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IV. TRADE MEASURES DIRECTLY AFFECTING EXPORTS
(1) Registration, Documentation andLicensing
1. Allexporters from Brazil must beregistered. TheForeign Trade Secretariat (SECEX) is
responsible fortheregistration procedures, which aresimilar tothose forimporters (Chapter III(1)).
2. Export procedures haveundergone anumber ofadministrative changes since 1992, mainly
asaresult oftheimplementation inJanuary 1993 oftheexport module ofSISCOMEX (established
byDecree No.660of25September 1992). SISCOMEX isacomputerized information system linking
datafromthemainagencies withresponsibilities forexports: SECEX, theCentral BankandtheFederal
Revenue Secretariat intheMinistry ofFinance.
3. According totheauthorities, SISCOMEX hassignificantly reduced administrative overheads.
Electronic records havereplaced documents suchastheExport Licence, Export Declaration andthe
Special Export Document. Thenewsystem relies onasingle export document, theRegister ofExport,
although some products mayalsorequire aRegister ofSaledocument oraRegister ofCredit Operation
document(thelatterisrequiredforexportswithfinance-paymenttermsover180days).Productssubject
totheRegister ofSaleareincluded inBoxIV.1.
4. FollowingtheestablishmentofSISCOMEX,export-relatedregulationswereconsolidatedthrough
DirectiveSCENo.02/92of22December1992,revokingDirectiveDECEXNo.09/91of15May1991.
Thisdirective specifies thataRegister ofExport document must generally beobtained forexport
operations before goods areshipped. However, certain products maybeshipped before theRegister
document isissued, forexample, when destined forconsumption onboard vessels. Some other
operationsdonotrequireaRegisterofExportdocument:forexample,shipmentsundercertainminimum
values, domestic animals andluggage. Register ofExport documents areprocessed freeofcharge.
5. Although export licences arenolonger inuse,exports maystillberegulated through conditions
attached totheRegister ofSaleortheRegister ofExport documents. Forexample, toobtain theRegister
ofSaledocument forrawsugar requires theexporter tohaveanexport quota from theMinistry of
Industry, Trade andTourism while otherconditions affecting sugar include: (i)amaximum waitperiod
before shipment, (ii)exclusion fromregistration offirms which previously failed tofulfilregistration
engagements,and(iii)transactionpricesmustbelinkedtotheLondonorNewYorkcommoditymarkets.
6. Annex"C"toDirectiveSCENo.02/92definesthegoodssubjecttospecialformalities,including
those subject toaRegister ofSalerequirement. Included inthatAnnex arethefollowing products:
agricultural andfishery products; minerals andchemicals; leather andwood; fibres, textiles, clothing
andfootwear; manufactures including motor vehicles, aircraft andships; andworks ofart.Asshown
inBoxIV.1, special formalities ariseinrelation totheexport ofgoods under export restrictions (e.g.,
wildanimals), domestic supply programmes (e.g., sugar), security considerations (e.g., weapons) or
international agreements (e.g., textiles).WT/TPR/S/21
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BoxIV.1: Special export formalities applied toselected products
Special export formalities apply tothefollowing product groups :
- Wild animals andplants -export prohibited except withspecial authorization.
- Certain horticultural products, fruitandcereals -subject tostandardization.
- Various plants -export either suspended orsubject toprior authorization.
- Instant coffee, cocoa andcocoa products -subject toanexport levy, currently setatazerorate,
andthecompletion ofaRegister ofSaledocument (which typically defines acceptable payment
andshipping conditions aswellasproduct characteristics).
- Soya andsoya oil-subject tostandardization; alsorequire aRegister ofSaledocument.
- Sugar andethyl alcohol -subject toexport taxes, with taxexemptions decided jointly bythe
Ministers ofFinance andofIndustry, Trade andTourism; sugar sales aredefacto subject to
registration bySECEX.
- Tobacco leaves "innatura" -export suspended; other types subject tostandardization ortoa
Certificate ofAuthenticity when exported totheEU.
- Tin-export suspended, butotherwise require complying with Brazil 'sengagements inthe
Association ofTinProducer Countries.
- Radioactive minerals andmineral products -prior authorization from theNational Commission
ofNuclear Energy.
- Certain mineral fuels, oils, andorganic chemical products -prior authorization from the
Ministry ofMines andEnergy.
- Explosives andrelated products, weapons andammunition -prior authorization from the
Ministry oftheArmy ortheStrategic Affairs Secretariat.
- Addictive drugs anddrugprecursors -prior authorization from theMinistry ofHealth and/or the
Federal Police.
- Various pharmaceutical products -prior authorization from theMinistry ofHeath;
- Rawskins -subject toexport taxes, except those ofwildanimals which aregenerally prohibited.
- Various wood products including sawn wood, wood chips andrailway sleepers -subject to
special authorization and/or quotas established bySECEX ortheBrazilian Institute ofthe
Environment.
- Threads andother textile products -must comply withEUandUnited States quotas, require an
Export Licence andaCertificate ofOrigin when directed totheEU.
- Cotton -subject tostandardization andaRegister ofSaledocument.
- Gold, copper, aluminium andother non-ferrous metals -require aRegister ofSaledocument.
Special conditions alsoapply forthesaletonon-residents ofjewels andjewellery intheinternal market.Brazil WT/TPR/S/21
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(2) Export Charges andRelated Measures
7. Export taxes areregulated byDecree-Law No.1578 of11October 1977, asamended by
LawNo.9019of30March1995,andProvisionalMeasureNo.1191of23November1995.Provisional
Measure No.1191 increased thetaxratefrom 10to25percentonallexport products, withthe
Executive Branch, through theNational Monetary Council, entitled toaltertherateuptoamaximum
of40percenttoachieve tradeorforeign exchange objectives. Export taxesarebased onf.o.b. prices,
butinexceptional cases minimum prices maybeused.
8. Export taxes arelittleused, withazerorateapplied inpractice tomostexports subject tosuch
taxes (Circular BCBNo.2638of22November 1995). Anumber ofpolymer andother plastics were
subject toanexport taxof15percentuntilMarch 1995, withmostexports toMERCOSUL zero-rated
(Circular BCBNo.2550/95 of13March 1995). Exports ofrawhides andskins arecurrently taxed
atarateof9percent. Theauthorities emphasized thatnoexport taxes applied tocoffee, cocoa, soya
andtheirproducts.
9. Exports ofallsugar types, alcohol andmolasses aresubject toexport taxes toassure the
availability ofsupplies inthedomestic market. Rates mayvarybetween zeroand100percent,with
arateof40percentapplying inmid-1996. Volumes considered toexceed domestic needs maybenefit
fromtaxexemptions orreductions (jointly decided bytheMinistries ofFinance andofIndustry, Trade
andTourism). In1995/96, 4.3million tonnes ofsugar weresoexempted, while theequivalent quantity
for1996/97 wasexpected tobe4.1million tonnes. Nozero-rated alcohol exports havebeenpermitted
asdomestic production hasfallen short ofconsumption. Besides export taxes, noother restrictions
apply toexports ofsugar, alcohol ormolasses.
10. Theauthorities indicated thatnoexport taxes areinplace inrelation toanti-dumping or
countervailing investigations bytrading partners; inthepast,anumber ofgoods weresubject tosuch
taxes. Certain products aresubject tointernal taxes thatmaynotberebated onexport (section (4)).
11. Brazil doesnotuseminimum export prices.
(3) Quantitative Export Controls andRelated Measures
(i) Export prohibitions
12. Theexport ofcertain goods iscontrolled foranumber ofreasons, including ensuring internal
supply, andprotecting wildfloraandfauna. Items subject toexport control orsuspension include
wildanimals andplants, hides andskins ofwildanimals, andcertain tobacco (Box IV.1). Exports
ofcashew nutsinshellarecurrently suspended.
13. Inaccordance withUnited Nations resolutions, Brazil applies trade embargoes against Iraq,
Libya andSomalia. Prohibitions apply totheexports ofweapons andmilitary equipment toLiberia;
salesofthose products andpetroleum totheUnion fortheTotal Independence ofAngola arebanned.
(ii) Export quotas
14. Quantitative export restrictions maybeapplied toensure domestic supply (GATT, 1992); no
suchrestrictions appear tobeinforce atpresent.WT/TPR/S/21
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15. Export quotas alsoresult frominternational commodity agreements, withtinsubject toexport
quotas established inaccordance withtheAssociation ofTinProducing Countries, where Brazil has
observer status (Box IV.2).
BoxIV.2: Export quotas affecting tin
Brazil participates asanobserver intheAssociation ofTinProducing Countries (ATPC) andexpects to
become afullmember inthenear future, possibly bySeptember 1996. Theauthorities noted that
conditions forparticipation intheATPC aretheexclusive responsibility oftheBrazilian Association of
TinProducers, aprivate organization.
Although theGovernment 'srôleislargely confined topromoting co-operation withother tinproducing
countries, attherequest oftheGovernment controls thevolume oftinexports according tolevels agreed
within theATPC. Therecent evolution ofactual exports andATPC export quotas isasfollows:
Year Exports Export quota
(tonnes) (tonnes)
1992 20,166 28,000
1993 23,224 24,000
1994 18,275 20,175
1995 10,188 28,336
Quotas allocation isagreed between theGovernment andtheBrazilian tinproducers, andareregulated by
legal dispositions issued bytheMinistry oftheIndustry, Trade andTourism. Control isensured through
themonitoring ofmonthly exports andproduction bytheNational Department ofMineral Production
(DNPM). Directive No.74of28February 1995, defines thetotal export level andliststhecompanies
authorized toexport. Such companies comprise firms regularly operating mining concessions orsmelters
supplied bysuch firms. Theshare ofeach company inthetotal quota isbased onprevious mine
production andsales inthedomestic market.
Source: Brazilian authorities.
16. Export quotas arefixedforsawnwood fromspecies under environmental control. Theformer
system whereby theBrazilian Institute fortheEnvironment (IBAMA) allocated volume quotas to
individual registered enterprises proved unsatisfactory andwasreplaced in1994bytheControl Quota
System forSawn Wood (Directive No.71-N of11July1994). Under thenewsystem, thetotalvolume
ofsawn wood forexport issetwithreference toanoverall management planforthesustainable
exploitation oftheforest andmanagement plans forindividual producers.
17. Coffee andcocoa exports arecovered byinternational agreements which include thepossible
useofproduction orexport quotas (Box IV.3). Inpractice, theagreements seem tohavehadlittle
impact onBrazilian exports ofcoffee andcocoa inrecent years; theextent towhich suchexports benefit
from theagreements hasbecome acontroversial issue among Brazilian producers.Brazil WT/TPR/S/21
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BoxIV.3: Brazil 'sparticipation ininternational coffee andcocoa agreements
Coffee
Brazil participates inthecoffee export retention plan agreed in1993 within theframework ofthe
Association ofCoffee Producing Countries (ACPC). Theplan'sstated aims aretoachieve market
equilibrium byregulating supply through participant countries acting towithhold apercentage oftheir
production from export. This percentage isafunction ofthelevel ofaworld "price indicator"
established bytheInternational Coffee Organization. Forarabica coffee, thevolume toberetained
ranges from 20percentforprices below US$1.65 perpound tozeropercentatprices above US$1.80
perpound; stocks aresoldatprices above US$1.90. Therespective prices forrobusta coffee are
US$1.35, US$1.50 andUS$1.60 (prices inforce since March 1995). Export from countries participating
intheplanaresubject toacertificate oforigin. TheBrazilian authorities noted thatthesystem does not
involve aminimum export price andthatnosuch prices areimposed onBrazilian exports.
Under thescheme agreed bytheACPC, Brazil hadanexport quota of12million bags (60kg.each) for
theperiod between 1July 1995 to30June 1996. However, thislimit hadnopractical impact as
Brazilian production for1995/96 reached only 12.5 million bags, areduction ofalmost 50percent
relative tothe1994/95 harvest. TheACPC heldafirstofaseries ofmeetings inMarch 1996 todefine
policies fortheperiod July1996 toJune 1997.
Thequota system hasapparently metwithstrong opposition from asignificant number ofBrazilian coffee
exporters. Agroup, Abecafé, broke away from theoriginal exporters 'association, Febec, inlate1995.
Febec supports theprinciple ofexport quotas andsome typeof"co-ordination" ofthemarket; Abecafé
favours efforts toincrease global coffee consumption rather thantosupport prices, butitis,nevertheless,
committed torespecting ACPC quotas. Some Abecafé members are,however, infavour ofacompletely
freemarket (Financial Times, 20March 1996).
Cocoa
Brazil isalsoamember oftheInternational Cocoa Organization (ICO), having signed ICO'sfifth
international agreement between producer andconsumer countries inlate1993. Theplan requires
producers toestablish national programmes submitted "forexamination" toaproduction committee. This
committee ischarged withtheco-ordination ofprogrammes andwithrecommending measures thatmay
contribute tothestabilization ofthemarket. TheBrazilian authorities emphasized thatalthough the
fourth ICOagreement envisaged theuseofabuffer stock asitsprincipal price-stabilizing mechanism, no
similar clauses areincluded inthefifthagreement andthatexisting stocks arebeing liquidated, aprocess
thatshould becompleted by1998.
TheBrazilian authorities noted thatinpractice thecocoa agreement doesnotresult inanyform ofmarket
intervention, either with respect toprices orexport volumes. Brazil presided over theProduction
Committee in1995, which, together with theConsumption Committee, isresponsible forseeking the
medium- andlong-term equilibrium between supply anddemand. With thisobjective, thesetting of
production targets bycountry isanattempt tocontrol theworld supply ofcocoa. Brazil 'starget for1996
wassetat300,000 tonnes, butproduction wasexpected toreach only250,000 tonnes.
(iii) Export cartels
18. Thenational oilcompany, PETROBRAS, enjoys adefacto export monopoly forpetroleum
andpetroleum products asaresult ofregulations contained intheConstitution; however, recent
constitutional amendments areintheprocess ofeasing thismonopoly (Chapter VI(3)(iii)). TheWT/TPR/S/21
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authorities arenotaware oftheexistence ofanyother export cartel, allforms ofcartel being prohibited
(Chapter V(1)).
(iv) Voluntary restraints, surveillance andsimilar measures
19. Brazil maintained export restraint arrangements under theMultifibre Arrangement (MFA) with
theEuropean Union andtheUnited States from1976, andwithCanada from1979. Suchagreements
havebeenadapted through newarrangements reflecting therequirements oftheWTO Agreement on
Textiles andClothing (ATC).
20. TheBrazilian authorities havedescribed thenegotiation ofthenewarrangements fortextiles
asextremely complex. Points ofdisagreement withtheUnited States included penalties andfines
aswellasthedegree offlexibility forsome product categories. WiththeEuropean Union, Brazil was
concerned about thelevelofquotas inthemarkets ofnewEUmembers (Austria, Finland andSweden),
inparticular, thelevelofrestrictions during thefirstphase oftheintegration period.
21. TheMinistry ofIndustry, Trade andTourism isresponsible fordistributing textiles andclothing
quotas. Twocomplementary methods areused:
- forquotas withhighutilization rates, 90percentofthetotalquota isdistributed among
exporters according totheirperformance intheprevious yearandtherestismaintained
bytheauthorities asatechnical reserve foreventual corrections; or
- quotas normally under-utilized aredistributed automatically, through acomputerized
service, toexporting firms onafirst-come first-served basis.
22. Quota utilization rates, theexport performance andother characteristics oftheBrazilian textiles
industry arediscussed inChapter VI(4).
23. Anexport quota ofhighquality beef-known asHilton beef-hasbeennegotiated between
Brazil andtheEuropean Union (GATT, 1992). Brazil 'sglobal quota wasincreased from3,600 tonnes
in1991to5,000 tonnes fortheperiod July1995toJune1996; individual quotas areassigned according
topastexport levels. The5,000 tonnes quota wasfullyfilled inthewake ofthe"mad cowdisease"
scare andlower beefprices.1
24. Thevoluntary arrangement under which Brazilian companies undertook torestrict exports of
sisaltotheEuropean Union wasinforce untilJuly1996.
25. Brazil maintained export restraint arrangements withtheEuropean Union until1991andwith
theUnited States until1992concerning ironandsteelproducts; theprevious Secretariat report noted
thatafterthearrangements withthelatter expired, Brazilian exporters faced anumber ofanti-dumping
andcountervailing investigations intheUnited States.
(v) Actions byother countries affecting Brazilian exports
26. Anumber oftrading partners havetaken trade measures against Brazilian exports, including
anti-dumping andcountervailing actions. Themain product category subject toanti-dumping duties
comprises steelproducts, although other mineral andmetal products, chemicals andplastics, and
1Gazeta Mercantil ,14March 1996.Brazil WT/TPR/S/21
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machineryarealsoaffectedbyrestrictivemeasures(AnnexIV.1).Anti-dumpingdutiesagainstBrazilian
exports areapplied byArgentina, Australia, Canada, theEuropean Union, India, Mexico andthe
UnitedStates.CountervailingdutiesareappliedbyArgentina,Australia,Bolivia,Canada,Chile,Mexico
andtheUnited States, mainly against steelproducts.
27. Theauthorities alsonoted thattheUnited States subjected Brazilian exports ofsugar andtobacco
toquotas, andorange juicetoaspecific import tax.Exports totheEuropean Union ofchicken, turkey,
beef, oilseeds andmanioc aresubject totariff quotas and/or surcharges.
28. Since1992,BrazilhaschallengedbeforetheGATTmeasurestakenagainstitsexportsoffootwear
andsteeltotheUnited States. Brazil hasalsoquestioned invarious GATT bodies United States support
forsoybean oilandpoultry meat exports toBrazil 'smajor export market, andBrazil 'slisting asa
"priority foreign country" under theU.S.Special 301provision. Brazil hasalsoexpressed concern
about certain European Union policies affecting Brazilian exports, inparticular, theEUbanana import
régime, increases inthelevyonBrazilian exports ofpoultry meat, measures tocontrol EUimports
offruitandvegetables andthere-introduction ofimport licences fororange juice. Austria 'smandatory
labelling oftropical timber andtimber products hasalsobeenraised asamatter ofconcern toBrazil.
(4) Export Support Measures
29. Specificexportsupportmeasureshavemainlytakentheformofexportsubsidies,taxconcessions
andexport finance; exports havealsobeenaffected bymovements intherealeffective exchange rate
(ChapterI).Overall,thepro-activeexportpoliciesappeartohavebeenquitesuccessful,withsubstantial
export growth inrecent years having continued thetrend started asearly asthe1970s. Moreover,
diversification efforts alsoappear tohavebeeneffective, astheexport basehasbeenbroadened both
interms ofproducts andmarkets. However, tosome extent theexport promotion schemes mayhave
beennecessary tooffset theanti-export biasassociated withpastimport-substitution industrial policies.
Brazil 'songoing efforts toestablish amoreneutral structure ofeconomic incentives should make export
promotion schemes increasingly redundant.
(i) Export subsidies
30. Brazil 'sWTO notifications onexport subsidies refer totwoschemes: theExport Finance
Programme(PROEX)andtheFiscalBenefitsforSpecialExportProgrammes(BEFIEX)-bothdescribed
below.2
31. Under WTO Agreement onAgriculture, Brazil iscommitted toreduce itsbudgetary outlays
forfiscalcreditstoexportsby24percentandthequantitiesbenefitingfromsuchsubsidiesby14percent
progressively overtheten-year period starting in1995.3Brazil isconsidered a"significant exporter"
ofsoyaforthepurposes ofthenotification requirements inrespect ofexport subsidy commitments.
2Other arrangements mayindirectly encourage exports. Forexample, Brazil 'sgasoline exports mayreflect
inpart production surpluses linked tothesubsidized useofalcohol inthedomestic fuel market
(Randall, 1993, p.180).
3Brazil 'sWTO Schedule III,PartIV,Section II.WT/TPR/S/21
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(ii) Duty andtaxconcessions
(a) Drawback
32. Theauthorities haveindicated thatnomajor changes havebeenmade tothedrawback system
since1992. Some modifications toadministrative controls resulted fromtherestructuring oftheformer
MinistryofEconomy,FinanceandPlanningandtheimplementationoftheexportmoduleofSISCOMEX
(section(1))
33. Thedrawback system isregulated byDecree 91.030 ofMarch 1985(GATT, 1992). Thesystem
applies toimported goods tobeusedinmanufacturing, processing orpackaging forexport; under
it,import andother taxes maybesuspended (after examination ofexport plans), exempted (through
specific actsorregulations), orreturned (bytheMinistry ofFinance bymeans offiscal credits). The
f.o.b. value ofexports mustbeatleast40percenthigher thanthevalue ofimports. Drawback benefits
aregranted bySECEX.
34. Thetotalvalue ofdrawback operations wasUS$3,384 million in1993, US$3,636 million in
1994, US$3,330 million in1995andUS$946 million between January andApril 1996. Reductions
inthevalue ofdrawback benefits were mostly duetoDecree No.1495 of18May1995, making
petroleum andrefined petroleum products ineligible forsuchbenefits.
(b) TheBEFIEX programmes
35. Theprevious Secretariat report referred totheFiscal Benefits forSpecial Export Programme
(BEFIEX) asthesingle mostimportant policy instrument affecting thetrade régime offoreign firms
inBrazil. Thatprogrammes granted fiscal incentives intheformofexemptions orreductions onimport
duties andtheIndustrial Products Tax(IPI)forimports ofmachinery, equipment andinputs; they
alsoprovided fortheexemption oftheAdditional Contribution ontheFreight forRenovation ofthe
MerchantMarine(AFRMM) .Inexchange,firmswererequiredtoagreetoexportmanufacturedproducts
andmade commitments toachieving fixed export targets foruptoyears. Requirements were also
placed oncompanies 'global foreign exchange balances.
36. NewBEFIEX programmes weresuspended inMarch 1990; BEFIEX legislation wasrevoked
on2June1993through LawNo.8661. However, taxincentives under existing contracts havecontinued
toapply untilthepreviously agreed export programmes expire; phasing outshould becompleted by
1999.TheMinistryofIndustry,TradeandTourismisresponsiblefortheadministrationoftheremaining
programmes.
37. Import dutyrelief wasthemostimportant fiscal incentive under theBEFIEX programmes in
1994 when itaccounted for72percentoftotalbenefits under those programmes; IPIreduction
contributed withafurther 25percent, theresttaking theform ofAFRMM exemptions. Transport
equipment wasbyfarthemainbeneficiary oftheprogrammes, accounting for53percentoftotaltax
relief in1994; other major BEFIEX beneficiaries were paper andpaperboard, metallurgy, electric
andelectronic equipment, textiles, andrubber (Chart IV.1).
38. Although existing BEFIEX contracts haveremained unchanged, theirrelated benefits have
decreased withreductions intariff rates. Thus, while thetotalvalue ofBEFIEX benefits reached
US$510 million in1990, theyfelltoUS$298 million in1992, US$199 million in1993, slightly
increasing toUS$219 million in1994. Brazil 'sWTO notifications onsubsidies indicate thatfiscal
incentives granted under BEFIEX amounted toanaverage ofUS$593,000 perprogramme inBrazil WT/TPR/S/21
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1992,US$466,000in1993,andUS$554,000in1994.ThetotalvalueofexportsunderBEFIEXcontracts
during 1990-1994 fluctuated between US$9 billion andUS$11 billion.WT/TPR/S/21
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(c) Internal taxprovisions
39. Under Article 153oftheConstitution, manufactured products forexport areexempt fromthe
Federal Industrial Products Tax(IPI)(Box III.3). Inputs, intermediate products andpackaging materials
produced domestically andusedintheproduction ofgoods forexport arealsoexonerated frompayment
oftheIPI(Decree-Law No.491of5March 1969 andLawNo.8402 of8January 1992). AnIPI
reimbursement credit isalsoavailable onproducts destined tooverseas markets andsoldbyproducers
totrading companies. Duty-free shops alsobenefit fromIPIreimbursements onnational products sold
forshipment overseas. IPIcredits andreductions havebeenparticularly important inthesteelindustry
(Box IV.4).
BoxIV.4: IPIconcessions inthesteel industry
Since 1977, integrated steel producers have benefited from credits orreductions forpayments ofthe
Federal Industrial Products Tax, IPI,inrespect ofthepurchase ofdomestically manufactured capital
goods andimported equipment. Thebenefits taketheform ofrefunds of95percentoftheIPIonthe
difference between thevalue ofdomestic sales andthecostofrawmaterials, packaging andintermediate
goods. Therefund isavailable tofirms which invest inincreased production capacity orproductivity,
improve product quality orenvironmental controls, orrestructure installations.
Theincentives areadministered bytheMinistry ofIndustry, Trade andTourism andareprovided under
LawNo.7554 of16December 1986. Thislawistoremain inforce until31December 1996, when IPI
benefits would cease. According toBrazil 'sWTO notifications onsubsidies, theaverage annual value of
IPIconcessions was some US$200 million between 1987 and1993; concessions amounted to
US$202 million in1994, toUS$180 million in1995, andwere expected tofalltoUS$110 million in
1996.
40. Theconcept ofan"assumed IPIcredit" wasintroduced in1995, initially through Provisional
Measure No.948of23March 1995, toallow producers engaged intheexport ofnational goods to
obtain reimbursements oftheContribution toFinance Social Security (COFINS) andtheProgramme
forSocial Integration (PIS/PASEP -BoxIII.2). Thescheme covers domestic purchases ofinputs,
intermediate products andpackaging materials usedintheproduction process. Reimbursements are
given onlyonexports offinalgoods thatwould havebeensubject totheIPI.Administrative rules
fortheuseofthe"assumed IPIcredit" were adopted inMarch 1996.
41. TheServices andMerchandise Circulation Tax(ICMS) isaState taxwhich isnotrebated
onexports ofprimary andsemi-manufactured products (Box III.3). Under agreements concluded since
1989 between State andtheFederal Governments, semi-manufactured products maybeentitled to
reductions intheICMS. Thelevels ofreduction haveundergone periodic alterations. TheNational
Congress wasdiscussing inmid-1996 thepossibility ofgranting acomplete ICMS exemption tosemi-
manufactured products.
