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With taxes and permit requirements hurting sales at home, Brazilian handgun manufacturers are increasing exports, making their country the leading foreign supplier of handguns to the United States.

"The U.S. is now our largest market," said Carlos Alberto Murgel, president of Brazil's largest handgun manufacturer, Forjas Taurus S.A. Taurus now accounts for about 10 percent of all handguns sold in the United States.With highly efficient assembly lines in this southern city, Brazil's largest handgun manufacturers feed American demand for reliable, inexpensive guns. The U.S. market receives about 75 percent of Taurus exports and about one-half of the production of Brazil's second-largest handgun maker, Amadeo Rossi S.A.

According to one recent survey, Brazil exports 775,000 handguns a year - three times the number sold annually in this country of 160 million people.

The spread of Brazilian-made handguns was underscored in April when Mexican police officials identified a .38-caliber Taurus revolver as the weapon used to kill Mexico's leading presidential candidate, Luis Donaldo Colosio. The gun trail passes through a California gun shop to a Porto Alegre assembly line.

Here in this gray workaday city, in the southeastern corner of Brazil nearly 700 miles from Rio de Janeiro, Taurus managers have applied the driving business techniques of industrialized countries to transform a dusty, 55-year-old company.

Benefiting from a recent $20 million investment in new machinery, Taurus assembly lines churned out almost half a million handguns last year. Of these, about 230,000 went to the United States. Rossi, the only other Brazilian handgun exporter, has 3 percent of the U.S. market.

The importance of the American market to gun makers is as clear as the plaque on Murgel's office wall: "If guns are outlawed, only outlaws will have guns."

Because the Brazilian government does not agree with that philosophy, Murgel has made exports the key to growth at his company. Last year, 80 percent of Taurus' $85 million in sales were to overseas markets.

At home, a thicket of regulations discourages legal handgun ownership.

With taxes accounting for nearly 75 percent of Brazilian sales prices for guns, Taurus revolvers are often twice as expensive in Brazil as in Miami.

In addition, many Brazilian states require waiting periods before handgun purchases. After submitting proof of fixed residence and employment, a buyer has to wait up to two weeks for a criminal record check.

In Rio de Janeiro, to get a permit to carry a handgun, an applicant must submit character references from three neighbors, results of medical and psychiatric tests and a certificate from a police firearms course.