RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/75
27 September 2000
(00-3734)
Trade Policy Review Body
TRADE POLICY REVIEW
BRAZIL
Report by the Secretariat
This report, prepared for the third Trade Policy Review of Brazil, has been
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has,
as required by the Agreement establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), sought clarification from the Government of Brazil on its trade
policies and practices.
Any technical questions arising from this report my be addressed to
Ms. E. Lizano (tel. 739 55 29) or Mr. R. Valdés (tel. 739 53 46)
Document WT/TPR/G/75 contains the policy statement submitted by the
Government of Brazil.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Brazil.Brazil WT/TPR/S/75
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS ix
(1) I NTRODUCTION ix
(2) M ACROECONOMIC DEVELOPMENTS ix
(3) I NSTITUTIONAL ENVIRONMENT x
(4) T RADE POLICY DEVELOPMENTS x
(5) S ECTORAL POLICY DEVELOPMENTS xi
(6) T RADE POLICY AND FOREIGN TRADING PARTNERS xii
I. ECONOMIC ENVIRONMENT 1
(1) O VERVIEW 1
(2) M AIN ECONOMIC DEVELOPMENTS 1
(i) Economic growth and structure of the economy 1(ii) Fiscal policy 2(iii) Monetary policy 5(iv) Balance-of-payments 7
(3) D
EVELOPMENTS IN INVESTMENT 9
(4) D EVELOPMENTS IN TRADE 10
(i) Composition of trade 12(ii) Direction of trade 12
(5) O
UTLOOK 15
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 16
(1) T RADE POLICY FORMULATION AND IMPLEMENTATION 16
(i) Trade policy objectives 16
(ii) Institutional and legal framework 16(iii) Trade policy formulation and implementation 17(iv) Main trade laws and regulations 19
(2) T
RADE AGREEMENTS AND ARRANGEMENTS 19
(i) World Trade Organization 19
(ii) The Southern Common Market 20(iii) Other arrangements 22
(3) F
OREIGN DIRECT INVESTMENT REGIME 23
III. TRADE POLICIES AND PRACTICES BY MEASURE 26
(1) I NTRODUCTION 26
(2) M EASURES DIRECTLY AFFECTING IMPORTS 26
(i) Procedures 26(ii) Customs valuation and rules of origin 28(iii) Tariffs 31(iv) Other charges affecting imports 38(v) Import prohibitions, restrictions and licensing 39
(vi) Import cartel 44
(vii) Contingency measures 44(viii) Standards and other technical requirements 49WT/TPR/S/75 Trade Policy Review
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(ix) Government Procurement 54
(x) Local content schemes 55(xi) Balance of payments and countertrade 56
(3) M
EASURES DIRECTLY AFFECTING EXPORTS 56
(i) Procedures and documentation 56
(ii) Export taxes and minimum export prices 56
(iii) Export prohibitions and other restrictions 57(iv) Export cartels and other arrangements 57(v) Export subsidies 58(vi) Export Support 58
(vii) Duty and tax concessions 60
(viii) Export finance, insurance and guarantees 61(ix) Export promotion and marketing assistance 64(x) Export performance requirements 64
(4) M
EASURES AFFECTING PRODUCTION AND TRADE 64
(i) Competition policy and regulatory issues 64
(ii) State-owned enterprises, pr ivatization and state trading 67
(iii) Incentives 68(iv) Intellectual property rights 72
IV. TRADE POLICIES BY SECTOR 77
(1) I
NTRODUCTION 77
(2) A GRICULTURE 79
(i) Market developments 79
(ii) Policy objectives and instruments 81
(3) M ANUFACTURING 87
(i) Main features 87(ii) Policy objectives and instruments 89
(iii) Automotive 90
(iv) Aircraft 93(v) Shipbuilding 94(vi) Other activities 95
(4) E
NERGY 96
(i) Petroleum 96
(ii) Alcohol 99
(iii) Electricity 100
(5) S ERVICES 102
(i) GATS and other international commitments 103(ii) Banking 105(iii) Insurance 108
(iv) Telecommunications 110
(v) Transport 112
REFERENCES 117
APPENDIX TABLES 121Brazil WT/TPR/S/75
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CHARTS
Page
I. ECONOMIC ENVIRONMENT
I.1 Trade in goods and non-factor services and average exchange rate, 1995-99 8