(iii) Export finance
42. Three mechanisms areenvisaged tofinance exports ofgoods andservices under Directive SCE
No.02/92 of22December 1992: theExport Finance Programmes (PROEX); credit fromauthorized
banks; andprivate credit. Credit from authorized banks maytaketheform offinancing bybanks
authorized todealinforeign exchange, theNational Development Bank (BNDES), overseas financial
institutions including branches ofBrazilian banks, andtheSpecial Agency forIndustrial Financing
(FINAME).Brazil WT/TPR/S/21
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(a) PROEX
43. Funds tosupport exports ofmerchandise andservices havebeenavailable since 1991through
theExport Financing Programme, PROEX (GATT, 1992). Theprogramme ismanaged bytheMinistry
ofFinance through theBank ofBrazil. Initially, eligible goods mainly included capital items such
asironorsteelproducts, machinery andequipment, aswellasvehicles andother transport equipment.
More recently, thelistofeligible products hasbeenexpanded toinclude, among other items, raw
materials, textiles, footwear, ceramics, wine, chocolate andcertain fruitandmeat.
44. Twotypes offinancing areoffered under PROEX: (i)direct financing, granted bytheBrazilian
Government totheexporter (supplier 'scredit) ordirectly totheimporter (buyer 'scredit, iftheimporter
isaforeign government) forpayment onsighttotheexporter; and(ii)an"interest equalization" scheme
tolower theinterest rateondomestic commercial export finance loanstoratesprevailing ininternational
markets. Interest ratesonPROEX loans arepegged totheLIBOR (plus amargin). Thedegree of
interest equalization depends onthematurity oftheloan, which maybeuptotenyears. PROEX
isfinanced bythenational treasury andmaycover upto85percentofthevalue ofexports.
45. Specific ruleswereadopted in1995forPROEX tosupport thesaleofBrazilian services abroad.
Abroad range ofservices arecovered, including studies, projects, consultancies, implementation and
turn-key packages; theprogramme doesnotcover theinstallation overseas ofBrazilian-made machinery
andequipment produced bytheexporting firmitself. Services maybenefit fromallthePROEX facilities
available forgoods.
46. Other recent changes toPROEX include thewidening ofminimum annual equalization spreads
from 1-2percentto2-3.8 percentdepending onthetermoftheloan. Theminimum equalization
period hasbeenreduced tooneyearinviewofthebroader range andtypeofproducts nowcovered.
Local-content requirements havebeenlowered to60percenttobring themintolinewithMERCOSUL
rules. Forproducts withalocal content of60percentorhigher, theinterest equalization scheme
reaches upto85percentofthevalue oftheexported product, butnotexceeding theamount actually
financed. Asimilar limitapplies togoods withlocalcontent oflessthan60percent; forsuchgoods,
interest equalization corresponds toapercentage equal tothelocalcontent (inpercentage terms) plus
40percentage points applied to85percentofthevalue oftheexported good.
47. Brazil 'sWTO notifications onsubsidies indicate thatthetotalamount budgeted forPROEX
varied significantly during the1991to1995period; however, actual disbursements weresignificantly
lower thanthebudgeted amounts (Table IV.1). During 1991-1993, 439PROEX transactions took
place withanapproved value ofsome US$3.9 billion. In1994, thenumber andvalue oftransactions
were 701andUS$2.4 billion; thecorresponding figures in1995 were 1,111 transactions and
US$2.1 billion. Onaverage, 85percentofapproved operations become actual exports. Aslight
increase inPROEX resources wasbudgeted for1996, withR$212 million being made available for
interest equalization andRS$53 million fordirect financing tosupport exports withavalue ofsome
R$2.5 billion.WT/TPR/S/21 Trade Policy Review
Page 88
Table IV.1
Budgeted andactual PROEX expenditures, 1991-1995
(US$ million)
Type/year 1991a1992 1993 1994 1995
Budget
Financing 1,200 494 620 218 142
Equalizationb394 133 820 764 928
Total 1,594 627 1,440 981 1,070
Actual disbursements
Financing 170 138 156 75 39
Equalizationb171 77 41 46 85
Total 341 215 197 121 124
a From 1June1991.
b From 1993 onwards, reflect theuseofnon-negotiable Treasury notes.
Source: WTO document G/SCM/N/3/BRA.
(b) FINAMEX
48. TheNational Development Bank (BNDES) hasoperated since 1990 theFinance Programme
forExports ofMachinery andEquipment, FINAMEX (GATT, 1992). Theprogramme offers
preshipment andpost-shipment financing facilities covering exports ofcapital goods andequipment
withaminimum domestic value added of60percent.According toBrazilian authorities, suchfinancing
involvesnointerestratesubsidies.Coverforpreshipmentfinancingwasincreasedfrom70to85percent
oftheexport value ataninterest rateequal toLIBOR plus2to5percent. Post-shipment financing
includes maturity terms ofupto96months andaparticipation share ofupto85percent; thelimit
fortheautomatic approval ofoperations wasincreased fromUS$130,000 toUS$500,000. Exporters
maynotbenefit simultaneously from FINAMEX andPROEX.
49. About R$1billion wasdisbursed bytheFINAMEX programme during the1993to1995period
(R$375 million in1995); theprogramme wastobeexpanded substantially in1996 when BNDES
budgeted R$600 million forFINAMEX, R$450 million forpost-shipment financing andtherestfor
preshipment financing. Thegeographical coverage oftheprogramme, nowencompassing mostly Latin
American countries withwhom Brazil hasReciprocal Payment andCredit Agreements, wasalsoto
bebroadened inaneffort toavoid thecredit limits implicit insuchagreements.
