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A dispute in the World Trade Organization (WTO) could lead Swedish telecom equipment provider Ericsson to shut down its Brazilian factory.
A top Ericsson executive confirmed this week that a closure is a real risk and it would affect some 1,500 workers. The plant was established in 1955 in the city of São José dos Campos, São Paulo state.
In 2015, the European Union and Japan questioned Brazil's industrial policy at the WTO, particularly policies for the auto industry, triggering an inquiry expected to last two years.
The same policies are also used by the Brazilian electronics industry, through a local computing law that grants tax breaks for companies manufacturing in Brazil in exchange for investments in R&D.
During a panel at the Futurecom ICT conference in São Paulo this week, Ericsson's head of Latin America, Sergio Quiroga (pictured), confirmed the risk of the factory having to close.
"We strongly rely on the computing law and will do everything so that these 1,500 people keep their jobs. But the law is essential to the country and must be maintained," said Quiroga, who added several other companies would also be affected if the law is changed.
Ericsson view on the WTO-related matter was not shared by its Chinese rival, telecom supplier Huawei.
Huawei's global VP of public relations, Alfredo Acebal, said countries should walk away from laws that serve as a form of protectionism.
"Brazil needs to embrace globalization. Protectionism is not the solution. We've seen that in other countries It might help in short term, but is not the answer in the medium or longer run," said Acebal.