WORLD TRADE
ORGANIZATIONWT/TPR/M/75
6 December 2000
(00-5278)
Trade Policy Review Body
30 October and 1 November 2000
TRADE POLICY REVIEW
BRAZIL
Minutes of Meeting
Chairperson:  H.E. Dr. Iftekhar Ahmed Chowdhury (Bangladesh)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3
II. OPENING STATEMENT BY THE REPRESENTATIVE OF BRAZIL 4
III. STATEMENT BY THE DISCUSSANT 7IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 11
V. REPLIES FROM THE REPRESENTATIVE OF BRAZIL AND
ADDITIONAL COMMENTS 25
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 29
ANNEX PRELIMINARY RESPONSES BY THE DELEGATION OF
BRAZIL TO ADVANCE WRITTEN QUESTIONS 31WT/TPR/M/75
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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The third Trade Policy Review of Brazil was held on 30 October and 1 November 2000.  The
Chairperson, H.E. Dr.  Iftekhar Ahmed Chowdhury (Bangladesh), welcomed H.E. José Alfredo Graça
Lima, Under-Secretary General for Integration, Ec onomic Affairs and Foreign Trade, Ministry of
External Relations, as head of the Brazilian delegation, and the delegation from Brasilia and from the
Brazilian Mission in Geneva.  He also introduced the discussant, Mr. Peter Jenkins (United Kingdom)
and reminded Members that the discussant would speak in his personal capacity and not as arepresentative of his Government.  In accordance with the established procedure, the discussant had
made available in advance an outline of the main i ssues he intended to raise.  This was contained in
document WT/TPR/D/54.
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures of the meeting.  The Report by the Government of Brazil was contained in documentWT/TPR/G/75, and that of the WTO Secretariat in document WT/TPR/S/75.  Copies of advance
written questions submitted by Switzerland;  Canada;  Peru;  Japan;  Uruguay;  Chile;  Hong Kong,
China;  Colombia;  the European Union;  Malaysia;  Thailand;  the Republic of Korea;  Australia;  the
United States;  India;  and Norway had
 been transmitted to the delegation of Brazil.  Preliminary
replies to these questions are reproduced in the Annex.  The Brazilian delegation stated that furtherresponses would be supplied at a latter date.  These will be circulated as document
WT/TPR/M/75/Add.1WT/TPR/M/75
Page 4
II. OPENING STATEMENT BY THE REPRESENTATIVE OF BRAZIL
3. The representative of Brazil mentioned his satisfaction in participating in Brazil's third Trade
Policy Review.  He intended to assess Brazil's progress, since the last review.
4. He noted that an Interministerial Group (the Brazilian Foreign Trade Board, CAMEX) was
set up in order to coordinate the responsible agen cies regarding liberalization involved in the Review
so that the required information could be provided to the Secretariat.  He felt the document prepared
by the Secretariat presented an objective and balanced outlook of the developments since Brazil's lastReview, in 1996.  Granted, more could have been done with just a little more time, but he was
perfectly aware that rigid deadlines were an inescapable fact of life in this type of endeavour.
5. Before moving to Brazilian trade policy proper, he took the opportunity to reflect briefly on
the Trade Policy Review mechanism itself and more particularly to what it represented within WTO.
The TPRM was not some sort of collective j udgement of individual Members’ trade policies.
Another interpretation, and one that lay much closer to the truth, revolved around the concepts of
transparency and publicity.  Members' obligations were detailed in the broad range of agreements that
resulted from the Uruguay Round.  The manner in which each Member translated such obligations
into its public policies varied according to its own particular circumstances and conditions.  A clear
perception of how this transposition was undertaken was one of the key elements in ensuring that allMembers might fully reap the opportunities of a rules-based multilateral trading system.
6. The greatest benefit to be derived from this mechanism seemingly lay in the process of stock
taking of each Member's own trade policy, both fr om the viewpoint of the country's obligations and
from its long term goals.  It was the equivalent of group psycho-analysis within the multilateral
trading system, a process that involved both an internal soul-searching and an open mind to the
comments of other peers.  He believed that if the exercise was perceived more as one of criticism than
one of a collaborative quest for means of development of each participant, then it was doomed toentirely lose its main appeal.
7. Brazil's previous trade policy reviews came on the heels of critical inflections of economic
policy.  In 1992, Ambassador Celso Amorim had had the opportunity to present to the TPRB the
outlines of a major shift in the Brazilian economy, from an inward-looking, import-substitution
model, to one characterized by outward, market-o riented policies.  In 1996, Ambassador Celso Lafer
highlighted the progress achieved by means of the economic stabilization plan, known as the Real
Plan, as well as through the integration of Brazil into the world economy, both at the multilateral level
through the implementation of Brazil's Uruguay Round commitments, and at the regional level
through Brazil's participation in the MERCOSUR customs union.
8. He had nothing comparable to put before the TRRB since the period reviewed had been one
of consolidation of the economic model adopted since the early 1990s and of deepening the structural
reforms required to implement it.  The hallmark of Brazilian economic policy over the last decade was
the creation of conditions for an increasingly competitive insertion into the global economy.  This
entailed a shift of the Government's  role away from that of an ec onomic actor in its own right to one
essentially of market regulation, including through a substantial privatization programme, and thecreation of an enabling environment for growth and development, which comprised economic
stabilization and trade liberalization.
9. Over the past four years, this process, had been consolidated and strengthened.  In terms of
the Government's role, the process of privatization, initiated in 1989, had continued, with the sale of
24 state companies between 1996 and 1999, generating revenues in excess of US$10 billion or overUS$15 billion considering debts transferred.  Privatization, however, was not an objective in itself.WT/TPR/M/75
Page 5
On the one hand, it was aimed at allowing the Government to use its scarce resources in areas that
were typically within the public domain, most notably in the social sphere.  On the other hand, it wasdirected at promoting investment that fostered  competitiveness in the Brazilian private sector.
10. This process did not imply, however, a comple te withdrawal of the Government from the
activities now in the realm of the private sector.  The Government ensured the quality and safety of
goods and services provided to the population, as well as fair practices by private enterprises.
Regulatory agencies in the areas of telecommunications, electric energy, petroleum, sanitarysurveillance, and supplementary health had been established for this purpose.  Other agencies were
envisaged for the areas of water supply, postal services, transportation, complementary social
security, and civil aviation.  In tandem, competition policy had become increasingly important.
Although there had been no recent change to the relevant legislation, which dated back to 1994, its
application had become more frequent.
11. A stable and predictable economic environment was viewed as essential for sustained and
long-term growth and development.  In this co ntext, the Brazilian Government remained firmly
committed to the stabilization plan, or Real Plan, implemented in 1994, which had been successful in
bringing about the end of chronic inflationary problems, which plagued the economy until the mid
1990s, allowing for long-term planning, both on the part  of the Government and of the private sector.
12. An example of the benefits of economic stability and integration into the global economy
achieved by Brazil was the manner in which the economy responded to the successive crises that had
struck the international economy in 1997 and 1998.  The effects on Brazil had been particularly
adverse in 1998, which led to the decision to accelerate the strategy of reducing macroeconomic
imbalances, notwithstanding the package of contingency support negotiated with the IMF.  Among
the measures adopted were:  further adjustments in the public sector, deepening structural reforms,
and floating of the currency.
13. The predictions made at that stage pointed to a somewhat catastrophic picture, with a severe
recession and a very pronounced upsurge in the inflation rate.  The Brazilian economy, however,
demonstrated a remarkable resilience, with real gr owth in GDP reaching 1% and inflation remaining
below 9%.  Among the factors behind this performance were the reforms undertaken during the
previous years, including in the financial sector, a firm administration of monetary policy, a credibleinflation targeting mechanism, and the improvement in  the fiscal situation attaining a primary surplus
of 3.1% of GDP in 1999.
14. He noted that although the relative participation of trade in Brazil's economy remained far
below the potential of its economy, the very profound liberalization undertaken over the last decade,
both unilaterally and as a result of multilateral and regional agreements, could be deemed positive forBrazil.  Greater exposure to competition from foreign goods and services had an undeniable effect on
containing inflation, enhancing productivity and competitiveness, and attracting productive
investments.
15. He refered to the diversity of Brazil's trade patterns both in terms of products and partners.
This explained Brazil's firm commitment to a rules-based multilateral trading system, which ensuredpredictability, stability, and security to its economic agents.  In this respect, the results of the Uruguay
Round had been positive.  The system, however, also needed to ensure adequate market access
opportunities in those areas in which Brazilian producers were globally competitive, and from this
point of view the statistics were somewhat disappointing.  Even considering the level of protection in
effect prior to Brazil's autonomous and negotiated trade liberalization, a comparison of growth inimports and exports led to disturbing conclusions regarding the persistent imbalances.WT/TPR/M/75
Page 6
16. On the basis of this evaluation, and with the expectation of mitigating these imbalances,
Brazil had actively supported the launching of a new round of multilateral trade negotiations at theSeattle Ministerial Conference.
17. Brazil was actively engaged in negotiations for sub-regional, regional and inter-regional
integration mechanisms.  The principles that guided  Brazil's participation in such efforts were the
requirement of full WTO compatibility and that of open regionalism.  Each of these processes,
detailed in both the Secretariat and the Government reports, had specific objectives and was currentlyat a distinct stage of negotiation;  all were based on these principles.
18. The Secretariat Report, and the Government Report presented a comprehensive view of trade
policy developments in Brazil since the previous Re view in 1996.  Thus, he considered that it was
only necessary to bring two specific points to the attention of Members.  The first referred to Brazil's
automotive regime.  Recalling the concerns raised  in the previous TPR, he underlined that as
established in the respective legal instruments, the benefits provided for this sector had ceased on
31 December 1999.
19. The second issue referred to the temporary increase of three percentage points applied to
MERCOSUR's common external tariff.  He highlighted  that this was effectively a temporary measure,
taken in the context of the effects of extern al crises on MERCOSUR economies in 1997 and 1998, to
which he had already made mention, and was scheduled to be eliminated at the end of the year 2000.
The measure fully respected Brazil's tariff bindings, which took precedence over the temporary tariff
increase.WT/TPR/M/75
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III. STATEMENT BY THE DISCUSSANT
20. The discussant (Mr. Peter Jenkins) said that the Secretariat Report confirmed what those who
had followed Brazilian affairs over the last decade already knew:  Brazil had moved unequivocally
away from the import substitution model that had dominated trade policy during much of the post-war
era.  Barriers to imports had been lowered – even if they had not entirely disappeared – and this had
been accompanied by a wide-ranging deregulation of state monopolies and prices, a substantial
privatization programme, and investment liberalization.  Some of these policy shifts were all the moreimpressive for having required amendments to the Brazilian Constitution, which had been hard to
extract from a traditionally independent-minded Federal Congress.
21. It was possible to detect three distinct phases in the conduct of trade policy over the last
decade.
22. It was during the first phase, which run up to the mid 1990's, that most of the import
liberalization took place.  This showed up clearly in the import statistics.  In 1990 total imports were
worth US$22 billion;  by 1995 they were worth just under US$54 million.  At the start of this period
Brazil was in the grip of an inflationary fever, first contracted in the mid-1970s and unresponsive to
several shock treatments.  Monthly rates sometimes reached 40%.  By the end of the period the
inflationary genie had been put back in the bottle, where it had stayed ever since, with yearly ratesrecently even lower than those of Brazil's golden years in the late 1960s and early 1970s.  Many
factors lay behind the defeat of inflation.  It could certainly not be ascribed to trade policy alone.  But
trade policy made a genuine contribution.  Cheaper and more plentiful imports put domestic producers
under competitive pressure in ways that had become unfamiliar, and helped them to break the habit of
frequent, often monthly, upward adjustments in prices.
23. This was followed by period in which the emphasis in trade policy appeared to have shifted to
promoting and supporting exports.  The defeat of inflation had let to a strengthening of the newBrazilian currency, the real.  This seemed to have aggravated a problem of export competitiveness,
encouraging greater recourse to export support measures, notably export financing.
24. In January 1999, the decision to allow the real to float freely marked a further turning point,
and a return to a more neutral policy stance.  The big question since then, as the Secretariat Report
indicated, was where next?
25. Brazil's simple average MFN tariff was, at 13.7%, comparatively high for an advanced
developing country.  The tariff showed clear es calation, with a higher tariff average on processed
items than on semi-processed goods or raw materials;  9% of tariff lines bore rates higher than 21%.
Certain non-tariff measures continued to have a restrictive effect.  The dollar-denominated growth
rate of imports had slowed since 1995 – indeed it had been negative since 1997.  Import penetrationremained relatively low:  imports represented only 10% of GDP in 1999.  All this suggested that there
was scope for further liberalization.
26. Brazil faced some constraints.  The country had been running a current account deficit
equivalent to 4.5% of GDP.  Export volumes had b een slow to respond to the floating of the real.
Brazil faced significant market access barriers in the U.S. and EU markets, which took more than 50%of Brazilian exports.  Demand conditions in some of Brazil's other major trading partners were
depressed.  The terms of trade had moved against Brazil's commodity exports, which still accounted
for more than a third of total exports.  And any ch anges in the Brazilian tariff could only be made in
coordination with Brazil's partners in MERCOSUR.WT/TPR/M/75
Page 8
27. Nonetheless, he asked whether further liberalization would not be a good thing.  It could
provide a useful spur to additional structural refo rm, with a view to raising real GDP growth rates
from their 1996-99 average of 1.7%, thus addressing  what was now arguably Brazil's most pressing
macroeconomic challenge.  Strengthening the supply side of the Brazilian economy ought to make
Brazilian exports more competitive, thus loosening the current account constraint.
28. He referred to trade measures affecting imports noting that in 1997 Brazil had temporarily
raised the tariff by three percentage points, but that this measure was due to lapse at the end of 2000.The increase appeared to have resulted in some tariff lines bearing applied rates above bound rates
(p. 35 WT/TPR/S/75); however, the Secretariat had encountered methodological difficulties in
establishing this (which raised another issue:  th at of transparency), and the Brazilian legislation
required the bound rate to prevail in such cases.
29. There had been controversy over Brazil's customs valuation and non-automatic import
licensing regimes.  A lack of transparency had been alleged, particularly in relation to the use of
reference prices.  It was estimated that non-automatic licensing applied to 30% of all imports:  this
seemed high.
30. The incidence of taxes and fees applied to imports was significant, though there appeared to
have been progress since the last TPR (with the elimination of import licence fees, a documentsurcharge for non-preferential customers, and a tax for the organization and regulation of the rubber
market).  Of the remaining charges the Merchant Marine Renewal Tax, which was levied on imports
transported by sea, tended to attract particularly adverse comments from Brazil's trading partners.
31. Import prohibitions were in place mainly to safeguard consumer health and well-being, or to
preserve domestic plant and animal life and the environment.  But prohibitions also applied to the
importation of second-hand automobiles and other used goods.
32. The so-called Law of Similars, designed to prevent the importation of goods when similar
goods were produced domestically, remained in force.  The Secretariat Report suggested that the law
could affect any imports, but usually came into effect in the case of imports by the federal state and
municipal governments that were subject to fiscal incentives, imports of capital goods included in the
ex-tariff list, and imports of used goods.
33. Brazil had become a frequent user of anti-dumping provisions, with some 45 measures
currently in force.  But there had been no sugges tion in the Secretariat Report that Brazil's anti-
dumping regime was not in conformity with WTO rules.  The same went for a safeguard measure
applied to toys, and transitional safeguards applied under the Agreement on Textiles and Clothing.
34. More generally, there appeared to be a problem with transparency.  Importers had great
difficulty finding their way through a thicket of normative instruments.  A simplification of legislationgoverning imports would be seen as a great boon.  The widespread use of provisional measures,
which were renewed every thirty days until adopted by congress or allowed to lapse, and which were
sometimes amended when renewed, was a particular source of difficulty.
35. He made some general points regarding foreign investment and the services sector.  He was
struck by the massive increase in recent years in foreign direct investment flows into the servicessector.  He assumed, despite the absence of a detailed breakdown, that most of it had gone into service
industries that had been privatized during this period and/or in which foreign participation was being
encouraged, notably telecommunications, electricity and financial services.  He, as others, considered
that scheduling commitments under the GATS attracted investment and wondered what part Brazil's
commitments had played in the decision-making of foreign investors.WT/TPR/M/75
Page 9
36. This large inflow of FDI had made a large contribution to financing Brazil's current account
deficit, and had helped close the gap between a gross domestic savings rate averaging around 17%during the period and a gross investment rate averaging a little over 21%.  (Both these rates were very
low in comparison with the rates of South East Asian tigers – though typical of much of South
America.)  There were economists who believed that a much higher domestic savings rate would be
desirable.  It would put an end to a historic ov er-dependence on foreign capital and would stimulate
higher investment-based growth).
37. The Secretariat Report (p. 108) suggested that the FDI inflow also increased the dynamism of
various sectors of the economy.  In June 1999, foreign capital controlled about 26% of the equity of
the banking segment of the national financial system, and the Brazilian authorities noted that as a
result of the growing presence of foreign capital in this sector competition had increased, compelling
other banks to become more efficient.  This suggested that a further opening to imports enhancedBrazil's competitiveness.  He added that there was a school of thought in Brazil that saw a connection
between relatively inefficient transportation and credit infrastructures and a disappointing export
perfomance.  This was part of what was sometimes referred to as "the Brazil cost".  It seemed clear
that foreign capital could help reduce this cost, and dynamize Brazilian participation in the global
trading system.  Indeed there was scope for a virtuous circle with foreign investment enhancingcompetitiveness and a more competitive Brazil attracting further foreign investment.
38. In this context he noted that a list of exceptions to national treatment remained;  and asked the
Brazilian delegation whether there had been any recent review of the economic impact of these
restrictions, and whether any of them were likely to be lifted in the foreseeable future.  He also
wondered why the 1997 Montevido Protocol on Trad e in Services within MERCOSUR had not yet
been ratified, and asked for clarification of the degree to which foreign participation was welcomed in
the provision of port and air services.
39. He drew attention to Brazil's active engagement in a variety of regional trading arrangements.
Brazil was working to turn the MERCOSUR cu stoms union into a common market.  MERCOSUR
was establishing, or aiming to establish free-trade arrangements with Chile, Bolivia, the Andean Pact
and Mexico.  Brazil participated in the Free-Trade Area of the Americas initiative.  And MERCOSUR
and the EU were working towards the conclusion by 2005 of an inter-regional association agreement.The Brazilian Government's report made it clear that it regarded regional economic integration as a
crucial element of its trade policy.
40. It appeared that none of this had diminished Brazil's commitment to multilateralism.  This
became evident in 1999 in Brazil's support for a further round of multilateral trade negotiations.  Also
the Brazilian Government's report (para 74) stated that Brazilian trade policy projects of sub-regional,regional and inter-regional (integration) were not, nor could they be, seen as an alternative to the
multilateral trading system.  The WTO agreements constituted the fundamental normative framework
for the insertion of Brazil into the internationa l economy.  The Brazilian Government saw regional
integration, pursuable at a faster pace than global integration because the participants were at roughly
similar stages of development, as paving the way for global integration;  regionalism complementedmultilateralism.
41. Of all the regional initiatives cited, MERCOSUR was clearly the most advanced.  Brazil and
its Southern Cone partners had come a long way since 1991.  There had been some controversy about
whether MERCOSUR has been trade diversionary.  Th e statistics available in this TPR did not permit
a responsible judgement.  He argued that MERCOSU R was one of those  RTA's that were justified by
their political impact.  Its significance for relati ons between Brazil and Argentina, and for South
American defence spending and nuclear non-proliferation policies could hardly be over-stated.WT/TPR/M/75
Page 10
42. He asked the delegation where MERCOSUR woul d go.  It was clear that some serious
problems had come to the fore.  Establishing an auto regime had been difficult.  The issue of a sugarregime remained unsolved.  Brazil had been attracting the lion's share of inward investment to the
region.  It was no secret that the free floating of the real caused concern in Buenos Aires where hands
were tied by a currency-board system.  Thus, he wondered whether it was still realistic to hope that
MERCOSUR could evolve beyond a customs union into a genuine common market;  whether a
degree of economic and monetary harmonization was a sine qua non  for the creation of a common
market;  and whether the parties were ready to accept the long-term specialization, in terms of
production, implied by concept of a common market.WT/TPR/M/75
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IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
43. The representative of Norway noted that Brazil was Norway's most important trade partner in
Latin America, bilateral trade had been strengthened since the early 1990s.  Norway's main exports to
Brazil were different varieties of dried fish.
44. Recently, Norway had experienced some problems in exporting dried fish to Brazil, mainly
because of Brazil's new requirements regarding water content and labelling.  He welcomed the
ongoing dialogue to remove this obstacle;  and asked how the problem could be solved.  He alsoqueried the purpose and effects of a 5% purchase tax on imported dried cod introduced during the
spring.
45. Brazil had made efforts to simplify customs procedures, particularly regarding import
licensing.  The Secretariat's Report indicated that 70% of all imports were cleared automatically.  He
encouraged Brazil to make further efforts in this field.  Import licensing was of special importance fortechnologically advanced products.  Trade was made cumbersome by the current import licensing
procedures, while automatic clearance was not uniformly applied.  He was interested in learning more
about Brazil's plans to facilitate trade in this area.
46. There had been significant liberalization of the maritime transport sector compared with the
situation ten years ago.  He welcomed Brazil's efforts in this regard, but there was still some way togo.  One general concern for Norway was the high level of costs related to light and buoyage dues in
Brazilian ports, particularly since vessels from certain countries were exempted from these, while
Norwegian vessels were charged US$1,500 for each regulatory call.  He asked whether there were any
plans to reduce the taxes for regulatory calls in Brazilian ports, and the criteria used to exempt vessels
from certain countries.
47. State involvement in the Brazilian economy was decreasing, and a substantial number of
state-owned enterprises had been privatised;  he encouraged the policy of further privatization.  He
sought information about Brazil's plans to strengthen private participation in Petrobras and Eletrobras,and any limits and requirements relating to foreign participation.
48. Norway attached great importance to the ongoing services negotiations, and in this context he
applauded Brazil's valuable and constructive contributions to these negotiations.
49. The representative of Canada welcomed Brazil's market liberalization efforts, which had
continued even against a backdrop of the 1998/99 fina ncial crisis and subsequent devaluation of the
real.  Liberalization had resulted in greater levels of foreign direct investment (FDI).  Canadian
investors had had a long history of involvement in Brazil and continued to consider Brazil an
important destination for FDI.  In this regard, Canada looked to Brazil to continue to implement
liberalization policies that would ensure consistency and transparency in the application of regulationsand laws related to investment.
50. Canada enjoyed an important trading relationship with Brazil, and expected trade levels to
further rise as Brazil continued its liberalization efforts across a range of key commercial sectors,
including advanced manufacturing equipment and technology, environmental equipment and services,
telecommunications and informatics equipment and services, and equipment and services related to
the power sector.  Also there were emerging opportunities in oil and gas equipment and services,forestry equipment and services, urban transportation equipment and services, and health industries.
51. There had been significant progress in Brazil's liberalization of its services sector, notably in
transportation and telecommunications.  Canada looked forward to further advances in the bankingand insurance sectors.  Canada urged Brazil to ratify the commitments it made during the GATS
negotiations on financial services.WT/TPR/M/75
Page 12
52. Canada was pleased at the strong partnership that had been developed with Brazil in the
multilateral sphere, including cooperation in the Cairns Group.  He highlighted their partnership in thepursuit of hemispheric trade liberalization and sustainable development, including through the Free
Trade Area of the Americas initiative.
53. He was interested in the developments within MERCOSUR, which was Canada's largest
export market in South America.  As MERCOSU R continued to evolve, he hoped that it would
continue its outward orientation, in a manner both consistent with, and supportive of, the principlesand goals of multilateralism.
54. The Secretariat Report made reference to the PROEX Export Financing Programme, which
the Appellate Body had confirmed was inconsistent with Brazil's obligations under the SCM
Agreement.  Canada noted that PROEX was still non-compliant with the DSB rulings and
recommendations.  He emphasized the extreme importance, for Canada and all Members, of fullcompliance by Brazil with its WTO obligations.  In the absence of a mutually agreed solution, Canada
would exercise its full WTO rights in this dispute.
55. Canada also raised concerns in a variety of other areas such as agricultural tariffs and
domestic support, import restrictions on genetically modified organisms, Brazil's Merchant Marine
Renewal Tax, various service sector issues, and others.  Some of these had also been identified in the1996 Review of Brazil's trade policy regime.
56. The representative of Uruguay noted that the financial crisis, which affected Brazil at the end
of 1998, and the consequent floating of the real in January 1999 had had a very serious impact on
Uruguay;  Uruguayan exports to Brazil, which in 1998 had reached $935 million dropped in 1999 to
$559 million.  He welcomed the efforts made by Brazil to overcome the crisis.  He also emphasized
the importance of Brazil's economic recovery for the region as a whole and for the economies of the
MERCOSUR partners.
57. As to MERCOSUR he noted that the political process was irreversible and it was to become
stronger.  The concept of open regionalism was a fundamental aspect of MERCOSUR's development.
Uruguay together with Brazil and the other MERCOSUR partners, as well as the associate States,
were involved in a joint project of economic and trade development that had been reflected in the
increase in intra-community trade.  Brazil and Uruguay shared the same trade policy goals at theregional and multilateral level.
58. Brazil and Uruguay were founding members of the Cairns group, which had emerged in 1986
to defend the fair and legitimate interests of agricultural producers and exporters and to fight against
the subsidies granted by developed countries.
59. He was fully convinced that Brazil's growth and development had been held up because of the
multiple barriers and distortions that characterized trade in agricultural products.  Brazil was one of
the main producers and exporters of agricultural products in the world and it had the potential to
increase production.  In this regard, Brazil, like Uruguay, had every interest in the liberalization of
trade in agricultural products.  It was also important that Brazil maintained its competitive agriculture
with access to inputs and technology at the lowest possible cost.
60. He drew attention to Brazil's progress in services since its last Review, in 1996.  The
modernization of the services sector and the extraordinary opportunities that this sector offered had
not been ignored by international and regional investors.  In 1999, the services sector was the main
recipient of FDI.  The liberalization of the services sectors in Brazil should be fully recognized;  it
constituted an important contribution to the multilateral trading system.WT/TPR/M/75
Page 13
61. Regarding the proliferation of rules and provisions governing foreign trade, he believed that a
general law should be enacted to regulate foreign trade.  He nevertheless recognized the effort toinclude many of these provisions on the Internet.  It was important that Brazil continued its efforts to
further rationalize its fiscal and tax systems.
62. Brazil was a very important trade partner for Uruguay.  Bilateral trade during 1995-99,
including exports and imports, represented approximately 26% of Uruguay's total trade.
63. He highlighted the deep rooted transformations carried out by Brazil since its last Trade
Policy Review and the efforts and contributions it had made to strengthening the multilateral trading
system.
