RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/212 
2 February 2009  
 
(09-0399) 
Trade Policy Review Body Original:  English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
BRAZIL 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Brazil is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
 session of the meeting of the Trade Policy Review Body on Brazil. Brazil WT/TPR/G/212 
 Page 3 
 
 
CONTENTS 
 Page 
I. OVERVIEW  5 
II. GENERAL ECONOMIC ENVIRONMENT 6 
 (1) M ACROECONOMIC STABILITY  6 
 (2) G ENERAL LEGAL AND REGULATORY FRAMEWORK  9 
 (i) Business environment 9  (ii) Financial system 9 
 (iii) Insurance Market 10 
 (iv) Securities market 11  (v) Government procurement 11 
 (vi) Exchange rate and foreign capital regime 12 
 (vii) Export insurance 12  (viii) Long run production and export finance 12 
 (3) S
OCIAL POLICIES  13 
III. TRADE POLICY DEVE LOPMENTS (2004-07) 14 
 (1) L ATEST DEVELOPMENTS IN BRAZILIAN FOREIGN TRADE  14 
 (2) L OCAL CURRENCY PAYMENT SYSTEM -SML 15 
 (3) P ARTICIPATION IN THE WTO 15 
 (i) The Doha Round 15 
 (ii) Dispute settlement 16  (iii) Special and differential treatment 16 
 (4) P
REFERENTIAL AGREEMENTS  16 
 (i) Mercosur 16  (ii) Mercosur and re gional agreements 17 
 (iii) Mercosur and extra-regional agreements 18 
 (iv) Global system of trade preferences 19 
IV. TRADE INSTITUTIONAL AND REGULATORY FRAMEWORK 19 
 (1) C
ROSS -CUTTING ISSUES  19 
 (i) Technical standards 19  (ii) Trade facilitation 20 
 (iii) Customs modernization 21 
 (iv) Sanitary and phytosanitary issues 21  (v) Competition policy 22 
 (vi) Intellectual property 22 
 (2) S
ECTORAL ISSUES  24 
 (i) Industry 24 
 (ii) Agriculture 25 
 (iii) Services 26 
 (iv) Renewable energy 26 
 (v) Land transports 27  (vi) Air transports 27 
 (vii) Ports 27 
 (viii) Telecommunications 28 
V. FUTURE DEVELOPMENTS 29 
  
 Brazil WT/TPR/G/212 
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I. OVERVIEW 
1. The Brazilian government is honoured to submit its Fifth Trade Policy Report to the scrutiny 
of fellow WTO members.  Indeed the TPR mechanis m has been a fruitful exercise of internal co-
ordination among all relevant governmental agencies,  as well as of external co-operation with the 
WTO Secretariat.  The outcome is a comprehensiv e and transparent review of the most significant 
developments in Brazilian economy and foreign trade since 2004. 
2. This report was drafted in times of uncertainty  about the dimension of the global financial 
crisis.  What most analysts predicted has come true, regrettably.  The “real economy” starts to feel the 
spill-over effects of the financial crisis which star ted about one year ago.  Predictions for 2009 look 
gloomy, with most studies indicating a severe recession in central economies.  In this  regard, Brazil 
advocates the further strengthening of the WTO as a means to avoid the risky path of protectionism. 
3. The Brazilian government believes that coordinatio n at the international level is essential in 
order to overcome the difficult times ahead.  The Financial G-20 Summit that took place in 
Washington last November was a promising starting point at this desirable direction.  On that 
occasion, world leaders reiterated the importance of reforming the internationa l financial institutions 
and of concluding the WTO Doha Round central negotia tions in due time, preferably by the end of 
2008.  Unfortunately, that was not possible, but th e Brazilian government insists on the benefits for 
both developing and industrialized countries of an  effective fulfillment of the Doha Development 
mandate. 
4. In effect, Brazil regards the multilateral trading system as the priority of its foreign trade 
policy, as it is one of the main pillars for the est ablishment of a fair and balanced global economic 
system, which can foster welfar e and mitigate poverty worldwide.  In the period under review, 
Brazilian foreign trade expanded steadily.  Brazilia n exports grew from US$96.5 billion in 2004 to 
160.6 billion in 2007, while imports went from US$62. 8 billion to 120.6 billion.  This expansion was 
done in a geographically well distributed  pattern, wh ich gives Brazil a structural attachment to trade 
multilateralism.  South-South trade was also promot ed, as the following figures illustrate: trade with  
Latin American partners (without  Mercosur) grew 114%; with A frican nations, 101% and with the 
Middle East, 73.5%. 
5. Consistently, Brazil was a strong advocate of the Doha Round as a means to achieving new 
development ambitions, and has been strongly engage d in a successful conclusion of the negotiations. 
Brazil attaches great importance to the conclusion of the negotiations as a means of attenuating the 
impact of the crisis through the expansion of international trade. 
6. Moreover, Brazil believes that bilateral and re gional trade agreements can be a useful 
complement to the multilateral system, by deepening the integration of markets, reinforcing the role 
of trade in economic growth, promoting gains of scale for domestic firms, and providing an expanded 
base to face global competition.  From that pers pective and in accordance with WTO disciplines on 
regional trade agreements, Brazil continued to place Me rcosur at the center of its foreign policy, as a 
process that goes beyond its customs union disci plines and constitutes a privileged space for 
cooperation in all areas.  Mercosur benefits fro m a broad range of free trade agreements (FTA) 
subscribed within the framework of LAIA and is in the process of expansion with the accession of 
Venezuela.  South American integration is seen  as a broad objective and Brazil has consistently 
supported regional infrastructure projects that would facilitate trade in the re gion and its integration 
with the world. WT/TPR/G/212 Trade Policy Review 
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7. Despite the seriousness of the current global cr isis, Brazil is well positioned today to face the 
negative impacts of economic recession.  In recent y ears, Brazil has achieved strong growth with low 
inflation, reflecting the continued implementation of sound macroeconomic polic ies.  Key to Brazil’s 
successful economic performance has been a policy framework which rests importantly on fiscal 
responsibility, income distribution and on an inflati on targeting regime.  As a result of this stable 
scenario, Brazil attracted solid Foreign Direct Inve stment (FDI), which totalled US$34.6 billion in 
2007, second only to China among emerging countries.   For 2008, Central Bank projections indicate 
that the country is likely to receive more than  US$37 billion in FDI.  All these improvements led 
credit-rating agencies to upgrade Brazil’s s overeign debt to investment grade. 
8. In the period under review, in Brazil as well as in other developing countries, a significant 
number of people have overcome extreme poverty and acquired qualified skills for the labour market 
through education.  Effective income distribu tion policies in Brazil have brought a significant 
expansion of access to goods in the lower income sectors of the population, helping to sustain the 
increasing growth rate of the Brazilian economy.  However, all the progress in providing economic welfare in recent years can be severely harmed if  world leaders opt for protectionist measures in 
world trade in the face of the current crisis .  The Brazilian government hopes that the Doha 
Development Agenda may inspire fellow WTO me mbers to wisely foster trade multilateralism. 
II. GENERAL ECONOMIC ENVIRONMENT 
(1) M
ACROECONOMIC STABILITY  
9. Brazil has consistently presented good economic re sults since the last Review.  The country is 
enjoying its longest period of economic prosperity  in two decades, underpinned by robust aggregate 
demand, increase in investments and improved terms of trade, with positive impacts on employment 
and salaries.  Some economic indicators att est the improvement of the Brazilian economic 
performance.  Real GDP grew by about 4.5% a year  during 2004-07, nearly twice the average rate 
experienced since 1980 .  In 2007, real GDP growth was 5.7%, reflecting strong private consumption 
and investment (6.5% and 13.3%, respectively).  In the third quarter of 2008, growth was 6.8% 
compared with the same period of the previous year.  The financial authorities have also taken 
advantage of favorable external conditions to reduce macroeconomic vulnerabilities and to build a 
robust external reserve buffer.  With the healthy state of the economy, including price stability, the 
Brazilian economy is well positioned to withstand the more difficult global environment.  These 
commendable improvements have been recognized th rough the recent upgrade of its sovereign debt 
rating to investment by credit-rating agencies. 
10. The unemployment rate decreased from 11.7% in 2002 to 9.4% in 2007, further decreasing in 
2008 (figures for October indicated 8%).  Another relevant macroeconomic indicator that showed a 
positive trend was the net debt of the public sector , whose value, as a percentage of GDP, fell from 
52.4% in 2003 to 42.7% in 2007 and to 36.6% at th e end of October of 2008.  The administration of 
the country's public finances also succeeded in im proving the profile of the country's public debt, 
increasing the participation of pre-set bonds as a pe rcentage of the total debt and modifying the 
composition of the indicators to which post-set bonds are linked.  Bonds revalued in accordance with 
exchange rate fluctuations were nearly eliminat ed, while the presence of bonds linked to the official 
interest rate and to the consumer price index, much  less volatile than the exchange rate, increased. 
11. In 2007, the Instituto Brasileiro de Geografia e Estatística (IBGE - Institute of Statistics and 
Geography) changed GDP estimates to align them with international best practices .  A s  a  
consequence, between 1995 and 2005, there was an av erage increase of 9% in nominal GDP and of 
0.3 percentage points in real GDP compared with the previous series.  The increase in nominal and Brazil WT/TPR/G/212 
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real GDP was more pronounced in recent years.  The new estimates have brought a change in GDP 
composition.  On the supply side, services have enla rged their share in the economy, while agriculture 
and manufacturing have lost participation.  On the demand side, there was an increase in the share of 
consumption in GDP and a decrease in the shares of investment, exports and imports.  The new 
methodology introduced several modifications to GD P estimates the details of which are beyond the 
scope of this report. 
12. The fiscal statistics that are calculated as per centages of GDP were affected by that change. 
The primary surplus target, whose main goal is to guarantee the sustainability  of internal debt, was 
kept stable in nominal terms for 2007 (R$95.9 bill ion).  As a consequence, the fiscal effort as a 
proportion of the nominal GDP decreased to 3.8%.  The new GDP has also affected the dynamics of  
net public sector debt.  Its main effect was a downwar d level shift in net public sector debt in relation 
to GDP. 
13. In 2008, the primary surplus target reached R $105.1 billion, or 3.8% of forecasted GDP for 
this year.  Notwithstanding, to capitalize the Braz ilian Sovereign Fund, the government will save an 
additional 0.5% of GDP, and the primary surplus w ill reach 4.3% of GDP.  The primary surplus target 
for 2009 was set at R$118.3 billion, which is equivalent to 3.8% of the forecasted GDP. 
 