(iv) Export insurance andguarantees
50. Export credit insurance wassuspended in1992. Previously, export insurance covering
extraordinary political orcommercial risksnotcovered byprivate insurance companies wasgranted
bytheReinsurance Institute ofBrazil (Chapter VII(3)). Inearly1996, theGovernment, incollaboration
withtheprivate sector, wasstudying thepossible re-establishment ofanexport credit insurance
mechanism tocover commercial risksforoperations withterms ofuptotwoyears; theGovernment
would assume political andextraordinary risks.Brazil WT/TPR/S/21
Page 89
(v) Export promotion andmarketing assistance
51. Export promotion activities areundertaken bytheMinistry ofIndustry, Trade andTourism,
through theForeign Trade Secretariat (SECEX), andbytheMinistry ofExternal Relations, through
theTrade Promotion Department aswellasbythetrade promotion sections ofBrazilian embassies
andconsulates.
52. There isnogeneral funding forthepromotion activities undertaken bySECEX, funding for
specific activities being arranged onanadhocbasis. Suchactivities include information toBrazilian
firmsontraderegulations,participationintradefairs,organizationofseminars,tradepromotionmissions
andtraining programmes. Exports arestillcarried outbyarelatively small number offirms andcover
relatively fewproduct lines, with690firms responsible for80percentofallexports. Forthisreason
andinviewoftheirgrowth potential, since1993SECEX hasbeendeveloping aprogramme topromote
newareas ofexport activity (Programa Novos Pólos deExporta ção).Theprogramme aimstoexpand
theexportparticipationofsmallandmedium-sizeenterprises,diversifyexports(withrespecttoproducts,
firms andmarkets), increase thecompetitiveness ofBrazilian products, foster manufactured exports,
andhelpuncover theexport potential ofselected products andregions. Awiderange ofproducts has
beentargetedforpromotionbySECEX,includingconsumerandcapitalgoods,agriculturalcommodities
andrelated processed products, mineral products, ceramic products, clothing, footwear, furniture,
automotive parts, software andtoys.
53. Aproject wasinitiated in1990 topromote technology transfer, joint-ventures andother
investment opportunities (Sistema dePromo çãodeInvestimentos eTransferência deTecnologia para
Empresas);fundingwasprovidedthroughaloanofUS$2millionfromtheInter-AmericanDevelopment
Bank, spent overtheperiod 1992-1995, complemented byamatching contribution fromtheMinistry
ofExternal Relations. Other trade promotion efforts bythisMinistry include studies toidentify new
trade andinvestment opportunities, market profiles, personnel training, tourism promotion, aswell
assupport topotential exporters, overseas missions andparticipation intrade fairs. Overall expenses
ontradepromotion activities bytheMinistry ofExternal Relations amounted tosome US$6.9 million
in1993, US$8.7 million in1994 andUS$9.9 million in1995.
(vi) Export-performance requirements
54. Export-performance requirements areusedinrelation totheBEFIEX programmes (section (ii))
above while company mergers have sometimes been made conditional onengagements todirect
production toexport markets (Chapter V(1)). Export-performance requirements arealsousedin
connection withthetariff reductions granted totheautomotive industry; fiscal incentives fornon-
Brazilian firms intheinformatics industry arelinked tobothexport andtrade-balancing programmes
(Chapter V(2)).
(vii) Export-processing zones
55. Thelegalbasesforexport-processingzones(EPZs)werefirstestablishedbyDecree-lawNo.2452
of29July1988. Therégime wastobeabolished byProvisional Measure No.158/90, buttheNational
Congress opted instead foritssuspension. Therégime wasre-established byLawNo.8396 of
2January 1992. Asdescribed intheprevious Secretariat report, thislawaimed toprovide anexport
basewithfullimport freedom, taxexemptions andafreeexchange rate.EPZs arepermitted inBrazil 's
less-developed regions; thetransfer ofproduction capacity tothose zones fromother areas andsales
tothedomestic market areprohibited.WT/TPR/S/21 Trade Policy Review
Page 90
56. Forthisreview, theauthorities noted thattheestablishment ofEPZs wasinitsearly stages,
withworkoninfrastructure stillongoing. Ofthe18EPZs approved until1994, tworegistrations lapsed
in1995 asnowork wasinitiated within thestatutory period. Inearly 1996, there were nofirms
operating intheEPZs. TheGovernment 'scurrent policy istogivelowest priority toproviding further
support toEPZs. Free-trade zones arediscussed inChapter V(1)).
(viii) Generalized System ofPreferences andother measures
57. BrazilianexportsbenefitfrompreferentialtreatmentundertheGeneralizedSystemofPreferences
(GSP) schemes ofthefollowing countries: Australia, Bulgaria, Canada, theCommonwealth of
IndependentStates,theCzechandSlovakRepublics,theEuropeanUnion,Hungary,Japan,NewZealand,
Norway andSwitzerland. Brazilian exports arealsocovered bytheGSPoftheUnited States, with
certain exceptions.4TheBrazilian authorities alsonoted thatanumber ofproducts (e.g.coffee, meat,
tobacco)havebeenexcludedfromtheGSPschemeoftheEuropeanUnionunderthescheme'sgraduation
mechanism andthat,asaresult, suchproducts receive less-favourable treatment thanproducts from
GSPbeneficiaries.