I.2 Foreign direct investment by sector, annual flows, 1996-99 9I.3 Foreign direct investment stocks by source, 1995 and 1999 10I.4 Trade in goods and non-factor services as shares of GDP, 1995-99 11I.5 Merchandise trade by product, 1995 and 1999 13
I.6 Merchandise trade by partner, 1995 and 1999 14
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Frequency distribution of MFN tariff rates, 2000 33
III.2 Tariff escalation by 2-digit ISIC industry, 2000 34
IV. TRADE POLICIES BY SECTOR
IV.1 Average and range of applied tariff by 3-digit ISIC code, 2000 78
IV.2 Growth in production and export volumes of major agricultural products, 1996-99 80
IV.3 Shares of services GDP, 1995 and 1998 102IV.4 Services trade balance, 1995-99 103
TABLES
I. ECONOMIC ENVIRONMENT
I.1 Basic macroeconomic indicators, 1995-99 3
I.2 Balance of payments, 1995-99 7
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES
II.1 Exceptions to national treatment 24
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Tariffs on telecommunication goods, 2000-06 31
III.2 Summary analysis of Brazil's MFN tariff, 2000 32
III.3 Selected tariff lines where the MFN rate is higher than the bound rate 35III.4 Cases in which goods may be admitted under the temporary admission regime 36III.5 Other charges affecting imports 38III.6 Prohibited imports 40
III.7 Operations subject to non-automatic licensing 42
III.8 Anti-dumping measures in force as of December 1999, by country and product 46
III.9 Countervailing measures in place, 1996-99 47III.10 Organizations involved in stan dards, testing and certification 50
III.11 Mutual Recognition Agreements signed by Brazil since 1996 51III.12 New labelling and marking regulations, 1996-99 52
III.13 Mode of tendering according to estimated value of the contract 55
III.14 Export performance targets by sector 59III.15 Fiscal incentives granted under BEFIEX 59III.16 Level of expenditure under PROEX, 1994-2000 62WT/TPR/S/75 Trade Policy Review
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Page
III.17 Price liberalization of oil products and alcohol, 1996-99 66
III.18 Results of the Privatization Programme, 1996-2000 67III.19 Manaus Free Trade Zone production, 1996-99 71III.20 Patents, trade marks, and industrial designs registered, 1996-99 72III.21 Protected copyright works 74
IV. TRADE POLICIES BY SECTOR
IV.1 PRONAF main indicators 83
IV.2 Profile of the manufacturing sector, 1995-99 87IV.3 Manufacturing, sectoral contribution to GDP, 1995-98 88IV.4 Selected manufactured export and import products, 1996-99 89
IV.5 Automobile industry, 1995-99 90
IV.6 Petroleum production, trade and apparent consumption, 1995-99 96IV.7 Brazil's banking system 107IV.8 Variables for establishing maximum tariffs 112
APPENDIX TABLES
I. ECONOMIC ENVIRONMENT
AI.1 Exports by groups of products, 1995-99 123
AI.2 Imports by groups of products, 1995-99 124AI.3 Exports by destination, 1995-99 125AI.4 Imports by origin, 1995-99 126
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES
AII.1 Status of notification requirements to the WTO, January 1995-May 2000 127
AII.2 Disputes in which Brazil has been involved as a complainant, 1996-2000 (19 May) 130AII.3 Disputes involving complaints against Brazil, 1996-1999 (19 May) 132
III. TRADE POLICIES AND PRACTICES BY MEASURE
AIII.1 Applied MFN tariff averages and range for bound rates by HS2, 2000 134
AIII.2 Anti-dumping investigations initiated by Brazil between January 1996 and
December 1999, by country and product 137
IV. TRADE POLICIES BY SECTOR
AIV.1 MFN tariff by ISIC 3-digit level and stage of processing 140
AIV.2 Summary of Brazil's specific commitments in individual service sectors 141Brazil WT/TPR/S/75
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GLOSSARY
Asphalt Asfalto
Airport Warehouse Tariff  Surcharge Adicional de Tarifa Aeroportuária , ATAERO
Aviation fuel Querosene para Aviação , QAV
Bank profits Lucro liquido
Brazilian Aeronautics Enterprise Empresa Brasileira de Aeronáutica S.A.