64. The representative of Chile noted that Brazil was extremely important culturally, politically,
economically, and in many other aspects.  The evolution of the Chilean economy had always been
very closely linked to that of Brazil.  During 1996-2000 exports to Brazil had grown by 52%, andimports of Brazilian products to Chile had increased  by 50%.  Brazil had always been amongst the
five major markets for Chile's exports and was of extreme importance because of its size.  Brazil had
also become an important recipient of foreign direct investment by Chile, particularly in the services
sector,  but also in certain manufacturing areas.  This would contribute to an even closer economic
relationship.
65. This positive evolution of economic relations had been possible because of the way in which
the Brazilian economy had been managed recently;  macroeconomic balances had been achieved.  The
country had a modest but positive growth rate, and this after a very serious financial crisis.Furthermore, its political structure and constitutional pattern must have represented certain obstacles
to the management of trade policy, and therefore Chile commended even more the efforts made by the
Government in carrying out the relevant reforms, which were not always easy to introduce especiallygiven the diversity of the country.
66. The large inflows of FDI represented a vote of confidence in the Brazilian economy and its
policies on the part of the international community.  Chile's relationship with Brazil had becomecloser over the last few years, particularly after a free-trade agreement was signed with MERCOSUR.
This agreement was now being implemented and he hoped to see full free trade for most products in a
few years.
67. Recently, the Government of Chile and the members of MERCOSUR had started to negotiate
greater integration of Chile with MERCOSUR.  He  hoped that this would open MERCOSUR markets
further, both for goods and services.
68. Trade between Brazil and Chile over the last years had grown but there were certain
difficulties in entering the Brazilian market.  In some cases, these were not necessarily the
responsibility of Brazil:  for example, Chile had been displaced in the Brazilian market due to imports
subsidized by third countries.  This was the case for tinned peaches, a very important product for
Chile, which had been subsidized in the European Union and in particular in Greece.  In other cases
Chile also had difficulties as a result of measures taken by the Brazilian Government, for example thefinancing rules that were put into place in 1997.  He also noted the effort made towards greater
rationalization and transparency in Brazil's foreign trade regulations;  he hoped this would continue.
69. The representative of the United States said that, since its last Trade Policy Review in 1996,
Brazil's economy had undergone some major developments.  Brazil continued to change its trade
policies from import substitution to an externally oriented market economy.  The privatizationprogramme had helped make the State more efficient, energizing key sectors of their economy.  The
economy's resilience to the Asian crisis proved that the changes were real.WT/TPR/M/75
Page 14
70. She noted that trade between Brazil and the United States had grown since 1996.
71. At the same time U.S. investment in Brazil had also been rising sharply.  American
companies had invested US$35 billion in Brazil in the last five years.  The United States and Brazil
had a long history of working together, they were founding members of the GATT in 1948.  More
recently, the United States and Brazil, as the largest economies in the western hemisphere, were
making an effort to improve regional integration through the Free Trade Area of the Americas
(FTAA).  The United States and Brazil also shared a very strong interest in agricultural reform andliberalization including the substantial reductions or eliminations of tariffs, expansion of tariff rate
quotas, the elimination of export subsidies, disciplines on state trading enterprises, disciplines on TQR
administration, and a reduction in disparities among countries and products in levels of support and
protection.
72. Although Brazil had made progress there was still more to do to carry out its commitment to
trade liberalization.  The legacy of Brazil's l ong-standing import substitution and inward looking
policies often remained a heavy burden on doing business in Brazil.  In general, tariffs remained very
high, increasing sharply the price of both inputs and finished products.  There were numerous other
forms of barriers to market access.  Imports and exports continued to move at a very slow pace
through customs, destroying the productivity gained through electronic trade.  Poor implementation ofimport control measures contributed greatly to this problem.  These factors not only discouraged trade
and investment but also hampered Brazil's competitiveness and limited Brazilian access to better
products.  The overall business climate in Brazil was not ideal, a lack of transparency in
administrative procedures and arbitrary application of regulations created uncertainty, discouraging
both trade and investment.  There were heavy taxe s, many of which were redundant and created a
cascading effect also deteriorating economic activity.  She highlighted certain areas that were
important not only to the United States but to many other delegations; taxation, SPS measures,customs valuation, and IPR.
73. She was pleased to hear that Brazil would drop the temporary increase of three percentage
points in their applied tariff by the end of the year.  With respect to customs valuation, some products
were required to meet minimum prices for the assurance of import licensing in order to receive
normal customs processing.  Imports falling below certain set price levels either did not receivelicences or were sent to a so-called "grey line" for enhanced customs scrutiny.  This process lacked
transparency and was burdensome;  and she raised questions about its WTO compatibility.  The
United States looked forward to hearing about Brazil's intention to eliminate this system.
74. Progress had been made in the area of SPS measures but certain of these measures remained
significant barriers to trade.  The United States urged the Brazilian Government to ensure that any
restrictions on products had to be supported by sufficient scientific grounds or adequate risk
assessment.  In the area of services, the United States took Brazil's commitment seriously, including
in financial services and basic telecom, and looked forward to hearing about Brazil's intention to
approve and implement its commitments for the Fifth Protocol on financial services and the Fourth
Protocol on basic telecommunications.
75. Regarding privatization, although the Brazilian Government had initiated many large-scale
programmes it still dominated certain sectors of its economy.  She asked whether the Government had
plans to privatize these areas, especially the petroleum and the electrical energy sectors.  She
recognized that telecommunications in Brazil had und ergone significant liberalization in the past few
years but also understood that there were some limits currently remaining on the level of foreignownership;  she urged Brazil to take action to allo w more foreign ownership in the provision of the
telecommunications services and eliminate practices designed to favour public procurement of
domestic over imported telecommunications equipment.WT/TPR/M/75
Page 15
76. Brazil recognized the importance of ensuring IPR protection to enhance its prospects for
further trade and investment with its trading partners.  Brazil had very commendable IPR laws;however, enforcement remained a serious problem to the United States.  Pirated and counterfeited
products were easily found throughout the Brazilian marketplace.  The provision in the Brazilian
patent law that prescribed a local working climate or stipulation that the patent product be produced in
Brazil was also of concern.  This could result in loss of patent rights for a patent owner and for
companies that had incurred huge costs in the development of new products;  the U.S. believed thatthis local working requirement was unfair.  The United States was also troubled that the Government
of Brazil had enacted a requirement for the Ministry of Health to approve pharmaceutical patents prior
to issuance:  this did not appear to be in conformity with TRIPs requirements.
77. She urged Brazil to ratify the WIPO treaties on copyrights and performances and phonograms
as these were central to the growth of e-commerce.
78. The representative of the European Union said that the EU and Brazil entertained strong
economic and trading ties and pursued the same objective of launching a new round of comprehensive
trade negotiations.  The EU supported Brazil's efforts in terms of regional integration, both in the
framework of MERCOSUR and in a wider South American context.
79. The EU-Brazil Framework Inter-Regional C ooperation Agreement of 1995 provided an
institutional setting for the political ties between the EU and Brazil, and a framework for their
cooperation, not only for trade and political dialogue but also in relation to R&D and the environment.
80. Brazil was an important market for EU exporters of goods and services and was also an
important source of imports.  The EU was Brazil's main trading partner, and Brazil remained the EU'smain trading partner in Latin America.  Brazil was also an important destination for European
investments in areas as diverse as telecoms, energy, financial services, the automotive industry, the
agroindustry, and the retail sector.  This showed th e confidence of EU companies in Brazil as a stable
and generally open economy, well integrated in the world trading system.
81. The EU fully supported the MERC OSUR process as the EU had a strong desire to improve
trading relations with that region.  The EU and MERCOSUR were currently negotiating;  the EU
looked forward to making substantial progress at the third round of negotiations, in particular in a
number of areas, where in-depth technical discussions appeared to be needed.
82. There were a few issues of concern:  he asked whether import tariffs and non-tariff barriers on
intra-MERCOSUR trade had now been eliminated.  If this was not the case, he was interested to know
which products were still affected and what was th e timetable for eliminating remaining restrictions.
The EU was also concerned about the uncertainty surrounding the nature of the three percentagepoints tariff increase adopted by MERCOSUR in December 1997.  The Government Report noted that
this measure was intended to expire on 31 December 2000;  he requested assurance from Brazil that it
would not be replaced by measures of similar effect.  He noted Brazil's ambition to become a
technologically advanced society and its strong inte rest in information technology.  In view of the
contribution of the ITA to building such an inform ation society in all participating countries, he
wondered why Brazil had not yet joined this important Agreement;  he asked whether Brazil intended
to do so in the near future.  The EU found that Brazil's policy of retaining the possibility to impose
export taxes of 30% on all exports and up to a maximum of 150% had a trade dissuasive or even trade
chilling effect.  He wondered if such a possibility was not out of sync with Brazil's ambitions in
relation to its position in world trade.  He strongly encouraged Brazil to renounce to this possibility,thereby bringing more security and predictability for economic operators.  He commended Brazil for
its significant legislative efforts in order to bring IPRs up to a high standard.  At the same time, he
underlined the need for Brazil to take efficient im plementation measures to safeguard the interests of
rightholders.WT/TPR/M/75
Page 16
83. The EU was aware of Brazil's concerns about the difficulties faced by developing countries in
implementing certain WTO obligations.  He thought that while some of these concerns could beefficiently dealt with through increased technical assistance, a vast majority of issues could only be
addressed in the context of a new round of comprehensive trade negotiations.
84. The representative of Switzerland welcomed the economic reforms pursued by Brazil, which
led to more open trade and investment regimes.  Foreign investment had increased remarkably
since 1996 financing the deficit in the current account.  In general FDI benefited from nationaltreatment and played a key role in the process of privatization, which had progressed rapidly;
nevertheless, state intervention remained important in Brazil.  Bilateral investment agreements and
double taxation agreements promoted FDI, thus she urged Brazil to ratify the agreements already
negotiated.
85. Brazil's institutional environment related to trade policy was highly complex and subject to
constant changes:  simplification of the regime would increase transparency and predictability.  She
noted with satisfaction that the three percentage point increase to the tariff would be eliminated by the
end of the year.  She wondered what the effect of this tariff increase had been on imports, which had
declined substantially in the last year.  Rega rding MERCOSUR, she asked whether Brazilian trade
had been diversified as a result of the common market.  She sought clarification regarding some tariffrates, which seemed to be above bound rates.
86. Non-tariff measures, such as non-automatic import licensing and anti-dumping, remained
important in Brazil.  She sought comments on this regard.
87. The representative of Peru was pleased to see the progress made by the Government of Brazil
in controlling inflation and tackling the 1997 financial crisis.  The speedy recovery, achieved through
the application of adequate trade policy measures, was praiseworthy;  Peru hoped that it would
continue.
88. Although Ambassador Graça Lima had already noted that the three percentage point increase
in the tariff rates would be reduced at the end of this year, he sought further clarification regarding
measures to be taken to ensure that these rates would actually decrease.  Regarding the tariff he also
asked if there were any plans to gradually adopt a smoother tariff structure in order to eliminate tariff
peaks and dispersion;  what was the average margin between the bound tariff and the applied rates;and whether the Government of Brazil was ready to reduce these margins.
89. On progress in export diversification he was interested in the strategy used by the export
promotion agency to promote export activities of micro businesses.
90. He requested clarification on several issues regarding provisions of movement of natural
persons, which according to the specific commitments adopted by Brazil under GATS guaranteedmarket access for specialized technicians and highly qualified professionals.
91. The representative of Hong Kong, China noted that Hong Kong’s trade relations with Brazil
had been good.  Bilateral trade amounted to US$9 82.7 million in 1999;  though it had decreased
during 1999 in the first seven months of 2000 it had increased by 33%.  He hoped this momentum
would continue and be reinforced in the coming years.
92. Brazil’s continued efforts towards economic reforms since its last Review were commended.
The enhanced privatization programme of recent years in the services area was of particular interest.
Further reforms would benefit the Brazilian economy and its international trade flows.WT/TPR/M/75
Page 17
93. The Brazilian services sector accounted for 62% of GDP, and 64% of employment.  Having
an efficient services industry was therefore vital.  Brazil had significantly liberalized a number ofsectors, especially telecommunications and financial services, since 1996.  Brazil had also participated
actively in the multilateral negotiations on financial services and in the negotiations on basic
telecommunications, and had offered improvements over its UR commitments.  However,
Hong Kong, China regretted that Brazil had not yet been able to ratify the Fourth or Fifth Protocol.
Hong Kong, China appreciated the quite liberal de facto regime, but it was unfortunate that such amajor player had not yet legally bound these commitments. He did not intend to comment on the newtelecoms offer.  The matter would be taken up in the CTS.
94. Brazil had temporarily raised tariffs by three percentage points in 1997.  Tariffs for capital
goods not produced domestically had also been increased from 0 to 5%.  Thus, Brazil’s average MFN
tariff increased.  He was pleased to note that the temporary 3 per cent increase “was scheduled” to be
removed by end 2000.  The fact that Brazil had bound all its tariff lines in the context of the Uruguay
Round was commended.  But most of the rates were higher than the applied rates.  He suggested that
closing this gap could further enhance predictability.
95. Brazil seemed in recent times to have been placing great focus on preferential trade
agreements.  This was of concern because of the potential trade diversionary effects, and the possible
undermining of the primacy of the multilateral trading system.
96. Brazil’s frequent resort to anti-dumping – 72 investigations initiated during 1996-99 – was a
worry.  Members were well aware that Hong Kong, China had argued for many years for fundamental
reform in this area of the WTO rules.  The proliferation now being seen, not only in Brazil, was
totally predictable following the bad example set thr ough misuse of this instrument in earlier years by
the major traditional users.  That the traditiona l users were now targets gave Hong Kong, China no
cause for satisfaction.
97. Brazil and Hong Kong, China were both members of the International Textiles and Clothing
Bureau.  They had collaborated closely over many years in promoting further liberalization of trade in
textiles and clothing.  Brazil's valuable contribution in this regard was greatly appreciated.
98. Hong Kong, China also respected and admired Brazil's participation and contribution in the
WTO.  Brazil had made great strides in many areas, such as simplified import procedures, enhanced
protection of intellectual property rights and concerted efforts in bringing disciplines related totechnical regulations, standards, and conformity assessment procedures into line with the TBT
Agreement.
99. The representative of Colombia noted that Brazil was Colombia's main trading partner in
MERCOSUR.  Colombian exports to Brazil had increas ed in a sustained manner over the last decade.
This favourable development was due to a demand recovery in Brazil and to tariff preferences grantedwithin the framework of the economic complementar ity agreement.  Colombia's main exports were,
inter alia , petroleum and their by-products, coal, and textiles;  it imported capital goods and
automobiles from Brazil.
100. The Brazilian market was of particular importance to Colombia.  As a member of the Andean
Community, Colombia was presently negotiating with MERCOSUR the establishment of a free-trade
agreement.  Colombia and Brazil shared the same interests as members of the Cairns group.
101. The economic crisis, which Brazil had gone through over the last two years, had also had an
impact on Colombia.  The successful recovery from  this crisis was reflected in an improvement in
economic indicators.  The return of foreign capital to Brazil was proof that the Brazilian crisis was
now over.WT/TPR/M/75
Page 18
102. The Secretariat Report showed the efforts undertaken by the Brazilian authorities to try to
avoid such crises in the future.  An example of this was the floating of the currency, the vastprivatization programme, and the commitment to multilateralism and free trade. He also noted the
initiative calling for greater trade understanding w ith the European Union.  Despite these initiatives,
as bilateral trade increased, certain difficulties emerged.  Colombia was therefore concerned that there
were still certain protectionist measures in the Brazilian economy;  a clear example was the import
licensing regime, the requirement for unjustified documentation and in some cases the application ofthe Law of Similars;  all these affected Brazil's co mmitment to free trade.  With regard to certain
products, like textiles and clothing, the requirement of a minimum price and other unjustified
requirements, as well as the application of the Merchant Marine Tax had had a negative impact on the
trade flows between Colombia and Brazil.
103. The representative of Japan said that Japan and Brazil had maintained a good economic
relationship over the years.  At the end of March 1998 Japan was the fourth largest investor in Brazil,
and ranked fifth in both exports to and imports from Brazil.
104. Japan appreciated Brazil's efforts to implement its commitments under the WTO Agreements.
The Government Report further stated that a new round of multilateral trade negotiations would
constitute an opportunity to enhance the multilateral trading system.  Japan welcomed Brazil'spositive view of holding a new round.  Brazil's contribution to the WTO was noteworthy for the
strengthening of the multilateral trading system.
105. Japan believed that regional trade agreements must be consistent with WTO rules and be
complementary to the multilateral trading system.  MERCOSUR should proceed in consistency with
the WTO Agreements with a view to contributing to the expansion of world trade.  MERCOSUR was
currently subject to an examination under the framework of the CRTA and Japan believed that there
was a need for further examination.  For example,  the exceptions to the MERCOSUR common tariffs
were broad, and exceptions for specific members still existed.  Japan expected MERCOSUR's
common external tariff regime to comply with the requirements of GATT Article XXIV 8(a)(ii)
regarding "substantially the same duties".  Japan requested Brazil's cooperation for further
examination of MERCOSUR within the CRTA.
106. There was a common MERCOSUR regulation on the application of safeguard measures.
Japan understood that when Brazil had imposed safeguard measures on toys in January 1997, as had
Argentina on footwear in September 1997, base d on this MERCOSUR re gulation, other MERCOSUR
members had been exempted.  It was recalled that the safeguards imposed by Argentina on footwear
were deemed inconsistent with the WTO Agreement by both a Panel and the Appellate Body.  Japan
thus called on Brazil to take safeguard measures in a manner consistent with the WTO Agreement.He asked about the current situation regarding the application of safeguards on toys and about its
consistency with the WTO Agreement.
107. Japan welcomed that Brazil had bound all its tariff lines in the context of the Uruguay Round.
However, bound tariff rates for a great number of manufactured goods, including steel, machinery,
electrical equipment, and vehicles, remained at the high level of 35%.  Japan encouraged Brazil toreduce these tariff rates at the earliest possible opportunity.
108. He believed that Brazil shared Japan's view that there was a need to review the Anti-Dumping
Agreement.  Nevertheless, during 1996-99, Brazil had initiated 72 anti-dumping investigations;  this
was a large number.  The mere initiation of an anti-dumping investigation could have a negative
impact on the expansion of trade.  Furthermore, the initiation of an investigation placed a significantburden on the companies under investigation.  Japan stressed that recourse to anti-dumping measures
should be made with prudence so that these measures were not used as a means of protectionism.WT/TPR/M/75
Page 19
109. Japan welcomed Brazil's position that the multilateral trade system was the fundamental
normative framework for its insertion into the international economy, as well as its approach toreview what it considers as "the distortion" of the current system through the launching of a new
round of multilateral trade negotiations.  A position that Japan fully shared.
110. The representative of Malaysia said that since Brazil's last TPR in 1996, the Brazilian
economy has undergone a number of challenges including the contagion effect of the Asian financial
crisis and its resultant adverse impact on exchange rates, economic growth, and unemployment.
111. It was encouraging to note that Brazil, like other crisis affected countries, had recovered
showing positive rates of growth, a decline in  unemployment, and more stable inflation.
Nevertheless, one of the casualties of the economic downturn had been the reduction in trade flows.
Both exports and imports of Brazil declined during the period 1998/99, with imports declining at a
faster rate.  This reduction had affected Brazil's trade with Asian countries, including with Malaysia.Total trade between the two countries declined by 31.6% in 1998 and by 12.1% in 1999.  She hoped
that trade would increase as the Brazilian economy recovered.  Malaysia urged Brazil to continue
looking towards markets in Asia, including Malaysia, which represented a huge market for Brazilian
goods.  Meanwhile, Malaysia looked forward to strengthening trade relations with Brazil, which was
an important market in South America.
112. Malaysia welcomed Brazil's removal of import financing restrictions, which had been a major
trade impediment for developing countries, like Malaysia, where advanced financing imposed higher
costs.  She also welcomed the lifting of the countervailing duty of 196.5% on desiccated coconut
originating from Malaysia and looked forward to normalizing trade in this product.
113. These actions reflected the increasing importance that Brazil attached to trade, and she
encouraged Brazil to intensify these efforts by reviewing its Law of  Similars and acceding to the
Information Technology Agreement, which would certainly give a boost to trade between Malaysiaand Brazil.
114. The representative of the Republic of Korea said that as a country that had also undergone a
financial crisis Korea understood the difficulties that Brazil had faced recently and was happy to note
that Brazil, too, had weathered the storm and was back on the path to economic growth.  He
commended the Brazilian authorities for their persistence in conducting economic reform and stronglyencouraged them to continue the reform programme.
115. Brazil was an important trading partner for Kor ea.  Bilateral trade had been expanding and
diversifying over the years, as both economies grew and increased in importance on the international
scene.
116. Korea was concerned about the exceptions to the Common External Tariff applied by Brazil
and the other MERCOSUR members.  Full implementation of the CET was expected to be achieved
by 2006.  The representative asked how many products were subject to these exception and their share
in Brazil's total external trade.  He also asked the Brazilian delegation to elaborate on its plan to
reduce the number of products subject to these exceptions and to provide a timetable.  Korea
wondered whether the Brazilian Government had an y plans to accelerate the full implementation of
the CET.
117. With regard to telecommunications, Brazil had informed the WTO Council for Trade in
Services in July 2000 of its intention not to ratify the Fourth Protocol on Basic Telecommunications
and had submitted a new schedule of commitments.  At the October meeting some delegations had
requested to hold bilateral talks on Brazil's new schedule;  Korea wished to know more about theWT/TPR/M/75
Page 20
current status of those bilateral consultations.  Also, it appeared that some Members had reservations
vis-à-vis the new schedule, he asked how the Brazilian Government was intending to deal with theseMembers' concerns.
118. On anti-dumping measures, it was his understanding that the Brazilian authorities were
currently investigating alleged dumping of Korean nylon products.  Korea hoped that the investigation
would be conducted strictly according to the spirit and the letter of the WTO Agreement on Anti-
Dumping.
119. Regarding the Law of Similars, the measure per se  seemed to be in contradiction with WTO
rules.  In addition, the test of similarity, if implemented arbitrarily, might constitute a trade barrier and
undermine the predictability of Brazil's trade regime.  He noted with serious concern that the Brazilian
Government had no plan to modify it.  He asked for detailed information on the specific criteria used
for the similarity test, in what instance the similarity test was applied, and if importation of goods wassubsequently blocked.
120. The representative of Australia noted that one of the most tangible common interests was the
importance of agriculture to both economies.  Australia welcomed Brazil's commitment to support
efforts within the WTO for further liberalization of international trade, including in the agricultural
sector.  As Cairns Group members, Australia and Brazil were continuing to work closely together toensure fairer international trade in agricultural products.
121. He welcomed the progress that Brazil had made over the past four years in deregulating and
privatizing some key state monopolies and developing a more open investment regime.
122. Despite substantial opportunities to expand the bilateral trade and investment relationship,
Australia's trade and investment relations with Brazil remained modest.  Relatively high tariffs, often-
onerous certification requirements, and the imposition of measures that discriminated against distant
suppliers, notably the Merchant Marine Renewal Tax, were impediments to future growth in trade andinvestment relations.
123. The rise since 1996 in average MFN tariffs from 12.5% to 13.7% was a particular issue of
concern.  Australia encouraged Brazil to continue to simplify import regulations and reduce import
tariffs, including through adhering to its commitment to reduce tariffs by three percentage points.
124. The representative of India said that, since 1996, Brazil had been able to strengthen fiscal,
structural, and administrative policies and genera te a more sound basis for medium and long-term
growth.  These policies had helped the economy to d eal successfully with external and other shocks,
facilitating in particular a rapid recovery from various crises, including the financial crisis in 1997.
The economic growth, which had been uneven in recent years, was expected to pick up in 2000.
Inflation and unemployment rates had been kept under check.  Foreign direct investment had
increased substantially in the last four years and the FDI flows had been able to cover the current
account deficit, which was of some concern.  The Secretariat Report suggested that further reforms
would be useful to lessen the anti-export bias present in the tariff structure, rationalize the use of tariff
concessions, and reduce remaining investment barriers.  He requested the delegation of Brazil to react
to these observations.
125. Bilateral trade between India and Brazil was sizeable, though nowhere near the potential.
Balance of trade had traditionally been in favour of  Brazil;  India looked forward to a balanced growth
in bilateral trade in the coming years.WT/TPR/M/75
Page 21
126. He focused on some aspects of Brazil's trade policy that hindered access to the Brazilian
market.  The Brazilian Ministry of Agriculture took considerable time in conducting Pest RiskAnalysis (PRA) before approving imports of food items into Brazil.  He requested the Brazilian
authorities to look into this problem with a view to expediting the PRA process.
127. Elaborate procedures existed for the registration of pharmaceuticals, a prerequisite for
importing into Brazil.  The requirement that a Bio-equivalence study needed to be done in Brazil also
impeded pharmaceutical exports to Brazil, as the process was time-consuming and expensive.  Brazil
could accept studies conducted in countries with adequate facilities to carry out the tests.  Registrationrequirements were in force for edible products imported into Brazil, with a fee charged for the
registration of each product.  Market access to Brazil was adversely affected by these procedures.  He
requested the delegation of Brazil to streamline these registration procedures and to review the
registration fee requirement for each and every edible product.
128. A non-automatic licensing regime and minimum price stipulation existed for export of pencils
and pens to Brazil.  This, in India's view, was not compatible with the WTO rules and hence requested
Brazil to withdraw this regulation.  There was also a requirement that all tyres imported into Brazilshould have INMETRO marking on them.  This requirement had proved to be expensive and thusIndia requested Brazil to review this requirement.
129. With respect to other issues of direct concern to the Indian industry,  since 13 July 2000, an
import licence was required for imports of polyester film from India.  Further, a unilateral c.i.f. value
of US$2.50 per kg. had reportedly been fixed as the minimum floor price to calculate customs duties.
No formal notification of this decision had been made.  India requested the Brazilian authorities toreview these restrictions, which were not compatible with the WTO rules.
130. The issue concerning anti-dumping duties on import of jute bags from India had been under
discussion bilaterally for quite some time.  He hoped that the duty levied on the basis of information
supplied by a company, which on investigation proved to be non-existent, would be withdrawn.
131. There was also a problem regarding exports of germ plasma and livestock to Brazil.  In
July 1997, a bilateral agreement had been signed on SPS measures.  India had expected that after
signing this agreement, the ban imposed by Brazil in 1962 on import of animal genetic material from
India would be lifted.  However, the position today was still the same, the ban remained in force.
Difficulties had been experienced in securing long-term visas and work permits by companies seeking
to establish joint ventures in Brazil.  India hoped that Brazil would also look into this problem.
132. The representative of New Zealand stated that in recent years Brazil had pursued a
programme of economic reforms that were not diss imilar to New Zealand's own experience, including
privatization and deregulation in many sectors, floating of the exchange rate, and passing the Law ofFiscal Responsibility.  The Secretariat Report noted that these developments had equipped Brazil to
deal more successfully with external and other shocks.  New Zealand welcomed and supported
Brazil's continued movement towards an outwar d oriented, market driven economy supported by
disciplined financial policies.