14. In relation to the adjustment capacity of the Brazilian economy, the evolution of the country's 
balance of payments during this period, especially the current account, improved  from a net deficit of 
4.19% of GDP in 2001 to a net surplus of 1.76% of GDP in 2004.  After that it fell slowly, following 
the acceleration of the growth in production, reach ing 0.13% of GDP in 2007.  For the 12 month 
period ended in October 2008 the current account presen ted a net deficit of 1.71% of GDP, reflecting 
the international crisis, which resulted in higher pr ofit remittances and dividend distribution and in a 
lower trade balance.  As the financial account show s, the country has proven attractive to foreign 
investment, and is thus capable of financing ne t current account deficits.  In moments of low 
availability of foreign funds, the balance of paymen ts adjusts itself through the floating exchange rate 
regime, and, in acute moments, there are enough in ternational reserves to manage the scarcity of 
investments. 
15. Inflation estimates above the midpoint of the targeted range has prompted a tightening of 
monetary policy.  Following a cumulative reduction of  850 bps in the policy interest rate from late 
2005 to October 2007, the Central Bank (BCB) began tightening the mone tary policy to rein in rising 
inflation and keep medium-term market inflation e xpectations well anchored to the target.  Since 
April 2008, the interest rate has been raised by  250 basis points to 13.75% and market inflation 
expectations have begun to improve.  
16. Recently, the global financial crisis has become an important factor to influence the Brazilian 
economic outlook.  The country is answering promptly  to the challenges posed by the slower growth 
in the global economy and the reduction in financial liquidity, so that they do not harm growth and 
inflation expectations. 
17. The stability of the Brazilian financial system remained high in recent years due to continued 
favorable developments in the m acroeconomic environment.  The major Brazilian ba nks seem well 
equipped to face the global credit crunch, as they can  rely on their solid solvency position and high 
profitability.  The exposure of the Brazilian banking sector to structure credit instruments – including 
in the form of derivatives – is very low.  Stress tests for credit and market risks conducted by the BCB 
show that the system could absorb losses from relati vely large shocks without threatening systemic 
solvency.  The prudential framework in Brazil is adequate. WT/TPR/G/212 Trade Policy Review 
Page 8 
 
 
18. Credit is robust, supported by strong intern al demand and increasing bank competition for 
market share.  Non-performing loans are still at 2. 9% of total credit at the end of 2008, down from 
3.2% of the previous year.  The drivers of cred it demand have been a sustained increase in real 
income, the emergence of new middle-class and the guidelines that reduce lending risk.  Under these 
favorable conditions, BCB decided to increase internal  liquidity by taking flexible measures towards 
the compulsory deposits.  Furthermore, BCB has inte rvened in the exchange market – especially in 
the future market of the US dollar – using part of its reserves in foreign currencies.  This intervention 
does not seek to forge a fixed exchange rate, but to  reduce the volatility of the market and to avoid 
excessive losses in economic sectors which were  over-exposed during the long period of high 
appreciation of the Brazilian currency.  By doi ng so, the natural conditions for credit were re-
established. 
19. The Brazilian authorities are closely following the developments derived from the financial 
turmoil in advanced economies.  To ease the li quidity squeeze, the Authorities adopted measures to 
tackle the financial problems, injecting liquidity in  foreign currency market and in the domestic credit 
market.  With these initiatives1, the BCB wants to prevent further ex cessive losses, not just to protect 
the economy from the dislocation associated with a sudden, massive weakness, but also to minimize 
inflation pass-through.  
20. Bearing in mind the need to further ensure the systemic stability, BCB and the US Federal 
Reserve (FED) have settled a swap line of USD 30 billion, authorized thr ough April 2009.  This 
arrangement has no political conditionalities and was established between the US and countries that 
have well managed economies.  Developed countries contemplated were Australia, Canada, England, 
Japan, New Zealand, Norway, Switzerland, Swed en and the European Central Bank.  Among 
developing countries, only Brazil, Mexico, Kor ea and Singapore benefited from this agreement. 
21. In sum, thanks to the significant progress th at Authorities have achieved in recent years in 
terms of the overall quality of the economic policy mix and the strengthening of macro indicators, 
Brazil is now resilient enough to absorb the impact of  the global financial crisis in a relatively orderly 
manner.  The economy’s resilience stems from a prude nt monetary policy, substantial international 
reserves, and a public sector with a net foreign cu rrency creditor position.  As a result of sound 
macroeconomic policies, fiscal sustainability has b een entrenched, inflation has been brought down to 
the low single digits, and domestic interest rat es have been reduced significantly.  The flexible 
exchange rate regime has played an important role  in facilitating needed adjustments in the economy. 
Enhanced social policies have also contributed to a si gnificant decline in poverty rates in recent years.  
                                                      
1 Some initiatives were:  sales of USD in repo auctions;  reduction of reserve requirements for banks 
acquiring USD with repos;  sales of cu rrency swap contracts;  sales of USD in spot market ; collateralized loans, 
aimed at financing exports;  elimination of tax (IOF) on fixed-income capital inflows;  authorization for BCB to 
engage in currency swap transactions with other central banks;  agreement with the US Federal Reserve.  In the 
domestic front, initiatives to inject liquidity in the internal credit market:  increase of exemption limits, reduction of rate and/or postponement of reserve requirements; commitment to eliminate reserve requirements 
on time deposits, on deposits by leasing companies and the additional requirement; and reduction of reserve 
requirements on time deposits for banks that buy assets from other institutions; authorization for BCB to buy certain assets from banks (this measure was merely prev entive, as no banks were currently in difficulty);  
authorization for public banks (Banco do Brasil and Caixa Economcia Federal) to acquire stakes or control of 
other institutions. Brazil WT/TPR/G/212 
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(2) GENERAL LEGAL AND REGULATORY FRAMEWORK  
(i) Business environment 
22. The Micro and Small Business General Law (Complementary Law No. 123/2006) and the 
National Network for Simplification of Registry and Legalization of Businesses – REDESIM (Law 
No. 11.598/2007) have provided a legal framework that foster efficiency on tax and registration 
procedures for  the great majority of Brazilian firm s.  Companies under Simples regime pay all taxes 
(IRPJ, CSLL, PIS, COFINS, ISS, ICMS) applying a percentage of their turnover.  The REDESIM 
implemented the principle of single data entry which seeks to avoid unnecessary multiple entries in 
diverse public agencies.  Another relevant measure is the provisional license to start a business.  By 
this rule, undue delay in analysis of a license requ est by public officials does not prevent the formal 
implementation of the economic activity.  These ne w measures are compulsory for public entities in 
regard to small and micro businesses.  On the othe r hand, they are voluntary for State and Municipal 
authorities when it concerns larger companies.  Bo th laws have effective consequences over most of 
Brazilian companies (66.13% , broadly), are micr o and small firms under the Simples regime.  
23. Another important measure was the regulati on of the National Program of Targeted 
Productive Microfinance (PNMPO), issued in 2005, targeting individual and corporate entrepreneurs 
involved in small scale productive activities with an nual gross income up to R$60.000, for purposes 
of financing goods, services and working capita l deemed essential to their undertakings. 
(ii) Financial system 
24. The National Monetary Council and the Central Bank of Brazil have been making efforts to 
promote competition among financial institutions.  Th e market share of foreign banks, authorized to 
operate in Brazil in the last decade, currently co rresponds to 23% of the total assets of the Brazilian 
banking sector. 
25. Among the efforts of the National Monetary Council and the Central Bank of Brazil to 
increase access to financial services, a series of measures have been taken aiming to make it easier for clients of financial institutions to establish busines s relationships with other financial institutions.  
One of the major elements in reducing asymmetries was the creation of the Central Bank Credit 
Information System (SCR), a credit bureau at the Central Bank which gathers credit information from 
all banks and all borrowers.  
26. Another important regulation was the implementa tion of the portability.  The portability of 
personal file information require financial ins titutions, once specifically authorized by their 
customers, to disclose to third parties, including  other financial institutio ns, information on both 
outstanding and settled loans granted to those cust omers.  They have 15 days to provide the 
information, which can be sent directly to the fi nancial institution specified by the customer.   The 
portability of wages was also implemented, and, as a r esult, if employers, both public and private, hire 
financial institutions to make pa yments related to wages and pens ions, which are not convenient from 
the point of view of their employees, these regulations allow for the direct transfer of funds from the 
institution which handles the payments for the employer  to the institution chosen by the employee, at 
no cost to the latter. 
27. To bring greater stability to Base Capital, in  December 2004, BCB released the procedures to 
implement a new capital structure, based on the recommendations of the Basel Committee on Banking 
Supervision (“International Convergence of Capita l Measurement and Capital Standards: a revised 
framework” or “Basel II”).  The BCB emphasized th at the recommendations of Pillar 2 (Supervisory 
Review) and Pillar 3 (Transparency and Market Discip line) will be applied to every institution in the WT/TPR/G/212 Trade Policy Review 
Page 10 
 
 
National Financial System (SFN) and announced the calculation of Regulatory Capital according to a 
standardized simplified approach or, for larger institutions, according to advanced approaches, 
founded upon an internal risk classification system.  The rules and criteria referring to implementation 
of Basel II are the same for national and foreign cap ital institutions.  In this sense, the requirements 
and demands for validation of internal credit, mark et and operational risk classification systems will 
be the same for every institution operating in Brazil.   The implementation schedule consists of several 
phases extending from 2005 to 2012, when the capital stru cture according to Basel II is expected to be 
fully implemented.  A revised regulation of Base Capital was also introduced, incorporating Basel 
Committee recommendations. 
28. Regulatory treatment of market risk was established in 2007, requiring that financial 
institutions must implement a structure that in clude policies and procedures to be observed, 
compatible with the nature and complexity of th e products, activities and processes of the institution. 
Risk management policy must also foresee which oper ation is subject to classification in the trading 
book, according to a minimum set of criteria2 that involves corroboration of trading intentions and 
consistent policies for segmenting operations.  
29. A National Financial System Clients Referenc e File (CCS) was created in 2005, complying 
with Anti-Money Laundering (AML) provisions.  All fi nancial institutions are required to maintain a 
data record of account holders and clients, as well as their legal representatives, as part of a general 
reference file centralized at BCB.  The CCS mak es it possible for proper authorities to request and 
consult data on a centralized database involving information on deposit accounts and financial assets 
in the form of properties, rights and values held or administered at SFN institutions.  Financial 
institutions are accountable for daily update of CCS data and for the preciseness and timeliness of 
information.  The judiciary system will be able to use CCS information on the basis of specific 
agreements formalized with cour ts throughout the country.  In the framework of AML measures, 
financial institutions must adopt procedures rega rding the establishment of business relationships and 
monitoring of financial transactions of clients considered to be politically exposed persons. 
(iii) Insurance market 
30. The insurance industry has grown significantly in recent years, thanks to the favourable 
economic environment.  Between 2000 and 2007 , insurance premiums have increased 155%, 
capitalization products 78%, and open private pension funds  47%.  This growth has been generated 
not only by economic stabilization, but also by the liberalization introduced in some sectors.  As a 
result, the participation of foreign capital in the insurance industry’s premiu m income has risen from 
29.5% in 1999 to 36.9% in 2007.  In the open priv ate pension funds, foreign capital participation grew 
from 21% in 1999 to 30.7% in 2007.  At the end of 2007, there were 166 companies in operation (insurance, capitalization, and open pension funds).  
31. The national regulatory insurance agency, SUSEP,  has introduced new mechanisms of risk 
management into the insurance, open private pension funds and ca pitalization markets.  SUSEP has 
moved toward a risk based supervis ory regime consistent with inte rnational standards and practices, 
such as the IAIS Principles.  Furthermore, SUSEP is encouraging the creation and development of 
popular insurance products meant for all layers of the Brazilian population, especially the poor or 
                                                     
 
2 Mentioned criteria include:  a) definition of position limits and daily monitoring of compliance with 
these limits;  b) periodic reevaluation of established limits;  c) evaluation of operations at market value at least 
once a day;  d) information to the director in charge of managing the ratio of operations classified in the trading 
book. Brazil WT/TPR/G/212 
 Page 11 
 
 
low-income households.  One of these measures was the phasing-out of the tax on financial operations 
(IOF) for life insurance. 
32. The first effects of this policy to expand insu rance coverage to the low-income population are 
visible: several insurers have the creation of new products, extending the coverage offered to the 
assets and interests of low-income citizens, and in creasing savings and investments that can benefit 
this segment of the population.  
33. Suplementary Law 126 of January 2007 provi ded a new framework for the reinsurance 
business in Brazil, as it opened the sector to foreign-owned and foreign-based re-insurance 
companies.  Based on this new regulation, the oper ations of reinsurance and retrocession can be held 
with the local reinsurer ( established as a corporation, with the sole object of conducting operations of 
reinsurance and retrocession), with the admitt ed re-insurer (based abroad, with office of 
representation in Brazil, registered with SUSEP  to carry out operations of reinsurance and 
retrocession);  and with the foreign re-insurer (fo reign reinsurance company based abroad without 
office of representation in Brazil also registered as such in SUSEP). 
(iv) Securities market 
34. The years of 2003 to 2007 were dedicated to th e consolidation of the reforms in  Brazil´s 
securities market of Brazil.  The volumes of securities offerings in the Brazilian market have soared to 
a total of US$86 billion in the past year.  There is no artificial incentive or inducement to market 
growth other than market mechanisms in opera tion, together with an attractive regulatory 
environment. 
35. The share offerings, which restarted as from 2004,  have grown much in relative terms to the 
total amount raised in the market, totaling US$38.8 billion in 2007, 53%  being secondary share 
offerings.  US$31 billion (80%) of this volume was pl aced in initial public offering (IPO), carried out 
by 64 companies in 2007.  There were 106 new listings  since 2004.  Of the total placed in this period, 
foreign institutional investors bought more than 70%, in  average.  Only two out of IPOs of this period 
involved dual listings in another market.  All th e other new public companies were listed only with 
the Brazilian stock exchange.  In 20 07, there were also a few listings of issuers established in other 
countries of the region, through the depositary receipt  mechanism offered to foreign issuers (BDR).  
São Paulo was, in 2007, the 5th market in absolute financial volume of share offerings in world terms, 
behind only of the New York, Shanghai, London and Hong Kong stock exchanges, according to the 
World Federation of Exchanges - WFE.  Investors ha ve been more receptive to this type of offering 
due to the improvements in corporate governance and company disclosure practices that are required 
by the “Novo Mercado” rules.  Last but not least, the investment funds industry in Brazil has assets amounting to US$707 billion, and more than 11 milli on shareholders.  This is the most important 
channel for the investment of individual savings.  
(v) Government procurement 
36. The Ministry of Planning has implemented si gnificant changes in the Federal Government 
Procurement System, transforming the electronic rever se auction into the main type of tender adopted 
by the Union -around 75% of total (R$34.5 billio n) - and has improved e-procurement systems 
considerably, making them safer, more transparent,  efficient and competitive.  Currently, the Federal 
Government is trying to pass by Congress an exte nsive amendment to the General Law of Tenders 
and Contracts, focusing on efficiency and on the use of Information Technology resources in tenders.  
Simultaneously, the Government is working on a draft for a new General Law of Tenders and 
Contracts, aiming to develop a more efficient, simple, transparent, faster and modern procurement WT/TPR/G/212 Trade Policy Review 
Page 12 
 
 
system in the long run.  All electronic tenders can be monitored online, in real time, and are saved by 
the system for anyone who wants to analyze them.  
(vi) Exchange rate and foreign capital regime 
37. Foreign exchange regulations we re liberalized further during the period under review.  CMN 
Resolution 3.265/2005, superseded by CMN Resolution 3.568/2008, unified the free rate and floating 
rate exchange markets and regulati ons.  Residents transferring forei gn currency abroad no longer have 
to do so through non-resident financial institutions accounts.  
38. Besides, limits and restrictions to the purchase and sale of foreign exchange and to 
international transfers of “reais” have been elimin ated.  In 2006, foreign currency controls at the 
Central Bank on export proceeds and import payments were abolished, allowing exporters to keep up 
to 30% of their export proceeds abroad.  This lim it was increased to 100% in March 2008.  Also, was 
introduced the possibility of registering in the Central Bank of Brazil, through the Electronic Statement of Registration – Foreign Direct Invest ment Module (RDE-IED), foreign capital in national 
currency, provided that such capita l is in accordance with the financial statements of the Brazilian 
company.  In April 2007, regulation on investments abroad by investment funds were further 
liberalized. 
(vii) Export insurance 
39. The Brazilian government established an export credit guarantee fund in 1997 and put in 
place an export credit insurance system.  The Export Credit Insurance (ECI) is one of the instruments 
that have contributed to bolster Brazilian e xports.  Between 2004 and 2008 , Brazil’s ECI-supported 
exports rose by 246.90% (from US$3.3 billion to US$8.2 billion), thus outpacing the growth of 
financed exports in the same period.  Decree 6.452, enacted May 2008, extended the guarantee to 
small and medium businesses, allowing the enhanc ement of productivity and the expansion of the 
domestic industry's capacity.  The civil engineer ing and capital goods sectors, which require medium 
and long-term payments in accordan ce with international standards, have been the leaders of ECI-
backed transactions.  Since 2004, five insurers  have been operating with their own resources.  
(viii) Long run production and export finance 
40. The National Bank of Social and Economic Development (BNDES), a state-owned bank 
created in 1952, is the main source of long term cr edit in Brazil.  Currently, the long term financing 
needed for investment in fixed assets, both dir ect, through capital markets, and indirect, through the 
banking system, is still scarce.  In 2007, the stoc k of  private non-financial enterprise bonds totaled 
only 2.6% of GDP - against an average of 10.8% of GDP calculated by the Bank of International 
Settlements (BIS) for a sample of 44 countries – and bank financing to the private sector represented 
just 33% of GDP, well below the level recorded ev en in developing countries, such as China, South 
Korea and South Africa (above 100% of GDP). 
41. The activities of BNDES have been clearly co mplementary to those of commercial banks, 
with distinct segmentation between short and long term credit initiatives.  In other words, Brazil’s 
financial market continues to be focused on the short term, with liquidity concentrated in a few assets. 
This is due, most likely, to the fact that macroeconomic stabilization is still recent and being consolidated, and to characteristics of the public debt such as its structure and terms.  Concentrating in 
short term bonds indexed to the SELIC rate, the govern ment offers liquidity, high returns and security 
to investors.  Under these conditions, its is hard fo r a private enterprise to a ttract investors to their 
long term, fixed rate bonds at an acceptable cost a nd commercial banks have little  interest in financing 
long term investment projects. Brazil WT/TPR/G/212 
 Page 13 
 
 
42. The credit lines offered by BNDES contemplate long term financing at competitive rates, for 
the development of investment projects and for the commercialization of new machines and 
equipment, as well as the financ ing of Brazilian exports, always c onsidering ethical, environmental 
and sustainable development principles.  BNDES’s credit lines also contribute to strengthen the 
capital of private companies and to the develo pment of the capital markets.  In 2007 BNDES 
disbursed R$64.9 billion, or 93% more than in 2003. 
43. With the attainment of the investment grade by Brazil, recognizing the consolidation of the 
macroeconomic stabilization, with a successful strategy to extend terms and obtain a more favorable 
composition of the public debt, and based on a cons istent and persistent policy of support to the 
formation of more liquid and comprehensive seconda ry markets for financial assets, there is a 
tendency towards the strengthening of the domestic fina ncial and capital markets.  In that sense, it is 
expected that these markets will supply a larger shar e of the private companies’ investment needs. 
(3) SOCIAL POLICIES  
44. For Brazil, poverty alleviation has long been a t op priority.  In 2004, President Lula launched 
the Global Call to Action Against Poverty, to m obilize additional funding for the fight against 
malnutrition and to promote the Millenium Deve lopment Goals (MDGs).  The country has made 
considerable progress in achieving the MDGs before 2015.  In effect, some of these goals have been 
accomplished before the deadline established by the United Nations.  
45. The country has almost achieved universal basic education, with 97% enrollment of children 
from 7 to 14 years old.  Additionally, the proportion of population over the age of 15 that was 
illiterate decreased from 10.4% in 2006 to 10% in 2007, and infant mortality declined from around 
50 per 1000 live births in 1990 to 21.1 per 1000 in 2005.  The main factors which enabled Brazilian 
society to improve overall living standards were efficient macroeconomic management combined 
with the implementation of nationwide social polic ies.  These policies are designed to combat poverty 
and have been adopted in the areas of social we lfare assistance, income transfer, food security, and 
hunger eradication.  These activities are integrated under the Family Stipend Programme, which 
articulates the goals to be attained.  The program proved to be a success story that has benefited over 
11 million Brazilian families and prompted a significant improvement in income distribution, as demonstrated by the evolution of the GINI index, which fell from 0.59 in 1997 to 0.53 in 2007, reaching its lowest point in three decades.  Several programs inspired by the Brazilian “Bolsa-
Familia” have been implemented in African and Latin American countries thanks to South-South 
co-operation agreements signe d by Brazilian Government.  
46. In the countryside, social improvements are also notorious.  Not only has the government 
improved the distribution of land, but it has also increased access to basic ser vices, such as sanitation, 
technical assistance and education.  Family farmi ng, comprised of small-scale operations, involves 
more than 4.1 million rural establishments operate d by families with a maximum gross annual income 
of R$110.000.  They  account for 10% of GDP a nd for 37% of the value of Brazil’s agricultural 
production.  This sector generates 15 million jobs, or 77% of all j obs generated by the country’s 
agricultural sector.  Family fa rmers produce approximately 70% of the food consumed by the 
Brazilian population, and is thus essential for the country’s food and nutritional security.  National 
rural development policies, focused on the segment of family farmers, aims at reducing the rural 
poverty in the country, even as it enhan ces the nation’s internal food security. WT/TPR/G/212 Trade Policy Review 
Page 14 
 
 
III. TRADE POLICY DEVELOPMENTS (2004-07) 
(1) LATEST DEVELOPMENTS IN BRAZILIAN FOREIGN TRADE  
47. In general terms, Brazilian foreign trade conti nued to increase since 2004, both in absolute 
dollars and measured as a percentage of trade to GDP.  In dollar terms, the country’s foreign trade 
volume increased 76% between 2004 and 2007, rising  from US$163 billion to US$287 billion.  As for 
the foreign trade to GDP ratio, it grew from 24.8% of the GDP in 2004 to 26.7% in 2007.  The net participation of Brazilian exports in global trade increased from 1,05% in 2004 to 1,16% in 2007, 
apparently a small difference but actually translatin g a continuous effort to expand the network of 
Brazilian firms exporting to the world market.  Approximately 21.000 fi rms were involved in 
Brazilian exports between 2004 and 2007, 16% more than in the period 2000/2003.  Of these 
exporters, 53% were small enterprises, while 22%  were medium and 25% large enterprises.  
48. The main feature of the 2004-2007 period was the expressive trade surplus, which averaged 
of US$40 billion, peaking in 2006, with at US$46.5 billion.  For the sake of comparison, the trade surplus averaged US$10 billion in the period  of 2000-2003, including a trade deficit of 
US$721 million in 2000. 
49. The determination to seek alternative markets fo r Brazilian exports is also noteworthy.  Brazil 
has diversified the destination of its manufactured  and agricultural goods.  From 2004 to 2007, while 
exports to major markets such as the US and European Union increased 24.1% and 63.8%, 
respectively, a much greater growth occurred in th e same period vis-à-vis new markets, such as Latin 
America (without MERCOSUR), 114%; Eastern Europe, 113,%;  Africa, 101%;  Middle East, 73.5%; 
and Asia, 72%. 
50. Brazil diversified not only markets, but also  the exports items: 65.8% were industrialized 
goods, of which semi-manufactured products account  for 13.6%, while manufactured goods were 
52.2%.  Agricultural products repre sented 32% of our foreign trade.  The remaining 2,2% consisted of 
the special operations.  The main industrial goods we re: aircrafts, automobil es, auto-parts, cellulose, 
semi-manufactured steel, radio transm itters and receivers, oil, shoes.  Within the list of basic products 
were: iron, oil, soy, beef, coffee in grains, tobacco, and cotton. 
51. Brazilian imports of goods, in turn, registered ra w materials and intermed iate products at the 
top of the list in 2007, with a share of 49.3% of total imports.  These products were followed by 
capital goods (20.8%), consumers goods (13.3%) and oil and gasoline (16.6%).  Among those are  
pharmaceutical goods, fertilisers, heavy equipment a nd industrial machines, automobiles, electronic 
goods, plastic materials, and grains.  
52. As for 2008, imports increased 46.3% from January  to October compared to the previous 
year.  The Brazilian exports did not grow as fast, re gistering an expansion of 25.2%.  By virtue of 
imports, the surplus in the trade balance will be sm aller than in 2007, as it registered US$22 billion by 
the end of October. 
53. On the one hand, the appreciation of real agai nst the US dollar has raised imports of goods 
and services.  On the other, due to higher prices for commodities Brazilian exports have soared, mitigating negative effects of the exchange rate.  In dustry perceived this scenar io as an opportunity to 
modernize its industrial park and to increment its activ ities.  The list of imports is an evidence of this 
perception, showing that capital goods and raw materials have totale d almost 70% of the imports from 
January to October 2008.  This enthusiasm also reflects upon the GDP, which, until the first quarter of 
2008, registered a 6.4% growth compared to the same period in 2007. Brazil WT/TPR/G/212 
 Page 15 
 
 
(2) LOCAL CURRENCY PAYMENT SYSTEM -SML 
54. In October 2008, Brazil and Argentina started to allow trade settlements in local currencies 
through the Local Currency Payment System (Sistema de Pagame ntos em Moedas Locais-SML ), 
which is a bilateral agreement between the Centra l Banks of Brazil (BCB) and Argentina (BCRA), in 
accordance with CMN Res 3.608, from September 11, 2008.  Around 10% of all Brazilian exports 
and imports are with Argentina, while roughly 30% of all Argentinean exports and imports are with 
Brazil.  In 2007, the CMC Decision No. 25 created  the Local Currency Payment System between the 
members of Mercosur as voluntary bilateral agreemen ts between the central banks.  The SML allows 
Brazilian and Argentinean exporters to set their pr ice in their own local currencies, and allows 
importers from both countries to pay exporters in th eir local currencies as well.  The SML rate is 
published daily and it is a cross-rate between the Brazilian Ptax rate (BRL/USD) and the Argentinean 
Reference rate (ARS/USD).  The Central Banks of both countries act as clearing houses.  It was an initiative to reduce transaction costs, promote financ ial integration and consequently increase trade 
among the member countries, mainly encouraging micr o and small entrepreneurs to participate in the 
foreign trade.  Currently 75% of the Brazil-Argentin a trade transactions have individual values below 
US$50.000. 
(3) P
ARTICIPATION IN THE WTO 
55. The WTO is at the center of Brazilian Trade Polic y.  There is no substitute for the multilateral 
trading system for the establishment of a fair and inclusive global economic order.  Brazil has been 
actively engaged in the negotiations of the Doha Round and expects that the outcome of the DDA will 
effectively transform the devel opment goals of its mandate in true opportunities for development 
countries. 
(i) The Doha Round 
56. Brazil considers that the Doha Development R ound will only be successful if it results in 
benefits for all members, particularly for developi ng countries.  Priority should be assigned to a 
successful and meaningful agreement on agriculture, since the overwhelming majority of the 
vulnerable segments of the population have their liv elihoods linked to the rural areas and the sector 
remains subject to a wide array of trade distor tions and protectionism, which hamper effective 
exploitation of developing countries' competitiveness in this field. 
57. The conclusion of the Doha Round would br ing new and structural opportunities for 
developing countries through: a) elimination of agri culture export subsidies;  b) significant reduction 
of domestic subsidies for agriculture in develope d countries, c) expansion of market access for 
agricultural products;  and d) strong reduction of tari ff escalation.  Moreover, Special and Differential 
Treatment (S&D) in the WTO should be reinforced .  Developing Countries will only benefit from the 
conclusion of the Round if they build export capacity and infrastructure, and if they are able to identify export opportunities, diversify production and add value to it. 
58. In the context of the world financial crisis, Brazil attaches great importance to the conclusion 
of the negotiations as a means of attenuating the impact of the crisis through the expansion of 
international trade.  The conclusion of the D DA is key for the strengthening of the Multilateral 
Trading System and the establishment of an open and fair trade regime, tr iggering economic growth 
and development. WT/TPR/G/212 Trade Policy Review 
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(ii) Dispute settlement 
59. Brazil has been a major user of the WTO dispute settlement system.  Since 1995, it has 
appeared as complainant or respondent in 37 cases submitted under the “Understanding on Rules and 
Procedures Governing the Settlement of Disputes” (DSU).  Considering all WTO Members, Brazil 
ranks fourth in terms of participation in the Mechanism, together with India, and after the 
United States, the European Communities and Canada .  As complainant, it has appeared in 23 
disputes, also ranking fourth after those three Memb ers.  Brazil's participation in the WTO dispute 
settlement system reflects its reliance on a mech anism designed to guarantee the implementation of 
the obligations undertaken by the Members in the various agreements.  In the period under review 
(2004-07), Brazil initiated 1 new case and has appeared in 2 new cases as respondent. 
(iii) Special and differential treatment 
60. Brazil attaches great importance to the WTO prin ciple of  providing special and differentiated 
treatment (SDT) to developing and least devel oped countries (LDCs).  Through SDT, the WTO is 
expected to offer developing countries and LDCs longer transition periods, reduced levels of 
commitments, and other mechanisms that allow limi ted flexibility in coping with the challenges posed 
by trade liberalization.  Demonstrating the importa nce given to this principle, Brazil presented in 
November an informal  proposal for the creation of a mechanism to monitor SDT.  The proposal 
recognizes “that the Monitoring Mechanism ca n facilitate in achieving the objectives of 
operationalization of Special and Differentiated treat ment and thereby accelerating the integration of 
developing and least developed members into th e multilateral trading system”, and foresees the 
creation of “a simple, practical and efficient mechanism, which complements other existing, as well as 
proposed monitoring mechanisms.” 
(4) PREFERENTIAL AGREEMENTS  
61. Brazil believes that bilateral and regional trade agreements can be a useful complement to the 
multilateral system, by deepening the integration of ma rkets, reinforcing the role of trade in economic 
growth, and promoting gains of scale for domestic firms.  From that perspective and in accordance 
with WTO disciplines on regional trade agreemen ts, Brazil continued to place Mercosur as the 
centerpiece of its trade policy.  Brazil also particip ates in other regional agreements within LAIA.  As 
a member of Mercosur’s customs union, Brazil has been negotiating a number of Preferential (PTA) and Free Trade Agreements (FTA) with extra-regiona l partners.  Mercosur si gned a FTA with Israel 
in 2007 and a PTA with India in 2004.  Mercosur has also concluded negotiations for a PTA with the 
Southern African Customs Union (SACU).  The ne gotiation of an Association Agreement between 
Mercosur and the European Union, including a Bi-regional Free Trade Agreement, remains on 
Mercosur’s agenda.  Brazil  also attaches great im portance to the new round of the Global System of 
Trade Preferences among Developing Countries (GSTP) as an opportunity to increase South-South trade.  
(i) Mercosur 
62. Mercosur is the backbone for further regional integration and negotia tion of extra-regional 
agreements.  During the period under revision, Me rcosur has taken important steps towards the 
consolidation of the Customs Union.  Decision No. 54/04 of the Council of the Common Market 
(CMC) provides for the elimination of the double charging of the Common External Tariff (CET) in intramercosur transactions in two phases.  In force since January, 1
st 2006, the first phase comprises 
goods for which the CET is 0% or for which the preference margin is 100% (Dec. CMC No. 37/05) 
This is an experimental phase for the complete  elimination of the double charging of the CET. Brazil WT/TPR/G/212 
 Page 17 
 
 
Negotiations are in due course to implement the second phase, which requires the conclusion of the 
Customs Code of Mercosur and ag reement upon a mechanism for the di stribution of the income from 
import duties.  
63. Deeper integration of the production chains w ithin the countries of the region has been an 
important aim of Mercosur.  Several initiatives are unde r way to foster integration in the automotive, 
tourism, wood and furniture, and oil and gas s ectors.  The “Fund for Small and Medium-Sized 
Businesses” (Dec. CMC n. 22/07), which will be implem ented soon, will be an important tool to help 
finance small and medium en trepreneurs in Mercosur. 
64. Established in 2006, the Fund for the Structur al Convergence of Merc osur (FOCEM) (Decs. 
CMC n. 45/04 and 18/05) epitomizes Mercosur’s commitment to bridging the development gap 
between the countries of the region.  It aims at funding the development of infrastructure and social 
cohesion in Mercosur.  The Fund is made up of contributions from the four member States that 
amount to US$100 million annually, of which Braz il contributes with US$70 million. Paraguay and 
Uruguay are the main beneficiaries of FOCEM a nd Brazil and Argentina the main contributors. 
65. Regarding trade in services, the sixth round of liberalization was completed (Dec. CMC 
No. 01/06), and a seventh round is under way (Dec. CMC n. 16/07), in order to proceed with the 
implementation of the commitments  under the Services Protocol.  
66. The signing of the Protocol of Accession of Ve nezuela to Mercosur in 2006 is an important 
landmark. Besides increasing regional trade, the inco rporation of Venezuela to Mercosur allows for 
closer co-operation in strategic sectors such as energy and infrastructure. 
67. Created in December 2005, the Parliament of  Mercosur (Dec. CMC No. 23/05) represents a 
political decision of Member States to strengthen a nd deepen the integration process and to develop 
common interests and values in the region.  There are currently 18 members of Parliament for each 
Member State, including Argentina, Brazil, Paraguay, Uruguay and Venezuela.  
68. Member States have agreed upon a number of instruments with a view to facilitating the 
movement of citizens among all participating countries.  
69. Active participation of civil society and social  movements in formulating public policies in 
areas as diverse as education, health, labour, human  rights and others is also contributing to the 
enlargement of social responsibility and political accountability.  For the first time, in December 
2008, the Common Market Council will open its doors to the participation of Ministers and authorities 
of social areas from Member and Associated States, alongside with Ministers of Foreign Affairs and 
of Treasury and the Economy.  This is as much an  institutional breakthrough as it is a commitment to 
advancing the social agenda of Mercosur integration. 
(ii) Mercosur and regional agreements 
70. Mercosur has also a broad range of free trade agreements (FTA) subscribed by that customs 
union, within the framework of LAIA.  These FTA are known as Economic Complementation 
Agreements – whose acronym in Portuguese and Span ish is ACE – and they have been signed with 
Bolivia (ACE-36), Chile (ACE-35), Peru (ACE-58), and Cuba (ACE-62).  Additionally, there is  a 
joint agreement with Colombia, Ecuador, and Venezu ela (ACE-59).  In July 2002, a partial scope 
agreement, providing for free trade in the automo tive sector after a transition period lasting up to 
30 June 2011, was signed between Me rcosur and Mexico.  It should be  noted that since 30 June, 2001 WT/TPR/G/212 Trade Policy Review 
Page 18 
 
 
Mercosur member countries are not individually allo wed to sign trade pref erence agreements with 
third parties, according to a Common Market Council Decision.3  The remaining agreements 
previously concluded by each Mercosur member c ountry are being replaced by agreements that 
involve Mercosur as a whole.  
71. Preferential margins granted within the frame work of the free trade agreements between 
Mercosur and Chile and between  Mercosur and Bolivia have been  regularly expanded since their 
entry into force (in 1996 and in 1997, respectively) .  Chile and Bolivia became Mercosur associate 
members, upon their request, after the conclusion of the mentioned free trade agreements.  As a result 
of the signature of ACE-58 and ACE-59, Peru, Co lombia, Ecuador and Venezuela became associate 
members of Mercosur.  In July 2004, Mexico announ ced its intention to appl y to become an associate 
member of Mercosur. 
72. Besides the aforementioned agreements in the framework of Mercosur, Brazil has bilateral 
fixed tariff preferences agreements with Mexico (sig ned in July 2002, in the context of a Mercosur-
Mexico Framework Agreement from the same year).  Brazil has also a Special Scope Agreement with Guyana, signed in 2001, in which nearly all the negotiated products enjoy 100% tariff preference. 
(iii) Mercosur and extra-regional agreements 
73. Mercosur signed a FTA with Israel in 2007 and a Preferential Free Trade Agreement (PTA) 
with India in 2004. MERCOSUR has also conclu ded negotiations for a PTA with the Southern 
African Customs Union (SACU), currently pendi ng signature. Mercosur has signed framework 
agreements– which indicate the beginning of trade ne gotiations – and is negotiating trade agreements 
with Egypt, the Gulf Cooperation Council (GCC), Jordan, Morocco and Turkey.  The negotiation of 
an Association Agreement between Mercosur and th e European Union, including a Bi-regional Free 
Trade Agreement, remains on Mercosur´s agenda.  
74. The FTA with Israel establishes the gradual e limination of tariffs, based on a schedule with 
four categories, within a 10-year timeframe.  The agreement has provisions on rules of origin, 
safeguards, technical regulations, standards a nd conformity assessment procedures, sanitary and 
phytosanitary measures, technical and technological  cooperation, and dispute settlement, as well as an 
annex on the promotion of mutual assistance in cu stoms matters.  The agreement provides for its entry 
into force, bilaterally, after Israel and one of th e Mercosur States ratify it. As of November 2008, one 
Mercosur country had completed the ratification process. 
75. The Mercosur-India agreement was signed in 20 04 (the Annexes were signed in 2005).  It 
contains disciplines on safeguards, anti-dumping and countervailing measures, technical barriers to 
trade, and sanitary and phytosanitary measures, as well as dispute settlement procedures.  The trade 
agreement covers 450 tariff lines (India) and 452 lin es (Mercosur), with tariff reductions between 10-
100% on the MFN tariff.  As of November 2008, three Mercosur countries had ratified the PTA. 
76. Mercosur and South Africa signed a framework ag reement in 2000.  Its main objective is the 
conclusion of a free-trade agreement, but a partial sc ope agreement was to be concluded as a first step 
to that objective.  In 2003, the other four memb er countries of the Southern African Customs Union 
(SACU) joined the negotiations, which have been concluded in 2008.  The Parties are working on a date for the signature. 
                                                     
 
3 Decision CMC/DEC/32/00. Brazil WT/TPR/G/212 
 Page 19 
 
 
77. Trade negotiations between Mercosur and the European Union are based on the EU- 
Mercosur Interregional Framewor k Co-operation Agreement, signed in December 1995.  The 
negotiations were formally launched in June 1999 and tariff and services negotiations started in 
July 2001.  Market offers from both sides, in cluding goods, services, government procurement and 
investment, were exchanged in September 2004 but were not deemed sufficient for an agreement. 
Since then, Mercosur and the European Union have  met a number of times at ministerial and senior 
official levels, but the formal resumption of negotiations has yet to take place. 
(iv) Global system of trade preferences 
78. Brazil, along with other 42 developing countries, is a member of the GSTP (Global System of 
Trade Preferences among Developing Countries).  Since South-South trade has been increasing well 
above world trade average growth and is, thus, becoming a significant source of dynamism for the 
global economy, the GSTP has gained more importa nce as an instrument to further enhance and 
deepen trade among developing countries.  Hence, Brazil actively promoted the launch of a third 
round of negotiations of the GSTP, which took place in São Paulo, in June 2004, during 
UNCTAD XI.  
79. Brazil continues to be engaged in those nego tiations which are seen as a timely opportunity to 
promote new markets and generate trade among de veloping economies, within a rule-based and 
predictable framework. 
IV. TRADE INSTITUTIONAL AND REGULATORY FRAMEWORK 
(1) CROSS -CUTTING ISSUES  
(i) Technical standards 
80. Since 2004, Brazil has published about 2173 standards, of which 37,5 % are the direct 
implementation of ISO or IEC standards.  The remaining standards either result from national 
initiatives or reflect International Standards, w ith appropriate adaptation to address fundamental 
climatic or geographical factors, as well as insufficien t level of safety or technological problems.  The 
adoption of International Standards was  concentrated in the areas of hospital equipment, electrical 
equipment, machines, automobiles, and others in which standards conform a reference for the 
development of technical regulations. 
81. The transparency requirements, foreseen in the  Agreement on Technical Barriers to Trade 
(TBT) and in WTO texts, have been observed and respected by Brazil.  During the period of the 
V TPR, 276 technical regulations and Compliance Ev aluation Procedures were notified, in line the 
number of notifications associated with ec onomies similar in size to the Brazilian. 
82. In Brazil, most technical regulations adhere to the public consultation period of 60 days. 
When, for any reason, this period cannot be met,  extensions are granted, but only upon request. 
Brazilian technical regulations can be consulted through request to the focal points of the TBT and 
SPS agreements.  
83. Brazil, through the Focal Point of the WT O’s TBT Agreement, provides answers about 
Brazilian technical regulations and clarifies doubt s about technical standards and conformity 
assessment procedures raised by companies interested in exporting to the country. 
84. At the end of 2007, Brazil implemented a G ood Regulatory Practices Guide.  Adherence to 
this guide, which provides directives for good practi ces present in the TBT text, is voluntary for the WT/TPR/G/212 Trade Policy Review 
Page 20 
 
 
regulatory agencies (which implement Compul sory Technical Regulations and Compliance 
Evaluation Procedures). 
85. During the period under review, Brazil intens ified its participation in international 
organisations dedicated to the creation and implementation of standards, such as the Codex 
Alimentarius ;  the ISSO;  the IEC;  the ITU;  and the United Nations Committees on the 
Transportation of Dangerous Goods  (SCETDG) and on the Classification and Labelling of Chemical 
Products (SCEGHS), with the objective of maintain ing its regulations alig ned with international 
standards in the related sectors and preventing th e local standards from creating barriers that could 
render access to the Brazilian market more difficult to the country’s trade partners. 
(ii) Trade facilitation 
86. In December, 2007, the Brazilian Chamber of  Foreign Trade (CAMEX) established new 
principles and rules, to be observed by government executive agencies, in order to improve trade procedures and to create a favorable and expedite  environment for commercial exchanges.  CAMEX 
intended to reduce red tape and re gulatory burden, to streamline procedures, to improve transparency 
and to strengthen security. Furthermore,  the Brazilian Government aimed at: 
• The reduction of inspections by improving risk management systems; 
• Better coordination and co operation among different government border agencies; 
• The enhancement of the "Economic Authorized Operator” for traders with good compliance 
records with trade regulations; 
• The reduction of trade transaction costs;  and 
• The development of automated systems and te chnologies to improve information exchange 
between border authorities. 
87. Since then, several steps have been taken to  implement these guidelines, including the 
creation of the Technical Group of Trade F acilitation (GTFAC) in march 2008. The Brazilian 
Government main accomplishments  for Trade Facilitation in 2008: 
• Conclusion of the draft legislation submitted to Congress to ratify the Istanbul Protocol (Ata 
Carnet); 
• Elimination of licencing requirements for importing airplanes and airplane parts; 
• Reduction in the number of products subjected to  inspection for internal transit by ANVISA 
and IBAMA; 
• Comprehensive review of legislation and li censing requirements for each non-tariff control 
agency with a view to reduce duplication and increase efficiency; 
• Introduction of improvements to Siscomex
4 in order to allow agencies to direct less risky 
operations to automatic licensing; 
• Incorporation of new software to Siscomex to allow for the attachment of electronic 
documents to the system;  and 
• Nationwide evaluation of the available work force of all Brazilian government agencies 
operating at borders to optimize personnel to increase flow of trade. 
                                                      
