This presentation by the Secretariat for Productivity and Competition Advocacy (SEPRAC), Ministry of Finance of Brazil, was made during the discussion on Informal Economy during the 2018 edition of the OECD-IDB Latin American and Caribbean Competition Forum held in Buenos Aires, Argentina on 18-19 September 2018. Find all related materials at the forum website http://oe.cd/laccf.

1. MINISTRY OF FINANCE
INDUSTRIAL POLICY
“ROTA 2030” – PUBLIC POLICY FOR VEHICLE INDUSTRY
Secretariat for Productivity and Competition Advocacy

2. - Tecnological development
- Innovation
- Safety
- Environment
- Efficiency
- Quality
Inovar-Auto (2013-2017)
Framework
Objectives
- Raise 30 points in excise tax on ex-factory sales
price and decrease it based on efficiency target
+ additional 2 points based on P&D
expenditures
- Quota for imports
Tax incentives
- Production stages routine
- Local content
- Covenant with local research institutes
- Commitment in efficiency goals
Rules for granted companies
- Vehicles with inferior quality
- No entry in external markets, excl. Mexico and
Argentina
- Pollution and safety issues
- 4% of GDP and 22% of Industrial Production
Market failures

3. Inovar-Auto
Results
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Demand for vehicle
(units - 12-month rolling)
WTO pannel in mid’2017!
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
% Foreign Trade and FX rate
% Exports % Imports BRL/USD

4. INOVAR-AUTO
Rota 2030 (2018-2032)
Initial proposal
Objectives
- Raise 15 points in excise tax on ex-factory
sales price and decrease it based on
efficiency target + additional 2 points based
on P&D expenditures
- Special regime for non-produced autoparts
- Quota for imports
Tax incentives
INOVAR-AUTO
Rules for granted companies
INOVAR-AUTO
Market failures

5. Competition assessment
- Barrier of entry for imported vehicles
- Poor identification of market failures
- Redesign the tax incentive
- No requirements related to production, only in R&D

6. INOVAR-AUTO
Rota 2030 (2018-2023)
Program
Objectives
- 50% rebate on corporate tax related to R&D
expenditure
- Special regime for non-produced autoparts
- Quota for imports
Tax incentives
None.
Rules for granted companies
INOVAR-AUTO
Market failures
- No barrier of entry
- No product discrimination
- Compliance with WTO standards

7. MINISTRY OF FINANCE
E-mail: seprac@fazenda.gov.br
Phone: +55 61 3412-5159
Home Page: www.fazenda.gov.br/seprac
Secretariat for Productivity and Competition Advocacy