Published: Mon, May 28, 2018
Business | By Kate Woods

Brazilian government, transport unions reach deal to halt truckers' strikes

Brazilian government, transport unions reach deal to halt truckers' strikes

South America's largest city and economic hub Sao Paulo decreed a state of emergency, as did Rio de Janeiro. Some cities around the country are reporting a shortage of fuel at gas stations, fruits and vegetables at supermarkets and the reduction in the number of busses circulating.

South America's largest economy runs largely on road transport and the stoppage indeed was beginning to have serious consequences, with highway police reporting trucks had blocked roads in almost all but one of Brazil's 26 states.

The four-day protest over fuel price hikes had put a stranglehold on the movement of goods through the country, leading to severe food shortages and threatening airports and public transport. Brazil is one of the largest exporters of meat in the world.

As strikes continue to hobble Brazilian customs, the government is now facing up to protests linked to rising fuel prices. Significantly lowering the price would require steep cuts in taxes, particularly hard at a time when many states, such as Rio de Janeiro, have their own fiscal crises.

The price of diesel has risen sharply in recent months as world oil prices have gone up and the real has devalued against the US dollar.

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Shares of the state-owned oil company, Petrobras, dropped by 15% on Thursday after it announced it was cutting diesel prices by 10% to encourage negotiations.

It wasn't immediately clear how many truckers would return to work Friday.

On Wednesday night, the lower house of Congress rushed through a bill to eliminate a tax on diesel through the end of the year.

"This will give the government 15 days to talk to the truck drivers", he added.

On Friday, Temer said he would have the army and police use force if necessary to remove thousands of truckers who parked along highways and roads nationwide. This coupled, with an increase in the global price of oil in recent weeks, has seen a steady increase in fuel prices.

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Temer, a lame duck president who is deeply unpopular, said the price of diesel fuel would drop by 0.46 reals (US$ 0.13) per liter for 60 days, about a 10 percent drop compared to the price before the strike began.

"It's regrettable that even after so many delays, the president prefers to threaten truckers with the use of force rather than respond to their needs", said the statement.

The Brazilian government has reached a deal with haulage companies to suspend protests over high diesel prices.

Brazil is a member of the G20 group of the world's largest emerging and advanced economies, but the first five days of the strike were estimated to have cost the country's economy $2.8 billion, according to the daily Folha de Sao Paulo.

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