4 Brazilian External Trade Data System. Brazil WT/TPR/G/212 
 Page 21 
 
 
88. As for the work in progress: 
• Definition, development of criteria, and intro duction of risk management tools for non-tariff 
control agencies into Siscomex;  and 
• Implementation of more efficient rules for in spections of wood products and containers 
consisting of wood, including acceptance of a certification issued by exporters or importers that the wood has been treated. 
(iii) Customs modernization 
89. From 2004 to 2007 the Secretariat of the Federa l Revenue of Brazil (RFB) kept the ongoing 
effort to speed up the flow of fo reign trade, also increasing combat to customs related crimes.  The 
average time for customs clearance has been constantly reduced trough the years, reflecting the effort 
to consolidate, simplify and harmonize customs procedures.  The intensive use of information 
technology (IT) improves risk analysis, reducing rele ase time in ports and strengthening the combat to 
frauds like counterfeiting and piracy.  In this peri od, RFB started developing  a project based on 
artificial intelligence, in order to make risk mana gement techniques more effective when applied in 
selection operations for inspection during customs clearance and during the authorization process for 
foreign trade operators.  Brazil is making efforts to sign important internationa l agreements related to 
customs, such as the Revised Kyoto Convention and the Istanbul Convention, both from the World 
Customs Organization.  Likewise, RFB is worki ng on licit trade facilitation,  cooperating with other 
Brazilian government agencies, as well as with other countries customs administrations. 
(iv) Sanitary and phytosanitary issues 
90. Transparency on sanitary and phytosanitary me asures has been enhanced in Brazil.  All 
measures aiming at protecting human or animal health from food-borne risks, human health from 
animal or plant carried diseases and animals and plan ts from pests or diseases are regularly notified to 
the WTO and made available on the internet. The mo st important risk analysis processes are notified 
to the WTO, and the relevant sanitary or phytosan itary events immediately reported to the competent 
international organizations and authorities of our tr ade partners.  Brazilian Enquiry Points work in a 
coordinated manner and both of them attend the SPS Committees, contributing actively to them. Since 
the last TPR, Brazil has increased significantly its participation on the development of international 
standards coordinated by the three Standard Se tting Bodies recognized by the SPS Committee.  In 
addition, the Brazilian sanitary and phytosanita ry measures are strongly based on standards and 
guidelines produced by Codex Alimentarius , OIE and IPPC. 
91. Since the creation of the WTO, Brazil has signe d more than thirty bilateral agreements on 
sanitary and phytosanitary matters, based on the SPS Agreement principles.  The main purpose of 
these agreements is to identify common rules, simplify import controls, harmonize certification 
requirements, and facilitate the bilateral trade and entry of selected products.  The importance of such 
agreements for Brazilian exporters and their trade partners can be measured by the increase of the 
bilateral volume of trade exports with more than one hundred countries and the integration of medium 
and small-sized agriculture producers into the inte rnational market, in such different sectors as 
honeybee, organic products, fresh fruits and flower s.  However, the full potential of Brazil’s 
agribusiness has yet to be fully developed, mainly  due to the lack of recognition of equivalence 
agreements by some countries, as recommended by the WTO’s SPS Agreement.  It is important to 
highlight Brazil’s commitment to animal and plant health and food safety in accordance with the SPS 
agreement. WT/TPR/G/212 Trade Policy Review 
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(v) Competition policy 
92. During the last few years, a number of provisions of the Brazilian antitrust law have been 
modified with the purpose of strengthening enforcement of anti-competitive laws and of improving the Brazilian Competition Policy System (BCPS).  Thus, competent authorities have been granted 
new powers, especially during cartel investigations . In 2003, the BCPS created an intelligence center 
for cartel investigation together with the federal police and public prosecution offices.  The first dawn 
raid related to cartel investigation was successfully carried out, and thirteen others followed; for the 
first time in Brazilian Competition history, a leni ency agreement was signed; and the use of wire 
tapping by criminal authorities was intensified. 
93. Law 11.482/07, amended the Brazilian Compe tition Law and introduced the possibility of 
direct settlements in cartel cases. Prior to  this amendment, the CADE or the SDE ( ad referendum  of 
CADE) could settle with the defendants in administra tive proceedings, except those related to cartels. 
This new possibility represents a remarkable impr ovement: early cooperation on the part of the 
defendants saves public resources, cuts down litigati on, enables collection of a significant sum of 
money and provides expedited treatment and more  certainty and transparency to the business 
community. 
94. Nowadays, merger control in Brazil is mandatory  over an established threshold.  Parties may 
choose between filing a merger either prior or with in 15 business days after the execution of the first 
binding document of the deal. The “Fast-Track  System” for simple cases has been introduced, 
reducing in about 86 days the review period. Cu rrently, 75% of the caseload is being reviewed under 
this simplified procedure. In 2004, the Brazilian authorities added a new category of cases that are 
now eligible for the “Fast-Track”, which are those where the merging parties’ turnover within Brazil 
is less than R$400 million (around US$200 million). 
95. It is worth mentioning that the draft Bill 5.877/2005, which establishes a pre-merger 
notification system, is in accordan ce with international standards with  regards to the merger control 
system . Said system would be a further incentive to  the parties to collaborate to the rapidity of the 
analysis, as well as to amplify the possibility of competition remedies to the anti-competitive 
problems that may eventually appear. 
96. Indeed, the BCPS is following international sta ndards of competition policy and consolidating 
even more its participation in a variety of intern ational organizations relating to competition policy, 
including the Competition Committee of the OECD (as an observer), the International Competition 
Network (ICN), UNCTAD, and the Latin American Competition Forum. 
97. Regarding the Financial System, a Bill (PLC  No. 344/02) is being discussed in Congress to 
set up a framework to subject the financial system to the antitrust Authority (the Brazilian Competition Policy System).  This Bill aims at great er competition in financial inter-mediation and, as 
a result, a reduction in the cost of  credit.  According to the propo sed Bill, the Brazilian Central Bank 
will be the one responsible for reviewing the mergers in the financial system in case of systemic risk. 
Notwithstanding, the BCPS will continue to be respons ible for those reviews if there is no systemic 
risk involved in the transaction. 
(vi) Intellectual property 
98. Among the institutional rearrangements that contri buted to a more integrated and efficient 
government action in the domain of intellectual pr operty, the establishment of the National Council to 
Combat Piracy and Crimes against Intellectual Property (CNCP) stand out.  After a Parliamentary 
Commission concluded its work, in August 2004,  the Brazilian government initiated action to Brazil WT/TPR/G/212 
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strengthen co-ordination among the governmental agencies involved in the fight against piracy and 
counterfeiting.  The CNCP was established, in Oc tober 2004, under the aegis of the Ministry of 
Justice. 
99. The new Council absorbed the functions of the Inter-ministerial Committee to Combat Piracy. 
The CNCP was put in charge of designing and implementing a National Plan with a view to 
combating piracy, tax evasion and other crimes ag ainst intellectual property.  Such Action Plan 
comprises 99 measures to improve the anti-piracy and anti-counterfeiting policies in Brazil.  The 
CNCP has recently revised its National Plan, adjusti ng it to the new reality of piracy in Brazil and 
throughout the world.  The new plan is compo sed of 15 goals and 25 projects which will be 
implemented until 2012. 
100. The CNCP is composed by representatives of the public and the private sector. There are 
representatives of the Ministry of Justice (MJ);  th e Ministry of Finance (MF);  the Ministry of 
External Relations (MRE); the Ministry of Science and Technology (MCT);  the Ministry of Culture (MinC);  the Ministry of Development, Industry and Trade (MDIC);  the Ministry of Labour and Employment (MTE). With regard to the participa tion of the private sector, the following associations 
have a seat in the Council:  the Brazilian Associa tion of Software Companies (ABES);  the Brazilian 
Association of Record Producers (ABPD);  the Braz ilian Institute for Ethics in Competition (ETCO);  
the Brazilian Association of Intellectual Property (A BPI);  the Motion Picture Association of America 
(MPAA); the National Confederation of Industry (CNI);  and the National Confederation of 
Commerce (CNC).  Also, in CNCP sessions, there is regular participation of officials of the Federal 
Police Department (DPF);  the Federal Highway Po lice Department (DPRF);  the Federal Revenue 
Secretariat (SRFB);  the National Public Security Secretariat (SENASP);  as well as of Members of the Parliament. 
101. By bringing together private entities and Gove rnment representatives, with equal rights to 
voice and vote, in a joint council, the Brazilian initia tive is unique and innovative.  Additionally, it 
goes beyond the fight against piracy and counterfe iting through mere police repressive measures and 
integrates measures of both edu cational and economic nature.  
102. In 2007, in view of the positive results of the CNCP, the Brazilian Association of Software 
Companies (ABES) granted an award to the CNCP fo r the work done and for the decline in the level 
of software piracy in Brazil, which decreased from 64%  to 60% percent in a year.  In 2008, estimates 
show already a decrease of 1%. 
103. The work of CNCP has produced, in certain ar eas or sectors, a decrease in the volume of 
commerce of items which violate intellectual propert y rights.  This is a by-product of enforcement 
action but also of a shift both in consumer awareness of the negative effects of piracy in Brazil and in 
the business strategies of companies which have acknowledged the economic nature of the problem 
and decided to lower prices in order to reach out to lower-income classes. 
Actions 2005 2006 2007 2008 (partial) 
Counterfeit medicines seized (in units) 119,586 310,320 322,601 410,639 
Goods seized in border controls (in R$ millions) 596. 1 871.7 1,051.1 600.0 
Police inquiries initiated (in number  of cases) 8,186 6,930 8,693 over 6,000 WT/TPR/G/212 Trade Policy Review 
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(2) SECTORAL ISSUES  
(i) Industry 
104. Brazil’s manufacturing sector is characterized by its heterogeneity with several sectors 
presenting a high degree of international competitiven ess.  The industrial structure includes not only 
the transformation industry but also strong mineral and construction industri es, in addition to the 
production and distribution of electricity, water and g as.  The sectors of food and beverage (19.2%); 
chemicals (13.1%); metallurgy (12.1%); and tr ansportation materials (10.9%) made the most 
important contributions to the va lue of industrial transformation. 
105. During 2007, Brazil’s manufacturing sector produ ced an aggregate value of R$628.9 million, 
representing 28.7% of the country’s GDP.  This amount results from a vibrant performance of the 
sector in recent years.  In fact, from 2003 to 2007, there was significant growth in industrial production, specially at the beginning and at the end of the period, with 8.3% in 2004 and 6% in 2007. 
106. The recent cycle of the Brazilian economy has be en marked by a strong increase in internal 
consumption and by growth in the level of exports, reflected in an elevated consumption of machinery 
and equipment, with record utilization of the inst alled capacity of the transformation industry and of 
the capital goods industry. 
107. In December 2007, Brazil completed 23 con secutive quarters of growth in industrial 
production, 15 quarters of expansi on in consumption and 13 straight quarters of investment growth, 
an expansion, in the last two and a half year s, always superior to that observed for GDP. 
108. Many sectors show a high degree of internati onal competitiveness.  Sectors such as pulp and 
paper; steel milling; mining;  aviation (ranked third in global production of commercial aircraft);  oil; 
natural gas e petrochemicals; and ethanol (world's  largest producer), contribute to Brazil’s presence 
among the world's leading producers and/or exporter s.  These sectors represented 36% of Brazil's 
2007 exports (US$58 billion). 
109. At the same time, more traditional sectors, su ch as the agroindustry, the textile sector, the 
automotive complex, and the capital goods sectors, am ong many others, due to their high participation 
in the economy, demonstrate the high degree of diversification of the Brazilian industry.  The 
manufacturing industry exports more than US$80 billion. 
110. Growth in industrial production in 2007 w as widespread, benefiting most manufacturing 
sectors and extending to all usage categories.  The most outstanding performances occurred in the 
automotive vehicles sector (15.2%) and the machiner y and equipment sector (17.7%), but growth in 
the production of machines;  electrical materials and apparatus;  other chemical products;  basic 
metallurgy; extractive industry;  and foods also deserve mention. 
111. Within the usage category, the production of capital goods presented the most significant 
growth, reaching 19.9%, followed by the category of  durable consumption goo ds, with 9.2%, which 
reveals the characteristics of the growth cycle in itiated in 2004;  i.e., growth was pushed by family 
consumption and by the acceleration of investments. As a matter of fact, the investment rate of the 
Brazilian economy jumped from 15.3% of GDP in 2003 to 17.9% in 2007.  
112. The increase in demand in the internal market, in 2007, was led by the capital goods (30.7%), 
construction (16.2%), automotive (17.8%), and commercial utility (16.7%) sectors.  Almost 
1.6 million jobs were generated in Brazil, a nd the manufacturing sector was responsible for 
576 thousand new jobs. Brazil WT/TPR/G/212 
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113. Additionally, industrial productivity also presented growth in 2007, together with a recovery 
in the level of employment and of hours paid.  Looking back a few more years, 6 of 18 sectors presented productivity growth during the last four years:  footwear and leather;  non-metallic minerals; rubber and plastic;  pa per and printing;  wood; and electric, electronic, precision and 
communication machines and appliances.  
114. In 2007 the Brazilian industry’s import ratio, wh ich measures the participation of imported 
products in domestic consumption, reached 20%, wh ich corresponds to a percentage 50% higher than 
that observed in 2003.  The sectors most responsible  for the increase in the import ratio were those 
that are intensive in scale, engineering and tec hnology, particularly electronics, machinery and 
equipment, and automotive vehicles.  The significant growth in the domestic production of 
automotive vehicles and of machinery and equipmen t shows that the increase in the import ratio 
occurred within a context of complementarity betw een the supply of nationa l and imported products. 
115. Finally, among the manufacturing sectors, the automotive business stands out, having reached 
the threshold of 3 million vehicles produced in 2007 a nd responding for 3.5% of global exports in the 
sector. The auto industry started operating in three sh ifts to meet the heated demand, with strong 
investment plans. The information technology sect or, whose sales surpassed 10 million units in 2007, 