4Fordetails seeTrade Policy Review oftheUnited States (forthcoming in1996).Brazil WT/TPR/S/21
Page 91
Annex IV.1 Anti-dumping andcountervailing actions inforce against Brazilian products, early 1996
(1)Anti-dumping actions
Product Action taken by Remarks
Chemicals andplastics
Polyvinyl chloride Australia Duties since 23.01.92, reviewed on23.05.94.
Triethanolamine andmixtures Australia Duties since 20.02.92.
Oxalic acid European Union Undertaking inforce.
Styrene polybutadiene Mexico
Bisphenol A India Investigation inprogress since 30.12.94.
PVC resin India Duties since 18.01.94
Mineral products
Ferrosilicon European Union Duties since 09.12.93.
Silicon metal European Union Duties since 07.08.92.
Artificial corundum European Union Duties since 02.10.91.
Ferrosilico-manganese European Union Duties since 14.10.95.
Ferrosilicon United States Duties since 14.03.94.
Silicon metal United States Duties since 31.07.91.
Silicomanganese United States Duties since 22.12.94.
Billet Argentina
Ironandsteelproducts
Cold-rolled steelsheet Argentina Minimum export price
Steel discs andblades Argentina
Hot-rolled steelsheet Argentina Minimum export price andguarantee.
Steel copper javelins Argentina
Carbon steelplate Canada Definitive dutysince 06.05.93, reviewed on
03.03.95.
Corrosion resistant steelsheet Canada Duties since 29.07.94.
Carbon steelwelded pipe Canada Duties since 23.01.92; revised 06.10.94.
Pigiron European Union Duties since 16.07.94.
Semi-finished products ofalloy steel European Union Duties since 02.07.92.
Special steels Mexico Definitive duties since 18.11.94.
Steel hoop andstrip Mexico Definitive duties since 10.10.89.
Cold-rolled sheet Mexico Definitive duties since 23.12.95.
Hot-rolled sheet Mexico Definitive duties since 30.12.95.
Malleable ironconnections Mexico Provisional measure.
Plate insheets Mexico Definitive duties since 29.12.95.
Plate incoils Mexico Definitive duties since 28.12.95.
Certain malleable castironpipefittings United States
Small diameter circular seamless carbon and
alloy steel, standard, lineandpressure pipeUnited States Duties since 03.08.95.
Butt-weld pipefittings United States Duties since 17.12.86.
Circular-welded non-alloy pipe United States Duties since 02.11.92.
Construction castings United States Duties since 09.05.86.
Cut-to-length carbon steelplate United States Duties since 19.08.93.
Lead &bismuth steel United States Duties since 22.03.93.
Pipefittings United States Duties since 21.05.86.
Stainless steelbar United States Duties since 21.02.95.
Stainless steelwirerods United States Duties since 28.01.94.
Other fabricated metal products
Copper wire Argentina Minimum export price andguarantee.
Aluminum cable Argentina
Brass sheet &strip United States Duties since 12.01.87.
Annex IV.1 (cont'd)WT/TPR/S/21 Trade Policy Review
Page 92
Product Action taken by Remarks
Electric products
Single-phase electric power meters Argentina Minimum export price andguarantee.
Photo-electric relays orswitches forpublic
lightingArgentina
Transformers Argentina
Electric power transformers Mexico Definitive duties since 07.09.92.
Non-electric machinery
Agricultural ground engaging tools Australia Duties since 18.07.91.
Tillage tools Canada Duties since 28.12.83.
Textiles
Cotton yarn European Union
Sisaltwine, binder andbale European Union Undertaking inforce.
Dening indigo Argentina
Paper products
A4cutream copy paper Australia Duties since 16.02.94, undertaking since 18.07.94.
Refill paper Canada Duties since 06.07.90.
Other products
Lined bristol board Argentina
Ophthalmic lenses Argentina Minimum export price andguarantee.
Taps Argentina Minimum export price andguarantee.
Bicycle tyres Argentina
Fibreglass gunrovings Australia Duties since 15.12.94.
Corrugated rods Mexico Provisional duties in10.10.94.
Ceramic walltiles Mexico Definitive duties since 05.09.91.
Nitrocellulose United States Duties since 10.07.90.
(2)Countervailing actions
Product Action taken by Remarks
Ironandsteelproducts
Booms (corrugated androds) Bolivia Duties since 02.92.
Hot-rolled sheet Mexico Duties since 30.12.95.
Plate insheets Mexico Duties since 29.12.95.
Cold-rolled sheet Mexico Duties since 27.12.95.
Plate insheets Mexico Duties since 27.10.95.
Corrugated rods Mexico Definitive duties since 11.08.95.
Hot-rolled lead&bismuth United States Since 23.03.93, noduties currently collected.
Pigiron United States Since 04.04.80, noduties currently collected.
Other products andmachinery
Aluminium cable Argentina Minimum export price.
Tillage tools Canada Duties since 14.12.95
Semi-trailers Chile Duties since 02.92.
Brass sheet andstrip United States Since 08.01.87, noduties currently collected.
Construction castings United States Since 15.05.86, noduties currently collected.
Other products
Fibreglass gunrovings Australia Duties since 15.12.94.
Polyvinyl chloride resin Australia Duties since 28.08.95
Refill paper Canada Duties since 06.07.90-05.07.95.
Cotton yarn European Union Duties since 27.03.92-24.11.93.
Sisaltwine, binder andbale European Union Duties since 08.10.93.
Cotton yarn United States Since 15.03.77, noduties currently collected.
Source: Brazilian authorities.