Brazilian Association of Standards Associação Brasileira de Normas Técnicas
Brazilian Committee on Certification Comitê Brasileiro de Certificação
Brazilian Committee on Metrology Comitê Brasileiro de Metrologia
Brazilian Electricity Regulatory Agency Agência Nacional de Energia Eléctrica, ANEEL
Brazilian Informatics and Automation Council Conselho Nacional de Informática e Automação ,
CONIN
Brazilian Institute of Geography and Statistics Instituto Brasileiro de Geografia e Estatística
Brazilian Nuclear Industries Industrias Nucleares do Brasil S.A.
Brazilian Technical Regulation Regulamentação Técnica Brasileira, RTB
Brazilian wax Cera de carnauba
Central Bank Banco Central do Brasil
Chamber of Deputies Cámara dos Deputados
Competition among any interested parties Concorrência
Competition among parties for technical
scientific or artistic projectsConcurso
Credit Line to Supplement Income in Rural
ActivitiesLinha de Crédito para Agregação de Renda à
Atividade Rural
Department of Foreign Trade Operators Departamento de Operações de Comércio
Exterior
Dock Worker Severance Pay Surcharge Adicional de Indenização do Trabalhador
Portuário , AITP
Dry port Estação Aduaneira Interior de Destino, EADI
Electronic Declaratory Registry Registro Declaratório Eletrônico, RDE
Exchange rate contract Contrato de câmbio
Export Credit Committee Comite de Crédito as Exportações, CCEX
Export Registry Registro de Exportação
Family farming Agricultura familiar
Federal Senate Senado Federal
Industrial Policy Secretariat Secretaria de Política Industrial
Industrial Products Tax Imposto Sobre Produtos Industrializados, IPI
Information on International Trade Informações sobre Comércio Exterior
Institute of Agricultural Economy Instituto de Economia Agrícola
Institute of Research on Applied Economics Instituto de Pesquisa Econômica Aplicada, IPEA
Invitation by the Administration ConviteWT/TPR/S/75 Trade Policy Review
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Invoice Price Preços de Faturamento , PF
Liquid propane gas Gas liquido propano , GLP
List of Convergence for the Informatics and
Telecommunications SectorLista de Convergência do Setor de Informática e
Telecomunicações
Ministry of Agriculture and Supply Ministério da Agricultura do Abastecimiento
Ministry of Development, Industry and Trade Ministério do Desenvolvimento, Indústria e
Comércio Exterior
Ministry of Finance Ministério da Fazenda
Ministry of Justice Ministério de Justicia
National Committee on Acreditation Comitê Nacional de Credenciamento
National Committee on Normalization Comitê Nacional de Normalização
National Congress Congresso Nacional
National Council for Energy Policy Conselho Nacional de Política Energética , CNPE
National Council of Metrology, Normalization and
Industrial QualityConselho Nacional de Me trologia, Normalização
e Qualidade Industrial
National Oil Agency Agência Nacional do Petróleo, ANP
National System of Metrology, Normalization and
Industrial QualitySistema Nacional de Me trologia, Normalização e
Qualidade Industrial
National System of Rural Credit Sistema Nacional de Crédito Rural, SNCR
Normative instruction directive Portaria
Petroleum and Alcohol Account Conta Petróleo, Derivados e Álcool
Port Warehousing and Administration
ContributionTaxa de Armazenagem e Capatazia Portuária
Premium for Product Outflow Premio para Escoamento de Produto, PEP
Price Effectively Received Preço de realização, PR
Price quotes from officially registered firms Tomada de preços
Public auctions for specific goods Leilão
Public Federal Administration Administração Pública Federal
Registry of Sale Registro de Venda
Reverse General Reserve Reserva Geral de Reversão, RGR
Services and Merchandise Circulation Tax Imposto sobre Circulação de Mercadorias e
Prestação de Serviços, ICMS
Special Brazilian Registry Registro Especial Brasileiro, REB
Specific Price Portion Parcela de Preço Específica , PPE
Structure and Tariff Values Estrutura e Valores Tarifários
Suppliers Declaration Declaração do Fornecedor
Tendering Commission Comissão de LicitaçãoBrazil WT/TPR/S/75
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SUMMARY OBSERVATIONS
(1) INTRODUCTION
1. Since its previous Trade Policy
Review in 1996, Brazil has continued its
programme of economic reform, which wasinitiated over a decade ago and has, over time,
led to visibly more open trade and investment
regimes.  Thus, during the last four years,
more neutral sectoral policies have been
adopted and a more market-driven,decentralized environment has emerged
through the deregulation of state monopolies
and prices, investment liberalization, and
privatization.  The resulting improved
resource allocation and greater flexibilityhave helped the economy to deal successfully
with external and other shocks, facilitating in
particular a rapid recovery from the financial
crisis that lead to the floating of the real in
1999.
