RESTRICTEDWORLD TRADE
ORGANIZATIONWT/TPR/G/75
27 September 2000
(00-3910)
Trade Policy Review Body Original: English
TRADE POLICY REVIEW
BRAZIL
Report by the Government
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), the policy statement by the Government of Brazil is attached.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Brazil.Brazil WT/TPR/G/75
Page 3
CONTENTS
Page
I. INTRODUCTION 5
II. THE ECONOMIC AND TRADE ENVIRONMENT 5III. THE INSTITUTIONAL AND REGULATORY FRAMEWORK 7
(1) S
TRUCTURAL REFORMS 7
(2) P RIVATIZATION PROCESS AND THE ESTABLISHMENT OF REGULATORY AGENCIES 7
(3) I NTELLECTUAL PROPERTY 8
(4) I NSURANCE SECTOR 9
(5) S ANITARY AND PHYTOSANITARY REGULATIONS 9
(6) T ECHNICAL STANDARDS AND REGULATIONS 10
IV. TRADE POLICY DEVELOPMENTS (1996-1999) 10
(1) T HE MULTILATERAL TRADING SYSTEM 11
(2) E CONOMIC INTEGRATION 11
V. FUTURE TRADE POLICY DEVELOPMENTS 13Brazil WT/TPR/G/75
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I. INTRODUCTION
1. Consistent with the principles and objectives of policies implemented throughout the last
decade, the Brazilian economy has experienced since 1996 an unprecedented consolidation process of
structural and fiscal reforms, the thrust of which continues to be the stabilization of the economy, the
liberalization of trade, and shifting the role of  State in the economy away from owner to regulator.
The aim is to improve economic competitiveness and efficiencies in social policies, creating a newlegal framework for sustained economic development.
2. Although the increased exposure to international competition has generated significant
achievements in terms of the restructuring and modernization of public and private sectors, the
opening up of the Brazilian economy, more markedly in recent years, has not resulted in improved
access of Brazilian goods and services in our major trading partners' markets. On the contrary, Brazil'strade balance performance during 1996-1999 continued to reflect such imbalances, in spite of
improvements in the quantum of exports, in the last year.
3. Adversely affected by contagion of the international liquidity crises of 1997 and 1998, the
Brazilian economy experienced a fast recovery in the aftermath. A combination of fiscal and
monetary discipline, the floating of the currency, accelerated public sector adjustment and thedeepening of structural reforms were essential to Brazil's robust and immediate answer to those
challenges.
4. During the same period, Brazil's commitment to trade liberalization and integration with
MERCOSUL continued to be the cornerstone of its trade policy.
5. Since 1996, Brazil strengthened its institutional cap acity to deal with trade issues, including
faithful implementation of WTO rules, especially those derived from the Uruguay Round
Agreements. For a country the size of Brazil, with diversified interests that spread around the world,the WTO agreements are a basic framework of insertion in the international economy. Hence, Brazil
hopes to see the multilateral trading system progressi vely improve, without the discrepancies, which
continue to affect agriculture and certain other areas.
6. In MERCOSUL, the first foreign frontier of the Brazilian economy, the main objective has
been to complete and improve the customs union, through deeper integration in new areas.Furthermore, MERCOSUL's ongoing negotiations w ith Chile, Bolivia and the Andean Community;
for the creation of the Free Trade Areas of the Americas  (FTAA); and the beginning of negotiations
with the European Union complement each other, within a four-fold trade enhancement perspective
that bear far reaching implications for the future of the Brazilian economy and the continuous
improvement in the standard of living of the Brazilian population.
II. THE ECONOMIC AND TRADE ENVIRONMENT
7. Since the last TPR, in 1996, Brazil has been able to strengthen fiscal and structural policies
and generate a sounder basis for medium and long-term growth.
8. The succession of crises that started in 1997 shrank liquidity in the international financial
markets considerably and imposed new challenges for the country.  Brazil responded to the Asian
crisis with a combination of strict fiscal and monetary policies, better institutional control on measures
with a fiscal impact and a set of new reforms.  Late in 1997, the authorities announced a
comprehensive fiscal package, involving both increased revenues and reduced expenditure,amounting to approximately 2.5% of GDP.  Moreover, the government accelerated discussion in
Congress of a series of reforms, including public administration and civil service reform.WT/TPR/G/75 Trade Policy Review
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9. Contagion seriously hit Brazil in 1998, in the aftermath of the Russian crisis and LTCM
failure.  Brazil negotiated a program with the International Monetary Fund, which was approved by
the Board on December 2 and paved the way for a package of contingency support, amounting to
US$ 41.5 billion from multilateral and bilateral sources.  In January 1999, Brazil felt it was necessary
to speed up the strategy of reducing macroeconomic imbalances.  It floated the currency, accelerated
public sector adjustment and further deepened structural reforms.
10. Forecasts were gloomy when the floating regime for the Real was established, but reality
proved different.  The economy grew by approximately 1% in 1999, the passthrough of devaluation to
domestic prices was considerably limited, the exchange rate stabilized at approximately 1.8 Real per
dollar after an initial overshooting, volatility in the exchange rate market decreased and Brazil
recovered access to private markets as early as April 1999.  Several factors explain these results.  Thestrength of previous reforms, including the financial sector reform initiated in 1995 was a crucial one.
But there are others: the authorities were firm in the administration of monetary policy (interest rates
went as high as 45% in March 1999); a credible inflation targeting mechanism was established within
the Central Bank; Brazil was able to shift the prim ary fiscal result from zero in 1998 to 3.1% of GDP
in 1999; private companies were largely hedged and la st but not least, an international support effort
was already in place.
11. Economic performance has been improving since then.  Real GDP is projected to reach 4% in
2000, inflation should stay within the targeted range of 6% plus two percentage points of margin and
unemployment has been kept at a 7.4-7.8% range.  Moreover and more importantly, Brazil has
established the long term basis for sustained growth and fiscal discipline, by approving the Fiscal
Responsibility Law, putting in place a new and more efficient budget process, implementing debt
restructuring agreements between the Federal Treasury and States and going ahead with theadministrative reform and an important reform of the social security system for private workers.
12. The privatization program has gained enhanced impetus since 1996.  Proceeds from
privatization amounted to US$ 76.175 billion between 1996 and 1999.  During these three years,
Brazil concluded the privatization of the secondary sector and started the privatization of services,
including gas, railways, energy, telecommunications, ports and banks.  At the State level, privatizationproceeds amounted to more than US$ 23 billion.
13. Total FDI from 1996 to 1999  amounted to US$ 81.2 billion. Only in 1999, FDI inflows
reached US$ 27.4 billion, more than enough to finance the current account deficit.  The current
account deficit followed a narrowing path from US$ 33.6 billion in 1998 to US$ 24.4 billion in 1999.
The narrowing of the deficit was produced by both a substantial reduction in the trade deficit, despitea 13% decline in the terms of trade and an improvement of the services account.   Actually, the trade
deficit came from US$ 6.6 billion in 1998 to US$ 1.2 billion in 99, a major shift that is expected to
continue in the year 2000, despite much higher than expected oil prices and lower than expected
commodity prices.
14. Brazil remains committed to trade liberalization and integration with MERCOSUL.  It is also
committed to strengthening the institutional capacity to deal with trade issues, including antidumping
and non-tariff barriers, in line with WTO rules. Finally, the Brazilian government established an
export credit guarantee fund in 1997 and put in place an export credit insurance system.Brazil WT/TPR/G/75
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III. THE INSTITUTIONAL AND REGULATORY FRAMEWORK
(1) STRUCTURAL REFORMS
15. During the last few years significant progress has been achieved in the consolidation of
constitutional changes intended to reform the role of the State and to modernize the Brazilian
economy.  It is worth highlighting, in this aspect, the establishment of the sub-national legal
framework that allowed the telecommunications and oil monopolies to become more flexible
(constitutional amendments of 1995) and the acceleration of privatization in the supply of electricityservices. Among other positive impacts, this one has enabled significant participation of private
national and international capital in sectors that are crucial for the elimination of bottlenecks in basic
infra-structure and, consequently, for increased cmpetition in the economy.  In addition to the reforms
in the economic order, recent reforms in the areas of social security, public administration and fiscal
management have been carried out that are essential to fiscal adjustment in the medium and long termperspective.
16. The Social Security reform (Constitutional Amendment - EC -  nº 20/98) paves the way for a
reversal of the exponential growth tendency of the social security deficits, the main factor of fiscal
imbalance in Brazil. This was possible mainly as a result of the modification of the rules for
calculating benefits for the private sector, with the introduction of actuarial criteria that permit afinancial balance of the system throughout the years. This Constitutional Amendment also established
more rigid rules for the retirement of public civil servants, among which the establishment of a
minimum age for pension benefits.
17. Along the same lines, the administrative reform, as it is called, approved by Congress in
June 1998 (EC nº 9), created the basic conditions for the Government, in all three branches, to have
more flexibility in carrying out adjustments in its staff, aiming at both fiscal adjustment and increased
efficiency in public administration.  Among the change s, it is noteworthy that civil servants admitted
to careers which are not “typical of the State” are hired under the same form of work contract used in
the private sector, making the benefits from social security more similar in the public and private
sectors.
18. Particularly worthy of attention is, above all, the Law of Fiscal Responsibility
(Complementary  Law 101/2000), considered a historic milestone for public management in Brazil, inthe sense that it defines a code of conduct for administrators in the three levels of government
(federal, state and municipal), consistent with the permanent pursuit of fiscal discipline. Among its
mechanisms, it establishes compulsory commitment to  fiscal goals and to full transparency in the
management of public funds, setting limits for personnel expenditures and public debt. The Law also
creates rules to prevent excessive expenditure in election periods and does not permit the approval ofnew expenditure without the proper indication of sources of revenue.
(2) PRIVATIZATION PROCESS AND THE ESTABLISHMENT OF REGULATORY AGENCIES
19. In 1999, the National Privatization Program (PND) turned 10 years. It is one of the most
comprehensive programs ever carried out in the world, attaining the total of US$ 89,7 billion so far, if
both the revenue obtained and the debts transferred are taken into account with the privatizations and
concessions at the federal and state levels.
20. From 1996 to 1999 the privatization process of state-owned companies in Brazil was
consolidated. In these four years, the Federal Government sold 24 companies, generating revenue ofUSS 10.133 billion. This total reaches USS 15.443 billion when the transferred debts are considered.WT/TPR/G/75 Trade Policy Review
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21. In July of 1998, the Federal Government sold the 12 holdings created by the spin-off of
telecomunication system (Telebrás), which gave way to the transfer to the private sector of all the
wireline and long-distance operators, as well as the "A" Band cellular operators, totaling USS 21.362
billion. In 1997, the Federall government sold its shares in Vale do Rio Doce Company, the most
important state-owned Brazilian corporation.  The sale generated a revenue of USS 3.299 billion and
the transfer of a USS 3.559 billion in debt.
22. The Brazilian Government will continue to carr y out the Program, through the privatization of
the IRB (Brazilian Reinsurance Institute) and of the BANESPA (São Paulo State Bank), as well as of
the remaining electricity companies - CHESF, FURNAS and ELETRONORTE - and state energy
distributing companies. The privatization of the sanitation sector still depends on the definition of the
participation model of the private sector.
23. As a result of this deep transformation, the State shifted its emphasis from the production of
goods and services to  regulatory role in the economic activity. This process led to the creation of
regulatory agencies to supervise private companies that had undertaken public utilities.
The following regulatory agencies were set up:
- National Telecommunications Agency (ANATEL);
- National Electricity Agency (ANEEL);
- National Petroleum Agency (ANP);
- National Sanitary Surveillance Agency (ANVISA); e
- National Supplementary Health Agency (ANS).
24. Other regulatory agencies are expected, among them the National Water Agency, the National
Mail Agency, the National Transportation Agency, the National Complementary Social Security
Agency and the National Civil Aviation Agency.
(3) INTELLECTUAL PROPERTY
25. In line with its commitments under the TRIPS Ag reement, Brazil has approved important new
legislation concerning intellectual property rights. In May 1997, Law no. 9.279 was enacted, coveringpatents for inventions and for utility models, registration of industrial designs and of trademarks and
service marks, repression of false geographical indications and of unfair competition. That same year,
Law nr. 9.456 established the rules for protection of new plant varieties. Protection for computer
programs was provided in 1998 by Law no. 9.609.  Law no. 9.610 also entered into force in 1998 and
established the main rules for the protection of copyright and neighbouring rights. Since then, severalPresidential Decrees and Ministerial Ordinances were issued on the application of those laws.  So
called Provisional Measures ("Medidas Provisórias - MPs") were also issued by the President
addressing some aspects of industrial property rights and of protection of genetic resources and
related traditional knowledge.  Such “MPs” are pr ovisionally in force pending approval by Congress.
26. This legal and regulatory framework establishes a higher standard for the protection of IPRs
than those contained in TRIPS Agreement, specially regarding copyright and neighbouring rights.
27. The strengthening of cooperation among the authorities responsible for the policy and for the
protection of intellectual property rights, in recent years, underlines the importance attached by the
Brazilian Government and the private sector to an adequate and effective enforcement of the different
laws and regulations, without losing sight of a prop er balance between the needs of rightholders and
users, and the socio-economic and technological development.Brazil WT/TPR/G/75
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(4) INSURANCE SECTOR
28. The insurance industry has grown significantly in recent years, due greatly to the favorable
economic environment. Between 1996 and 1999, total insurance premium increased by 131%. This
impressive growth was generated not only by the economic stabilization, but also by the liberalizationintroduced in some sectors. From 1996 onwards, restrictions to the access of foreign capital to the
domestic insurance market were eliminated. As a result the participation of foreign capital in the
insurance industry premium income increased from 6,33% in 1996 to 29,54% in 1999. At the end of
1999 there were already 61 insurance companies with some foreign capital participation instead of
only 26 in 1996. The same trend could be observed in the open private pension funds, where anincrease in foreign capital participation went up from 4% in 1997 to 21% in 1999.
29. The transition from a closed to an open reinsurance market has been a consistent target of
governmental policies and some important measures have been implemented to that end, the most
important of which were: a) the end of state monopoly in that activity since the approval of the
Constitutional Amendment nº 13 in 1996; b) inclusi on of the state owned Instituto de Resseguros do
Brasil (IRB) in the National Privatization Pr ogram (PND) in 1997; and c) the approval of
Law nº 9.932 in December 1999, which initiated the process of regulation of an open reinsurance
market in Brazil.
30. As part of Brazilian foreign trade policy an insurance company specialized in export credit
insurance was established in 1997. The Seguradora Brasileira de Crédito à Exportação - SBCE  is a
private company formed by the participation of three Brazilian insurance companies and one foreign
specialized company.
31. Negotiations on this subject within MERCOSUL have also experienced positive
developments since 1996.  A comprehensive process of full integration started with the establishment
of general guidelines to the admission and operations of companies in members´markets which will
lead to a completely open market in the future.
32. Other important changes will follow in the years to come in the insurance sector, such as the
privatization of worker's compensation insurance. The starting point of this process was the approval
of Constitutional Amendment nº 20, in December 1998, which establishes that legislation will
regulate the coverage of worker's compensation by the public and private sectors. Discussions have
already begun on this matter.
33. In addition, recent developments in Brazilian agricultural policy have changed the insurance
market related to agricultural risks leading to an increased growth in the participation of foreign
reinsurers. Results of this policy can already be seen, for instance, in the numbers of crop insurance
policies, posting an increase of 273% in premium income in the period of 1996 to 1999.
(5) SANITARY AND PHYTOSANITARY REGULATIONS
34. As a global trader Brazil fosters the continuous improvement of the sanitary and
phytosanitary environment for its livestock and agricultural production.  Unprecedented resources
have been assigned to sanitary and phytosanitary programs, which resulted in 2.025.769 km2 of
disease free areas; 76,5 million bovines; a wide range of new local control units; and progress in manyothers areas.
35. Since 1998, Brazil adopted, and notified the WTO Sanitary and Phytosanitary (SPS)
Committee, criteria for automatic and non-automatic licensing based on risk evaluation to human andWT/TPR/G/75 Trade Policy Review
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animal health and plant protection, in compliance with strict scientific methodologies applied to
import controls.
36. With respect to sanitary, phytosanitary issues and food safety, Brazil notified 53 regulations
to the SPS Committee between 1996 to 1999. Furthermore, 12 bilateral agreements on sanitary and
phytosanitary matters were concluded. The purpose of these agreements is to simplify import controls
and facilitate trade. Notwithstanding the importance of such agreements, Brazil's expectationsconcerning the attainment of such objectives have not yet been fully met.
37. Lately, a number of safety concerns, on-farm quality programs, food safety aspects,
sustainability and competitive factors, along with  several other requirements, have become central
issues in market acceptability. Although necessary, these measures bring a burden to the producing
countries by increasing costs related to production and controls, resulting in many instances inunjustified adoption of restrictive measures.
(6) TECHNICAL STANDARDS AND REGULATIONS
38. The process of structuring and modernization of disciplines related to technical regulations,
standards and conformity assessment procedures continued in Brazil with a view to bringing them
into line with the determinations of the Agreement on Technical Barriers to Trade (TBT). This has led
to significant progress in terms of international recognition, in particular through the signing of the
Mutual Recognition Arrangement for National Measuring Standards and of Calibration and
Measuring Certificates Issued by National Instit utes of Metrology (CIPM/BIPM), the Multilateral
Recognition Agreement  - MRA (International Accreditation Forum - IAF) and the first MRA for
recognition of laboratories at the world level, promoted by the International Laboratory AccreditationCooperation - ILAC, to be signed in 2000.
39. At the domestic level, the significant increase in the number of ISO 9000 certificates, from
1200 to 5300 in the period, is noteworthy. With regard to environmental management, ISO 14000
certificates, initiated in the period,  have already reached the level of 200.
40. Brazil attaches particular importance to the international systems of  standardization, due to
their central role in international trade. It increas ingly participates in ISO Committees, particularly in
those related to management (TC 176 and TC 207). The National Association of Technical Standards
(ABNT) is now regularly notifying the ISO in relation to its standardization programs, according tocommitments undertaken with the accession to the Code of Good Practice for the Preparation,
Adoption and Application of Standards (TBT, Annex 3), with a growing number of international
standards being taken as a basis for Brazilian standards.
IV. TRADE POLICY DEVELOPMENTS (1996-1999)
41. The years from 1996 to 1999 may be defined as a period of consolidation of the path
established by the Brazilian Government towards a trade policy designed to foster a competitive
presence of the Brazilian economy on the global scene.  Even in face of significant challenges posed
by successive liquidity crises in the international financial system, with marked impacts on theBrazilian balance of payments, the open orientation of the Brazilian economy was maintained.Brazil WT/TPR/G/75
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(1) THE MULTILATERAL TRADING SYSTEM
42. In keeping with the importance it places on the mu ltilateral trading system - an assurance of a
rules-based, transparent system, Brazil continued to faithfully implement its commitments under the
Uruguay Round Agreements.
43. At the conclusion of those negotiations, Brazil was of the view that, as a whole, the Uruguay
Round Agreements embodied a relative balance of benefits among participants, not only due to the
breadth of the issues covered, with the inclusion of the so-called new issues, such as services,
intellectual property and investments, but also, and above all, due to the beginning of the
incorporation of the agricultural and textile sectors to the multilateral trade rules.
44. The implementation of those Agreements, however, revealed persistent imbalances in the
materialization of this balance of benefits, which continue to undermine the attainment by Brazil of a
participation in the flows of international trade comm ensurate with the real potential. Such obstacles
are evident, for example, in the continued existenc e of unjustifiable barriers to agricultural products,
as a result of the maintenance of the sector largely outside the general multilateral trading rules, and,with regard to manufactured goods, in the excessive latitude for application of anti-dumping
measures. Brazil believes that a new round of multilateral trade negotiations would constitute an
opportunity for the enhancement of the multilate ral trading system and, consequently, for the
elimination of such imbalances.
(2) ECONOMIC INTEGRATION
45. The processes of regional economic integration for Brazil represent, alongside the multilateral
trading system,  a cornerstone of the  liberalization of its  trade regime and can be viewed from a four-
fold perspective: subregional integration, with the construction of Mercosul; regional integration, with
the establishment of free-trade areas between Mercosul and other countries in the region, as has
already taken place with Chile and Bolivia and with the resumption of negotiations with the AndeanCommunity and with Mexico; hemispheric integration, with the negotiations under way among 34
nations to establish a Free Trade Area of the Amer icas (FTAA) by 2005; and, finally, biregional trade
agreement, with the launch of negotiations between the European Union and Mercosul aiming at the
conclusion of an Inter-Regional Association Agreement by 2005.
(a) Mercosul
46. The introduction of the Mercosul Common External Tariff (CET), in January 1995,
represented a further move in the process of trade liberalization, with a significant reduction of import
tariffs. At that time, the CET covered 8.766 tariff lines, with an average import duty of 12,66% fornominal tariffs and 14%  for modal ones.
47. Since 1997, with the nomenclature review of the Harmonized Commodity Description and
Coding System, as well as with  the adoption of recommendations from the World Customs
Organization (WCO), the CET underwent certain adjustments, incorporating around 500 new items to
the Mercosul Common Nomenclature and, in 2000, it comprised 9.372 tariff lines.
48. In December 1997, the Common Market Council of Mercosul adopted Decision nº 15/97, a
transitional provision which introduced an increase of 3 percentage points on almost all tariff lines.
This temporary tariff increase, which is scheduled to expire on 31 December 2000, led to an increase
in the average import duty to 13% for nominal tariffs and to 17% for modal ones.WT/TPR/G/75 Trade Policy Review
Page 12
49. In the period 1996 to 2000, Brazil continued  applying exceptions to the CET authorized by
Mercosul. The so-called Basic List of Exceptions, which will be in effect until 31 December 2000,
was, however, reduced from a total of 300 items in 1996 to 270 items in 2000. The List of Exceptions
for Capital Goods will also be eliminated on 31 December 2000 for Brazil and Argentina (Paraguay
and Uruguay are entitled to an extension until 31 De cember 2005). At that time, in view of the CET
convergence process, these goods will have a common import tariff of 14%. The List of Exceptionsfor Telecommunications and Information Technology goods  will remain in effect in the four
countries, subject to a process of convergence  to the CET, until 31 December 2005.
50. Until April 1996, when the effects of a high domestic demand pressure brought about by the
Real Plan decreased, Brazil continued to make use of a provisional mechanism, authorized by
Mercosul, involving temporary tariff reduction on certain products  due to supply constraints,gradually reducing its initial list of 300 items. In June 1996, Mercosul adopted Resolution GMC
nº 69/96, regulating this emergency mechanism for all members. This was modified in 1998 by
Resolution GMC 33/98, which establishes that until 31 December of 2000, tariff reductions due to
supply constraints will be permitted, within a limit of 15 tariff items per country.
51. All tariff levels established by the CET are consistent with the tariffs consolidated under the
WTO.
(b) Regional Integration
52. Within the framework of LAIA (Latin American Integration Association), Mercosul has
continued negotiation of Economic Complementation Agreements 35 and 36, with Chile and Bolivia,
respectively. With regard to ECA 36, a mechanism has been created for increasing tariff preferences,in which requests from both parties are taken into account. During the last meeting of the
Administration Commission, in 1999, several issues were discussed, such as the participation of
Bolivia in Mercosul fora, a draft resolution for the issuance of certificates of origin for products
exported through pipelines, and the need to create joint mechanisms to combat informal trade. The
common objective of increasing trade flows between Brazil and Bolivia, through successive rounds ofnegotiations on tariff preferences, was also reaffirmed.
53. The implementation of negotiations with Chile regarding tariff preferences has followed a
similar path. Channels for consultation with the private sector and Brazilian business organizations
were established, with a view to a full and active participation in the Brazilian decision making
process involving Chile's requests. In September 1999, a Safeguards Regime was approved by theAdministration Commission, as well as the proced ures for Dispute Settlement. Proposals have also
been discussed in the context of the Automotive Sector Working Group.
54. The Common Market Council has further adopted decisions establishing that Mercosul shall
resume negotiations with the Andean Community  and with Mexico so that, at the latest on
31 December 2001, trade relations between Mercosul-CAN and Mercosul-Mexico are regulated.These agreements should replace the bilateral ones presently in effect, except for Brazil and Mexico,
which do not have an agreement in force.
(c) Hemispheric Integration
55. The Free Trade Area of the Americas (FTAA) has as its main target the progressive reduction
of barriers to trade in goods and services as of 2005 in the Western Hemisphere. The insertion of the
Mercosul in this free trade area is based on a building block approach to negotiations. This format isBrazil WT/TPR/G/75
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possible in view of  FTAA's principle of  coexistence of the future FTAA agreement with deeper
bilateral and sub-regional integration and free trade agreements.
56. At present, negotiations are being held in negotiating groups dealing with market access;
agriculture; subsidies, anti-dumping and countervail ing duties; investments; government procurement;
intellectual property rights; services; competition policy; and dispute settlement. The objective of the
current phase of negotiations is to present a draft agreement, in April 2001, to the Ministersresponsible for Trade, at the Buenos Aires Ministerial Meeting.
(d) Bi-Regional Trade Agreement
57. Following the commitments undertaken throug h the Framework Inter-Regional Cooperation
Agreement of 1995, the EU and Mercosul Heads of  State and Government decided, on 28 June 1999,
in Rio de Janeiro, to launch negotiations  aiming at the conclusion by 2005 of an Inter-Regional
Association Agreement  between the EU and Mercosul towards bilateral, gradual and reciprocal trade
liberalization, without excluding any sector and in accordance with WTO rules.
58. For this purpose, an EU-Mercosul Bi-Regional Negotiations Committee  was established and,
in order to ensure the smooth functioning of the negotiations, the parties agreed to set up the
following technical groups: Technical Group 1 to deal with trade in goods, covering both tariffs and
non-tariff measures; Technical Group 2: to deal with trade in services, intellectual property rights and
measures to encourage an open and non-discriminatory  investment climate; and Technical Group 3: to
deal with government procurement, competition policy and dispute settlement.
V. FUTURE TRADE POLICY DEVELOPMENTS
59. The Brazilian Government shares the view that the international economy is currently
characterized by an extremely dynamic process of growing internationalization and integration of
national economies, Globalization, as such process is usually named, will probably continue to mark
the evolution of the international economy in the foreseeable future.
60. Because of the diversity of its foreign trade, both in terms of products and of partners, Brazil
has traditionally been an active player in all effort s intended to strengthen the multilateral trading
system.
61. It is from these objective conditions that stem the central elements of Brazilian trade policy,
directed at minimizing the risks and maximizing the opportunities of the process of globalization forthe national socioeconomic development effort, supported by the continuous enhancement of the
disciplines that govern external trade.
62. This effort of adjustment of the Brazilian economy to the new international context is
translated, on the domestic front, by the continuity and the deepening of the process of deregulation
and privatization of the economy, alongside the pursuit of institutional and legal bases for sustainedeconomic development. Reforms of the State machinery, of the tax system and of social security are
under way with a view to ensuring sustained economic growth and the continued improvement in the
living conditions of the Brazilian population.
63. On the external front, the fundamental objective of Brazilian trade policy lies in the expansion
of opportunities for the participation of the Brazilian private sector in the flow s of international trade.
The policy of opening the Brazilian economy, implemented throughout the 90´s, led to undeniable
benefits in the areas of modernization, productivity and competitiveness. It has, however, generated aWT/TPR/G/75 Trade Policy Review
Page 14
significant growth in imports. The sustainability of this process will require, in the long term, a
corresponding access to foreign markets for Brazilian goods and services.
64. The successive GATT negotiation rounds, alongsi de national trade liberalization policies,
have, over the last decades, produced, on the one hand, a significant reduction of tariff levels, which
are, with few exceptions, the main obstacle to international trade. On the other hand, a number of
sophisticated and not entirely transparent non-tariff measures and regulations have been established inthe most developed countries, currently representing the major restriction to international market
access. Developing countries still face discriminations in terms of market access for their agricultural
products, such as the non-automatic recognition of disease free areas, additional certification
prerequisites; unjustifiable border controls; traceability; and stringent requirements for foreign
producers and others.
65. The process of broad market opening undertaken by Brazil since the beginning of the 90´s has
not resulted in commensurate access to foreign markets, as had been expected, in terms of trade
barrier reduction in its main export markets. On the contrary, in many sectors, specially in those in
which Brazil is highly competitive, developed countries have maintained or even increased
protectionist measures.
66. This situation is reflected in Brazilian trade deficits registered over the last five years with its
main importing markets. In the period 1995-1999, trade with the European Union, the United States
and Japan were constantly negative, with accumulated deficits of,  respectively, US$ 6,526 billion,
US$ 12,215 billion, and US$ 1,655 billion.
67. With regard to trade with the United States, the main export products affected by restrictive
measures are: textiles, sugar and tobacco (quotas); orange juice, footwear and ethyl alcohol (specific
high tariffs); steel and orange juice (antidumping duties); fruits and vegetables, bovine meat andpoultry (sanitary and phytosanitary restrictions).
68. Within the European Union, there are still di fferences in procedures among Members, with
particular note of the broad environmental legislation and certification requirements with protectionist
impacts. In the European market, Brazilian exports are subject to different types of barriers: sanitary
and phytosanitary restrictions, quotas (sugar, bananas, fish products, Hilton Beef, textiles andpoultry), antidumping and countervailing duties (silicon iron and monosodium glutamate), and
technical barriers (such as warranted labeling requirements).
69. There remain, furthermore, serious and well-know n distortions remain. They derive from the
implementation of policies and practices, very often on a unilateral basis, by developed countries,
which have an adverse impact on the balance of trade relations at the international level.
70. The attainment of greater integration in the world economy is undertaken on several fronts.
Mercosul constitutes the first external frontier of the Brazilian economy, in which the current
objective is to complete and improve the customs union, through the inclusion of new sectors, the
progressive consolidation of the Common External Tariff and the deepening of integration in new
areas, such as government procurement, services, technical standards and coordination of macro-economic policies.
71. Beyond Mercosul, the establishment by the end of 2001 of a broader economic area within
South America is being sought, through the conclusion of a free trade agreement between Mercosul
and the Andean Community, bearing in mind that South America is one of Brazil’s main trading
partners.Brazil WT/TPR/G/75
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72. At the hemispheric level, the negotiations for the establishment of the Free Trade Area of the
Americas (FTAA) are scheduled to be concluded in 2005. It is a project of major dimensions, with
profound implications for the Brazilian economy.
73. Furthermore, Mercosul has started negotiations with the European Union, with the aim of
improving trade relations between the two customs unions.  or Brazil, such negotiations should not
exclude, at the outset, any good or service, and should adopt the single undertaking format. Theconclusion of these negotiations should coincide with those on the hemispheric context, in 2005.
74. The Brazilian trade policy projects of sub-regional, regional and inter-regional are not, nor
could they be, seen as an alternative to t.he  multilateral trading system. The WTO Agreements
constitute the fundamental normative framework for the insertion of Brazil into the international
economy. The Brazilian approach as to the central role of the multilateral trading system was reflectedin the support to the launch, at the III Ministerial Conference of the WTO,  of a new round of
multilateral trade negotiations. Brazil believes that such a round would be an opportunity for a
renewed effort to enhance the multilateral trading system, particularly through the possibility of
correcting persistent distortions in the system, wh ich became evident in the implementation of the
Uruguay Round Agreements, particularly in the ag ricultural sector and in certain disciplines.
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