133. He also supported Brazil's commitments to trade liberalization and a multilateral trading
system based on genuinely open markets.  In this context, New Zealand shared some of the concerns
voiced by Brazil, regarding the negative impact of the distortionary policies of major trading partners
in some sectors, particularly agriculture.  These market distortions had had a negative impact onBrazil's trade balance despite increases in export volumes.  Consequently Brazil continued to use
minimum price schemes and preferential rural credit to support agriculture producers.  This support
appeared modest in the context of market distortions resulting from assistance provided to agriculture
in other countries.  However, New Zealand strongly supported the Brazilian Government's policy of
continuing to reduce state intervention in the agriculture sector.WT/TPR/M/75
Page 22
134. New Zealand looked forward to the elimination of Brazil's exceptions to the MERCOSUR
Common External Tariff (CET) and to the scheduled three percentage point reduction in the CET on 1January 2001.  He also noted Brazil's generally high bound tariff rates and endorsed the Secretariat's
observation that closing the gap between bound and applied rates would increase predicability for
Brazil's trading partners.
135. Brazil's active use of anti-dumping measures was of concern to New Zealand.  During the
period under review Brazil had initiated 72 anti-dumping investigations and had imposed definitiveanti-dumping duties in 36 cases.  This high use of the anti-dumping measure seemed somewhat at
odds with Brazil's own position in the 1999 WTO Ministerial Conference.  At that time Brazil had
called for new measures to prevent anti-dumping from being used as a means of protecting inefficient
sectors of domestic industry.
136. New Zealand (together with Argentina, Australia, the European Union, and Uruguay) was the
subject of a current Brazilian anti-dumping investig ation regarding milk products.  He looked forward
to the outcome of this investigation.  He noted that at this stage New Zealand would be surprised if
the investigation would find injury resulting from imports originating in New Zealand.
137. New Zealand congratulated Brazil on the work it had done during the review period to
improve its sanitary and phytosanitary environment, programmes, and procedures.  In 1999, NewZealand and Brazil had agreed a Memorandum of Understanding on Technical Cooperation and
Sanitary and Phytosanitary procedures, and in the near future New Zealand hoped to conclude
negotiations on a protocol to that Understanding covering certification issues for trade in animal
products.
138. He noted Brazil's important leadership role in the development of trade policies in South
America.
139. The representative of Argentina noted that Brazil's systematic reform process had made it
possible for a more open trade and investment regime to be set up, which allowed Brazil to
successfully face the financial crisis and to set a solid foundation for sustained medium and long-term
growth.  He highlighted some of these reforms, ma inly regarding efforts towards modernization of the
state, modernization of the economy, and privatization of state enterprises.  Argentina urged the
Brazilian Government to push forward the tax refo rm, which would promote the integration process
that was under way.
140. He commended Brazil for a liberalization process in the energy and services sector as well as,
in the financial sector and in telecommunications.  He also congratulated Brazil for keeping its
economy open despite the international financial crisis, which had had a serious impact on its balance-
of-payments situation.  He welcomed Brazil's openness to foreign investment.
141. Like Brazil, Argentina was concerned about the distortions generated by agricultural
subsidies;  it would work with Brazil in the multilateral trading system to improve market access
conditions for these products.  He also shared the concerns expressed in the Brazilian Government
Report, which noted that even though Brazil had made an effort to open up, other markets had not
done the same;  much to the contrary, in many sectors the developed countries had maintained andeven strengthened protectionist measures.  Argentina shared Brazil's view that the present mandated
negotiations should correct persisting distortions.
142. The integration of Argentina, Brazil, Uruguay, and Paraguay through MERCOSUR had not
only been promoted by the complementarity in their economies but also by shared history and by a
clear will of the countries to promote democracy in Latin America and place their economies withinWT/TPR/M/75
Page 23
the multilateral trading system.  This scenario had made it possible for Brazil and Argentina to deepen
their bilateral relations beyond trade and economic relations in a climate of confidence, replacing anold system of conflict and distrust.  He stressed the efforts made to coordinate policies in areas such as
education, health, and defence.  The integration process was open and transparent and the Members
were working to further consolidate the system.  Argentina shared Brazil's view that MERCOSUR
was the first external border for MERCOSUR economies, and thus were fully committed to pushing
this process of integration forward.
143. The representative of Mauritius noted that although Brazil was increasingly relying on tariffs
as an instrument of border protection, its use of non- tariff measures remained significant.  There was a
non-automatic import licensing system, and import prohibitions were applied for a number of reasons.
144. According to the Secretariat Report:  "In general, import prohibitions apply irrespective of the
origin of the good, with the exception of other cereals for planting;  fescua seeds;  and animal feed,including meat flour, and bone meal, which are prohib ited only if originating in North America, Asia,
Africa, and Oceania."  She wished to understand the purpose of this prohibition against certain
regions, in particular Africa.  Moreover, she welcomed the abolition of the restrictions on import
financing in 1999, but urged Brazil to remove the ot her measures it had taken to restrict imports.
145. She was also concerned about the general increase of three percentage points in the applied
MFN tariff of Brazil since 1997.  It appeared that, in a number of cases, this had resulted in the
applied rates exceeding the bound rates.  Mauritius hoped that the three percentage points increase
would be eliminated by 31 December 2000.
146. Brazil provided domestic support to its agricultural sector through the policy of minimum
guaranteed prices and a number of other support programmes, including the National System of Rural
Credit, the Programme to Strengthen Family Farming, FINAME  Agricola, and MODERFROTA.
She asked the Brazilian delegation for details of the amount spent on each of the existing domesticsupport programmes in relation to the value of Brazil's total agricultural production or the production
of the products concerned, as the case my be, over the last five years.
147. Brazil was looking forward to the establishment by the end of 2001 of a broader economic
area within South America through the conclusion of a free-trade agreement between MERCOSUR
and the Andean Community.  MERCOSUR had also st arted negotiations with the EU.  Moreover, the
negotiations for the establishment of the Free Trade Area of the Americas were scheduled to be
concluded in 2005.  Trade negotiations between Brazil and Mexico were also under way.  She
acknowledged Brazil's perception that regional trade agreements should not be seen as an alternative
to the multilateral trading system and urged that the new agreements to be concluded by Brazil,
whether by itself or as a member of MERCOSUR, should not adversely affect trade with third partiesnor impinge on its obligations under the WTO.
148. The representative of the Slovak Republic noted that the Trade Policy Review had shown that
Brazil had continued its programme of economic reform, which led to more open trade and
investment regimes.  However, as noted in the Se cretariat Report, some trade restrictions remained.
She encouraged the Brazilian authorities to continue liberalizing.
149. Brazil was an important trading partner of the Slovak Republic and she hoped that this
relationship would deepen.  She welcomed Brazil's active role in promoting a new round of
multilateral trade negotiations.
150. The representative of Ecuador stated that Brazil had made important progress in the area of
economic integration not only through its partic ipation in MERCOSUR but also by seeking toWT/TPR/M/75
Page 24
establish stronger links with the Andean Community, ALADI, and in particular through its
participation in FTAA negotiations.  During the fi rst summit meeting of Latin American Presidents
the commitment to the multilateral trading system wa s reaffirmed, while highlighting their interest in
a new round of negotiations to be initiated as soon as possible.  Brazil was one of Ecuador's main
trading partners;  an important market for Ecuadorian products, as well as a main supplier of many
products.
151. However, Ecuador still had a trade balance deficit with Brazil, and this deficit had
deteriorated over the past year in view of Ecuador's economic crisis.  Ecuador exports to Brazil had
been restricted because of a proliferation of trade practices that Ecuador considered to be an
excessively harsh control.  For instance, the import licensing system was cumbersome.  It was also
difficult to obtain sanitary or phytosanitary certification.  This was the case of exports for Ecuadorian
bananas to Brazil, which were subject to unjustified phytosanitary controls.  The Ecuadorianauthorities had participated in intense dialogue wi th the Brazilian authorities to try to solve these
problems;  he hoped they would be resolved as Brazil continued to adopt trade practices consistent
with the organization's principles.
152. The representative of the Czech Republic said that Brazil was a traditional trade partner in
South America.  Their Governments had been successful in strengthening bilateral relations and, as a
result, bilateral trade had been developing smoothly.
153. He sought clarification on: the "system of guarantees" in operation in Brazil;  labelling
requirements and the need to notify them at the WTO;  and the consistency of the Law of Similars
with Brazil's competition law.
154. The Czech Republic would welcome more liberalization in the automotive sector.
155. The representative of Hungary noted that the temporary tariff increase of three percentage
points, which increased the average MFN tariff above its 1996 level, was due to be removed at the
end of 2000.  He commended Brazil for the steps taken towards the simplification of import
procedures and awaited with interest the outcome of  the import licensing system's review.  Trade was
regulated in Brazil by an intricate web of laws, regulations, ministerial decrees, and provisional
measures;  there seemed to be room for some simplification in this area.  The efforts to decrease state
involvement in production activities had already brought significant results, but there was still muchto do, in particular in the manufacturing sector.  Liberalization undertaken in the services sector
since 1996 was applaudable.  He hoped that the ratifica tion of the Fifth Protocol could be brought to a
successful conclusion and that a mutually acceptable solution could be found with respect to Brazil's
commitments on basic telecommunications.
156. He shared Brazil's view that multilateral and WTO-compatible regional initiatives could be
mutually supportive.  Hungary, like Brazil, believed that a new round of multilateral trade
negotiations would constitute an opportunity for th e enhancement of the multilateral trading system.WT/TPR/M/75
Page 25
V. REPLIES FROM THE REPRESENTATIVE OF BRAZIL AND ADDITIONAL
COMMENTS
157. The Chairperson invited the representative of Brazil to focus his responses on three main
themes:  (i) economic environment;  (ii) a discussion of trade policies by measure;  and (iii) sectoral
elements of trade policies.
(i) Economic environment
158. The representative of Brazil presented his delegation's preliminary written responses to
advance questions related to the economic envir onment; the trade policy regime:  framework and
objectives;  trade agreements;  and foreign direct investment (Annex).  More comprehensive
responses would be provided at a later date and published on the WTO website in document
WT/TPR/M/75/Add.1.
159. The discussant (Mr. Peter Jenkins) thanked the Ambassador for the thorough replies.
160. He was struck by the number of delegations who appreciated and admired all that Brazil had
done over the last decade to promote and facilitate trade and to make foreign investors feel welcomed,
but also felt that the process was still incomplete and there was scope for further progress.  All
Members were pleased to have heard from Ambassador Graça Lima that the deepening of the process
of deregulation and privatization of the economy was going to continue.  A couple of delegations hadreferred in particular to the Brazilian tax system and to its tendency in it to be cascading.  He was
pleased to hear that the reform of the state and of the tax system were under way and that the
Government had submitted to Congress a bill regarding tax reform.
161. Ambassador Graça Lima had mentioned measures that affected Brazil's trade with, notably,
the United States and the European Union. A very clear indication was given of where Brazil felt that
the problems lay;  he thought the Members owed it to Brazil to take due note of this.
162. He noted Brazil's comments about the complexity of trade-related legislation and that there
was no intention for any lack of transparency.  Nonetheless, traders thought it difficult to find their
way round this rather intricate web of related instruments, and at least one of Brazil's trading partners
had suggested that it would be very helpful if Brazil could consider introducing a kind of omnibus
trade bill that would bring together all the existing legislation and maybe simplify where possible.
The Brazilian delegation might consider this suggestion.
163. On MERCOSUR, it was mentioned that it was the intention of Brazil and its partners in the
enterprise to pursue the creation of a common market, including in services.  In this context he asked
why the 1997 Montevideo Protocol on Services had not been ratified.  Concerns had been raised about
the three percentage point increase in the Common External Tariff and about evidence that in some
cases CET tariff rates had appeared to exceed Brazil's bound rates.  Brazil had responded that thisincrease would lapse at the end of 2000 and no changes had been made to that decision  It had also
become clear that when CET rates exceeded the bound rates, the bound rates prevailed.
164. The representative of Paraguay encouraged the Government of Brazil to continue the process
started in 1996 aimed at liberalizing trade, opening up its economy, and improving the efficacy of its
social policies.
165. Paraguay shared Brazil's concern about the imbalance in trade with some of the Members of
the WTO;  the opening of markets was not reciprocated completely.  The balance desired might be
achieved in the mandated negotiations on agriculture and services started at the beginning of 2000,WT/TPR/M/75
Page 26
but the representative was not convinced that a broadly based round would be of benefit to Paraguay
since other economic sectors under these negotiations were already sufficiently opened up to the restof the world.  The further opening of international markets, especially for agricultural products would
aid Paraguay's exports to the Brazilian market, as Brazil's surpluses would be absorbed by the
international market.
166. In connection with investment flows, Paraguay had infrastructure projects with Brazil, such as
the hydroelectric plant of ITAIPU.  He noted that Brazil was Paraguay's main trade partner.  Aneconomic crisis, such as the recent one, had had strong repercussions on Paraguay.
167. Another important project with Brazil was the ocean channel connecting the Atlantic and the
Pacific through the Paraguayan territory.  Paraguay's exports were transported through Brazil.  For
over three decades Paraguay's products had been able to flow through Brazil in order to reach other
markets;  this was of extreme importance for a country without coastal borders.
168. Along with Brazil, Argentina and Uruguay, Paraguay established the Ascension Treaty with a
view to establishing a common market.  The memb ers of MERCOSUR had been working to promote
improved well-being for all inhabitants of the region, consolidate economic development, and seek
economic, political, and social development.  Paraguay supported Brazil in its efforts to strengthen the
multilateral trading system and to establish a broader economic zone in 2001 with the conclusion ofthe free-trade agreement between th e MERCOSUR and the Andean Group.
169. The representative of the European Union thanked the Brazilian delegation for its written
responses, which would be studied in detail.  Regarding Brazil's statement that the EU used
environmental requirements as a protectionist measures, it had become clear during the EU's TPR and
from discussions at other WTO fora, that these measures were taken with the sole purpose of
protecting the environment, to ensure food safety and consumer protection.  He underlined that the
EU had fully implemented its Uruguay Round commitments regarding agriculture.
170. The EU was interested in supporting Brazil in studying how to conduct sustainability impact
assessments.  The EU was still defining the methodology to be used to develop such an instrument
and was open to discussing this with other members.
171. The EU supported the MERCOSUR process and was encouraged by Brazil's assurance that
the CET would soon cover all products and that the three percentage point increase was to be removedby end of the year.
172. No response had been given to the EU's ques tions regarding FDI, and he hoped to receive
answers especially, regarding the reasons for keeping certain sectors closed or partly closed to FDI,
and on whether future liberalization had been planned by Brazil in this sector.
173. The representative of India joined other delegations in thanking Brazil for their excellent
responses and hoped that all questions raised by India during this Review would be adequately
covered in the written responses.
174. The representative of Japan also thanked the Brazilian delegation for their responses.  She
enquired how the new mandate for the Brazilian In vestment Promotion Agency, which was to start
operating at the beginning of 2001, differs from the existing enquiry points for FDI.
175. In response the representative of Brazil said that the EU's question on  FDI would be answered
in the latter part of the exercise.  He understood that the EU was mostly interested in knowing why aWT/TPR/M/75
Page 27
number of sectors remained, in their view, closed.  There were exceptions as stipulated in the
Brazilian law; however, a number of sectors had recently been opened.
176. He took note of the Indian delegate's comments.  With regard to Japan's question on the
functions and the nature of the Brazilian Investment Promotion Agency, he said that full information
on the nature of the agency and its function would be provided in due course.  This agency was not
created to direct investments in any way.  It was mostly a promotion agency, intended mainly to
support the Central Bank's department of foreign capital.
(ii) Trade policies by measure
177. The representative of Brazil presented his delegation's preliminary written responses to
advance questions related to measures affecting imports, measures affecting exports, and measures
affecting production and trade.
178. The discussant considered that the responses given by Brazil dismissed many of the concerns
raised regarding the Brazilian tariff, for instance es calation, and the fact that 9% of tariff lines had
rates above 21%, among others.  On the Merchant Marine Tax,  he noted that data were being
collected and responses would be provided.  He reiterated the strong concern that this provision had
aroused among Members.  He also sought further clarification on the Law of Similars since he
considered the reply opaque.  It was his understanding that the application of this provision wasactually much more limited than might have been thought from the Secretariat Report;  that it
inhibited the granting of tax breaks but did not actually forbid the importation of goods where similar
national goods exist.
179. In response the representative of Brazil made further clarifications on its tariff.  He considered
that the applied tariffs in Brazil were in genera l low;  they had been negotiated within MERCOSUR
and were usually much lower than bound tariffs.  There was, of course, some degree of dispersion, as
was recognized.  There was also tariff escalation, a feature that was common to tariff structures allover the world.  However, the trend in Brazil was to lower tariffs further, as long as Brazilian exports
received suitable offers.  He reiterated that Brazil suffered from imbalances, asymmetries, but it was
ready to lower tariffs as long as more market access opportunities were offered to Brazil.
180. With regard to the Merchant Marine Tax, he agreed entirely with the discussant's remarks.
Brazil took note of the concerns and would reflect on what had been said in this regard.  TheMerchant Marine tax had been in place for a number of years to serve a certain purpose.  It was not
meant to restrict trade in any way, but since it was a charge it might represent for some Members not a
restriction but a certain limitation.  Brazil would give the matter its full attention.
181. The Law of Similars was conditional upon the giving of incentives, exemptions or other
benefits, it was not applied across-the-board.  The Law of  Similars was intended merely to providefor an examination of imports that were benefiting from special incentives, it did not constitute any
kind of violation.
182. The representative of the European Union noted that in addition to customs duties Brazil
levied other taxes and fees.  The EU considered that Brazil needed to simplify and reduce these
charges.  He noted with great satisfaction that Brazil was in the process of simplifying its importlicensing regime, since a considerable amount of imports were still subject to non-automatic licensing.
183. Regarding the Law of Similars he also sought more clarification.  Brazil had replied that the
application of this provision mainly affected government procurement.  He asked whether other areasWT/TPR/M/75
Page 28
were also affected, whether there was a large scope for uncertainty of application and what was the
effect of this provision.
184. The EU asked Brazil to elaborate further on export taxes:  at the discretion of the Executive,
there was a possibility of increasing export taxes to up to 250%;  Brazil had stated that the authorities
seldom used this measure and therefore it did not have trade persuasive effect.  However, Brazil had
also said that it was very useful in regulating commodity stocks.  He asked whether the measure was
used or was not used; it was unclear to the EU.
185. The representative of Norway had a particular interest in import licensing and thus took note
of the efforts to simplify the system.  He urged the Brazilian authorities to look particularly into trade
in technology products, which he thought were subject to non-automatic licensing.  There seemed to
be a new regulation regarding water content and labelling of dried fish.  He sought more information
in this regard.
186. The representative of Japan echoed the EU's concern about export taxes.  She urged Brazil
again to take safeguard measures in a manner co nsistent with the WTO Agreement in the future.
187. On the questions raised by the EU and Japan regarding export taxes, Brazil stressed that even
though the law existed, the measure was seldom applied because it was to be used only to deal with
extreme situations; for instance in cases of shortages.  This explained why at this point only oneproduct was subject to export taxes.  He took note of the observations made by Norway on import
licensing, but at this stage made no comments.
188. He thought that Japan's question regarding safeguards had already been answered when the
safeguard was imposed.
(iii) Sectoral elements of trade policies
189. The representative of Brazil presented his delegation's preliminary written responses to
advance questions related to agriculture, energy, manufacturing and services.  Full responses
regarding services were not detailed because of time constraint.
190. The representative of India reiterated the hope for responses to all of India's written questions,
especially regarding imports of animals and genetic material.
191. The representative of Brazil said that he hoped that his delegation's answers had been
appropriate and comprehensive;  but that Brazil was also glad to provide additional answers toquestions posed during the second day of the meeting.  He reiterated that Brazil was going even
further in its determination to reform and to liberalize trade in a manner that was in general coherent
with its economic policies.  He stressed that, in the context of multilateral trade, there was need for the
system to advance further and cover sectors that were not actually integrated in the system.WT/TPR/M/75
Page 29
VI. CONCLUDING REMARKS BY THE CHAIRPERSON
192. We have had an open, detailed and informative discussion of Brazil's trade policies and
practices.  Members were impressed by the resilience of the Brazilian economy and its rapid recovery
from the financial crises in 1997 and 1998.  They attributed this largely to sound macroeconomic
policies and the liberalization pursued over the last decade, both unilaterally and in the context of
international agreements:  greater exposure to competition from foreign goods and services has helped
contain inflation, enhanced productivity and competitiveness and attracted investment.  Membersrecognized that, as a result, Brazil has now moved unequivocally away from the import substitution
model of earlier years.
193. Although the relative importance of trade in the Brazilian economy probably remains below
its potential level, Members underlined Brazil's already significant role as a trader and investment
destination.  Members commended Brazil for its active participation in the multilateral trading system,with several welcoming its support for the launching of a new round of negotiations.  Some Members,
however, encouraged Brazil to help strengthen, and to take fuller advantage of, existing multilateral
rules and disciplines by joining the GPA and ITA.  Some Members also asked about Brazil's still
pending ratifications of the Fourth and Fifth Protocol of the GATS.
194. Brazil's active involvement in preferential initiatives also attracted considerable interest.
Mainly, Members sought information on current an d future directions for MERCOSUR, particularly
concerning the automotive and sugar regimes.  They offered different views on MERCOSUR's
meaning to third parties, some stressing the opportuni ties offered by a single large, regional market,
and others raising questions about trade diversion.
195. Regarding Brazil's domestic trade regime, an important issue was the myriad laws and
regulations governing trade, with the widespread use of provisional measures identified as a particular
source of difficulty.  There thus appear to be room for simplification in this area to render the traderegime more transparent, suggestions including the adoption of a single trade law as Brazil had
considered in the past.
196. Members observed with concern that since Brazil's last Review in 1996 the average MFN
tariff had risen to 13.7% as a result of the temporary three percentage points tariff increase;  they took
note of Brazil's reassurances that the increase would be eliminated at the end of this year.  Membersalso observed that closing the often large gap between bound and applied rates would increase
predictability for Brazil's trading partners.  On certain applied rates apparently exceeding bound
levels, the Brazilian delegation stated that all WTO tariff bindings were being fully respected.
197. Questions were also raised on non-tariff measures, many focusing on Brazil's customs
valuation and the role of minimum prices, as well as on the non-automatic import licensing regime.The use of labelling and sanitary and phytosanitary measures also were queried.  Brazil's frequent
resort to anti-dumping measures was a concer n, with some Members observing, however, Brazil's
support for stricter multilateral disciplines in the application of such measures.
198. Members sought clarification on sector-specific support programmes, particularly for
agriculture and manufacturing.  It was observed that agricultural support, including to exports andcredit provided under favourable terms, appeared modest, particularly relative to assistance levels in
other producing areas.  Nonetheless, even that support could affect world markets where Brazil is a
major supplier, for example sugar and alcohol.  Brazil is also a leading producer of automotive
products;  its special automotive regime having given rise to concerns earlier, the Brazilian delegation
emphasized that all benefits provided to that industry had ceased at end 1999.WT/TPR/M/75
Page 30
199. Additional details were also sought on a number of issues, including:
• non-tariff import charges, including the Merchant Marine Renewal Tax;
• the Law of Similars;
• incentive programmes linked to local content requirements;
• export promotion and financial assistance, particularly PROEX;
• export taxes;
• competition policy;
• enforcement of intellectual property rights;
• market access in the services sector.
200. Members expressed their appreciation of the written and oral responses provided by the
delegation of Brazil to those and other questions during the meeting.
201. I feel that this Review has met the vision for the TPRM expressed by Ambassador
Graça Lima in his opening statement, our discussion having enhanced transparency and understandingof Brazil's trade policies and practices through a collaborative quest.  Members were appreciative of
Brazil's efforts to implement wide ranging economic reforms and encouraged it to continue down this
path.  This will have to be buttressed no doubt by further improvements to the trade and investment
regimes, especially to improve transparency and predictability.  The Brazilian delegation reiterated its
strong commitment to a rules based multilateral system, and I hope that Members will be able to
support this commitment by extending open access for Brazilian exports.WT/TPR/M/75
Page 31
ANNEX
PRELIMINARY RESPONSES BY THE DELEGATION OF BRAZIL
TO ADVANCE WRITTEN QUESTIONS1
I. ECONOMIC ENVIRONMENT
US – 1 – RG – Introduction - para. 3 - The Government Report notes that Brazil experienced a fast
recovery after the international liquidity crises of 1997 - 1998 through fiscal and monetary discipline,
floating of the currency, public sector adjustment and structural reform.  What actions is the Braziliangovernment taking to continue these policies?
US – 8 - Developments in Trade - para 31 - The Secretariat Report states that exports in 1999 were
stimulated by the Government's foreign trade policy, designed to foster foreign sales through creation
of and/or expansion of incentive programs and deregulation measures.  What incentives and
measures is the Government focusing on?
US – 7 – Incentives - para.15 - Although Brazil has substantially diminished state involvement in
production activities, some current policies echo earlier import substitution strategies in which
incentives favor some activities while implicitly taxing others.  What steps is Brazil taking to further
sectoral neutral policies?
URUGUAY - 1 – Market access - paragraph 65, page 14 - Could Brazil comment on paragraph 65 of
the Government Report which express that 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 and, on the contrary, in
many sectors specially in those in which Brazil is highly competitive, developed countries have
maintained or even increased protectionist measures?
SWITZERLAND – 1 – p.11 para.29 - The Secretariat Repo rt mentions several possible reasons for the
decline in imports in 1998-99, such as a decline in internal demand, the three percentage points tariff
increase at the end of 1997 or the process of import substitution by domestic production as a result of
the devaluation. What is in your view the most re levant factor for the downward slide of Brazilian
imports ?
INDIA 1 – Para.2 Summary Observations states “nevertheless further reforms would be useful to
lessen the anti-export bias present in the tariff structure, rationalize the use of tariff concession and ofnon tariff measures” …Para.7 notes “the intricate web of statutes governing foreign trade in Brazil”.
We would welcome the comments of Brazil on these observations.
MALAYSIA – 3 - Could Brazil clarify the meaning of an export bias created by the tariff structure as
reflected in para.3 page 26?
BRAZIL - ECONOMIC ENVIRONMENT
Regarding the economic environment, the U.S. Delegation asked what actions is the Brazilian
Government taking to continue fiscal and monetary discipline, public sector adjustment and structural
reform. What incentives and measures is the Government focusing on in order to foster foreign sales?
And what steps are we taking to further sectoral neutral policies?
                                                     
1 Reproduced as received from the Brazilian delegation.WT/TPR/M/75
Page 32
Of course, there are no magic formulas to achieve sustained economic growth. Thus, the
Brazilian Government will continue to pursue and deepen the policies implemented throughout thelast decade, and more markedly since the Real Plan, with a view to consolidating the important
macroeconomic results achieved.  In the realm of trade, these policies and practices are consistent
with the principles and objectives of improv ing Brazil's overall economic competitiveness and
efficiency in social sectors, as pointed out in th e Government's policy statement for this Review.  The
deepening of the process of deregulation and privatization of the economy, alongside the pursuit ofinstitutional and legal bases for sustained economic growth will continue.  The reform of the State
machinery, of the tax system and of the social security are underway.  In this regard, it is worth noting
that a bill regarding tax reform has been submitted to Congress, which provides for a major
simplification and deregulation of the system in place.   This initiative constitutes a major step towards
fostering exports through an important sectoral neutral approach.  We expect to see results in this areain the course of 2001.
Uruguay asked us to comment on the difficulties faced by Brazilian goods and services with
respect to the significant obstacles in terms of access to our major partner's markets.  We have noted
that the broad opening of the Brazilian market, which began in the early 1990s has not resulted in
commensurate access to foreign markets.  On the contrary, in several sectors, especially those in
which Brazil is highly competitive, developed countries have maintained or even increased
protectionist trade measures.  As stated in our Report: "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, US$6,526 billion, US$12,215 billion, and US$1,655 billion, respectively".
With regard to trade with the United States, the main export products are affected by
restrictive measures are: textiles, sugar and tobacco (quotas); orange juice, footwear and ethyl alcohol(specific high tariffs); steel products and orange juice (antidumping duties); fruits and vegetables,
bovine meat and poultry (sanitary and phytosanitary restrictions).
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: sanitaryand phytosanitary restrictions, quotas (sugar, bananas, fish products, Hilton Beef, textiles and
poultry), antidumping and countervailing duties (silicon iron and monosodium glutamate), and
technical barriers (such as warranted labeling requirements).
The delegation from Switzerland asked what was the most relevant factor for the reduction of
imports in 1998-99.  It must be recalled that, during that period, the Brazilian economy was hit bycontagion, in the aftermath of the Russian crisis.  Yet recovery was fast, even under adverse
circumstances:  GDP grew even though at just 1% in 1999.  But compared to the previous years, this
represented a significant decrease in domestic production and consumption.  Hence, the most relevant
factor determining the decrease in Brazil's imports in 1998-99 was most certainly the reduction in
domestic demand.  The floating of the currency, in February of 1999, also played a role in enhancingFDI in industrial and services sectors, with a view to stimulate local production of goods and the
supply of services to Brazil's regional markets.  In the first six months of this year, the country's
economic output has regained momentum and a 4% growth is expected at year's end.  From January
to June, 2000, Brazil's aggregate consumption has regained impetus and imports have risen
considerably, especially in the raw materials and intermediary goods segments, compared to the sameperiod of last year.WT/TPR/M/75
Page 33
II. TRADE POLICY REGIME  - FRAMEWORK AND OBJECTIVES
US – 3 – RG - Introduction - para.5 - The Secretariat Report states that since 1996 Brazil has
strengthened its institutional capacity to deal with trade issues, including implementation of WTO
rules, especially those derived from the Uruguay Round Agreements.  Please describe those steps the
Brazilian government has taken to strengthen its institutional capacity in this regard.
EC – 1 - The Multilateral trading system
1.1 - In the Government Report paragraph 44, and the Secretariat Report page 19, paragraph 22,
Brazil notes that a new round would constitute an opportunity for the enhancement of the multilateral
trading system.  The EU attaches great import ance to the launch of a new comprehensive round of
trade negotiations, which would address the conc erns of all members of the WTO and strongly
welcomes Brazil's commitment to this goal.  The EU would be grateful for a more detailed
explanation of which issues Brazil would like to see addressed in a new round.  1.2 - What meansdoes Brazil use to make its trade policy supportive of sustainable development?  To what extent does
Brazil use, or is planning to use, instruments such  as sustainability impact assessments, as a tool in
this sphere?  In particular, what other mechanisms is Brazil using to promote synergies between its
trade policy and its environmental policy? 1.3 - What are the priorities of Brazil in relation to
consultations with domestic stakeholders?  How does Brazil consult with civil society (NGOs,business community, etc) on the formulation of it s trade policy?  What are Brazil's views on
improving WTO transparency?
KOREA - 1 - As para. 7, page x of the Secretariat Report points out, “foreign trade in Brazil is
governed by a large number of laws, provisional measures (MPs), decrees, and resolutions” and
trade-related laws are frequently amended, especially by the use of MPs.  This may have adversely
affected the transparency and predictability of the regulatory structure for traders.  Does the
Brazilian Government have any plan to improve this legal environment?
BRAZIL - FRAMEWORK AND OBJECTIVES
A number of speakers referred to Brazil’s firm commitment to a new round of multilateral
trade negotiations, and a question was raised as to which issues we would like to see addressed in it.
As underlined in my initial statement, Brazil, with its diversified trading interests, both in terms of
products and partners, attaches utmost importance to the multilateral trading system.  On evaluatingthe implementation of the results of the Uruguay Round - and when we discuss implementation we
are not primarily addressing issues of developing country capabilities - we can conclude that benefits
have not been spread as evenly as expected, with significant distortions still affecting the system.  A
new round should aim above all at correcting these distortions.  Highest among these is the
agricultural sector, in which persistent patterns of protectionism in major markets have maintained itessentially outside the normative framework of the multilateral trading system.  We would also like to
see a new round tackle certain disciplines, such as those in the areas of anti-dumping.
Brazil believes that trade policy and environmental policy could in effect have very positive
synergies.  In this respect, perhaps one of the most important mechanisms for promoting such
synergies lies in the efforts undertaken to secure access to foreign markets for Brazilian products, asthe environmental degradation caused by poverty is widely recognized, particularly in the agricultural
sector.  In this respect, export led economic growth would have a positive effect on the environment.
Brazil also supports market access to value-added products, as a means to help the environment.  One
good example of this is the exports of timber, which is not as heavily taxed as wood-finished
products, such as furniture, forcing the industry to cu t more trees in order to ensure its profitability.
Furthermore, Brazil attaches great importance to th e valuing of products originating from sustainableWT/TPR/M/75
Page 34
areas, such as certified logging, in order to support and preserve environmentally sound activities.  In
regards to sustainability impact assessments, Br azil welcomes the views of those who support such
tools.  However, we would like to underline the fact that, to date, there is no reliable methodology to
conduct such a study in a trustworthy manner, which, we fear, could seriously hamper the exercise
and produce distorted results.  We also would like to stress the importance of assessing the
environment or sustainable impact of trade measures in general, which includes not only trade
liberalization, but also trade protectionism.
The formulation of Brazilian trade policy increasingly relies on closer ties and consultations
with civil society.  The Foreign Trade Board (CAMEX) regularly invites views on trade policy issues
through public hearings.  In my capacity as Undersecretary for Integration, Economic and Trade
Affairs at the Ministry of Foreign Relations, coordinator of intergovernmental bodies which formulate
and discuss proposals to be submitted to trade negotiated committees, I also regularly consult withrepresentatives of civil society with a view to arriving at positions towards international negotiations.
This was true, for example, of the entire preparatory process leading up to the Seattle Ministerial
Conference and is true today of the whole range of negotiations within the Free Trade Area of the
Americas and Mercosur – EC.  With regard to WTO transparency, Brazil is prepared to examine any
measure that will enhance it, on the basic condition that the fundamental inter-governmental characterof our Organization be preserved.
We recognize that trade-related legislation has been subject, over the last few years, to a
significant number of amendments.  Although at first sight this could be interpreted as creating
difficulties for traders, it is in fact the result of the profound overhaul required to transform an inward-
facing, import substitution economic model for the outward facing, market oriented system we have
today.  Transparency is ensured in enacting all legislation and predictability is compatible with that of
any other system, which can equally be amended according to conditions.
A number of steps have been taken by the Brazilian Government to strengthen institutional
capacities to deal with trade issues.  Among these, one could mention the filling of positions of
foreign trade analysts in the Ministry of Development, Industry and Trade.  Furthermore, the
Government has set up a number of regulatory agencies, in areas such as telecommunications,
petroleum and electric energy, and envisages others, in order to fulfill its new role of regulation withinthe economy.
TRADE AGREEMENTS - MERCOSUR
US – 2 – RG - Introduction - para. 4 - According to the report, Brazil's commitment to trade
liberalization and integration with MERCOSUL continue to be the cornerstone of its trade policy.
Have changes to MERCOSUL already been notified to the WTO?
SWITZERLAND – 2 - pages 20ff. - We would be intere sted to know whether Brazil estimates that -
after some 10 years of experience - the founding of the Mercosur has had any influence on
international trade with regard to "trade diversion" ? Have there been studies conducted to assess the
impact of the Mercosur ?
COLOMBIA - 1 - paragraph 27 - The Secretariat Report mentions that in January 1998, Mercosur
temporarily increased its CET by 3 percentage  points and Brazil implemented this measure in
November 1997 when it was still under negotiations. The increase is to be eliminated by 31 December
2000. Could the Brazilian authorities provide more details regarding the rationale for the increasing
of the CET? Why did Brazil apply the measure before the rest of the Mercosur Members? The plans
towards the reduction of the CET to the previous levels are still prevailing?WT/TPR/M/75
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COLOMBIA – 2 - Paragraph 28 - The report explai ns that negotiations among Mercosur Members
are underway to eliminate restrictions on internal trade in sugar products, automotive products, andservices. What are the current conditions that govern the intra- Mercosur trade in sugar and
automotive products? What are the plans towards the elimination of trade barriers to sugar and
automobiles within Mercosur?
COLOMBIA – 3 - Paragraph 28 - The report also ment ions the conclusion of the negotiations for the
establishment of a common automotive regime with  Argentina. Could the Brazilian authorities give
more details regarding this new regime? In this regime are there any local content or performance
requirements?
EC – 2.1 - Brazil has now for 5 years benefited fr om the 85% internal liberalisation for intra
Mercosur trade. In addition, the Mercosur countries have had to face the challenge of defining and
conducting a common external trade policy. We woul d be grateful for Brazil sharing her assessment
of this experience and the impact it has had on its economy and trade policy. Has Brazil's
participation in Mercosur yielded the expected benefits? What have been the difficulties? What are
the next steps in the evolution of Mercosur both short term and long term?  2.2 - Can Brazil please
elaborate on the progress made in removing import restrictions on its trade in goods with other
Mercosur partners?  Have all import tariffs and non-tariff barriers on intra-trade now beeneliminated?  If not, what products are still affected by tariffs and/or non-tariff restrictions?  How
many products are affected and what proportion of ex-Mercosur imports do they account for?  What
is the timetable for elimination of any remaining restrictions?  2.3 - As regards the Common External
Tariff of the Mercosur countries, how many tariffs lines are presently excluded?  Since the adoption of
the CET by Brazil has led to applied rates on some products that breach its existing bindings, what
steps is Brazil taking either to correct this situation or to ensure the early satisfactory conclusion of
negotiations for appropriate tariff adjustments under GATT Article XXIV:6 and XXVIII?  2.5 - TheSecretariat reports that Mercosur has concluded free trade agreements with both Chile and Bolivia.
Have these agreements been notified to the WTO?  If not, when do Brazil and the other parties
propose to notify them?
THAILAND – 3 – We would like to have Brazil’s preliminary views on the impact that Mercosur has
had on the Brazilian economy.
KOREA – 2 - According to para 26, page 20, Brazil, like other members of the MERCOSUR, applies
different tariffs to a certain group of products imported from third countries, as exceptions to the
Common External Tariff. Full implementation is exp ected to be achieved by 2006. Could the Brazilian
Government provide information on the number of pr oducts subject to these separate tariffs and their
share in Brazil's total external trade? Could the Brazilian Government elaborate on its plan to reducethe number of products that are exceptions to the CET,  together with a timetable? Does the Brazilian
government have any plan to accelerate the full implementation?
KOREA – 3 -  According to para 27, page 20, Brazil and its MERCOSUR partners have temporarily
increased its CET by 3 percentage points. Could the Brazilian Government provide the background
for the temporary percentage point increase?  Is this measure related to Brazil's WTO obligationunder GATT Article XXIV or the Enabling Clause, both of  which provide, inter alia, that the external
barriers should not be raised on the whole? Will the temporary increase be terminated by the end of
year 2000, as planned?  Is there any future plan to increase the CET again?
AUSTRALIA – 7 - What progress has been made in  the development/conclusion of regimes within
Mercosul for automobiles and auto parts and for agricultural commodities such as sugar? Can theBrazilian comment on the future direction of Mercosul, particularly the relationship between
Mercosul and its associates, the Latin American Integration Association and the Andean Community.WT/TPR/M/75
Page 36
AUSTRALIA – 3 - Several developments are expected  in the application of the Mercosul Common
External Tariff (TEC) in the near future. Australia understands that the 3 percent TEC surtaxestablished during the economic crisis of 1997 is due to be removed by 31 December 2000. Will this
occur as planned?
AUSTRALIA - 4 - Further, will the so-called Mercosul  “exceptions list” (with the exception of certain
IT-related goods) come to an end by December 31 2000? We understand that certain manufacturing
industries are pressing for the surtax to be retained. What is the Brazilian Government’s position onthis?
AUSTRALIA - 6 - We note Brazil’s (and Mercosul’s) heavy agenda of negotiation on RTAs with the
FTAA, EU, Andean Community, South Africa and Chile. Has Brazil established criteria – other than
WTO consistency- for the negotiations of RTAs and extension to other countries?
BRAZIL – MERCOSUR
During the period of existence of Mercosur, intra-regional trade grew impressively by about
400%. This was not done at the expense of extra regional trade, as imports from non-Mercosur
countries grew in the same period by around 200%.  This is coherent with the fact that Brazilian MFN
tariff rates were reduced from a simple average of more than 40 % previous to the establishment of
Mercosur to the 14% average of the CET. Built under the concept of open regionalism, Mercosur isready to conduct negotiations on tariffs, both at the multilateral or regional levels, and has in fact
engaged in a number of such exercises.  The known studies on Mercosur, conducted mainly by the
academic sector and some international organizations, show no evidence of a net trade diverting effect
of Mercosur  on Brazilian trade.
Since the creation of Mercosur, the four me mber countries have been experiencing an
impressive process of modernisation and liberalization of their economies. Not only have trade and
investment across borders boomed in this period, but Mercosur has also proven to be a rising actor atthe international level, with a dynamic external agenda covering processes of negotiation and
consultation with a wide array of countries and groupings.  Mercosur now represents the fourth largest
economic entity world-wide, after the European Union, the United States and Japan.  It has more than
200 million consumers and boasts a combined GDP of more than US$1 trillion.  This market is
among the fastest growing in the world.
In the case of Brazil, Mercosur has played an important role in supporting, consolidating and
deepening the liberalization process the economy has undergone, both in its trade and regulatory
regimes.  In the light of a limited expansion of Brazilian exports to markets outside Latin America,
where many Brazilian exports face important barriers, particularly in the agricultural sector, Mercosur
has provided an important market for Brazilian exports and a source of advantageous imports.Argentina today is Brazil's second most important individual trade partner, just behind the United
States.  Brazil has become Argentina's most important single foreign market, accounting for about
30% of all the exports. Paraguay, in terms of trade values, has attained the same level as the United
Kingdom and France for Brazil. Uruguay exceeds Spain as a trade partner.
Spurred by the consolidation of the Mercosur project, foreign investment has been attracted to
the region and more than 50 billion dollars entered Mercosur last year, despite the economic
difficulties that, in the aftermath of successive international crises, were associated to the devaluation
of the Brazilian currency.  Foreign and domestic companies are increasingly planning their activities
and investments on a region-wide basis, with a view to benefitting from the unified market of the four
countries.WT/TPR/M/75
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Despite the recent difficulties following Brazili an devaluation in 1999 and the recession in the
region, over the last two years, no negotiated liberalization commitments were modified.  On thecontrary, the crisis gave room to a re-evaluation of the Mercosur project which resulted in the
confirmation of its main objectives.  The process of re-launching of Mercosur is already under way
with a view to fulfilling the missing elements st ill required for the completion of the Customs Union.
As the integration process deepens and the establishment of common trade policies advances,
increasing commitment to the process is required as national autonomy is reduced in favour of
common decisions.  Brazil remains committed to the original objectives of the Asunción Treaty and is
actively promoting the establishment of the common policies necessary to both the completion of the
common trade policy instruments and the advancement towards a Common Market, through
negotiations in areas like services and government procurement.
Mercosur also has a broad internal agenda, which extends far beyond economic and trade
issues. In its institutional structure, there are several working groups dealing with the so-called
"Mercosur´s social dimension", which covers areas such as education, labour, culture, environment,
justice and consumer protection.  Although seeking deep integration in all these areas, Mercosur
adopts a flexible approach, whereby every advance is made "step-by-step" and following
consolidation of previous achievements.
The Treaty of Asunción set forth a programme of progressive trade liberalisation among the
four countries that has been implemented since its entry into force in 1991.  That programme was
concluded in December 1998 for Brazil and Argentina and in December 1999 for Paraguay and
Uruguay.  From 1991 to 1999, the totality of  intra-regional trade was liberalised, with the elimination
of tariff and non-tariff barriers, with the exception of the sugar and the automotive sector, which are
the object of current negotiations aimed at their incorporation in the regional free trade area and
customs union.
At present the only restrictive measures admitted within Mercosur (except for the automotive
and sugar sectors) are those allowed by Article 50 of the Montevideo Treaty, which, in general terms,
reproduces the provisions under GATT 1994 Articles XX and XXI.
Despite having already been defined for the whole universe of products, the CET is not fully
in force, as there exists a number of transitory exceptions.  In 1994, timetables were defined for linearand automatic convergence to the CET in the years 2001 and  2006.  This approach was taken so as to
render the Customs Union less vulnerable to protectionist pressures and to political changes that may
occur within Member-States.
There are four categories of exceptions to the CET:
(i) National Exceptions - Brazil was entitled to a list of exceptions to the CET of
300 items. These exceptions are to be eliminated on 1/1/2001.
(ii) Capital Goods - covering some 900 items, which will converge to the CET on
1/1/2001.
(iii) Computer and Telecommunication Goods - in the case of certain computer and
telecom equipment (some 200 tariff items), the CET will be phased in towards theyear 2006.
(iv) Automobile and Sugar Sectors – Mercosur’s regime for these sectors is under
negotiation.WT/TPR/M/75
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At present, in the case of sugar, Mercosur countries receive MFN treatment. In the case of
automobiles, trade proceeds under bilateral preferential agreements under LAIA. Mercosur’s regimesfor these sectors are under negotiation. The future automotive regime shall contemplate the following
principles: intra-regional free trade, adoption of a common external tariff for the sector and absence of
incentives that distort competitiveness in the region.  As far as the sugar sector is concerned, an Ad
Hoc Group was set up to prepare a tariff reduction scheme applying to intra-regional trade and to
define a common external tariff for the product.  As for the negotiations with Argentina in theautomotive sector, these are part of the negotiations of the Automotive Policy of Mercosur, which are
not yet concluded.  It will establish a transition period in which preferential trade will  remain subject
to specific bilateral conditions.  Those conditions include rules of origin and quantitative limitations to
preferential trade and do not include local content or export performance requirements.
With respect to the free trade agreements concluded with Chile and Bolivia, both agreements,
negotiated under the 1980 Montevideo Treaty framework, are notified to the WTO under the regular
notifications provided by LAIA.
A number of delegations inquired about the temporary increase of three percentage points
applied to Mercosur’s CET and sought confirmation as to the date of its elimination. According to
Decision 15/97 of the Common Market Council, which approved the aforementioned temporary
increase of the CET, such increase is limited to 31 December 2000.  After that date, the CET returns
to the levels established in 1994. No changes to this decision have been under discussion.  As for the
reasons behind the measure, it will be recalled that it was implemented in the aftermath of the Asian
Crisis, with prospects of a critical  balance of payments situation. It was geared towards forestalling
the deterioration of the financial and fiscal position of Mercosur countries. Brazil applied the measure
earlier than other Members in order to prevent a surge in imports in anticipation of tariff increases
once the proposal of the measure became public.
A number of questions reflected a perceived inconsistency regarding the Mercosur CET and
bound tariffs in the WTO.  Although certain tariff rates established by the CET may exceed Brazil’s
bound ones, in such cases Brazil applies the WTO bound rates, pending their renegotiation under
article XXIV:6. Being intergovernmental in nature, Mercosur legislation does not have direct
application and has to be incorporated into the legal order of  the four countries.  The Brazilian Decreethat put the CET into force states that whenever the tariff levels adopted exceed Brazil's WTO bound
rates, these should prevail.  WTO Members have been notified under Article XXIV:6 tariff lines in
which the CET rate is higher than Brazil and other Mercosur members bound rates
(WT/COMTD/1/Add.5/Rev.1).
Finally, an indication was sought as to the criteria applied in the negotiations of Regional
Trade Agreements.  As stated in our initial statement, Brazil is involved, as part of Mercosur, in a
number of such negotiations.  In all of them, the essential conditions are the principles of full WTO
consistency and of open regionalism.
INVESTMENT - FDI
CANADA - 1 – para. 45 - What is the status of the congressional review for ratification of each of the
14 signed bilateral investment agreements?
JAPAN – 1.1 - p.23, para. 42 - Are there any information centers or inquiry points which respond to
questions by foreign companies concerning legi slation or system concerning FDI?  1.2. - p.23,
para.45WT/TPR/M/75
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Please explain what exactly is the difference in  treatments between FDI from MERCOSUR countries
and that from non-MERCOSUR members.
EC - 3.1 - The report states quite accurately (Secretariat Report p.23, paragraphs 41 and 44), that
Brazil generally grants national treatment for all FDI – with only few exceptions. Despite the recent
opening of a number of sectors to FDI (mentioned in p.23, paragraph 42), some sectors remain
closed. The European Community would be very interested to hear the reasons for keeping these
sectors closed or partly closed to FDI. Is future liberalisation planned? In the affirmative could Brazilmake available a detailed schedule of the planned measures?  3.2 - Secretariat Report Paragraph 43:
What is the rationale behind requiring FDI to be registered? Is registration only applicable to FDI?
How long is the pro-forma?
MALAYSIA – 2  - It is noted also in Para.21 (page 8) that although FDI flows are strong, most of it is
concentrated in the services sector, which does not yield immediate benefits in terms of export
volumes, while relying on imports and has contributed to the current account deficit. It will be useful
if Brazil could give an indication whether this development would affect its plans to attract further
investment in the services sector.
THAILAND – 1 – It was stated that “The Federal Government does not grant special incentives to
foreign investment other than those available to investment in general”.  We would like to have
information on the incentives to foreign and domesti c investment.  For example, are these incentives
mostly tax exemption measures or are there other kinds of measures as well?  Does each state follow
the same principle as the Federal Government in granting national treatment to foreign investment in
the area of incentives?  Do these states have incentives measures that are different from one another
in order to attract foreign investment into their respective region?
KOREA – 4 - According to Table II.1 (pages 24-5), certain industries remain either closed to foreign
investors or opened to foreign capital under certain conditions.  These industries include, inter alia,financial institutions, shipping insurance, telecommunications, etc.  Does Brazil have a liberalization
schedule for these industries?  If so, please provide details.
BRAZIL - INVESTMENT
On this subject, questions were raised by Canada, Japan, EC, Malaysia, Thailand, Chile, and
Korea.
It is important to note that the 15 bilateral investment agreements have been signed by Brazil.
Six of them have been submitted to the Brazilian National Congress and are presently at different
stages of review by the Brazilian National Congress.  None of them has been approved nor rejected.
(Canada)
Brazil has signed agreements regarding the promotion and protection of investments within
MERCOSUR and with respect to third parties' inve stments in the territory of the Customs Union.
There are no differences between these instruments, both in terms of registration and transfers outside
the country. (Japan)
With regard to information centers or inquiry points which respond to questions by foreign
companies concerning legislation or the system concerning FDI, it must be pointed out that at presentseveral institutions within the Brazilian Government have the capacity to assist foreign investors in
their quest for data and regulatory information, amongst them, the Central Bank's Department of
Foreign Capital. Moreover, the Brazilian Investme nt Promotion Agency, a new body, will start its
operation in the beginning of 2001. (Japan)WT/TPR/M/75
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As pointed out in both the Government's and the Secretariat Report, several important
restrictions have been eliminated in recent years;  a few sectoral exceptions remain, as it is the casefor the majority of Member countries. (Canada and Korea)
In Brazil, FDI is required to register for monitoring purposes.  It is a simple and
straightforward process and can be made online. (Canada)
Brazil has attracted and will continue to attract substantial flows of FDI in the services
sectors.  This should be understood as part of a strategy to modernize the country's infrastructure andincrease the competitiveness of Brazilian private sector. (Malaysia)
In Brazil, States follow the same principle as the Federal Government in granting national
treatment to foreign investments. (Thailand)
Chile's question related to investment will be addressed in my answer regarding local content
measures.
III. TRADE POLICY AND PRACTICES BY MEASURE
MEASURES AFECTING IMPORTS
TARIFFS
CANADA – 2- Tariffs – para. 36 and Table III.3: Selected tariff lines where the MFN rate is higher
than the bound rate, and Government Report, para 51: Regarding tariffs, the Secretariat Report statesthat there are a number of products where the applied MFN tariff exceeds Brazil’s bound rate.
Table III.3 lists selected items to which Canada would like to add 1107.10.10 (Malt, not roasted,
whole or separated), with a final Uruguay Round  bound rate of 9% and a current applied rate of
17%.  When this factual information is juxtaposed with para 51 of the Government Report, which
states that “All tariff levels established by the CET are consistent with the tariffs consolidated under
the WTO.  ”we are uncertain what is intend ed by this statement.  Please clarify.
SWITZERLAND – 3 - p. 34, para. 36 - As it appears, for some tariff lines applied rates are above
bound rates. Could the Brazilian authorities provide some more information on this matter?
PERU – 1.1 – (Page 26, paragraph 1) We welcome the indication that, in December 2000, the
3 percentage point increase in the tariff in effect since 1997 will be eliminated.  What measures are
being taken to ensure that Brazil's tariff decreases?  Does the increase apply to all products or are
there some headings to which it does not apply?  1.2 - (Page 31, paragraph 31) As the Report states,there is clear escalation in the tariff structure.  Does the Brazilian Government or MERCOSUR
intend gradually to adopt a more uniform tariff stru cture that would eliminate distortions and reduce
dispersion?  1-3 - (Page 34, paragraph 35) What is the average margin between bound tariffs and
those applied in general and for groups of products, for example, agricultural products, manufactures
and other sectors in the Harmonized System?  Is the Government of Brazil ready to lower the averagemargins?
EC - 5.1 - Paragraph 48 of the Government Report, paragraph 9 of the summary to the Secretariat
Report and paragraph 27 in Chapter II: Can Brazil confirm that the temporary 3% tariff increase
adopted by Mercosul in December 1997 will expire as scheduled on 31 December 2000 and that it
will not be replaced with measures of similar effect?   5.2 - According to paragraph 15 of thesummary to the Secretariat's report, "well above average tariffs apply to beverages, tobacco,
furniture, clothing and footwear, while tariff dispersion is particularly high for transport equipmentWT/TPR/M/75
Page 41
and electronics". According to paragraph 43 of Chapter IV, the year 2000 average applied MFN
tariff for the manufacturing sector was 14%, while some of the most important industries benefit from
above average levels of protection of around 23% ( vehicles, textiles, clothing accessories, footwear
and toys). The EC wishes to know if Brazil plans  to lower such high tariffs on these items and to
create a more uniform tariff structure.  5.3 - According to paragraph 36 of Chapter III, some tariff
lines appear to bear applied rates above bound rates (Table III.3). Could Brazil please explain how it
ensures that the lower bound rates are applied in such cases? The Secretariat notes that acomprehensive line by line comparison was not possibl e since Brazil uses an 8-digit classification for
applied tariffs, while it bound its tariff at the 10-digit level. Could Brazil please identify all bound
tariff lines where the applied rate is higher?  5.4 - Paragraph 51 of the Government's report states
that all tariff levels established by the Mercosul CET are consistent with the tariffs consolidated under
the WTO. Could Brazil please confirm that there are indeed no tariff lines where the CET rate ishigher than Brazil's bound rate and, if this is not the case, provide a complete list of such tariff lines?
5.5 - Certain EU exports have informed that customs still are applied within Mercosur, when sending
goods which have been exported to Brazil on to another Mercosur country. Can Brazil confirm or
refute this information?
US – 12 - While Brazil bound all its tariffs in the Uruguay Round, some of the bound rates are high,
with some agricultural goods at 55 percent and some manufactured goods at 35 percent.  Brazil’s
current average applied tariff of 13.7 percent is also  high. What is the Government of Brazil doing to
reduce these high tariffs?
KOREA – 15 - According to para.44 (page 89), there exists tariff escalation with an average
protection of 15.8% for fully processed goods, 11.9% for semi-processed and 9.3% for primary
goods. The protection structure, with this significant escalation, provides higher levels of effective
protection than is indicated by the nominal tariff and undermine the competitiveness and efficiency of
the economy as a whole. A more uniform tariff structure would thus enhance resource allocation as a
recent OECD analysis indicates. Does the Brazilian government have a plan to remedy the tariff
escalation problem? If so, please specify.
INDIA – 2 – Para.9 of the Summary Observations note s that a number of rates in the tariff schedule
exceed bound rates levels, but that Brazilian legislation requires abidance by binding in such cases,and that tariff escalation is still a problem. Comments are required.
EC - 6.1 – ITA - Paragraph 76 of Chapter IV notes that Brazil did not participate in the negotiations
on the Information Technology Agreement.  The ITA enjoys the participation of a large number of
developed and developing countries, representing more  than 93% of world trade. In view of the
contribution that the ITA makes to build an info rmation society in all countries and Brazil's own
interests in the telecommunications and IT sector, would Brazil please indicate when it intends to join
the ITA?
MALAYSIA – 5 – ITA - para.28 page 31 of the Report noted that higher ad valorem or specific duties
apply to certain telecommunications goods. Would Brazil be able to indicate if these duties could be
changed to only ad valorem and what is the timetable for joining the ITA
OTHER CHARGES
CANADA – 3 - Table III.5 - This refers to the Merchant Marine Renewal Tax.  Other than a simple
mention in Table III.5 that this tax exists, there is no examination or report on its trade-restricting
and trade-distorting effect.  The amount of this tax is 25% of the ocean freight of imported goods.  The
tax does not apply to domestically produced goods, nor to goods imported over land fromneighbouring countries.  Also, in many cases where Brazil’s applied tariff is within the level of itsWT/TPR/M/75
Page 42
WTO binding, the combination of the Merchant Marine Renewal Tax with the applied tariff may
exceed the binding.  Furthermore, as the tax is applied as an ad valorem amount to the ocean freightcharge, this tax is applied more heavily to exports of Members that are located farther away from
Brazil.  Although it is stated that Brazil’s objective in imposing this tax is to modernize and improve
its merchant fleet, it is Canada’s view that this ta x is trade restricting and not consistent with Brazil’s
WTO obligations. Please provide information on the level of funds generated by this tax and
rationalize the tax’s effect on improving Brazil’s marine infrastructure.  Will Brazil amend itsMerchant Marine Renewal programme in such a way that the same level of improvement can be
achieved without restricting imports  or discriminating amongst Members?
COLOMBIA – 10 – (Paragraph 47) Table III.5 of th e Report by the Secretariat mentions a Merchant
Marine Renewal Tax (AFRMM) on imports transported by sea corresponding to 25 per cent of ocean
freight charges.  It is stated that it is used to modernize and improve the Brazilian merchant fleet andis covered by Provisional Measure No. 1.960 of 3 February 2000.  This tax does not apply to all
imports and does not appear to have been bound with in the WTO under "other duties and charges".
It affects the value of imports and its application is discriminatory.  What is the legal basis for this
tax, bearing in mind that it was not bound by Brazil during the Uruguay Round negotiations?
EC – 6.2 - Secretariat Report paragraph 47, Table III.5: Brazil appears to impose a number of
additional charges on imports, e.g. Merchant Maritime Renewal Tax. It is not clear from the report
why this occurs or whether WTO compatibility is an issue. These charges are said to be bound in
Brazil's tariff schedule, but in terms of rules on Customs Charges, it is not obvious that they are in
any way related to the costs of customs services rendered.  What is the rationale behind Brazil's
policy of imposing a number of additional charges on imports and how is this practice in line with
WTO rules?  How are they related to the costs of customs services rendered?  6.3 - Secretariat Report
p. 38, paragraph 50: It is stated that the IPI rate varies according to the "degree of necessity" of thegood. There are, however, considerable differences between the IPI levels levied on different
alcoholic beverages, for example. Does this mean that the Brazilian Government considers some
alcoholic beverages "more necessary" than others?"
AUSTRALIA – 1 - Is Brazil considering a review of the operation of the so-called “shipping freight
tax”. Additional Freight for the Renovation of the Merchant Marine (AFRMM)? The AFRMM is
applied as a percentage of the freight component of goods shipped, discriminating against countries
that a re geographically distant from Brazil or on higher cost shipping routes, such as Australia. The
tax is a major imposition on trade in high volume items such as minerals and energy, agricultural
commodities and dairy products. For instance the tax imposes a freight cost on Australian coal
exports estimated to be some 60 percent higher than those from the US and between 80 and 116percent higher than those from South Africa.
US – 14 - para. 52 - Although the ICMS tax is described in the report as a value-added tax, it appears
to be assessed on the movement of goods rather  than on the addition of value to the goods.  Is the
ICMS assessed on imports at the time of entry?  Is  it subsequently reassessed on imported goods by
states if such goods are shipped interstate or intrastate?
PROCEDURES
COLOMBIA – 4 – Paragraph 6 - The Secretariat Re port describes the procedures for importation
into Brazil. One of the requirements is that the invoice must be accompanied by a published list of
prices or a sales catalogue. This type of re quirements seems to be burdensome and not trade
facilitator. Are these requirements intended for custom valuation purposes?WT/TPR/M/75
Page 43
EC – 4 - Secretariat Report p. 28: While Brazil has removed some restrictive practices as regards its
payment term restrictions, we understand that the importer and exporter are still not allowed to freelymodify the payment date but are bound by that date which is indicated in the invoice. Also, banks that
are handling the exchange contracts related to the payment of imports have to be specifically
authorised to do so. Could Brazil clarify why it still needs to maintain such measures and what are
more specifically the conditions for banks for receiving an authorisation to carry out exchange
contracts?"
BRAZIL – TARIFFS, OTHER CHARGES AND PROCEDURES
In the case of tariffs, other duties and charges and procedures Brazil has received questions
from Canada, Switzerland, Peru, the EC, Malaysia, the US, Korea, India, Colombia and Australia.
The two most asked questions were related to Table III.3 on page 35 of the Report by the Secretariat
(relationship of some selected applied tariffs and the correspondent bound rates), and the increase ofpercentage points in our tariff lines, applied in 1997.
As for the first question, the footnote of Table III.3 shed light on the issue, when it states that
whenever the Common External Tariff exceeds the tariff levels bound in the WTO, the latter will be
the levels effectively applied.  This rule is embodied in Article 5 of Decree 2.376, dated 21 November
1997, and SISCOMEX ensures its implementation.  Therefore, in Brazil there are no applied rateshigher than the WTO bound rates, which answers many of the questions posed to us.
The temporary increase of 3 percentage points in the tariffs was adopted in line with
Decision 15/97, which was taken by the highest body of Mercosur, the Conselho Mercado Comum.
In article 5 of Decision 15/97, a deadline of 31/12/2000 was adopted.  The rationale for establishing
such a measure was the need for a response to the crisis of 1997 in terms of revenue of the concerned
countries.  As I mentioned on Monday, the 3 percen tage points will be removed in two months time
To answer a question about our present tariff levels, I would like to state that the average
bound tariff of Brazil in the WTO is around 30% and the applied rate is 13,8%.  As the 3 percentage
points increase will be phased out in two months, the average applied rate will be reduced below 11%.
In the agriculture sector, the average applied rates vary from 3,6% to 22,7%, according to the tariff
chapter.  In the industrial sector, the chapter averages range from 5,16% to 23%.
Brazil does not apply any tariff for intra-Mercosur trade.There were many questions related to points that might be treated in the context of a new
round of negotiations.  These are, for instance, suggestions that we should decrease the level of our
bound tariffs, the alleged dispersion in our tariff structure, which, by the way, we do not consider to
be high, by any standards, especially if compared to other Members, tariff escalation, which again is
no different from the overall practice and an eventual accession to the ITA.  About this last point, itmust be said that Brazil is not considering to join  the ITA.  Also, it should be retained that as
Mercosur has a common external tariff, any decisions on tariff reductions must be negotiated among
all its members.
Some questions were posed as far as certain internal taxes in Brazil are concerned.  In this
respect the European Communities asked about the criteria for application of the Tax onIndustrialized Products (IPI) for alcoholic beverages.   We would like to inform that this tax varies
according with the alcoholic content of the beverage.  This treatment is applied on an equal basis for
domestic and imported goods.WT/TPR/M/75
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About another internal tax of Brazil (the tax on the circulation of goods and services- ICMS),
there were the following questions by the US: 1) Is the ICMS assessed on imports at the time ofentry? and 2)  Is it subsequently reassessed on imported goods by states if such goods are shipped
interstate or intrastate?  The answer to the first question is:  Yes, ICMS is charged on imports at the
time of entry.  The answer to the second question is: Due to differences in the levels of the ICMS tax
among states, it might be necessary to effect a compensation if the good is traded in a state with a
different tax from the one where it was cleared, in order that the level of the state of destination isduly reflected.  In any case, there is no difference in the final result, whether this operation is
performed, or if the good is cleared directly in the state of destiny.  The situation described above
does not apply to intrastate operations.
As for the questions on the Merchant Maritime Renewal Tax, data are being collected and
responses will be provided in due time.
In terms of procedures, there we would like to rectify one sentence on page 26 of the Report
by the Secretariat, which reads: “The invoice must be accompanied by a published list of prices or a
sales catalogue”.  This is not a requirement in the Brazilian legislation.
Still as far as procedures are concerned, the EC has asked a question related to measures on
payment term restrictions and on the conditions for banks to receive an authorization to carry outcontracts.  As for the first case, the invoice indicates the date when the payment is due.  As for the
second question, the handling of foreign currency in Brazil is a prerogative of the Government,
through the Central Bank, which can delegate or transfer this function to private banks
CUSTOMS VALUATION
EC – 9.2 - Secretariat Report paragraph 16: Are Brazil's reservations on the reversal of the
sequential order of customs valuation (paragraphs 3 and 4 of Annex III of the Customs Valuation
Agreement) time-limited or open-ended in duration?  9.3 - Secretariat Report paragraph 23: Whatprogress has been made since May 2000 in the im plementation of Brazilian legislation on the
treatment of interest charges in  the customs value of imported goods and the valuation of carrier
media bearing software for data processing equipment?  9.4 - Secretariat Report paragraph 25: Can
we assume that, as a result of EU and US consultations in 1999 on minimum import prices all
minimum import prices for the purposes of cu stoms valuation were subsequently abolished
(paragraph 13)? Are reference prices for the imports of some textile products still imposed and if so,
does Brazil intend to abolish them and by when?  9.5 Brazil applies minimum prices on several
imported products, both agricultural and industrial,  often linked with import licensing. The
Community has requested WTO consultations on this issue (Sorbitol, CMC, and textiles). The
consultations were held in Geneva on 19 November 1999. The Commission is still expecting answersfrom Brazil to its written questions. When does the Brazilian government plan to answer to those
written questions?  9.6 - Secretariat Report,  p 28-30 (ii) customs valuation and rules of origin § 16-
25 and p39-43 (v) Import prohibitions, restrictions and licensing §54-69: We are informed that Brazil
continues imposing minimum prices through cu stoms valuation. Communicado No. 23 of 23 August
1998 makes the list of products that are subject to non-automatic import licensing confidential. As aresult, it is impossible to know in advance which products are indeed covered by the licensing
requirement. What is the reason for keeping the list of products confidential and does Brazil intend to
maintain this regime?  9.7 - Secretariat Report paragraph 21:  The Community is concerned about
the application of the customs value legislation in Brazil, in particular as regards the use by the
Brazilian customs of value parameters which de facto systematically correspond to the minimum
customs value accepted by Brazil and are established on the basis of data expressly excluded by
Article 7 of the WTO Customs Valuation Agreem ent. While, following WTO consultations held in
November 1999, improvements have taken place with regard to several chemical and agriculturalWT/TPR/M/75
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products, major problems are still faced by the Community's textile industry. The Community expects
that Brazil will take the necessary action with regard to textile imports, as it has already done forimports of the other products affected by the same measure. The Secretariat Report states that
"imports of merchandise that originated, was acquired, or was processed in specific countries or
regions considered by the Brazilian authorities as markets that offer fiscal incentives, were subjected
to control of the declared customs value". Which specific countries or regions are concerned by this
measure? On the basis of which fiscal incentives?
COLOMBIA – 6 -  Paragraph 17 and 19 - The Report st ates that Brazil does not use minimum import
prices for customs valuation purposes and that in accordance with Decree 2498 of 1998 the custom
value of any imported good may be verified if there is a suspicion of a fraudulent declaration of value,
considering the historic value of the same or a similar import. The legislation does not specify criteria
to determine which goods should be subject to cont rol. Article 17 of the Agreement on Implementation
of article VII of the GATT 1994 states: “Nothing in th is Agreement shall be construed as restricting
or calling into question the rights of customs administrations to satisfy themselves as to the truth or
accuracy of any statement, document or declar ation presented for customs valuation purposes”.
Notwithstanding the above, article 22 of the Agreement provides that each Member shall ensure the
conformity of its laws, regulations and administrative procedures with the provisions of theagreement. Taking into account the above considerations, could the Brazilian delegation explain what
are the regulations and the administrative procedures used by the custom authorities to ensure that
the historic values of the same or similar import do not become an import minimum price for the
goods cleared through the grey channel?
COLOMBIA – 7 – Paragraph 20 - The Report mentions when there are doubts on the value declared
by the importer or when the value cannot be determined because the final price payable or the
information required for the use of the proper va luation method depends on factors to be implemented
after the importation, the custom authorities released the goods upon the provision of a guarantee.
Does Decree 2.498 of 1998 or any other regulation establishes that under no circumstances the goods
cannot be retained or the custom clearance process delayed?
COLOMBIA  – 8 – Paragraph 21 - The Report states  that imports of merchandise that originated,
was acquired, or was processed in specific countries or regions considered by the Brazilianauthorities as markets that offer fiscal incentives, were subjected to control of the declared value until
31 march 1999. The report mentions that import of to ys were subject to control of declared customs
value. Could the Brazilian authorities confirm the derogation of these controls? Could the Brazilian
authorities explain why these control methods were used instead of recourse to the Agreement on
Subsidies and Countervailing Duties?
COLOMBIA – 9 – Paragraph 23 The Report indicate s that Brazilian legislation has provisions
regarding the treatment of interest charges in the customs value of imported goods and the valuation
of carrier media bearing software for data processing equipment.  It is stated that implementation of
this legislation was apparently still under examination in May 2000.  Could Brazil inform us of the
results of this examination and whether there are any specific provisions?  What are the specialprovisions for the valuation of motor vehicles?
HKC - 3 – page . 29-30, Para. 17 - It is noted that if the customs authorities are able to prove that the
prorated values have been calculated with certain objectives, they can reject the declared value and
determine the value by themselves. We would be interested to know whether the justifications for such
determinations are made known to the importer concerned and whether they are given a chance to
appeal.WT/TPR/M/75
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US – 10 - Para. 23 - The Report notes that Brazilian legislation has provisions regarding treatment of
interest charges in the customs value of goods and the valuation of media bearing software for data
processing equipment.  According to the report,  th e implementation of this legislation was still under
examination in May, 2000. Has implementation now been completed?
CZECH REP - 1 - Relating to the "system of guaran tees" operational in Brazil. Is consideration
whether value is reasonable for identical or similar goods subject to the individual consideration of
customs officer, or is it based on given procedures or rules.
PRE-SHIPMENT INSPECTION
EC - 9.1  Secretariat Report paragraph 13: Does Brazil intend to phase out Pre-Shipment Inspection
for agricultural products, and, if so, by when?
MALAYSIA – 4 – In para.13 page 28 it is noted that Brazil does not use pre-shipment inspection.
Does Brazil intend to use this system thereby increasing the percentage of the goods through thegreen channel and further facilitate trade?
BRAZIL - CUSTOMS VALUATION AND PRE-SHIPMENT INSPECTION
As for customs valuation, we have received questions of a general nature, related to the
functioning of our system of valuation, as well as those of a more specific character. The countries
that have submitted those questions were: Colombia, the EC, Hong Kong, China and the US,Malaysia and the Czech Republic. In order to address these questions, allow me first to give you a
general outline of the Brazilian system of  customs valuation.
First of all, I would like to state that, contra ry to what has been mentioned in some of the
questions, Brazil does not apply minimum values for customs valuation since 1988, that is, two years
after the implementation by Brazil of the Protocol to the Tokyo Round Agreement on the
Implementation of Article VII of GATT.
“Risk assessment” is the key expression that adequately translates the foundations of the
Brazilian system of customs valuation.  To put in practice this assessment, we have devised a system
which is divided into four channels: green, yellow, red and gray.  Goods that are cleared through the
green channel pass through customs automatically, and these account for approximately 70% of our
imports.  A further 20% are cleared through the so called “yellow channel”, when there is simply the
examination of the documents, without, however the physical verification of the merchandise.  Goodsthat go through the red channel (approximately 8% of the total), are subjected to both documental
review and physical verification of the good.  Only the remaining 2% of the goods are cleared with
the verification of the customs value of the good, and this is done according to the rules of the
Customs Valuation Agreement.
The gray channel, therefore, should be the object of our discussion here.  On the grounds of
statistical methods, the Brazilian authorities determine imports that are more prone to risk of fraud.
These will be cleared through the gray channel, that is, with the review of the declared value.
Controls related to merchandise that originated, was purchased or was processed in specific countries
or regions considered by the Brazilian authorities as  markets that offer fiscal incentives, according to
Normative Instructions 116 and 147, were phased out on 31
st March 1999.  The definition of risk
assessment parameters is a prerogative of the customs authorities.
As I have mentioned before, Brazil does not use minimum prices for customs valuation
purposes.  Questions related to the application of those minimum prices to specific products (such asWT/TPR/M/75
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textiles, chemical and agricultural products) are therefore automatically answered.  Minimum prices
for those or any other sectors are not applied.
Another aspect of our legislation about which there was a question (from Colombia) is the
provision of a guarantee for the anticipated release of good that is in the process of being cleared
through the gray channel.  This is consistent with Article 13 of the Customs Valuation Agreement.
After the process of valuation is concluded and there is the definition of a conclusive amount, if the
declared value by the importer is accepted, the guarantee is returned.  If the value is not accepted, thedifference is collected, after ample right of defense to the importer.  Instrução Normativa 16
establishes the rules related to deadlines for the clearance of the goods: immediate release for the
goods on the green channel, five working days for channels yellow and red and seven working days
for the gray channel.
There was a question by Malaysia that asked if Brazil intended to use pre-shipment
inspection, which would have, as a side-effect, the increase in the percentage of goods cleared through
the green channel.  Brazil does not intend to use pre-shipment inspection services.  Another question
on pre-shipment inspection was made by the EC.  It was asked if Brazil intended to phase out pre-
shipment inspection for agricultural products, and, if that was the case, by when.  First of all, it is
important not to mix pre-shipment inspection which is conducted by specialized companies, whichBrazil does not use, with inspection of a sanitary or phytosanitary nature, to which the report is
making reference.  These procedures are standard in the trade in certain agricultural products and
Brazil does not intend to phase them out.
The EC has also asked about our reservation on the reversal of the sequential order of
customs valuation related to paragraphs 3 and 4 of Annex III of the Customs Valuation Agreement.
In this respect I would like to state that our reservation is open-ended in duration.
The EC, Colombia and the US have asked about the implementation of Brazilian legislation
on the treatment of interest charges in the customs value of imported goods and the valuation of
carrier media bearing software for data processing equipment.  These two points were incorporated in
Decree 2.498, articles 19 and 20, which was already notified to the WTO.
Hong Kong, China, has made the following question: “It is noted that if the customs
authorities are able to prove that the prorated values have been calculated with certain objectives, theycan reject the declared value and determine the value by themselves.  We would be interested to know
whether the justifications for such determinations are made known to the importer concerned and
whether they are given a chance to appeal”.  This passage relates to a very specific circumstance of
valuation of several goods presented in one single invoice.  In this case, the importer must declare the
value of each good separately as well as the criteria used to determine individual values.  The “certainobjectives” Hong Kong, China is referring to in the question are related to the calculation of the
individual values by the importer with the objective of reducing the taxes to which the importer is
liable, or preventing the imposition of safeguard measures, anti-dumping or countervailing duties.
Anyway, in terms of procedures, the customs auth orities are obliged to tell the importer of any
decision they take.  Also the importer has a chan ce to appeal to both the administrative and the
judicial spheres.
Over the past 12 months, we have had consultations with the EC and the US on the issue of
customs valuation.  We hope that the information that was provided on those opportunities, as well as
the replies to the written questions we have forwarded to both parties served to clarify any doubts
about our system.  As for the responses forwarded to the EC, object of a specific question in this
exercise, they were transmitted by fax to the EC Mission in Geneva on 3
rd December 1999.  We regret
that there has been a sort of communication gap that  led to the answers not to be forwarded to theWT/TPR/M/75
Page 48
competent authorities in the Commission, but woul d be willing to transmit them again, if so
requested.
IMPORT LICENSING
CANADA - 5-  para 65 - Brazilian authorities cons ider the criteria for applying non-automatic import
licensing to be in accordance with the WTO Agreement on Import Licensing Procedures.
Nevertheless, they noted that the entire licensing system was under review in early 2000, including the
viability of drawing up a list indicating the licensing type for each product.  At that time, no list hadyet been consolidated.  Has the review process of the licensing system been completed? If yes, what
provisions will apply to textiles?  If no, when is the review expected to be completed?
SWITZERLAND – 4 - p. 41ff. - In the Secretariat Report regarding the non-automatic licensing of
Brazil it is estimated that non-automatic licenses apply currently to some 30% of all products
imported into Brazil (cf. §60, page 42). As this seems a rather high figure and as the WTO Agreementon import licensing procedure stipulates in its arti cle 3.2 that “non-automatic licensing procedures
shall correspond in scope and duration to the measur e they are used to impl ement..”, SWITZERLAND
would welcome Brazil’s comments on how this figure of 30 % must be interpreted. In §65 of the same
chapter it is noted that “...the entire licensing system was under review in early 2000, including the
viability of drawing up a list indicating the licensi ng type for each product.” However, it seems that
such a list has not been published yet. To this , SWITZERLAND submits the following questions: What
will be the main thrust and aims of the review th e Brazilian authorities are conducting in their import
licensing system?  Will there be a consolidated list indicating the licensing type for each product as
mentioned in the secretariat’ report and, if yes, when will it be available?
COLOMBIA - 5 – Paragraph 9 - The Report mentions the three channels used by the Brazilian
customs authorities to process all imports. Under this scheme 30% of the total imports are subject to
the red, yellow and grey channel. We see this figure too high and the channel scheme as a non-transparent mechanism to survey imports. It causes uncertainty to exporters so as to they do not know
to which channel their exports will be subject to. Could the Brazilian authorities provide more details
regarding the operation of the channels system? What is the average time for the clearance of goods
through each yellow, red and grey channel? Does the system exclude automatically imports from
certain countries (e.g. Mercosur)?
COLOMBIA - 11.1. Paragraph 63 The Report by the Secretariat states that "In August 1998, Brazil
apparently introduced other modifications to its non-automatic import licensing system, which have
not yet been notified to the WTO".  It is also stated that non-automatic licences are currently applied
to around 30 per cent of all products imported into Brazil.  Taking into account the objectives of the
Agreement on Importing Licensing Procedures, could the Brazilian authorities explain what these
modifications are and whether they are intended to reduce substantially the percentage of imports
subject to non-automatic licensing? (Paragraph 65) It is indicated that "… they noted that the entire
licensing system was under review in early 2000, including the viability of drawing up a list
indicating the licensing type for each product".  According to the Report by the Secretariat (page 43),
on 31 December 1997, the list of products subject to non-automatic licensing included agriculturalproducts, food and wine;  hides, textiles, clot hing, and footwear;  pharmaceuticals, chemicals,
petroleum, and energy products;  metals and paper;  tapes and compact discs;  certain vehicles;  and
radioactive materials.  According to document G/LI C/N/3/BRA/1, which contains Brazil's notification
under Article 7:3 of the Agreement on Import Licensing Procedures, dated 24 April 1998, "the goods
and operations subject to non-automatic licensing are listed in public communiqués published by theDepartment of Foreign Trade Operations of the Foreign Trade Secretariat of the Ministry of Industry,
Trade and Tourism (MICT).  In general terms, th ese imports include products which may cause harm
to health, products which may cause environmental damage and products classified as being weaponsWT/TPR/M/75
Page 49
or for purposes of war" (emphasis added).  Could th e Brazilian authorities inform us of the definitive
and updated list of products subject to non-automatic licensing?  What are the criteria for theirselection?  Is the new regime mentioned intended to limit the range of products and simplify import
procedures?  Could Brazil indicate when this new system will enter into effect?
HKC  - 4 - P. 41, Para. 58; P. 43, Para. 64 - We noted that an import licensing system is in place for
all goods imported into Brazil.  We are wary that such system may pose unnecessary documentary
burden to the trade as well as increase the cost of import.  We are interested to know the result ofconsultation between EU and Brazil on the latter's import licensing regime.
EC – 7.2 -  Secretariat Report paragraph 63: What is the value of issuing non-automatic licensing on
the products listed? Whilst it is understandable that some will need to be subject to control, such as
pharmaceuticals, chemicals and radioactive materials, but why should products such as hides,
textiles, clothing and footwear be subject to non-automatic licensing?
EC – 9 - 9.8 It appears that the last Brazil's WTO notification with regard to its licensing regime
dates 19 June 1998? This notification was only partial and did not cover all points mentioned in
Article 5(2) of ILP. Has any legal text been issued after that date that has not been notified to the
relevant WTO bodies? If so, is it the intention of Brazil to notify immediately this legislation or
administrative regulation?  9.9 In Chapter III .2 v(b) (paragraph 65) on imports licensing, the
Secretariat Report states that "the entire licens ing system was under review in early 2000, including
the viability of drawing up a list indicating the licensing type for each product.  At that time, no list
had yet been consolidated". In fact, it appears th at published information is no longer available on
products subject to licensing procedures in Brazil since August 1998. Could Brazil confirm this?
Could it explain the reason for such modification? Would Brazil be ready to publish a regularly
updated list of the products subject to licensing requirements and notify it to the WTO Committee on
Import Licensing?
US – 11 – Para. 25 - The Government of Brazil requires some products to meet minimum prices for
the issuance of import licenses in order to receive normal customs processing.  Imports falling below
set price levels either do not receive licenses or are sent to a so-called "grey line" for enhanced
customs scrutiny. This process is opaque and burdensome.   Some of Brazil's trading partners have
concluded that Brazil's regime is inconsistent with its obligations  under the WTO and have heldconsultations with Brazil under the WTO dispute settlement mechanism.  What is the Brazilian
government doing to eliminate this WTO inconsistent system?
US – 15.1 - Para. 63 - The report states that in August 1998,  Brazil further modified its non-
automatic import licensing system.  Have those changes been notified to the WTO?  Paragraph 8
states that the entire licensing system was unde r review in early 2000.  Has this review been
completed?  Is non-automatic licensing in any form  still maintained by Brazil?  If so, under what
WTO provision are such restrictions maintained?  15.2 - Para. 64 - Beginning in October 1998,
Brazil issued a series of administrative measures that required additional sanitary/phytosanitary
(SPS) quality and safety approvals from various government entities for products subject to non-
automatic licences.  Some of Brazil's trading partners have concluded that Brazil's regime isinconsistent with its obligations  under the WTO and have held consultations with Brazil under the
WTO dispute settlement mechanism.  What is the Brazilian government doing to eliminate its WTO
inconsistent non-automatic import licensing system?
AUSTRALIA – 5 - Following the 1997 crisis, va rious border measures, including non-automatic
import licenses, were applied to imports unde r “SISCOMEX”, the National Agency for Sanitary
Control (ANVS) and the customs valuation scheme. On some occasions the measures were introduced
with little warning, appeared to conflict with other national and multilateral (egWT/TPR/M/75
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sanitary/phytosanitary) requirements and tended to discourage small and medium exporters to Brazil.
Can Brazil comment on whether consideration has been given to streamline and co-ordinate suchmeasures so that they do not unduly hinder imports? Can Brazil comment on why it considered it
necessary to extend safeguard measures on toys until 2003?
INDIA – 6 – With effect from 13 July 2000, th e Brazilian authorities have reportedly imposed
restrictions requiring an import license before sh ipment of polyester film is  made from India. It is
understood that no formal notification of this deci sion has been made. We would like to request the
authorities to withdraw these restrictions.
INDIA - 7 – We understand that while there is considerable scope for export of pencils and pens to
Brazil, the non-automatic licensing with a minimu m price stipulation has shut off this market. We
would like to request Brazil to withdraw these restrictions.
BRAZIL - IMPORT LICENSING
Brazil received questions on import licensing  from Canada, Switzerland, Colombia, Hong
Kong, China, the EC, the US, India and Australia.  I will address the issues that were raised in those
questions.
First of all, we confirm that the Brazilian system of licensing is fully consistent with the
WTO. Notwithstanding that, the whole system of administrative control is now being reviewed forpurposes of simplification.  This is, of course, a complex process, which involves the coordination of
many bodies of the Brazilian Government which have legal competence over the control of the
imports of certain specific products.  The objectives of this review are to enhance the level of
informatization of the controls and to reduce, to the extent possible, the range of products which are
presently under non-automatic licensing.
At the conclusion of this process, which we estimate to occur in the coming months, the
results will be duly notified to the WTO, as an amendment to our previous notification of June 1998,and in accordance with the rules of the Organization and the practices of Members.
Non-automatic import license criteria in Brazil are fully justifiable according to the rules of
the Agreement.  The categories under non-automatic import licensing include, among others:
- products which may cause harm to human, animal and plant health;
- products which may cause environmental damage;- products classified as being weapons or for the purposes of war.
There were questions about whether specific categories of products would fall into non-
automatic licensing procedures.  In this regard, we confirm that textiles, clothing and footwear are not
included in the non-automatic regime.  About the percentage of 30% of imports subject to non-
automatic licensing, we understand that all the categories in this situation are fully justifiable underthe WTO.  Nevertheless, as it was already mentioned, one of the goals of this exercise which is being
conducted in Brazil is, to the extent possible, to reduce the number of products subject to non-
automatic licensing controls.
Another important element of our system that must be retained is that all information related
to the regulations on non-automatic licensing is public and can be accessed either in the OfficialGazette or through the computerized system managed by Brazilian trade authorities (SISCOMEX).  In
SISCOMEX, there is a field called “Tratamento Administrativo” where there is thorough informationWT/TPR/M/75
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about the treatment for all products, including references to the requirement of non-automatic
licensing.  Also, attached to notification G/ LIC/N/1/BRA/1 and G/LIC/ N/2/BRA/1, one can find
copies of the Brazilian legislation in this regard, which are available for consultation in the Secretariat
of the WTO.
IMPORT PROHIBITIONS
KOREA – 5 - As indicated in para.55 (page 39), the importation of second-hand automobiles and
other used goods remains prohibited in Brazil. What is the rationale for the prohibition? Does theBrazilian Government have any plan to lift the restrictions?
BRAZIL - The policy of restricting imports of used consumer goods into the Brazilian market, a
practice that is common to many Members, responds to a number of concerns. Firstly, the
commercialization of used goods raises difficulties in the area of customs valuation, in the
determination of duties, with a significant potential for fraud. Furthermore, the Brazilian Governmenttakes into account the possibilities of negative imp acts for the environment and public safety arising
from the commercialization of used consumer goods in the domestic market. In light of these
considerations, there are at present no plans to lift the restrictions in this area.
TBT
EC – 10 - pages 49-51, par. 90-98 - 10.1 - Alt hough INMETRO (National Institute of Metrology,
Normalisation and Industrial Policy) has the overall responsibility regarding normalisation,
regulation, testing and certification policy (par .91), standards are adopted by ABNT (Brazilian
Association of Standardisation)(par.93) and technical regulations are adopted by authorities listed in
Table III.10 (par. 91). Which organisations are responsible for accreditation issues and for
compulsory certification?  10.2 - Par.94 reads "since its previous Review, Brazil has adopted 1,480
standards, of which some 9.7% were interna tional standards, and 12.7% were based on ISO/IEC
standards". Goods affected by the adoption of inte rnational standards are listed in this paragraph. In
which sectors has Brazil adopted standards not based on international ones?  10.3 - Compulsory
certification is mentioned in paragraphs 95 and 96. Which sectors, products or services are covered
by this compulsory certification?  10.4 - In accordance with par. 97, a product can be demonstrated
to be in compliance with Brazilian technical requirements either by means of a Suppliers declaration
or by being certified through the Brazilian System of Certification. The first option seems similar tothe manufacturer declaration or self-certification in Europe: are there any differences? As to the
second option, is use of quality assurance included in it? Brazilian conformity assessment procedures
are supposed to be aligned with international ones. Can Brazil confirm this?  10.5 - Par. 97 makes a
reference to the Brazilian System of Certification. Is the system aligned with international practice in
the field of conformity assessment (i.e. manufacturer's declaration, quality assurance, third-partycertification, and governmental certification)?  10.6 - Agreements with different coverage regarding
the conformity assessment (i.e. testing laboratory, calibration) are included in par. 98. Could Brazil
please explain how these agreements are in line wi th the requirements WTO TBT Agreement?   10.7 -
In addition, does the Memorandum of Understandi ng related to food products circulation cover the
conformity assessment and is it based on Mercos ur/GMC/Resolucion N° 59/99 concerning the
recognition of the equivalency of control systems between the Parties States of Mercosur?
INDIA 5 – In the case of edible products there is a requirement for registration for each and every
product. The procedures is reported to be cu mbersome and affects market access to Brazil
INDIA 9 – It is understood that there is a requirem ent that all tyres imported into Brazil should have
INMETRO marking on it. It has been reported that  this requirement is very expensive. We would
request that this be reviewed.WT/TPR/M/75
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EC – 11 - Labelling and marking requirements - 11.1 - Secretariat Report paragraph 99, page 51
indicates that "imported products should bear this  information in Portuguese". Is this information
required both for placing products on the market and for importing products? (In this last case, some
information is not necessary, e.g. price).  11.2 - Paragraph 100 points out that "many processed food
products are required to have their labels approved by the Ministry of Agriculture". Which products
and/or sectors are covered by this requirement?
JAPAN – 2 - p.51, para.100 - The Report states that, "all labels must contain the brand or name of the
manufacturer".  Does this requirement apply to both domestic and imported merchandise?
CZECH REP – 2 - Relating to the labelling. Our understanding is that goods, subject to the
compulsory certification are notified to WTO Committee on Trade Barriers to Trade.
INDIA 4 – Pharmaceutical formulations are required to be register with the Register of
Pharmaceutical products in Brazil, but the process is reported to be cumbersome and timeconsuming. We request the authorities to streamline the procedures.
HKC – 2 - Control of Wood Packing Materials - We  are aware that a Brazilian regulation on imports
of wood packing materials from certain economies is in place.  The regulation requires that shipments
originating in or transiting through these economies to Brazil with wood packing materials be subject
to certain treatment or documentation requirements.  As the requirement is not applied on selectedplaces, we would be grateful for clarification on the scientific basis/justification of such selective
application.
BRAZIL - TBT
The Brazilian legislation (The Customer Protection Code) makes no distinction between
domestic and imported merchandise in regards to labeling. Labels must contain the brand or name of
the manufacturer order to permit consumers to resort to legal measures, if needed, against misleading
practices from manufacturers and dealers.
The organisations responsible for accreditation issues and for compulsory certification are
mainly those listed in Table III.10, except for the Brazilian Association of Standardization (ABNT), a
private agency in charge of the elaboration of standards. INMETRO is the accreditation authority for
most regulations related to industrial products. It is also responsible for the surveillance of
compulsory certification in that field. However, as stated in paragraph 92 of the Report by theSecretariat, “authority to issue technical regulations lies with the different ministries with competence
in the specific area to be regulated”. Thus, regulations disciplining pharmaceutical products are under
the responsibility of the Ministry of Health, sanitary and phytosanitary regulations are dealt by the
Ministry of Agriculture, and so forth.
Several national standards, as mentioned in Par.94, were based on international standards.
However, in some instances, there are not such international standards, or, in others, national
standards reflect the most updated technological status of domestic industry. Since there are several
products that fall into one or another category, it is difficult to make an assessment by products or
groups of products.
Products and services subject to compulsory certification are those which may affect human
health and safety or the environment, for example: ti res, fire extinguishers, toys, etc, according to the
definition set out under Article 2:2 of the TBT Agreement.WT/TPR/M/75
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In respect to tires (a question posed by India), there are two specific technical regulations:
one related to tires for motor vehicles (Portaria number 56, of April 20, 1999 - INMETRO) and theother related to tires for other vehicles (Portaria number 05, of January 14
th, 2000 – INMETRO).
There is also resolution no. 7, from CONMETRO, of December 5th, 1995, that established regulations
on tires in general.  Given the nature of the regulation, that relates to consumer safety, the certification
has to be validated on a yearly basis by an agency accredited by INMETRO, in order to assure that
safety requirements are being met.  The accreditation process, however, is based on ISO guides andapplies equally to both imported and domestically produced tires..
In Brazil, supplier's declaration may be used to demonstrate a product is in compliance with
Brazilian technical requirements. However, due to its voluntary nature, it is subject to the acceptance
by the buyer or consumer. In this regard, it does not seem to differ from the manufacturer declaration
in Europe. In respect to the product or system certification under the Brazilian System ofCertification,  confidence is ensured by the use of applicable ISO-Guides, perfectly in line with
international procedures (manufacturer's declaration, quality assurance, third-party certification, and
governmental certification).
Agreements with different coverage regarding the area of conformity assessment (i.e. testing
laboratory, calibration), as mentioned in par. 98, are in line with the requirements under Article 6:1 ofthe TBT Agreement. They should be understood in the context of  “prior consultations” (Art. 6:1.1),
aimed at building up confidence between differen t national or regional systems of certification.
In response to the EC, The Memorandum of Understanding related to food products
circulation covers conformity assessment and is in accordance with Mercosur/GMC/Resolucion
N° 59/99 concerning the recognition of the equivalence of control systems between the member States
of Mercosur.
Labelling and marking requirements.
The information mentioned in paragraph 99, page 51 ("imported products should bear this
information in Portuguese") is a requirement for placing products on the market, irrespective of its
origin, domestic or imported. It is aimed at providing the necessary information to consumers.
Most food products, including processed ones, are required to have their labels approved by
the Ministry of Agriculture. In some instances, however, this process is done in coordination with theMinistry of Health.
All goods subject to compulsory certification are notified to the WTO Committee on Trade
Barriers to Trade, in conformity with Article 2:2 of that Agreement.
In response to Hong Kong, China, the Brazilian regulation on imports of wood packing
materials from certain members is based on evidence of the existence, in certain parts of the world, ofplagues that can be found in wood used for that purpose and that can cause severe damage to
agriculture.  For that reason, shipments originating in or transiting through these territories to Brazil
are required to undergo specific treatment and have to be accompanied by appropriate documentation.
CONTINGENCY MEASURES
SWITZERLAND – 5 - AD - pages 44ff. - As describe d in paragraph 85, Brazil favours improvement of
several provisions of the WTO Antidumping Agreem ent. On the other hand, Brazil regularly applies
antidumping duties. We would be interested to k now in what way the changes envisaged by BrazilWT/TPR/M/75
Page 54
might influence, on the one hand, the contingency measures Brazilian products are faced with abroad
and, on the other hand, the measures Brazil is applying towards imported goods.
HKC – 5 - AD - PP. 45, 47, Paras. 81-82, 85 - In the preparation for the WTO Ministerial Conference
in 1999, Brazil proposed improvement of certain provisions of the WTO Anti-dumping Agreement "to
reduce the ability of Members to arbitrarily apply anti-dumping measures", and "to prevent the
perpetuity of such measures or their widespread use as a means to protect inefficient sectors of the
domestic industry".  In view of this, would Brazil share with us in greater details its position on anti-
dumping?  Does Brazil find that the application of anti-dumping measures under the existing WTO
Agreement could be easily abused?  If yes, what could be done to reduce such abusive use?
KOREA – 7 – AD -Brazil has been a frequent user  of anti-dumping measures. Could the Brazilian
Government elaborate on the factors that presum ably make its market susceptible to dumping
practices by foreign traders?
KOREA – 8 – AD - According to paras 81-82 (page 45), Brazil initiated 72 anti-dumping
investigations while imposing definitive duties in 36 cases during the period 1996-99.  What is the
current status of these cases? Have some of these AD measures been rescinded after their reviews?
INDIA – 8 – AD - We are given to understand th at Brazil had imposed an AD duty on jute bags
imported from India for a period of five years fr om September 1992. These AD duties were continued
for another year with simultaneous initiation of inve stigations. Based on these investigations the duty
was revised with effect from September 1998. We would request the Brazilian authorities to revoke
the AD wrongly imposed.
US - 16 – Subsidies - para.72 - In accordance with Article XVI:1 of the GATT 1994 and Article 25 of
the Agreement on Subsidies and Countervailing Measures, please indicate when you will make the
following notifications:  (A) update due in June 1997; (B) new and full notifications due in June 1998
and (C) update due in June 1999.
EC - 8 – CVM - Brazil has not sent any notification pursuant to Article 25 of the WTO Agreement on
Subsidies and Countervailing Measures since January 1997. Brazil nevertheless posed questions on
the notification of the European Communities on 23 March 2000.  Could Brazil explain why it has not
made the appropriate notifications?
KOREA – 12 – Subsidies - As stated in para 138 (page 58) and para 186 (page 68), Brazil has not
made further notifications on its export support regime (since 1997) and activities of state-trading
enterprises (since 1998).  Could the Brazilian Gove rnment inform Members when it plans to complete
its notifications?
HKC - 7 – Subsidies - P. 58, Para. 138 - It is mentioned that in 1996 and 1997, Brazil notified a
number of programmes under the Agreement on Subsidies and Countervailing Measures (SCM).However, Brazil has made no further notifications on export subsidies due in 1997, 1998 and 1999.
We are interested to know the reasons for no notifications in 1997, 1998 and 1999; and whether
Brazil has any plan to submit these notifications.  Will Brazil consider making a single "best efforts"
notification covering all of the time periods for which it owed a notification as suggested at the
meeting of the Committee on SCM held on 9-10 May 2000?
THAILAND – 2 – Safeguards - Brazil has extended her safeguard measure on finish toys until
31 December 2003. Would Brazil review her base years on which the determination of injury was
based with respect to countries such as Thailand, since 1997 was the year that Thailand experienced
a drastic currency depreciation and since then our toy exports to Brazil have declined noticeably?WT/TPR/M/75
Page 55
BRAZIL – CONTINGENCY MEASURES
The use of AD duties and the AD Agreement
With regard to comments and questions of a general nature about the way Brazil applies
anti-dumping measures and about Brazil’s position concerning the provisions and implementation of
the AD Agreement, the Brazilian delegation offers the following remarks.
Brazil stands by the position it adopted during the Seattle preparatory process, against the
indiscriminate and abusive way the AD Agreement is sometimes utilised in order to serve as a veiledprotection to inefficient sectors of the economy.  Brazil agrees with the view that the opening of an
investigation may, in itself, provoke a “chilling” effect on the trade of the product under investigation.
Brazil reassures WTO Members, however, that its investigating authorities fully observe the
provisions of the AD Agreement and that all investigations have been opened and conducted in full
consistency with its relevant provisions.  Brazil recalls that the threshold of dumping and injuryevidence for the opening of an investigation is significantly lower than that required for final
determinations.
Brazil also agrees that the application of the AD Agreement should not constitute a trade
harassment.  Since the beginning of its operations in 1995 until today, the Trade Remedies
Department (DECOM) closed 72 investigations, 43 resulting in the imposition of AD duties.  This is a60% rate of affirmative determinations.  If we use the numbers found in a study by members of the
WTO Rules Division staff for the period 1987-1997, this 60% rate would be higher than or equal to
those found for several Members that regularly apply AD measures, includ ing Australia, South
Africa, Turkey, Argentina, Mexico, Chile, New Zealand, Korea and the EC, among others.  Except for
India, that study finds that no other Member that  regularly applies AD measures has a rate above 64%.
Brazil, nevertheless, has doubts about the relevance of such indicator.  Brazil would much rather
focus on the quality and fairness of the investigations.  Under this light, Brazil is certain thatDECOM’s negative findings are a consequence of the serious and unbiased way the investigations are
conducted.
Brazil still believes that the language of the AD Agreement is imprecise in several important
areas, and that such lack of precision encourages th e use of its provisions in an unfair and biased way.
The proposals made by Brazil in the Seattle preparatory process aimed at mitigating this problem.Responding to a question posed in this TPR, I would recall that Brazil identified shortcomings in the
Agreement in areas such as (i) the criteria, methodology, and procedures of reviews; (ii) the definition
of the product motivating the investigation; (iii) the determination of the margin of dumping; (iv) the
imposition and collection of duties; and (v) the “cumulation” clause.  Brazil believes that an effort at
clarifying the provisions of the Agreement will promote a uniform and predictable application of theAgreement by Members, in cases where there truly is unfair behaviour by the exporter causing injury
to the domestic producer.
The status of all AD investigations and measures conducted or imposed by the
Brazilian authorities, updated until 30 June 2000, are found in document G/ADP/N/65/BRA,
dated August 1
st 2000.  Several reviews were concluded with the withdrawal of the AD duties.  In the
1999-2000 period, all 4 reviews conducted withdrew the duties. They concerned the United States
(vacuum blood containers made of glass and laboratory reagents on a backing of glass), Ukraine,
Kazakhstan, and the Russian Federation (ferro-chrome less than 4% of carbon).
Brazil also takes note and will look into matters raised by some Members about specific
investigations and measures concerning their exporters.WT/TPR/M/75
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Subsidies and Countervailing Measures
Brazil is finalising the full and new notification pursuant to Article 25 of the Agreement on
Subsidies and Countervailing Measures.  A draft is in the final process of inter-ministerial approval
and Brazil still hopes to circulate this “best efforts” notification before the meeting of the Committee
on Subsidies and Countervailing Measures to be held next week.
Safeguards
The full reasoning of the motives that led to the extension of the safeguards applied on
imports of toys is found in the pertinent notifications to the Safeguards Committee, particularly
documents G/SG/N/8/BRA/2/Suppl.1 and G/SG/N/8/BRA/2.
With regard to the questions posed by Thailand, Brazil notes that the finding of injury in
safeguards investigations is not country-specific.  Since its exports were below the 3% de minimis
level, Thailand was excluded from the initial application of the measure.  It was however included inthe safeguards measure when its exports exceeded the 3% de minimis  level, in the period January-
March 1997.
OTHER MEASURES - SIMILARS
COLOMBIA - 12 – Paragraph 69 The Report indica tes that Brazil does not have any formal import
surveillance mechanism.  Nevertheless, it is mentioned that the "Law of Similars" is still in force andthat there are no plans to modify it.  As the objecti ve of this Law is to prevent the importation of goods
when similar goods are produced domestically, what action will be taken to repeal it and cease non-
compliance with the commitments on national treatment, especially those in Article III.4 of the
GATT?
MALAYSIA - 6 - It is mentioned in para.69 that there is a test of similarity. What is the criteria for this
test?
US – 18 - Para. 110 - There is no central procurement agency in Brazil.  There is concern that
Brazil's “law of similars” leads to non-transpar ent preferences.  Implementation of such import
measures continues to be poorly coordinated and not well publicized.  What steps is the Government
taking to make the procurement process more transparent?
KOREA – 6 – In regards to the "Law of Similars" as described in para 69 (page 43), the measure per
se seems to be in contradiction with WTO rules. In addition, the test of similarity, if implemented
arbitrarily, may constitute a trade barrier and undermine the predictability of Brazil's trade regime.
It is noted with serious concern that the Brazilian Government has no plan to modify it.  Could Brazil
provide detailed information on the specific criteria for the similarity test, as well as any instance
where the similarity test was applied and the importation of goods subsequently blocked?
CZECH REP – 3 - We would like to ask on consistency of the "Law of Similars ", objective of which, in
our understanding, is to prevent the importation of goods when similar goods are produced
domestically, with the Competition policy legislati on according to which practice aimed at restricting
and limiting free competition is prohibited.
BRAZIL - SIMILARS
Concern has been expressed by Colombia, Malaysia, the US and Korea over what has been
entitled the “Law of Similars”, particularly as it could be inferred from the Secretariat Report
(W/TPR/S/75, § 69) that this is legislation of general application. The requirement for evaluation ofWT/TPR/M/75
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similarity, however, stems from the Customs Code, adopted by Decree Nº 91.030, of 5 March 1985.
Article 132 of this instrument specifies that reductions or exemptions of duties on imported goodscannot be granted wherever similar national products are available.
The application of this provision mainly relates to the area of government procurement,
taking into account the exemption of import duties for goods purchased by governmental entities for
governmental purposes. It is worth highlighting th at this provision of the Customs Code does not
create any obstacles to the regular trade of goods, which may be imported through the payment ofapplicable duties. It only conditions the granting of fiscal incentives to the test of similarity.
GOVERNMENT PROCUREMENT
CANADA - 6 – paras. 111 and 112 - 6.1. According to the report, Brazil is not participating in the
WTO Plurilateral Agreement on Government Proc urement (GPA) “mainly because the authorities
believe it is administratively burdensome and too complex to apply.”  The Brazil Tendering Law, LawNo. 8.666 of June 21, 1993, however, seems to be quite consistent with the GPA.  What aspect of the
GPA does Brazil find to be “administratively burdensome and too complex”?  6.2. Article 42,
Paragraph 4 of the Brazil Tendering Law, Law No. 8.666 of June 21, 1993 provides that “For
awarding purposes, the bids placed by foreign bi dders shall be added by the amounts corresponding
to the taxes exclusively payable by Brazilian bidders on the final sale transaction.”  What are Brazil’splans for removing this preference for domestic suppliers?
SWITZERLAND - 6 - p. 54 para.111 - The report explains that the Brazilian authorities believe that
applying the GPA would be administratively burdensome and too complex. We believe, in our turn,
that the GPA could also benefit the Brazilian economy insofar as it, in general, serves to increase
predictability and transparency. Do the Brazilian authorities see any possibility in the future to
overcome the difficulties in administrative matters, which have so far impeded them in participating
in the WTO plurilateral Agreement on Government Procurement ?
EC – 14.1 - In case of a tie in the tendering procedure, preference is given to goods produced or
services supplied by Brazilian firms of national capital, domestically produced in Brazil or produced
or supplied by a Brazilian company. Does Brazil have any agreement with  Mercosur countries or
other ones, according preferential treatment to their goods or services?  14.2 In selecting suppliers,
law No. 8.666 allows for consideration of non-price actors, granting preferential treatment for locallymanufactured telecommunications and informatics products containing significant local value added.
Does Brazil have an agreement with Mercosur or other Countries, granting preferential treatment to
their telecommunication and informatics products?  14.3 Could you please explain the criteria
applied to define products as “domestically produced in Brazil”? Do you apply the rules of origin
internationally established in Annex 1A of the WTO Agreement ?
KOREA – 9 - As stated in para 111 (page 54), Brazil does not participate in the WTO Agreement on
Government Procurement (GPA) mainly because the authorities believe it is “administratively
burdensome and too complex to apply”. However, Brazil would surely benefit from the improvement
of transparency and fairness in its procurement administration and the promotion of efficiency
through intensified competition by joining the GPA. We would appreciate to have Brazil’s commenton this.
KOREA – 10.1 - Paras 113 through 118 (pages 54-55) state that for government procurement,
Brazilian law offers non-discriminatory treatment for all bidders, regardless of nationality or origin
of product or service unless there is a tie. In this regard, the Report mentions no preference for other
domestic products than telecommunications and comp uter products. Does this imply that Brazil
provides no preferential treatment to domestic fi rms for any other goods in government procurement?WT/TPR/M/75
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Does Brazil maintain any domestic content requirement for goods procured by the Government?
10.2 - Brazil maintains a decentralized purchase sy stem in government proc urement, which makes it
difficult for a supplier, especially a foreign one, to access the information on procurement. Does the
Brazilian Government have any plan to introduce a system that would promot e access to procurement
information, such as an internet access point thr ough which it could offer integrated information to
the public?  10.3 -  What is the Brazilian Government's position on the conclusion of a WTO
Multilateral Agreement on Transparency in Government Procurement currently being discussed inthe Working Group?
