BU532 International Economics

Prof.: Dr. Kim, Rachel

Brazil’s International Trade Regulations

Bruna Martins

Southern States University

Running head: TRADE IN BRAZIL 1

Brazil’s International Trade Regulations

The international trade patterns and compositions started to witness many shifts at the dawn of the 21ST Century, especially due to the evolution in the process of economic evolution. Consequently, the scope of cross-border trading has become more complex and wider. The implication is a multi-layered relational framework that links foreign direct investment, the support services of core activities of companies, and international trade as a result of fragmentation of production in terms of tasks and its global value chains’ geographic dispersion.

Consequently, the traditionally more closed Brazil’s economic policies have begun to shift. Brazil began to open its trade and investment regime policies since its last economic depression and recession about six years ago (Oliveira, 2017). The result include a decentralized but more market-driven environment via prices and state monopolies deregulation, privatization and privatization, and liberalization of investments. Furthermore, the World Trade Organization (WTO) reports that greater flexibility and improved resource allocation have enabled the Brazilian economy to deal with unfavorable internal and external shocks thus facilitate a rapid financial recovery (World Trade Organization, 2000).

The transformation has come with much opportunity. Market-set exchange rate has enabled the country to decrease, or alleviate measures that initially caused the restriction of supposed exports or imports and create a definitive departure from all forms of formerly protective trade policies. The progressive policies have fostered an undistorted balance between export and large domestic offer, and achieve and sustain greater economic growth through its offer of a positive strategy towards the realization of such opportunities.

The foreign direct investment (FDI) FOR Brazil has continued to exponentially increase since1996, surpassing US$30 billion in 1999 due to its stimulation of privatization (World Trade Organization, 2000). Brazil’s internal market is very attractive, has reflects a better share to MERCOSUR markets’ access, and has an enhanced policy environments’ market orientation. Brazil remains the largest country in Latin America, and the second largest in the Western Hemisphere, only after the United States of America. Furthermore, it remains the largest exporter of several agricultural products and produce in the world, including sugar, orange juice, and coffee. The European Union (EU), MERCOSUR (including Argentina and Uruguay) are the leading markets for Brazilian products, while the leading suppliers to Brazilian markets include Argentina, United States, and EU, in increasing order (World Bank Organization, 2020). For instance, according to the US Census Bureau, Brazil has had a net import and export totals of US$ 181,230,498.36 and US$239,887,754.93, respectively, thus leading to a positive trade balance of US$ 58,657,256.58 (in thousands), with the US (United States Census Bureau, 2019).

Foreign trade in Brazil is governed by many resolutions, decrees, provisional measures, and laws which are also frequently amended. However, international trade regulations in the country are very complex (Ayub, 2017; Novatrade, 2016). Non-residents are exclusively taxed at source based in their Brazilian-sourced income whereas residents the taxation of residents is based on their worldwide income (International Living, 2020). The main trade instrument in Brazil is tariffs computed through a plan which converges or leans the Common External Tariff (CET) of MERCOSUR (World Trade Organization, 2000). Furthermore, the country adopted a computerized system for customs clearance, or SISCOMEX to simplify its custom clearance (Australian Trade and Investment Commission, 2020). The other import policies include the contingency measures like anti-dumping laws and automatic import licenses for trade law monitoring and statistical purposes.

Brazil regularly uses export promotion policies. The practice aids the country to offset its domestic inefficiencies like overvalued exchange rates, cascading tax system, inefficient financial intermediation, and poor infrastructure. As a founding member of the WTO, Brazil upholds the five basic principles of global trading systems, including safety valves, transparency, enforceable and binding commitments, reciprocity, and non-discrimination. However, the European Commission has recently reported that Brazil has resorted to several potentially trade-restrictive measures.

Its domestic market is protected using applied customs duty averaging at 13.5% (European Commission, 2019). The tariff and non-tariff barriers inhibits open and stable regulatory environment for foreign traders and investors. However, Brazil sees the trade protection policies to cause the consumption of Brazilian products and produce within the local market (International Monetary Fund, 2019). The country is however opening up and implementing newer international trade regulations that would open up the Brazilian market to more global trade.

References Australian Trade and Investment Commission. (2020). Doing Business – Tariffs and Regulations – Brazil – For Australian Exporters. Retrieved February 4, 2020, from Australian Government: Ayub, C. (2017, January 4). Brazilian Trade Regulations ‘Too Complex’. Retrieved February 4, 2020, from World Finance: European Commission. (2019, May 7). Brazil – Trade – European Commission . Retrieved February 4, 2020, from European Commission: International Living. (2020). Taxes in Brazil. Retrieved February 4, 2020, from International Living : International Monetary Fund. (2019, March 18). Trade’s Impact on Brazil’s Industries. Retrieved February 4, 2020, from IMF Blog: Novatrade. (2016, September 16). Import Duties and Taxes in Brazil. Retrieved February 4, 2020, from Novatrade: Oliveira, S. E. (2017, February 1). Brazil in the Twenty-First-Century International Trade: Challenges and Opportunities. Retrieved February 4, 2020, from IntechOpen: United States Census Bureau. (2019). Foreign Trade: US Trade in Goods with Brazil . Retrieved February 4, 2020, from United States Census Bureau: World Bank Organization. (2020, February 4). Brazil Trade – Data. Retrieved February 4, 2020, from World Integrated Trade Solutions: World Trade Organization. (2000, November 4). Trade Policy Reviews: First Press Release, Secretariat and Government Summaries – Brazil: November 2000. Retrieved February 4, 2020, from World Trade Organization: