023 surpassed the 2020-2022 average by at least 30 percent. “The government expects the decision will contribute to reducing the idle capacity of the national steel industry,” the statement adds. 

• Local steel producers say the loss of market share to Chinese competitors has led to a 40 percent idle capacity, shrinking profits, and several layoffs in recent months.

• Marco Polo Lopes, head of the Brazil Steel Institute, said last year that the industry is facing “an asymmetrical war.”

Yes, but … Industries that buy steel products are against these tariffs, arguing that barriers on Chinese steel will have an inflationary ripple effect on their goods.

State of play. The world is experiencing a tsunami of Chinese steel exports as that country’s property crisis has sapped domestic demand. Several countries have seen massive jumps in imports. In Q1, they soared by 29 percent in Brazil from a year prior — in Colombia and Chile, growth reached 46 and 32 percent.

• Bloomberg cited steel analysts who say Chinese exports of hot-rolled coil benefit from a tax scam that allows traders to trim VAT payments and make even cheaper product offerings to the global market.

• Many countries have turned to higher tariffs against perceived dumping. In the U.S., President Joe Biden defended tripling import levies on Chinese steel. 

In Brazil. Import tariffs for steel products affected by Camex’s decision currently range from 9 to 14.4 percent. The government, however, has made isolated moves to reduce imports.

• In September 2023, it removed 12 steel products from a list that benefited from a 10 percent reduction in import tariffs. Then, in February, Camex reinstated tariffs on five steel products — that Brazil had unilaterally cut in 2022 — two of which had their tariffs further hiked with Tuesday’s decision.

You should also read:

• Brazilian iron ore could be key to China’s decarbonization targets

• Trade tensions rise as U.S. accuses China of using Mexico as backdoor

• U.S. lifts anti-dumping duties on Brazilian steel

Political ads banned on Google

Starting next month, Google will no longer allow political content to be boosted on its ads platform — just months before the October 2024 municipal elections, when voters in all 5,569 Brazilian municipalities will choose new mayors and city councilors.

State of play. A February decision by Brazil’s main electoral body ordered platforms that allow political ads to create a registry with real-time data on the content, amounts paid, payment origins, and targeted demographics for each and every ad. That database should be made public and have a friendly interface.

• Similar regulations were already in place, but the Superior Electoral Court has broadened the scope of what needs to be monitored. Any glitch in the system could result in a platform being accused of negligence and facing punishment.

Not unseen. Google has pulled out of political ads before, namely in Canada, before the country’s 2019 election.

 Why it matters. During the 2022 general election in Brazil, no other company raked in as much money as Facebook and Google. Political ads on these platforms raised a combined BRL 255 million (USD 49.7 million) — almost 4 percent of all campaign spending in that election, official data shows.

Opacity. A registry would enable journalists, researchers, and watchdog groups to understand what ads run during an election. Oversight could deter illegitimate actors from trying to tip the scales of a race.

• Moreover, a registry would also have the potential to expose platform-based micro-targeting, which is when ads are custom-designed to appeal to specific voters and manipulate their behavior. Many call for micro-targeting to be banned, but they should at least be made transparent. 

Thought bubble. Big social media platforms such as Facebook, YouTube, and X have been observed deviating from their commitment to safeguarding election integrity. Moreover, messaging apps such as Telegram and WhatsApp have emerged as key public spaces for sharing political content — and monitoring is practically nonexistent.

• It remains to be seen how effective Google’s ban on political ads will be, or whether the platform will be used for spreading disinformation.

You should also read:

• Social media regulations take a hit in the House

• How Elon Musk joins Brazil’s online far-right

• Is Brazil going too far to curb AI-generated disinformation?

COP vulnerabilities

Valter Correia da Silva, the recently appointed special secretary for the organization of the 2025 UN Climate Conference in Brazil (COP30), told senators on Tuesday that COP30 host city Belém has “weaknesses” that could affect the event if not properly addressed.

No news. Early in 2023, Brasília correspondent Cedê Silva first showed the challenges faced by Belém, a city of 1.3 million people in the heart of the Amazon. The city lacks hotel infrastructure and has only one large convention center. 

• The last major international event held there was the 2009 World Social Forum, which is not nearly as demanding in infrastructure as the world’s most prominent climate convention.

Solutions. Federal and local governments agree that the city must expand its lodging capacity by bringing in hotel ships (or floating hotels), as done in Glasgow for COP26 in 2021 and other significant international events.

• Hotel ships are necessary because, even if Belém has thousands of hotel beds, it has few accommodations that are suitable for heads of state and ministers.

 Why it matters. Mr. Silva told senators that bringing in hotel ships would first require dredging the nearby river, which is a long process. The public bidding plus the dredging itself would take an estimated 18 months — a timeline that would elapse dangerously close to the event, scheduled for November 2025. 

• And that is only if everything goes smoothly, a big if when it comes to Brazilian public bidding processes.

Benchmark. Ten years after Brazil hosted the football World Cup in 2014, over one-third of the urban mobility works promised by the federal and local governments have yet to be concluded.

By the numbers. Hana Tuma, lieutenant governor of the surrounding Brazilian state of Pará, said she expects around 50,000 visitors to attend the conference. The state government has partnered with Airbnb to increase Belém’s lodging capacity. 

Optics. Bringing the UN Climate Conference to the Amazon region was a significant political win for President Luiz Inácio Lula da Silva. But a strike of environmental workers (who demand higher salaries and better working conditions) has lasted for three months already and hinders the government’s ability to curb environmental crimes — not a good look for Brazil.

• The strike has dramatically reduced fines imposed on deforesters in the Cerrado savanna and Amazon rainforest. Moreover, it has created concerns over energy projects, imports, and wildfire control (with the dry season looming).

You should also read:

• Ibama walkout sparks fears of an Amazonian catastrophe

• Pará follows through on COP28 pledge to restore native vegetation

• The Amazon’s “tipping point” may vary within the forest

Quick catch-up

Tax Reform Secretary Bernard Appy is expected to present the government’s proposal to provide the fine print for the tax reform Congress approved in December. However, the House beat the administration to the punch, presenting its own such proposals last week.

A study shows that 15 of 24 agricultural segments have seen gross production value hit record levels. The measurement analyzes how much farmers are getting paid. But soybeans, corn, and beef production (44 percent of the agricultural GDP, combined) have lost money.

The government wants to create incentives for foreign airlines to operate in the Amazon, making airfares to the region cheaper.

Far-right Congresswoman Carla Zambelli orchestrated the invasion of the Judiciary’s computer servers conducted by notorious hacker Walter Delgatti in 2022 and 2023, according to charges filed by Prosecutor General Paulo Gonet on Monday.

Petrobras approved the construction of solar plants in three of its refineries, aiming at reducing greenhouse gas emissions — with a total capacity of 48 megawatts. They are expected to be operational by 2025.

 Bicycle producers will not benefit from tax breaks created by a government program to reduce carbon emissions of the transportation industry. The decision aimed at reducing the fiscal impact of the program.

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