BRAZIL - GOVERNMENT PROCUREMENT
Canada, Switzerland, the EC and Korea have addressed questions regarding government
procurement.  The central issue raised refers to the reasons why Brazil is not a Party to the plurilateral
Government Procurement Agreement (GPA).  The reluctance to become a party is not a result ofpossible complexities of the GPA, for the provisions of Law Nº 8.666, which regulates government
procurement in Brazil, is generally compatible with those of the GPA.  The main difficulty lies in the
excessively burdensome nature of some of its requirements.  This is particularly true of the provision
for the notification to the WTO, in an official language, of all tenders opened by covered entities.
Illustratively, it is worth mentioning that in Brazil there are over 5.000 tendering boards only at theFederal Government level.  A requirement for all tenders conducted by these boards to be translated
into an official language and notified to the WTO would lead to a significant administrative burden
and a corresponding decrease in efficiency of procurement processes, which by themselves are
already sufficiently time consuming.
With regard to a possible agreement on transparency in government procurement within the
WTO, Brazil has participated constructively in the respective working group and is supportive of the
general trends envisaged for such an agreement. Brazilian legislation on government procurementrequires the widest possible transparency in procurement processes. One area of particular concern
relates to the same difficulties encountered with regard to the GPA, namely that provisions are
included requiring notification to the WTO of all tenders in an official language.
A specific point has been raised regarding Article 42, § 4 of Law Nº 8.666, which establishes
that “for awarding purposes, the bids placed by foreign bidders shall be added by the amountscorresponding to taxes exclusively payable by Brazilian bidders on the final sale transaction”.  The
Government of Brazil does not understand this to be any sort of preference for domestic suppliers, in
that its intention is that of creating a level playing field in the evaluation of bids from both foreign and
domestic suppliers, requiring that the same taxes be taken into consideration on those bids.  This
being so, there are no plans for amending this provision of Law Nº 8.666.
With reference to preferences established in Article 3 of Law Nº 8.666, these are only
applicable in cases of a tie among competing bids, with non-discriminatory treatment constituting the
general rule.  It must be noted, furthermore, that Constitutional Amendment Nº 6, of 15 August 1995,
eliminated the distinction between Brazilian companie s of national or foreign capital. In this respect,
the criteria applied to define products as domestically produced refer essentially to the establishmentof the enterprise within Brazil.  It is not based on the determination of origin.  Additionally, Brazil is
not currently a party to any agreement that confers preferential treatment in the domain of government
procurement.  Negotiations under way, however, both within Mercosur and the FTAA process,
address preferential treatment for government procurement.
Telecommunications and informatics products are granted preferential treatment within
Mercosur, as long as they observe the rules of origin prevailing in the Customs Union. This does not,WT/TPR/M/75
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however, refer specifically to government procuremen t, in which, as stated earlier, negotiations for a
Mercosur Protocol are under way.
Access to information regarding government procurement processes is readily available
through the Internet, at the following website: www.comprasnet.gov.br.
MEASURES AFFECTING EXPORTS
EXPORT TAXES
SWITZERLAND - 7 – p. 56 para. 127, p. 64, para. 164 - SWITZERLAND would be interested to know
why all Brazilian exports are subject to a tax of 30%, while it seems that those taxes are in reality
usually not applied. In what cases are they being applied ? In which way do the export taxes affect the
export promotion programme?
EC - 7.1 Secretariat Report paragraph 56: All Brazilian exports are said to be liable to a 30% export
tax, which can be increased up to 150% at the discretion of the executive, though in practice this israrely applied. If these taxes are applied they could introduce a number of significant distortions into
Brazil's trade regime. Even if they are not applied, the uncertainty that this legislation creates must
act as a deterrent to potential new exporters and directly conflicts with other Brazilian policies aimed
at promoting or subsidising exports. Does Brazil not consider that this possibility create significant
uncertainties for economic operators with significant trade dissuasive effects? What is thejustification and rationale behind Brazil's policy for retaining the possibility to impose export taxes of
30% on all exports, up to a maximum of 150%? Does Brazil intend to remove this policy and if yes by
when?
BRAZIL - EXPORT TAXES
As for export taxes, Brazil has received questions from Switzerland, the EC and Japan. In this
respect we would like to state the following. Br azil has legislation on this issue (Decree-Law 1.578, of
October 1977 and Law 9.716, of November 1998) that allows it to charge export taxes for all theproducts. The base rate is 30%, but it can be reduced or increased until 150%, if necessary. Presently,
this export tax is only being applied to salted raw hides and skins in the positions 4101, 4102 and
4103, at a level of 9%.
It must be noted that this measure, which is compatible with WTO provisions, is seldom used
by the Brazilian authorities, as the present situation illustrates. Therefore, we do not believe itembodies trade dissuasive effects. Brazil does not intend to remove this policy, since it is useful to,
for instance, help the regulation of commodities stock in the country, due to shortages
EXPORT PROMOTION
JAPAN – 4.1 - p.64, para.164 -  The Report states that, "In the past three years, the New Export
Development Areas Programme (PNPE) has continued in its primary objective to increase Brazilianexports.  The programme is aimed at promoting marketing activities so that enterprises, especially
small and medium-sized companies, are able to expor t".  Please indicate in concrete terms the
contents of the PNPE.  Please also explain the consistency between the PNPE and the Agreement on
Subsidies and Countervailing Measures.  4.2 - p.64, para.165 - The Report states that, "The Export
Promotion Agency (APEX) was created in 1997 to support the export initiatives of micro-enterprises".Please indicate in detail the function of the APEX.  Please also explain the consistency between the
APEX and the Agreement on Subsidies and Countervailing Measures.WT/TPR/M/75
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PERU - 2- Page 64, paragraph 165 The Report by the Secretariat indicates that the Export Promotion
Agency (APEX) was created in 1997 to support the export initiatives of micro enterprises.  Whatprogress has been made in diversifying exports?
CHILE - 1 – The Report by the Secretariat indicates that Brazil has several financing and export
guarantee fund programmes.  Please indicate the criteria used to set the interest rates and how these
compare with prevailing rates on the market.
US – 19 - Export Support - Para. 138 - The Government of Brazil offers a variety of tax and tariff
incentives to encourage production for export and the use of Brazilian inputs in exported products.
What is the status of Brazil's proposed tax reform, which would alter the value-added tax, thus
modifying some of these incentives ?
US – 20 - Export Finance, Insurance and Guarantees - para 150 -  In 1999, a WTO panel found
PROEX interest equalization payments on regional aircraft to be a prohibited export subsidy.  A WTOAppellate body upheld this finding.  The Government of Brazil states that it has modified PROEX to
bring it into conformity with WTO subsidy rules.   Yet some of Brazil's trading partners are concerned
about the adequacy of Brazil's implementation of the panel's findings.  What is the Government of
Brazil doing to phase out this subsidy?
AUSTRALIA - 2 - Australia notes a continuing high le vel of support for exports by measures such as
the PROEX export credit program. What means are available to ensure transparency of the
application of PROEX and similar funds, particularly disbursements to end-receiver industries? Are
export credit programs being applied to agriculture sector, in particular to orange juice and chicken
meat exports?
US – 6 - RGB - Para 30 - The Report states that the Seguradora Brasileira de Credito a Exportacao
(SBCE) was established in 1997.  Please provide more details on how the SBCE was established and
what role the Brazilian Government played in its establishment?  Does the Brazilian Governmentprovide guarantees for the export insurance offered by the SBCE?
BRAZIL - EXPORT SUPPORT
Tax reform - The Administration’s proposal for the tax reform is currently under
consideration in Congress.
Export finance, insurance, and guarantee - PROEX
The findings of the panel and Appellate Body regarding PROEX operations are limited to the
financing of aircraft.  The very limited scope of those findings is a result of the singular manner the
program was applied to those exports.
The program is currently being reviewed and bilateral consultations are being held with the
complaining party in that dispute with a view  to reach a mutually satisfactory solution.
The operation of the program is fully transparent and all regulations are published in the
official gazette.  A list of all eligible products is found in the Annex to Portaria No. 374 of the
Ministry for Development, Industry, and Trade, dated 21 December 1999.WT/TPR/M/75
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Export promotion and marketing assistance – PNPE and APEX
PNPE’s is mostly an “awareness” program.  The main goal is to bring sectors with export
potential to participate in the international trade flows.  Most of the potential beneficiaries of the
program, small and medium-sized enterprises, are located in areas distant from the major metropolitan
areas.
The Program does not rely on public funding and operates with partnerships.  Most activities
involved training and capacity building in foreign tr ade, coordination of participation in international
fairs, industry meetings for the identification of business opportunities.
The program does not envisage the granting of export subsidies.
APEX - The Export Promotion Agency (APEX) operates under the Brazilian Support Service
for Small and Micro Enterprises (SEBRAE).  SEBRA E is funded with contributions from private
companies.  APEX supports activities that may fo ster the participation of the small and micro
business in international trade.  Its operations mostly involve trade promotion activities, such as:
informative seminars and workshops, market analysis for specific products, training and capacity
building, product marketing requirements (design, packaging, and licensing requirements), marketing
strategies (elaboration of folders and catalogues), participation in international fairs, business rounds,
evaluation of electronic commerce strategies.
There are no studies evaluating the impact of the program on the diversification of Brazilian
exports.  The participation of the small and micro enterprises in international trade remains an
important goal of Brazil’s social and economic policy.
The activities of the Agency are fully compatib le with the disciplines of the Agreement on
Subsidies and Countervailing Measures.
MEASURES AFECTING PRODUCTION AND TRADE
COMPETITION POLICY
CANADA – 10.1 - Page 64, Paragraph 169 - Reorganization of System for Protection of Competition:
We understand there have been discussions about the possible merging of the three Brazilian antitrust
authorities: CADE, SDE, SEAE. Such reform may constitute an important step toward more efficent
system for the protection of competition. However, there is the concern that the new structure is
independent. This includes proper and sufficient budgeting, staffing etc to enable the new antitrustauthority to undertake and complete its role to safeguard open and competitive markets for the benefit
of Brazilian consumers and firms and international companies located in Brazil. Can Brazil please
provide information to Members on the nature and status of this reorganization?  10.2 - Page 65
Paragraph 171 - Dumping and Subsidies: Paragraph 171 indicates that the provisions of Law
No. 8.884 do not apply to dumping and subsidies cases.  However, does the law permit any of CADE,
SDE or SEAE to have an intervenor or other role in proceedings related to dumping and subsidies in
order to advocate the consideration of competition disciplines and pro-competitive decisions?  10.3.
Transparency: Transparency in the development and enforcement of competition policies is
imperative if marketplace participants are to have confidence in decisions made by an independent
antitrust authority. What measures are currently in  place that allow firms, consumers and others to
comment on new rules and regulations before they come into effective?  10.4 - Enforcement in the
Financial Services Sector: It is our understanding that CADE and the Brazilian central bank created
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in the banking and finance sectors.  Has the working group reported, and will the report be made
public? If it has yet to report, when is it expected to report?
JAPAN – 7 - Please explain any recent cases of anti-competitive behaviour between the Brazilian
jurisdiction and that of another country, as well  as how such behaviour has been regulated.
BRAZIL – COMPETITION POLICY
As to the Delegation of Canada's four questions regarding competition policy, it should be
stressed, with respect to the first question, that, by means of a Decree dated 11/08/00, the President ofthe Republic established a working group to conclude the studies and prepare a bill on the
establishment of the National Agency for the Protection of Consumers and Competition (ANC).  Such
process will include public hearings.  From the institutional point of view, such agency will absorb the
responsibilities of the Economic Defense Secretariat (Secretaria de Defesa Econômica - SDE) and of
the Administrative Council for Economic Defense (Conselho Administrativo de Defesa Econômico -CADE), which will be extinguished.  The exis ting PROCONs (Council for Consumer Protection)
shall be maintained.  With regard to budgetary asp ects, the fines applied by ANC will be incorporated
to its budget, as well as the taxes pertaining to the so-called concentration acts and consultations.  It is
expected that the proceeds from these two activ ities will result in more then US$15 million.
Furthermore, 500 new specialist jobs will be created for ANC.  From the standpoint of resources thereare no foreseeable problems.  Such bill is expected to be sent to Congress in December, 2000.
As to the second question, competition advocacy is one of the responsibilities of the Special
Secretariat for Prices (SEAE), SDE, and CADE. Howe ver, there is no specific provision of procedural
nature that stipulates the participation of anti-trust bodies in the context of anti-dumping and
countervailing duties processes.
Canada's third question refers to transparency. The present structure of the competition policy
legislation in Brazil allows for an important degree of transparency: the administrative processes, aswell as the procedures for the control of concentration are public; the anti-trust bodies publish annual
reports; and any interested party may follow the cases at SDE, SEAE and CADE, except for the
confidential business information.  ANC will seek to enhance such a transparency regime.
Regarding the working group created in 1999 between CADE and the Brazil's Central Bank,
it has not yet produced its report and has no time-limit to do so.
PRIVATIZATION
US – 4 - RG - Para 19 - The Brazilian Government has initiated large-scale programs to privatize its
parastatal enterprises and has realized approximately $100 billion in privatization revenues since
mid-1994. However, the Government of Brazil still dominates certain sectors of the economy,
including the petroleum and electrical energy sectors.  What plans does the Government have toprivatize these areas?
MALAYSIA – 1 – Para. I of the Summary Observations of the Secretariat Report noted that there have
been more neutral sectoral policies including privatisation. Could Brazil indicate some of the state
enterprises that were privatized since 1996 and in what sectors?
US – 5 – RG - Para. 21 - The report states that in 1997, the Federal Government sold its shares in
Vale Do Rio Doce company (CVRD).  However, the government-owned BNDES, still holds shares in
the company. When does Brazil plan to privatize the remaining shares of CVRD?WT/TPR/M/75
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KOREA – 13 - It is our understanding that the Brazilian Government has consistently been trying to
privatize public enterprises since the previous trade policy review in 1996. However, according topara 185 (page 68), the State still controls a significant number of entities (CONAB, BR
Distribuidora, etc.) and many of them, especially in  services sector, are even excluded from the
privatization programme. Is the Brazilian Government envisaging further privatization?
US - 24.2 - Para. 115 - The Report states a program was established to privatize government-owned
banks with government provided financing options.  It appeared that the Brazilian Government wasmaking an attempt to either privatize all government-owned banks,  convert them into developmental
agencies or liquidate them.  On the other hand, th e Brazilian Government  offered an 'out' if none of
those three options were chosen by providing only 50 percent of the financing and making states pay
the remainder of the costs of restructuring.  If this was the policy of the Brazilian Government, please
explain to what extent this policy has been successf ul.  Please provide details on the role of BNDES in
this planned restructuring?  Why was BNDES reta ined as government-owne d under the agreement in
force?
BRAZIL - PRIVATIZATION
The US Delegation submitted three questions regarding the Brazilian Privatization Program.
The first one refers to the Government's plans with respect to the petroleum and electrical energysectors.  A second question regards the Vale do Rio Doce Company (CVRD).  And the third is related
to banking.
The most recent figures point out that, through the National Privatization Program, the
Brazilian Government has so far obtained US$78.5 billion in proceeds and US$18.1 billion in debts
transferred to the private sector, totalling US$96.6 billion in privatization revenues since 1991.  As
stated in the Government's Report, it is one of the most comprehensive programs ever carried out in
the world, if considered the revenue obtained and the debts transferred to the private sector.  In thepetroleum and electrical energy sectors, important achievements have resulted from the deregulation
process started in 1995.  In the petroleum sector, the State monopoly on the exploration and
exploitation of petroleum and natural gas deposits was then lifted to allow the Government to contract
private enterprises to develop such activities through joint-ventures.  Restrictions were also lifted in
recent years in terms of the importation of oil and its derivatives as well as refining and transportation.In the electrical energy sector, which has already been included in the National Privatization Program,
conditions are being prepared for the privatizati on of all power generation companies in 2001.  As to
the Vale do Rio Doce Company (CVRD), the Brazilian Government intends to sell, in 2001,
80 million shares of CVRD (32% of voting capital valued at R$3,2 billion) 40 million shares owned
by the Banco Nacional de Desenvolvimento Econômic o e Social (BNDES) are included in this total.
As to the banking sector, it must be stressed that the policy towards government-owned banks
is considered a success, by all standards. Several institutions were privatized, among them the Banco
do Estado de Minas Gerais (BEMGE),  Banco do Estado do Rio de Janeiro (BANERJ), Banco de
Desenvolvimento do Estado do Paraná (BANDEP), Banco de Crédito Real,  and, more recently,
Banco do Estado do Paraná (BANESTADO). These banks were privatized directly by the statesgovernment. BNDES was not directly involved in su ch privatization process. The control of other
banks, such as Banco Meridional - already privatized -, and Banco do Estado de São Paulo
(BANESPA), was transferred to the Federal Government, in order to allow their privatization by the
Brazil's Central Bank. There are no plans to privatize BNDES considering the nature and scope of its
activities.WT/TPR/M/75
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The Malaysian Delegation asked for a list of some of the state enterprises that were privatized
since 1996. Such list will be handed over with the description of sectors, proceeds, debts transferred
and consolidated revenues.
As to the Korean question if the Brazilian Government is envisaging further privatization, it is
important to note that the National Privatization Program permanently evaluates the inclusion of state
owned enterprises. Thus, recent inclusions were: Ceasa-AM Centrais de Abastecimento da Amazônia;
Ceasa-MG Centrais de Abastecimento de Minas Ge rais; CASEMG – Companhia de Armazéns e Silos
do Estado de Minas Gerais; BESC – Banco do Estado de Santa Catarina; BEP – Banco do Estado do
Piauí; BEM – Banco do Estado do Maranhão. Those potential inclusions reaffirm the belief in the
privatization program.
INTELLECTUAL PROPERTY
CANADA – 7 – paras. 208 and 230 - We note that a draft law for the protection of the layout designs
of integrated circuits, which was introduced to the Brazilian Congress in 1996, remains under
discussion.  Please indicate how the layout designs of integrated circuits are currently protected?
When is the draft law under discussion likely to take effect? Please provide details on how it will
conform with the obligations under the TRIPS Agreement?
JAPAN - 3 - p.72, para.208 - The Report states that, "A draft law for the protection of the layout
designs of integrated circuits, which was introduced to Congress in April 1996, remains under
discussion".  Please explain the schedule for establishing and implementing this law.
SWITZERLAND  -  8 - p. 72 para. 211 - The Report stat es that " The Law also protects nationals of or
persons domiciled in a country that assures Brazilians or persons domiciled in Brazil reciprocity of
equal or equivalent rights.". Could you please explain whether this treatment is consistent with the
national treatment obligation of the TRIPS Agreement.
EC - 13.1 - Copyright and related rights - Are compilations of data protected as intellectual property
under Brazilian copyright law? Are rental rights for authors to cinematographic works recognised
under Brazilian legislation?
EC - 13.2 – Patents - Please explain how, in your view, Article 68.1.I of the Brazilian Law on
Industrial Property which authorises the compulsory licensing of patents for “lack of manufacture or
incomplete manufacture” of the patented product in the territory of Brazil complies with Article 27.1of the TRIPs Agreement, which provides that patents must be available and enjoyable without
discrimination as to, inter alia, whether products are imported or locally produced.
Temporary Measure MP 2014 of 30 December 1999 (renewed since then on a monthly basis)
provides for the rejection of certain patent applications filed before 1 January 1995 and still pending
on 1 January 2000 under certain circumstances.  This exclusion affects patent applications that were
still pending on 1 January 2000.  Please explain how in your view loss of protection for such
applications would comply with the requirements of Articles 70.2 and 27.1 of the TRIPs Agreement.
When is the draft legislation to protect designs of integrated circuits expected to enter into force?
EC - 13.3 – Trademarks - Does Brazilian law require publication of trademark in connection with
applications and/or registrations to allow for opposition? Applications for trademark registrationsenjoy priority when filed in a foreign country that either maintains an agreement with Brazil or
belongs to an international organisation where also Brazil is a member. How long is that priority
period?WT/TPR/M/75
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EC - 13.4 - Geographical indications - Please clarify what type of protection is attached to
Article 179 of Law N° 9,279 of May 14, 1996.  Please describe how additional protection is grantedby your legislation to geographical indications for wines and spirits.  Please describe which
conditions have been established by the INPI for the registration of geographical indications.
EC - 13.4 – Enforcement - Could you please precise what type of actions you have entered into to
fight importation of pirated goods (sound recording and videocassettes).
Do the competent authorities have the possibility to destroy counterfeited goods or goods that
incorporate IPRs without the right holders authorisation which have been seized.
US – 21 - Para 233 - As indicated in the WTO Secretariat Report, Brazil has made important strides
in its efforts to improve enforcement against software piracy.  While we are pleased by this effort,
serious concerns remain with regard to continually high levels of pirated copyright material for all
media.  Piracy of sound recordings and video cassettes, in particular, remain alarmingly high.Therefore, while we appreciate the GOB is initiating action to better fight the importation of these
pirated products, we would like details on the GOB's border control efforts; the number of infringing
sound recordings and videocassettes seized since last year; and an accounting of whether fines were
imposed, to include the amounts issued. Concerns have been raised by our industry over the GOB's
inadequate criminal enforcement and ineffective copyright deterrence.  From raids to judicial
decisions, our industry reports that GOB progress has not been sufficient.  Please describe what steps
the GOB is taking to create an effective deterrence to copyright piracy.  What is the total number of
convictions in criminal copyright infringement cases decided last year by Brazilian courts?  Was jail
time imposed?  What is the amount of  criminal penalties imposed in these cases?    According to the
report, Brazil's congress is examining a bill to review the criminal sanctions on copyright
infringements.  Please provide information on this bill.  Is  legal reform in the area of criminal
sanctions likely;  where does the bill stand in the legislative process today.  The United States furthernotes concern over an aspect of Brazil's patent regime that prohibits importation as a means of
satisfying the requirement that the patent be "worked" in that country.  We have expressed concern
over this provision's consistency with the WTO Agreement on Trade Related Aspects of Intellectual
Property Rights (TRIPS). We look forward to cooperatively working with Brazil on addressing this
concern.  The United States further recalls that the GOB issued a medida provisoria that containsproblematic provisions, including a requirement for Health Ministry approval prior to the issuance of
a pharmaceutical patent.  We have raised concern that this does not appear to  be in conformity with
TRIPS requirements.  Please indicate whether the GOB is taking steps to address this concern in
accordance with WTO TRIPS  obligations.  Near term ratification and implementation of the WIPO
Treaties on Copyright and Performances and Phonograms by countries are essential to the growth ofe-commerce.  The necessary legal framework provided by these treaties will ensure the healthy
development of the digital marketplace, and will contribute to the economic development of countries.
Please indicate whether Brazil intends to ratify these treaties, and if so the likely date that is to occur.
BRAZIL - INTELLECTUAL PROPERTY
May I now turn to the issue of intellectual property, where five countries have presented
questions and comments on the legal framework of Brazil on industrial property and copyrights.  I
should note that although we may not answer all questions, the replies on these issues reflect our best
efforts to provide all information available to those Members.
On patents, the European Commission and the US refer to Article 68.1.I of the Brazilian Law
on Industrial Property, which covers compulsory license.  Brazil reserves the right of not addressingthis particular question at this moment, as it is subject matter of consultations under the disputeWT/TPR/M/75
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settlement mechanism.  Brazil takes note, however, of the comments by United States on their
expectation to work cooperatively with Brazil in addressing this issue.
The EC and the US refer to Provisional Measure PM 2014 of 30 December 1999.  Concerning
the question by the EC, after the entry into force of the TRIPs Agreement, Brazil has fulfilled its
commitment under Article 70.2 and 70.8 (the so called “mail box” provision) to provide, as from the
date of entry into force of the WTO Agreement, a means by which applications for patents for
inventions on pharmaceutical and agricultural chemical products can be filed.  The PM has denied allproduct and process patent applications for such inventions filed before 1
st January 1995, given that
before that date the TRIPs Agreement did not enter into force.  The PM has also denied all process
patent applications for such inventions filed between 1st January 1995 and 14 May 1997 (date of entry
into force of the Brazilian Law on Industrial Property – Law 9279).  The PM allows for the
examination of product patent applications filed between 1st January 1995 and 14 May 1997.
As regards the question by the US on the same PM, the requirement for National Sanitary
Surveillance Agency (ANVISA, subsidiary to the He alth Ministry) approval prior to the issuance of a
pharmaceutical patent is fully consistent with Article 8 of TRIPs, which establishes that “ Members
may, in formulating or amending their laws and regulations, adopt measures necessary to protect
public health and nutrition, and to promote the public in terest in sectors of vital importance to their
socio-economic and technological development, provided that such measures are consistent with the
provisions of this Agreement. ”  Additionally, Article 1 of the Agreement sets out that “ Members shall
be free to determine the appropriate method of impl ementing the provisions of this Agreement within
their own legal system and practice. ”  The Brazilian Government aims at optimising the use of its
technical framework.  While INPI, (National Institute of Industrial Property, the Brazilian patent
office) may lack the expertise to examine all the complex technological elements involved in
pharmaceutical inventions, ANVISA’s approval may contribute to ensure a more expeditiousapproval of pharmaceutical patents.
Canada, Japan and the EC have asked for information on the draft law currently being
discussed at the Brazilian Congress on the protection of the layout designs of integrated circuits.  The
issue is expected to enter in the congressional agenda and may probably be submitted to vote this
year.  Once approved by the Congress, the law will protect the layout designs of integrated circuits ina sui generis  system, in accordance with Section 6 of the TRIPs Agreement and the Treaty on
Intellectual Property in Respect of Integrated Circuits (1989).
Currently, layout designs are protected by trade secrets.  The protection foreseen in the draft
law covers the title holder’s exclusive right to explore the protected topography and to prohibit third
parties its reproduction, importation, sale or distribution, for commercial purposes, or otherwise theimportation, sale or distribution of a product embodying a protected integrated circuit for commercial
purpose, unless it contains an illicit reproduction of a topography.  The term of protection is ten years
as from the filing date or the first exploitation.
On copyrights, Brazil has received a number of questions by Members.  I shall now reply
those on which we have available data.
The European Communities addressed two questions.  Concerning the first, on protection of
compilations of data, Brazil notes that Article 7, it em III, of the Copyrights Law (Law 9610 of 1998)
states that “ the intellectual works that are protected are creations of the mind, whatever their mode of
expression or the medium, tangible or intangible, known or susceptible of invention in the future, in
which they are fixed, such as (…) collections or compilations, anthologies, encyclopaedias,dictionaries, databases and other works which, by virtue of the selection, coordination or
arrangement of the subject matter, constitute intellectual creations ”.  Further, Article 7 paragraph 2 ofWT/TPR/M/75
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the same Law establishes that “ the protection conferred under item XIII shall not extend to the
information or materials itself, and shall be understood to be without prejudice to any copyright in thedata or elements incorporated in the works ”.  Consequently, compilations of data are perfectly
protected under the Brazilian legislation.
In the second question by the European Commission on copyrights, that Member asks
whether rental rights for authors to cinematographic works are recognized under Brazilian legislation.
Rental rights are recognized by Law 9610 of 1998, which incorporates the principle of generality byextending such rights to all categories of works protected by copyrights.  Article 5, item IV of that
Law defines “distribution” as “making the original or copy of literary, artistic or scientific works,
fixed performances and phonograms available to the public by sale, rental or any other transfer of
ownership or possession”.  Consequently, the Brazilian law is actually TRIPs-plus, as it goes beyond
the categories required in Article 11 of the TRIPs Agreement.
The United States and the EC request information on the number of infringing sound
recordings seized last year.  Unofficial data indicate that the estimated value of CDs seized and
destroyed in 1999 was of US$8.367.166 and until August 2000 was of US$21.661.802.
The EC asks if the competent authorities have the possibility to destroy counterfeited goods
or goods that incorporate IPRs without the right holder’s authorization which have been seized.Law 9610 of 1998 establishes that the sentence for infringement of copyrights “ may include the
obligation to destroy all unlawful copies and originals, and also the blocks, molds, negatives and
other material used to commit the infringement; and it may provide for the seizure of machines,
equipment and materials used for the purpose, including their destruction where they can only serve
unlawful purposes. ”
On the question by the US on where the bill to review the criminal sanctions on copyright
infringements stands today, the Executive hopes to take the issue for discussion in Congress this year.Given that this is election year in Brazil, however, it is not unlikely that Congress may give
consideration to the issue at the beginning of next year.
Switzerland requested explanations on consistency between the national treatment obligation
of the TRIPs Agreement and the Brazilian Law on Industrial Property, which protects nationals of or
persons domiciled in a country that assures Brazilians or persons domiciled in Brazil reciprocity ofequal or equivalent rights.  The provision in the Industrial Property Law is compatible with Article 3
(“National Treatment”) of the TRIPs Agreement; it also complements that principle, since it is
applicable to nationals from countries who do not take part in treaties signed by Brazil.  Nationals
who have protection assured by treaties or conventions in force in Brazil – such as the TRIPs
Agreement or the Paris Convention – receive national treatment.
IV. TRADE POLICY BY SECTOR
AGRICULTURE
CANADA – 8 – paras. 10-37 - It is difficult to assess the significance and nature of the support
provided by the agricultural support programs mentioned in the Secretariat Report.  For example, an
“outlay” of R$718 million is mentioned for the Federal Government Acquisition Programme (AGF)in paragraph 24.  It is not clear if “outlay” mean s the gross cost of purchasing commodities or the
loss incurred in resale.  The Report also mentions several credit programs – National Rural Credit
Program (para 10); Program to Strengthen Fami ly Farming (paras 21-22); FINAME Agricola
(para32); MODERFROTA (para 33) –  but only some, if any, of the important parameters of the
programs are indicated.  It is helpful to know the amount of loan outstanding, the interest rate appliedWT/TPR/M/75
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on this amount, and the market interest rate.  As well , it is not clear what is meant by “outlays” under
these credit programs.  We request Brazil to clarify the significance and nature of support providedby the National Rural Credit Program, the Program to Strengthen Family Farming, the Federal
Government Acquisition Programme, FINAME, and MODERFROTA.
CANADA – 11 - para 42, page 37 - In 1997, Brazil notified to the WTO Members its intention to
withdraw its tariff quota for wheat (HS1001.1000.00).  This tariff quota, negotiated in 1970, has
never been opened.  Two Members notified their interest in negotiating the quota arrangement withBrazil;  according to the authorities these negotiations, under Article XXVIII, have been concluded.
Tariffs and other taxes; para 14; page 81 - MFN tariff quotas of 10,000 tonnes apply to pears and
apples but these were not opened during 1996-98 because the MFN tariff (10% in 1995-96, and 13%
in 1997-98) was lower than the in-quota tariff rate of 15%.  The authorities noted that since 1998
these tariff quotas have not been opened.  In 1996, under the provisions of GATT 1994 Article XXVIII,Brazil notified WTO Members of its intention to withdraw its tariff quota for wheat
(HS1001.1000.00).  This tariff quota, negotiated in 1970, has never been opened.  Two Members
notified their interest in negotiating with Brazil; the Brazilian authorities noted that these
negotiations had been concluded.  Comment: On both the foregoing paragraphs the Secretariat
reports that negotiations under Article XXVIII to settle interests in Brazil’s withdrawal of its wheatTRQ in 1997 have been concluded.  In fact, Canada registered an Article XXVIII claim on this issue
which, despite discussions on several occasions, has not been resolved.  We would request the
Secretariat to correct this factual error in its report.
JAPAN - 6 - p.82, para.14 - The Report states that, "Two members notified their interest in
negotiation with Brazil; the Brazilian authorities noted that these negotiations had been concluded".
Please explain the results of the negotiations on tariff quotas for wheat under the provisions of
GATT 1994, Article XXVIII.
JAPAN – 5.1 - p.56, para.127 p.79, para.7and p.82, para.15 - What is the purpose of the export
taxes? 5.2 - Please indicate the names of the agricultural products on which export taxes are applied,
together with their respective tariff rates.  5.3 - In paragraph 7 of page 79, the Report states that,
"Exports of both coffee and sugar have shown an upward trend, especially sugar exports, which have
increased substantially since 1997 reflecting in part the reduction of export taxes to 0%".  Is it correctto understand that there still remains possibility that 30% or more export taxes could be applied on
sugar as the system itself has not been abolished?
CHILE - 2 – Brazil applies a Policy of Guaranteed Minimum Prices (PGPM) in the agricultural
sector.  What is its scope in terms of Gover nment loans and Government acquisitions?  To what
products will it continue to be applied?  What methodology is used to calculate the minimum prices ofagricultural products covered by this programme?
URUGUAY - 2 - paragraph 17 Summary Observations, page xi; paragraph 9  Trade Policies by
Sector, page 79 - Could Brazil comment on paragraph 17 (last sentence) of the Summary
Observations, Secretariat Report, that refers to the trade distortions introduced by the support
provided to agriculture in other countries, a problem  that remains of major concern to the Brazilian
authorities? Could Brazil also comment on paragraph 9 of Chapter IV Trade Policies by Sector,
Secretariat Report, which states that several of Brazil's main agricultural exports compete in world
markets distorted by subsidies and significant trade barriers, and these distortions disadvantage
Brazil more than most countries because of its comparative advantage in agriculture and potential to
expand further its production frontier?
US – 22 - What is the Brazilian Government doing to encourage a reduction of trade barriers on
agricultural products?WT/TPR/M/75
Page 69
KOREA – 14 - According to paras 10-11 (page 81), “outlays in rural credit for the 2000/2001 harvest
were projected to reach R$11.3 billion, which represents a nominal increase of 36% over the previousyear.” This contradicts the Brazilian Government's stated intention to withdraw from the marketing
and financing of agriculture production leaving room for the private sector to undertake these
activities.  What is the future plan for the provision of rural credit by SNCR?
CANADA - 4 - GMO – para. 55 - The Report states that in September 1997, Brazil banned the
importation of genetically-modified soybeans, a ban which continues to date.  What is the rationalebehind this ban?
EC – 16 – PROEX - The EU would like inform ation on the use of the PROEX programme on
agricultural products.  Data on the volumes exported and their values for each agricultural product
covered by PROEX since 1995, on a yearly basis, are requested.  The EU would also like to know
how export credit guarantees or other subsidies are covered under PROEX.
US – 17 – SPS - Para. 103 - While we note that progress has been made in the areas of SPS
measures, certain SPS measures remain significant barriers to trade.  What steps is the Brazilian
Government taking to ensure that any restrictions on products are supported by sufficient scientific
grounds or adequate risk assessment?
INDIA – 3 SPS - Considerable time is taken by Brazilian Ministry of agriculture for conducting Pest
Risk Analysis before giving its approval for import.  We would request the authorities in Brazil to look
into this problem.
BRAZIL – AGRICULTURE
With regard to questions formulated by Canada , Japan, Chile, Uruguay, Korea, EC and US on
the issue of Agriculture, Brazil would raise the following points:
The Brazilian Policy of Guaranteed Minimum Prices (PGPM) is implemented through two
mechanisms: AGF - Federal Government Acquisitions Programme and EGF – Federal GovernmentLoans Programme.
AGF is applied according to the criteria presented in paragraph 25 of the Secretariat Report.
Since the opening of the Brazilian economy, in the beginning of the 1990’s, AGF has been applied as
a “safety net” mechanism, which has no or very limited impact in production and trade, for minimum
prices are set well below world levels, as demonstrated in paragraph 28.  AGF, as a safety net, hasbeen offered for specific products and in regions where the Federal Government deems necessary to
act as a “last instance buyer”, due to the absence of structured market forces.
To answer a specific question posed by Canada concerning AGF, let me add that the “outlay”
of US$718 millions mentioned in paragraph 24 of the Secretariat’s report refers to the budgeted
resources allocated to cover the gross cost of purchasing of commodities harvested in the 1999-2000through the AGF Programme.
EGF was originally conceived as a complementary instrument of support price policies
through sale option to the Government (EGF/cov – “com opção de venda”).  In 1996 the sale option to
the Government was eliminated and EGF has been, since then, applied only as a loan to help farmers
with the marketing of their products in the harvesting period.WT/TPR/M/75
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EGF is mainly applied to farmers, although processors may have access to this mechanism,
under different conditions, whenever the relevant product has been acquired directly from the farmerat the set minimum price.
Minimum prices for AGF and EGF are based on several parameters.  Among these, I would
emphasize present and expected conditions of domestic and international markets, which are taken
into account particularly in the case of tradable products.  Costs of production, national stocks and the
profitability of the previous crop are other parameters used to determine minimum prices for non-tradable products and for goods whose international market is highly unstable.
AGF and EGF are applied and will continue to be applied to the products listed in
paragraph 27 of the Secretariat Report.
“The National Rural Credit Program” (SNCR) is a system that establishes an institutional
regulatory framework for public and private provision of credit to the agricultural sector.  In thiscontext, SNCR is comprised of a set of credit lines applied to finance the production, marketing
(including EGF) and investment activities in agriculture, in accordance with the general policy
objectives for agricultural development.  Some of these credit lines, which are described in detail in
the Secretariat Report, may contemplate concessionary terms or observe conditions negotiated among
interested parties.
As noted by the Secretariat, the Brazilian Government has reduced the use of public funds to
finance agriculture production.  These limited public funds are being directed to small farmers and to
producers in less developed areas.  In the c ontext of the SNCR, Government is creating an
institutional environment that favours alternative sources of private funds to finance agricultural
activities.  This initiative explains the increase of 36% in the amount of resources available for SNCR
in 2000/2001.
The support implicit in the SNCR, represented by the difference between the interest rate paid
by farmers and a reference interest rate, has been duly notified by Brazil to the Committee on
Agriculture.  Support provided by production and marketing credit, excluding those aimed at small
producers, is notified in the AMS, according to Article 6 and Annex 3 of the Agreement on
Agriculture.  Support provided through investment  credit and through production and marketing credit
directed to small producers is notified under Article 6.2 of the Agreement on Agriculture.
With regard to TRQ issues: In 1996, Brazil notified to the WTO Members its intention to
withdraw its tariff quota for wheat.  The Brazil ian decision stemmed from liberal reforms undertaken
in its policy for wheat production and trade, including elimination of artificially administered prices
and state trade monopoly.  Brazil believes that the withdrawal of this TRQ is also consistent with its
general trade policy, which does not favour the recourse to tariff rate quotas.
Negotiations under Article XXVIII were initiated in 1996 with two trading partners.  So far,
no proof of prejudice has been presented to Brazil in the context of these negotiations.
GMOs
In September 1998, CTNBio, the interagency group established to devise a national policy for
Genetically Modified Organisms, determined that “Roundup Ready” soy seeds produced byMonsanto would not present risks to the environment or to human health and authorized the planting
of that transgenic seed in Brazil.WT/TPR/M/75
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Three different lawsuits brought about by the GREENPEACE, IDEC (consumers lead
non-governmental organization) and the Workers Pa rty questioned that Governmental decision and
impeded its execution, on the grounds that an environmental impact assessment had not be carried out
to justify the decision.  These lawsuits are still pending of a definitive decision.
It is then somewhat exaggerated to argue that Brazil has “banned” the imports of genetically
modified soybeans.  It is only natural that, due to the growing opposition to transgenic food in the
world, the decision making process in Brazil takes into account the whole range of opinions on theissue.
SPS
The US expressed interest in knowing what steps have been taken by Brazil in the SPS area to
ensure that any restriction on products are supported by sufficient scientific grounds or adequate risk
assessment.  Brazil would like to point out that all SPS measures in Brazil are adopted in fullaccordance with the Agreement on the Application of Sanitary and Phytosanitary Measures.  SPS
measures in Brazil are preceded by a risk assessment procedure, which takes into account available
scientific evidence, relevant processes and production methods and other pertinent matters such as
existence of pest or disease-free areas and appropriate inspection, sampling and testing methods.
When determining the appropriate level of SPS protection, Brazilian sanitary authorities take intoconsideration the objective of minimizing negative trade effects as well as the need to avoid arbitrary
distinctions in similar situations.  Sanitary measures applied or modified in Brazil are notified to the
Committee on SPS, according to Article 7 of the SPS Agreement and to the provisions contained in its
Annex B.
PROEX
Australia and the EU asked questions about the role of PROEX in the exports of agricultural
products.
From the outset, let me remind Members that the recent findings of the Panel and Appellate
Body regarding PROEX operations are limited to the fi nancing of aircraft.  The very limited scope of
those findings is a result of the singular manner the program applied to those exports.  The operation
of the program as a whole was not found to vi olate any provision of the WTO Agreements.
As far as the eligibility of some agricultural products under PROEX, let me first note that
Brazil shares the views expressed by those two Members with regard to transparency issues related to
export credits activities.  For this very reason, Brazil proposed – and Members agreed by consensus –
that the General Council, in the context of its de liberations on implementation issues, instruct the
Committee on Agriculture to start discussing the mandate of Article 10.2 of the Agreement on
Agriculture.  Only when disciplines to govern the provision of export credits, export credit guaranteesor insurance programmes have been negotiated in the WTO and agreed among the whole of its
membership, transparency with regard to export credit activities will be addressed and ensured.
With regard to PROEX support of exports of so me agricultural products, I would like to stress
two important points:
- PROEX equalization is an export credit mechanism and therefore fall squarely under
Article 10.2 of the Agreement on Agriculture.
- PROEX support to agricultural products is not a subsidy, since it is fully in line with
current international financing practices.WT/TPR/M/75
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Brazil understands and shares the concerns about the way exporters of agricultural products
are currently supplying export credits.  Such concerns are amplified by the fact that PROEX is notnearly as generous as other export credit programmes currently operated by governmental agencies or
state trading enterprises in countries that play a major role in the international agricultural market.
Brazil hopes that these concerns will be fully addressed by end of this year when, according to the
commitments agreed under the Agreement on Agriculture, we achieve concrete progress on the
implementation of Article 10.2.  If, however, our efforts fall short of the agreed timeframe, Brazilbelieves that the current mandated agriculture negotiation will provide an important opportunity to
develop disciplines on officially supported agricultural export credits.  For that purpose, Brazil is
looking forward to address this issue in the Cairns Group.
As far as export subsidies as such for agricultural products are concerned, Brazil has no
amendments to make to the notifications contained in documents G/AG/N/BRA/5, G/AG/N/BRA/9,G/AG/N/BRA/ 12  and  G/AG/N/BRA/15, wher e it is indicated that no export subsidy has been
granted for the scheduled products.
General Comments on Agriculture raised by Uruguay: Brazil’s efforts to participate more
actively in the multilateral trading system, particularly  in trade in agriculture, have fallen short of our
expectations for reasons well known to all, but important to reiterate here today.  Despite the UruguayRound commitments, tariffs applied to agricultural products continue to impede real market access
opportunities and so do domestic support and export subsidies, which also remain very high in the
agricultural international trade.  According to a recent paper released by OECD, support in
industrialized countries have returned to the levels preceding the end of the Uruguay Round, which,
originally, justified the need to reform agriculture.
Brazil’s production and exports of meat, sugar, oilseeds and fruits, among others goods, have
faced distorted trade practices, such as prohibitive tariffs, tariff peaks, tariff escalation andmanipulation of TRQs.  These unfair practices have prevented Brazil from achieving its potential as a
competitive agricultural exporter.  Only a reform that results in the elimination of export subsidies, in
substantial reductions of production distorting domestic support and in real improvement in market
access opportunities will bring about the necessary conditions for a full and fair participation of Brazil
- and other agricultural exporters -  in the world trading system.
The US asked what Brazil is doing to encourage a reduction of trade barriers on agricultural
products.  In the Uruguay Round, Brazil committed to undertake very important steps towards a more
liberal agricultural trading system.  As a result, we took very important and bold steps.  Today, our
average tariff for agricultural products, of 12.6%, is not trade restrictive, as Brazil is classified as the
8
th in the ranking of world imports of agricultural products.  Some representatives argued on Monday
that this 12.6% tariff level still imposes a high level of protection to Brazilian products.  In this regard,
I would like to remind that this average tariff is, in fact, very low to face the highly subsidized and
distorted agricultural world markets.  These distortions penalize countries that have liberalized and
discourage others from implementing further liberalization.  While Brazil participates actively in the
mandated negotiations, we regret that major agricultural partners do not seem committed to real andsubstantial changes in the agricultural trading system.  Brazil hopes that the launching of a new round
of trade negotiations will produce the necessary incentives for a reform in the multilateral trading
system, which will be inclusive of agricultural trade.WT/TPR/M/75
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ENERGY
CHILE – 4- The Report by the Secretariat indicates that the INB industries have a monopoly over the
import of inputs and products used to generate energy, essentially nuclear energy.  Could Brazil
explain the reasons that have recently led it to impo se restrictions on the import of chemical products
containing lithium?
EC - 16 - Direct and indirect subsidies remain in the Brazilian alcohol sector.  This coupled with
constant government intervention makes the Brazilian ethanol market very unpredictable, particularlyin light of the size of Brazil's output.  What plans does Brazil have to eliminate the remaining direct
and indirect subsidies and improve the predictability of her ethanol market?
BRAZIL - ENERGY
As to energy issues, Chile and the EC posed questions.
The answer to Chile's question is that for safety reasons, as so many other Member countries,
Brazil has restricted the imports of goods that contain lithium. (Chile 4)
EC's question related to the ethanol sector.  In this regard, the well known Pro-Alcool
Program, which began in the '70s, with a view to  reducing Brazil's dependence on fossil resources of
energy and controlling pollution from emissions.  Since the beginning of its implementation, the
Government has reduced progressively and significantly its role in overseeing the ethanol market and,today, it is a fact that the remaining intervention in the sector does not affect the predictability of such
a market. Presently, the Government's role in this sector is restricted to establishing the percentage of
ethanol in gasoline, taking into consideration the necessary technical criteria for the attainment of
adequate environmental objectives.  (EC 16)
INDUSTRY
US – 23 - Manufacturing - Para 41 - While the manufacturing of steel is discussed, the report does
not mention  minerals such as iron ore and coke and whether those industries benefit frompreferential treatment.  Please provide information on how the iron ore and coke industries stand in
the Brazilian manufacturing sector?
LOCAL CONTENT
JAPAN – 1.3 - p.55, para.119 - The Report states that, "However, a similar programme, also linked to
local content but in force only in specific areas of the country will be in force until 2010". Pleaseprovide a detailed explanation on this programme.
EC – 12 - Paragraph 119-121: There is some description of Brazil's local content requirements, we
would have liked to see a comment on their WTO compatibility and their effects.  Could Brazil explain
how her local content requirements are in line with her WTO obligations and their likely economic
effects?
HKC - 6 - P. 55, Para. 119 - It is stated that the nation-wide incentive programme for automotive
industry prescribing local-content requirements  was phased out on 31 December 1999.  However, a
similar programme also linked to local-content requirements in specific areas will be in force
until 2010.  We are interested to know the sectors involved and the reasons for introducing such
requirements.  To what extent is this programme consistent with para. 4 of Art. III of GATT 1994 andArt. 2.2 of the TRIMs Agreement?WT/TPR/M/75
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US – 9 – Para 4 - The report notes that "some programs were subject to local content and export-
balancing requirements."  Have these requirements been discontinued?  If not, in what areas ofindustrial production, in addition to the automotive sector, are such requirements maintained?
Please describe the workings of the loca l content and export-balancing requirements.
US – 13 – Para. 39 - While Brazil phased out it automotive regime at the end of 1999, regional
benefits maintained at a lower rate will continue in effect until 2010.  Please describe these regional
benefits and the rationale for maintaining them?
KOREA – 11 - Para 121 (page 56) mentions that Brazil “proposed specific provisions be included in
the TRIMs Agreement to provide developing countries with necessary flexibility to implement
development policies that may help reduce the disparities they face vis-à-vis developed countries”.
What types of measure – e.g., local contents or investment ceilings? – did Brazil have in mind? Does
Brazil still maintain this position?
CZECH REP – 4 - With regard to the automotive industry we don´t raise any specific question, but we
would like express our concerns relating to this sector and will appreciate to hear on further
liberalization in this respect.
CHILE – 3 – Brazil has a system of regional incenti ves for the establishment of enterprises.  Could
Brazil explain in more detail how these programmes operate?
BRAZIL - LOCAL CONTENT
As of 1 January 2000, the local content requirements of the Brazilian Automotive Regime
expired, as laid down in Law Nº 9.449, of 14 March 1997.  A number of delegations, however,
inquired about a similar programme applicable in specific areas and which will remain in effect
until 2010.
The Automotive Regime for the North, Northeast and Center-West regions was brought into
effect by Provisional Measure Nº 1.532, of 18 December 1996, as notified to the WTO indocument G/SCM/N/16/BRA/Suppl.1, of 23 January 1997, definitively adopted as Law Nº 9.440, of
14 March 1997.  It establishes a set of benefits that may be granted, under the conditions specified in
corresponding regulations, with effects exclusively up to 31 December 1999.  These benefits were
available to any enterprise in the automotive sector  located in the North, Northeast and Central-West
regions of Brazil in the context of the Government’s policy of social and economic development ofthese regions.  It is this legislation which contained requirements of export performance and local
content.
On 23 August 1999, Law Nº 9.826 established a benefit which granted, until 31 December
2010, a presumed credit of 32% of the value of the Industrial Products Tax (IPI), to be deducted on
the determination of this tax, applicable on vehicles produced in the North, Northeast and Central-West regions or imported by automotive producers established in those regions, exclusively for
projects presented before 31 October 1999.  This is the only benefit of this regime, which also, it must
be underlined, does not contain any export performance or local content requirements.
SERVICES
GATS/GENERAL
HKC – 1 - General (P. x, Para. 7) It is noted that provisional measures form part of the legislation
governing foreign trade.  Would Brazil advise if there are any provisional measures in place or in theWT/TPR/M/75
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pipeline that have significantly affected or would affect trade in services sectors in which Brazil has
inscribed specific commitments?
PERU – 3 – Page 103, paragraph 108 Peru would like to have further details on the provisions on the
movement of natural persons which, according to the specific commitments undertaken by Brazil,
guarantee market access to specialized technicians and highly qualified professionals.  Please specify
the requirements to be met and the maximum num ber of months allowed for temporary contacts.
EC – 15.3 – MERCOSUR - Secretariat Report paragraph 114: Does Brazil planning to ratify the
Montevideo Protocol and if yes, when?  What is the timeframe for MERCOSUR services
liberalisation? Is the ten-year objective for full liberalisation from the date of signing of the
Agreement or from the date of ratification by the four contracting parties?
EC – MERCOSUR.  The Secretariat reports that a Protocol on Trade in Services was concluded by
the Mercosur countries in December 1997.  This agreement is intended to lead to the liberalisation oftrade in services within a ten year period.  Has this agreement been notified to the WTO under GATS
Article V?  If not, when do Brazil and the other parties propose to notify it?  If the agreement does not
meet the definition of an "economic integration agreem ent" in the sense of GATS Article V, can Brazil
confirm that all liberalisation of trade in services will be extended to other WTO Members on an
MFN basis?
CAN – 9.8. (Appendices Table IV.2 – Summary of Brazil’s specific commitments in individual services
sectors – GATS/SC/13).  Under mode 3, limitations  on market access for Construction and Related
Engineering Services (i.e., A. General Construction Work for Buildings; B. General Construction
Work for Civil Engineering; C. Installation, assembly work and maintenance and repair of fixed
structures; and E. Other), Brazil indicated that access will be granted 5 years after the date of entry
into force of the Agreement establishing the WTO, with no limitations after that date.  Could Brazil
confirm that all market access limitations have been removed?
CAN – 9.9. At what level of government are professional services regulated in Brazil? Have there
been any recent developments in terms of regulator y reform in the area of professional services?
BRAZIL – SERVICES/GATS
Referring to questions by Hong Kong, China (provisional measures in services), the EC
(Montevideo Protocol), Peru (movement of natural persons) and Canada (construction andprofessional services).
(HK) To our knowledge the only MP in force that affects trade in services is Medida
Provisória 1897-51 of 1999, which eliminated fiscal incentives previously granted to goods
transported in ships registered in the Special Brazilian Registry.  We have no information of
provisional measures in the “pipeline” that affect trade in services.
(EC) The Montevideo Protocol on Trade in Services in Mercosur is under examination by the
Brazilian Congress for ratification.  There is no estimate as to when it will be ratified.  It will be
notified to the WTO when it comes into force that is, when it has been ratified by at least three
Mercosur Member countries.  Full liberalization is to be in place in ten years from the entry into force
of the Agreement but in practice Members intend to achieve that goal in ten years from the signing ofthe Protocol, that is, by 2007.
(Peru) Brazil’s horizontal commitments concerning mode 4 (specialized technicians, highly
qualified professionals, managers and directors) are contingent on work contracts made with juridicalWT/TPR/M/75
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persons established in Brazil as well on the additional conditions specified in the market access
column according to the sector or subsector in question.  The work contract must be approved by theMinistry of Labor as a precondition for the granting of a “temporary visa type 5”, which allows for a
stay of up to two years in the country.  The documentation required varies according to the type of
profession.  Qualification must be proved and the period of experience required is of two years for
professions that require higher education background and three years for activities of technical
qualification.
(Canada) As indicated in Brazil’s schedule of specific commitments, after 5 years from the
date of entry into force of the Agreement establishing the WTO there will be no market access
limitations under mode 3 for Construction and Related Engineering Services.
(Canada) With regard to professional services, the regulatory powers are delegated to Federal
Councils and the subordinated Regional Councils.  Their functions are complementary.  The FederalCouncils elaborate policies and guidelines and coordinate the activities pertaining to each profession.
The Regional Councils are in charge of functions of administration, registration, qualification,
supervision and other activities related to the coordination of the respective professions and
professionals in their area of jurisdiction.  The regu lations are issued by the various Councils in the
form of Resolutions.  There have not been developments in terms of a “regulatory reform”.
__________