2. A market-set exchange rate would now
seem to provide the opportunity for Brazil toreduce, and perhaps remove, some measures
taken to restrict imports or support exports,
and to make a definitive break from traces of
past inward-looking policies.  Indeed, steps
have already been taken in this direction.Nevertheless, further reforms would be useful
to lessen the anti-export bias present in the
tariff structure, rationalize the use of tariff
concessions and of non-tariff measures,
reduce remaining investment barriers andimprove the provision of credit.  These and
other reforms aimed at fostering an
undistorted balance between exports and
Brazil's large domestic market offer a positive
strategy to achieve and sustain highereconomic growth.  This is important because
Brazil still faces the long-term challenge of
increasing GDP per capita, which in real
terms is just slightly higher than at the end of
the 1980s.
(2) M
ACROECONOMIC DEVELOPMENTS
3. The main macroeconomic
development since Brazil's previous Review
was the financial crisis of late 1998, and thesubsequent floating of the real in January
1999, which has since depreciated some 30%
against the U.S. dollar.  Economic growth has
been uneven in recent years, real GDP
expanding at an average annual rate of about
1.7% during 1996-99, down from some 3.3%in the previous four years.  However,
developments in economic activity were better
than expected after the financial crisis and the
prospects are for real growth of 4% in 2000.
Inflation has been kept in line with theGovernment's target of 8%, reflecting the firm
stance of macroeconomic policies, the absence
of a formal indexation mechanism, and the
still significant output gap.
4. Foreign direct investment (FDI) has
increased substantially since 1996, exceeding
US$24 billion in 1999. Although FDI has been
stimulated by privatization, an important
share has been autonomous reflecting the
attractiveness of a large internal market,
better access to other MERCOSUR markets,
and the improved market-orientation of thepolicy environment.  FDI flows more than
cover the current account deficit (4.5% of
GDP in 1999).  This deficit has declined
notwithstanding export growth having been
dampened by a deterioration in terms of trade.However, the current account deficit would
seem to be of some concern, in part because of
Brazil's large external debt, and the
authorities are seeking to improve export
performance so as to narrow the trade deficitor move into surplus.  Brazilian trade policy
thus features a series of measures aimed at
export promotion, both through financial
support and trade facilitation.
5. Brazil's trade as a percentage of GDP
remained stable at some 20% during the
period under review.  There been no major
changes in the composition of Brazilian
merchandise trade, the share of primary
products in total exports declining only
slightly with a corresponding increase in
manufactured exports, namely aircraft andautomotive products.  Brazil remains the
world's largest exporter of several agricultural
products including coffee, orange juice and
sugar.  The United States and MERCOSUR,WT/TPR/S/75 Trade Policy Review
Page x
especially Argentina, are Brazil's most
important markets, followed by the European
Union (EU).  The main suppliers to Brazil are,
in decreasing importance, the EU, the United
States, and Argentina.
(3) INSTITUTIONAL ENVIRONMENT
6. There have been no significant
changes to the general structure of trade
policy formulation or implementation in
Brazil.  The Chamber of Foreign Trade
(CAMEX), created in 1995, formulates andcoordinates trade policy.  CAMEX is presided
by the Minister of Development, Industry and
Foreign Trade, and includes five other
ministers and the President of the Central
Bank.  The Chamber coordinates theimplementation of its decisions, but each
ministry remains responsible for matters
within its competence.
7. Foreign trade in Brazil is governed by
a large number of laws, provisional measures
(MPs), decrees, and resolutions, which have
created an intricate web of statutes;  itssimplification, for example through the single
trade law mentioned during Brazil's previous
Review, could enhance transparency.  Trade-
related laws are amended frequently,
including through the use of MPs issuedautonomously by the President.  Some
amendments have helped speed up certain
reforms but they may also have lessened the
predictability of the regulatory structure for
traders.
8. FDI has been encouraged by Brazil's
favourable policy stance, which generally
accords national treatment to all foreign
investment.  The Federal Government does not
grant special incentives to FDI other thanthose available to investment in general, which
vary by state.  Remaining trade barriers in
combination with a relatively liberal
investment environment have probably led to
tariff-jumping foreign investment.  As the
economy has become more open and as
privatization continues, competition policy isgaining importance in Brazil.(4) T
RADE POLICY DEVELOPMENTS
9. Brazil's main trade instrument is the
tariff, whose structure and level are largely
determined by a programme of convergence
towards MERCOSUR's Common External
Tariff (CET).  In 1997, Brazil temporarilyraised the tariff by three percentage points.  In
addition, tariffs for capital goods not produced
domestically were increased from zero to 5%.
As a result, since 1996 the average MFN tariff
has increased to 13.7% (from 12.5%);  thetemporary three percentage points increase is
due to be removed by end 2000.  Although
dispersion has fallen, escalation is still
present.  Brazil has bound its tariff but mostly
at rates higher than applied rates;  closing thisgap would further improve predictability.  A
number of rates in the tariff schedule exceed
bound levels, but Brazilian legislation requires
abidance by bindings in such cases.
10. As foreshadowed in its previous
Review, Brazil has simplified import
procedures through the implementation ofSISCOMEX, a computerized system for
customs clearance.  Import financing rules
imposed in 1997 were removed in 1999;  such
rules often required importers to purchase
foreign exchange to pay for imports eitherupon importation or 180 days in advance.
Still in force are the lighthouse fee, applied
only to foreign flag vessels, and the Merchant
Marine Renewal Tax (AFRMM) on imports
transported by sea.
11. Automatic import licences are in place
for statistical purposes and to monitor trade
flows.  Imports subject to non-automatic
licensing include products subject to a zero
import duty rate, tariff quotas, the drawbackregime or the "Law of Similars".  The latter
aims to prevent the importation of goods when
similar goods are produced domestically;  it is
mostly used in specific cases, e.g. certain
government imports or imports of capital
goods.  Brazil's import licensing regime has
been the subject of consultations betweenBrazil and some WTO Members, and is
currently under review.  Some import
prohibitions would seem to be in place largelyBrazil WT/TPR/S/75
Page xi
for economic reasons, for example the bans on
the importation of used automobiles and
several other consumer goods.
12. Brazil is an active user of contingency
measures, mainly anti-dumping;  there are
some 46 anti-dumping measures in force.Over 1996-99, 72 anti-dumping investigations
were initiated leading to the imposition of
definitive duties in 36 cases.  Brazilian
products have been the target of several anti-
dumping investigations in foreign markets.Brazil supports negotiations on the WTO Anti-
Dumping Agreement.  Brazil applies
safeguard measure to toys, except for imports
from some developing countries, which have
been extended to end 2003.  During the periodunder review, Brazil also applied the
transitional safeguard of the Agreement on
Textiles and Clothing.
13. Export promotion has been one of the
key elements of Brazil's trade policy, partly to
offset domestic inefficiencies such as poor
infrastructure, inefficient financialintermediation, a cascading tax system and,
until 1999, an overvalued exchange rate.
Several export financing programmes and
export guarantee funds are available including
PROEX, an export credit programme thesubject of a dispute in the WTO.  Brazil also
makes widespread use of regional support
programmes in the form of fiscal incentives,
including tax and duty exemptions for selective
activities notably the automotive sector.  Allproducts are in principle subject to export
taxes but, following the zero-rating of the duty
on sugar, only cured leather appears to be
currently taxed.
14. Since 1996, protection of intellectual
property rights has been enhanced through the
passage of new legislation and greater
enforcement efforts.  Brazil is not a member of
the WTO Plurilateral Agreement on
Government Procurement.  In general, the law
offers non-discriminatory treatment to all
bidders but in certain cases preference isgiven to Brazilian suppliers or products.(5) S
ECTORAL POLICY DEVELOPMENTS
15. State involvement in production
activities in Brazil has diminished
substantially and distortions to inter-sectoral
incentives have been reduced through the
progressive adoption of more neutral sectoralpolicies, for example the cut back or ending of
special programmes for alcohol production
and informatics.  However, some current
policies echo earlier import substitution
strategies, with incentives favoring someactivities while implicitly taxing others.  Thus,
well above average tariffs apply to beverages,
tobacco, furniture, clothing, and footwear,
while tariff dispersion is particularly high for
transport equipment and electronics.
16. Brazil has a highly diversified
manufacturing sector.  During the period
under review, specific support programmes in
the sector were applied to steel, automobiles,
aircraft, and shipbuilding industries.  These
industries are often also the target of
government assistance in other majorproducing countries.  The Brazilian
automotive regime was largely phased out as
scheduled in December 1999.  Assistance to
the aircraft industry, through export financing,
has played a role in the dynamism of thissector, especially in terms of export
performance.
17. Brazil is one of the world's major
producers and exporters of agricultural
products. Government intervention in thesector has decreased;  support programmes,
mostly minimum-price supports and rural
credit at preferential rates, are targeted at
assisting low-income farmers in
disadvantaged areas.  Assistance toagriculture appears modest, especially in the
context of market distortions introduced by the
support provided to agriculture in other
countries, a problem that remains of major
concern to the Brazilian authorities.
18. Important changes have affected
Brazil's energy sector since 1996.  Supportedby a regulatory framework introduced in 1998,
the process of privatization of power utilitiesWT/TPR/S/75 Trade Policy Review
Page xii
has attracted sizeable private investment.
Current plans to increase private participation
in the national oil company follow the
adoption of a new petroleum law in 1997.
Nevertheless, state involvement in the sector is
still considerable;  limitations on foreigncapital participation and procurement also
remain, as do price controls.
19. Since 1996, there has been significant
liberalization in the services sector, mainly in
telecommunications and financial services.The entry of foreign banks since 1996 has led
to increased competition and efficiency in the
banking system but persistent relatively large
interest rate spreads suggest the possibility for
further efficiency gains.  Reforms have yet toproduce the required improvements in
activities such as transportation.  Thus,
additional efforts to improve the provision of
services appear essential to support an
outward-oriented development strategy.
(6) T
RADE POLICY AND FOREIGN
TRADING PARTNERS
20. Brazil grants at least MFN treatment
to all its trading partners.  Brazil's main trade
policy objective has been the implementation
of the trade agreements negotiated at the
beginning of the 1990s, namely the UruguayRound and MERCOSUR.  Better market
access conditions for Brazilian products are
also a key item on its trade agenda.
21. Brazil is a founding member of the
WTO.  Multilateral agreements are an integralpart of Brazil's legislation and have the same
hierarchical level as ordinary laws.  As a
developing country, Brazil benefited from atransition period to implement a number of
commitments under various WTO Agreements.
Since 1996, Brazil has been involved in 16
cases under the WTO dispute settlement
mechanism, seven as a complainant and nine
as a defendant;  it has participated as a thirdparty in four disputes.
22. Brazil took an active role in the
multilateral Negotiations on Financial
Services and in the Negotiations on Basic
Telecommunications, making offersrepresenting improvements on its Uruguay
Round commitments in both sectors.  In July
2000, Brazil informed the WTO Council on
Trade in Services of its decision not to ratify
the Fourth Protocol on BasicTelecommunications, and submitted a new
schedule of commitments for consideration by
WTO Members.  In mid-2000, the Fifth
Protocol on Financial Services was still being
discussed in the Brazilian Congress.
23. Brazil gives great importance to
deepening integration in South America;  it isthe region's largest economy and trader, and
is playing a key role in that process.
Accordingly, one of Brazil's major trade
objectives is the completion of MERCOSUR,
by including the sectors currently excludedfrom free trade (i.e. automobiles and sugar),
the progressive elimination of the exceptions
to the CET, the coordination of economic
policies, and the deepening of integration in
new areas.  Another key element of Brazil'sagenda is the pursuit of negotiations with the
European Union;  efforts involving the United
States, Brazil's main single trading partner,
take place mostly through the Free Trade Area
of the Americas initiative.