Uruguay, the tanning industry is in crisis and political entities’ answer is protectionism

Uruguay intends to fight the current crisis hitting the tanning segment with a protectionist behavior. After the shock caused by the closing of production sites and loss of hundreds of jobs announced by JBS Zenda, congressman Eduardo Rubio (Uniòn Popular party) presented a draft legislation that limits “for a transitional period” sales of tanning raw material abroad. The text presented to parliament includes the possibility of only exporting wet blue and finished leather. But this is also up for debate, because as reports the news source La Diaria, Rubio’s project also includes a decision following the latter, that consists of forcing a quota of finished materials to remain inside the country to help national manufacturing. This protectionism was caused, according to local sources, by two considerations. First, that Uruguay applies a 5% duty on the export of raw material, while MercoSur’s partners settle at about 20% – 25%. Second, the congressman is irritated by the fact that JBS Zenda, subsidiary of Brazil’s JBS, wants to only leave the raw hides treatment’s plant open, and plans to shut down the two refinement ones. The proposal, it seems, carries transitory value: the limit over export quotas disappears once the amount of finished hides that is exported reaches the level of 2008, which is of 65% of the total.

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