an increase of more than 24%, placed Brazil as the fi fth largest consumer market in the world.  
Estimates indicate that 2008 will end with sales of computers reaching the mark of 11.7 million units. 
(ii) Agriculture 
116. Brazilian agribusiness is highly competitive and its upward export trend was accelerated in 
2007 and 2008, backed-up also by the record grain crops observed in this same period, after the 
setbacks faced by the Braz ilian agriculture in previous years cau sed by declining prices and weather 
associated crop failures. 
117. Based on the data of the National Company of  Food Supply (CONAB), the total physical 
output of Brazil’s agribusiness increased appr oximately 16.7%  between 2004 and 2007, from 
571,837 to 667,157 thousand tonnes. According to the same data, the production of meat (beef, 
poultry and pork) reached of 23,589 thousand tons in 2007, a growth of almost 20% since 2004 
(19,761 thousand tons).  These figures do not incl ude the increase in the production of the food 
processing industries. 
118. The global financial crisis occurs at the clim ax of Brazil’s agricultural production and export 
performance. This is a factor that attenuates the impa ct of the crisis, whose major effects are the lack 
of liquidity and a downturn in de mand, commodity prices and profit margins.  Thus, Brazil estimates 
that its grain crop production in 20 08-2009 will be slightly lower than the one observed in the last 
harvest season. 
119. Brazilian agricultural policy and its instruments continue to follow a market oriented 
approach. Most of the rural credit, which relies on private sources, has increased steadily and the 
access criteria has improved. A new program was in troduced to support further the recovery of 
degraded soil and pasture and new initiatives were unde rtaken to overcome infrastructure deficiencies.  
120. About Brazilian agricultural programmes, OECD st udies highlight that despite the fact that 
agriculture in Brazil accounts for a much higher share of national income than in most OECD 
countries, producer support has accounted for a rate far below the OECD aver age.  The mechanisms 
to support producer prices in Brazil are target to assist family farmers and do not result in sector-wide 
price distortions. In addition the government is increasingly using instruments through which the 
private sector effectively operates the price gua rantees.  The reports conclude that Brazilian WT/TPR/G/212 Trade Policy Review 
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agricultural price support provides a limited subsid y to producers who are considered to be at 
disadvantage, either because their costs are rais ed by the underdevelopment of infrastructure, or 
because of low incomes.  
121. The studies also attest that Brazil does not have  agricultural export credit programmes, with 
the majority of lending to the sector coming from private non-bank sources such as domestic 
agribusiness and international lenders.  Althou gh rural credit represents roughly 15% of the 
operations, it constitutes less than 1.2% of the banking  system’s total liabilities, and is financed from a 
variety of sources, including savings deposits, speci al funds (FAT), government funds and general 
bank funding. 
(iii) Services 
122. In 2007, the service sector in Brazil represente d 65.8% of GDP and responded, in 2006, for 
nearly 80% of formal jobs distribution,  accordi ng to IBGE. Also in 2007, the sector attracted 46.9% 
of foreign direct investment, according to the Brazilian Central Bank’s database. Concerning the 
balance of services, the same period presented a defic it of US$12.3 billion. In 2007, the revenue of the 
exports of services reached US$22.5 billi on against US$34.8 billion in imports.  
123. One of the innovations introduced to improve st atistics in services is the development of a 
computerized system denominated SISCOSERV (Inte grated System for Foreign Trade in Services). 
When fully developed, this system will register  foreign trade transactions in services and rights 
between residents and non-residents.  The system will be a pioneer in data gathering for statistics in 
the foreign trade of services and rights, covering all four modes of supply in accordance to the 
General Agreement on Trade in Services (GATS) of the WTO. 
124. Another relevant aspect, from the perspective of trade policy in services, is the elaboration of 
the Brazilian Nomenclature of Services, with nine  digits.  The adoption of a common nomenclature 
will allow the harmonization of definitions about foreign trade in services regarding commercial, 
fiscal and exchange policies.  The first version of  a proposal on the nomenclature will be submitted to 
public scrutiny in the first semester of 2009. 
(iv) Renewable energy 
125. Brazil has one of the world’s cleanest energy mi xes, in which 46% of primary energy sources 
are renewable, whereas the world’s average is at 14%, a percentage that drops to 6% in OECD 
countries. Brazilian studies for the energy sector fo resee that such large use of renewable sources 
should be mantained, greatly due to the use of hydropower and bioenergy, including biofuels.  
126. About 30% of Brazil’s hydroelectric potential h as been explored, a percentage significantly 
lower than that observed in developed countries.  Such potential for the production of this renewable 
and affordable energy source is an integral part of the country’s long-term strategy for the sector. 
Widespread access to affordable energy is really important to achieving the goals of sustainable 
development, as means to promote social inclusion and combat poverty, promote national integration 
and the reduction of greenhouse gas emissions.  Braz il is, therefore, investing significant amounts in 
research and in new technologies to improve the ge neration and distribution of energy, including 
investments in hydroelectric power sources. 
127. Brazil also considers bioenergy, including biof uels, an indispensable tool for the expansion 
and diversification of the energy matrix.  Nowada ys, biomass electricity – generated mostly from 
sugarcane processing plants – accounts for about 3% of  Brazil’s total energy consumption.  By 2020, 
it should meet 15% of the national need for electricity.   As for the transport sector, the use of ethanol Brazil WT/TPR/G/212 
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and biodiesel plays a key role in the pursuit of su stainable development, climate change mitigation 
and energy security.  The Brazilian case shows th at the long term and large scale sustainable 
production and use of biofuels are possible, and Braz il works towards the creation of an international 
market for biofuels.  
(v) Land transports 
128. Brazil has land transportation ag reements with its neighbors and is negotiating one with 
France (French Guyana). The National Agency of  Land Transportation (ANTT) has enhanced and 
simplified regulations to facilitate the transport of goods and passengers.  The joint control of customs 
and transportation procedures in the 26 frontie r crossings, through on line processing systems, 
simplified and expedited the hauling of 13 million metr ic tonnes in 2007.  There is no limit for foreign 
participation in investments in road cargo tr ansportation, as the 20% limit was revoked by 
Law 11.442/2007. 
(vi) Air transports 
129. The National Civil Aviation Agency (ANAC), creat ed in September, 2005, is responsible for 
the regulation and safety/security oversight of civi l aviation in Brazil. Regarding negotiations for 
celebration of Treaties and Agreements on Internati onal Air Transport, the Agency, in coordination 
with the Ministry of External Relations (MRE), must observe the guidelines issued by the Council of Civil Aviation (CONAC).  
130. In 2007, CONAC Resolution 07 established the following guidelines relating to the 
international market for Brazilian air transport:  (i ) to use the Air Services  Agreements (ASAs) as 
mechanisms to stimulate the development of air tran sportation, in order to e xpand the flow of people, 
goods and services;  (ii) to improve the ASAs betw een Brazil and South American countries, in order 
to provide regional integration a nd to strengthen the principles of the Fortaleza Agreement;  (iii) to 
adopt a multi-designation policy;  (iv) to foster competition to lower prices and stimulate demand;  (v) to review pricing regulation, prevailing the free pricing. 
131. In accordance with those policies, ANAC ha s adopted, on aeronautical meetings for the 
renegotiation of the ASAs, the following provisions:  (i) increment of frequencies and traffic rights 
including 5ª and 6ª freedoms, for cargo and passe nger services; (ii) more flexible cooperative 
arrangements, such as codeshare, (including provisions  with third countries);  (iii) full liberalization of 
flight frequencies within South America;  (iv) reduc tion of restrictions that limit capacity and aircraft 
types;  and (v) adoption of free pr icing and multi-designation policies.  
132. Considering the guidelines above, during 2008, 15 ASAs were renegotiated, with the 
following countries: Russia, Ukraine, France, Be lgium, South Africa, United States of America, 
Singapore, Australia, United Arab Emirates , Venezuela, Peru, Luxembourg, Uruguay, 
United Kingdom and Chile. 
(vii) Ports 
133. Brazil’s terminals and port terminals, which ar e responsible for approximately 90% of the 
cargo traded with other countries, have sought oper ational improvements to meet the growing demand 
originating from the country’s foreign trade. The port system is composed of 34 government owned 
ports and 125 privately used port terminals. 
134. The total movement of cargo in Brazil’s ports and terminals, which grew by 7.2% per year 
between 2003 and 2007, exceeded 754 million tonnes in 2007.  During the same period, the WT/TPR/G/212 Trade Policy Review 
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movement of containers grew by an average of 13%  per year, measured in tonnes, and 12% measured 
in TEUs. 
135. The following are some of the most important m easures taken to increase the efficiency of the 
port system during the period: 
• US$280 million were invested between Augus t 2004 and July 2008 to modernize port 
equipment; 
• The National Dredging Programme was launched,  forecasting an additional investment of 
US$707 million for the next five years;  and 
• A total of 34 ports and 226 port facilities were certified in compliance with the ISPS Code. 
(viii) Telecommunications 
136. In the last 10 years, the transition from state monopoly to an open and competition-based 
regime in telecommunications was reinforced. Policy for the sector is set by the Ministry of 
Communications (MC) and implemented by the regulatory agency ANATEL.  Competition among 
operators has been possible through the developmen t of a regulatory model that established clear and 
reliable rules and regulations.  This new framework has provided domestic and international investors 
with a high degree of confidence, and has targeted  rules on universal service, service continuity, and 
quality principles in order to meet the telecommunications needs of the Brazilian population.  
137. Since telecommunication services were privatized , the sector’s contribution to GDP almost 
doubled from 3,2% in 1998 to 6,2% in 2007. In this period, companies invested R$141,0 billion, not to mention the payments of licenses and the valu e expended during privatization.  From the mid-
1990s onwards, investment increased between 5% a nd 7% a year in Brazil.  According to OECD 
Communications Outlook 2007, the emerging economies are among the fastest growing communication markets, representing approxima tely 9.5% of the worldwide market for 
communications equipment and services. The report indicates that Brazil ranks second in total 
expenditures in this sector within a group composed  of Brazil, China, Indonesia, India and Russia. 
138. In recent years, the technological convergen ce and the fast evolution of the sector 
underpinned the necessity to review the regulator y framework of the Brazilian telecommunications 
sector. As a result, in 2008, ANATEL developed a st udy with the scenarios that the sector could 
potentially fallin the next years, resulting in th e General Plan for Telecommunication Regulation 
Updates in Brazil (PGR). PGR presents the actions  that ANATEL will conduct in the short, medium 
and long run to update the regulatory framework for th e sector in Brazil.  These actions are related to 
the achievement of the goals of spreading broadb and access services, reducing barriers to the use of 
telecommunication services, improving the customer s’ perception of the quality of the services, 
increasing the use of telecommunication networks and services, diversifying telecommunication 
service offering, specially with th e increase of the offering of conver gent services, ensuring adequate 
competition levels in service exploration, expandi ng pay TV services and the development of national 
technologies and industry. 
V. FUTURE DEVELOPMENTS 
139. Fundamentally, Brazil is much better placed now th an it was during its last currency crisis in 
2002.  Macroeconomic management will continue to  follow the same principles applied in recent 
years.  The inflation target regime has been succ essful and market expectation for inflation in 2008 
and 2009 is within the target of 4.5%, with a vari ation band of 2%.  Government has been managing Brazil WT/TPR/G/212 
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the public finance in a way to a achieve a primary su rplus according to the target  and to keep the debt 
of the public sector under 40% of GDP. Brazil also aims at keeping its position as a net creditor in 
foreign currency.  
140. Brazilian growth in recent years, especially in  2008, has been strongly influenced by an 
increase in investments, forging the conditions for the expansion of the productive capacity and 
productivity.  The increase in investments as a pe rcentage of GDP, along with the increase of the 
domestic demand, mainly influenced by social policies and salary improvements, enables the continuation of the new cycle of growth of the Br azilian economy, despite the worsening of external 
conditions.  
141. Another fundamental measure was the Growth  Acceleration Programme (PAC), launched on 
January 22, 2007, with the objective of ensuring a GDP growth rate of 5% per year, raising 
employment levels and improving  the living standards of the population.  PAC consists of a set of 
measures aimed basically at raising public investment in infrastructure and removing obstacles to growth.  Moreover, PAC includes actions to stimul ate credit and financing, to reduce the tax burden 
and perfect the tax system, to improve the busin ess environment and to incentive investment in 
infrastructure.  
142. PAC’s investment in infrastructure are planne d along three main axes:  logistics (roads, 
railroads, ports, waterways and airports);  energy (generation and transmission of electricity, oil, 
natural gas and renewable fuels);  and social and urban (the programme electricity for all, sewage 
systems;  housing, subways e water resources). 
143. In January 2007, investments were forecast to total R$504 billion until 2010.  Today, the total 
volume of resources to be invested is estimated at R$636.2 billion, due to the addition of new 
projects. 
Axis 2007-2010 
Logistics 90,4 
Energy 292,9 
Social and Urban 252,9 
Total 632,2 
144. Encompassing PAC, the policy for productive development (PDP) has been conceived to 
guarantee the long run sustainability of a new cycle of  growth in the Brazilian economy.  To maintain 
this long run cycle of growth it is necessary to consolidate the private sect or’s confidence in the 
country capacity to grow and to foster competitiveness in all productive sectors. It is also important to 
strengthen the supply side to match the demand incr ease and to avoid inflationary pressures.  The 
objective of the PDP is to achieve a better integr ation of the governmental initiatives that have 
systemic impacts, emphasizing the investments foreseen in the PAC.  Another important PDP objective is the strengthening of the legal framewo rk regarding technological innovation. Aiming at 
creating a favorable environment for private inv estments, the Government implemented important 
measures, such as the already mentioned Trad e Facilitation Initiatives included in the National 
Strategy for the Simplification of Foreign Trade, to simplify the export and import process. 
145. From a trade policy perspective, Brazil will conti nue to play an active role at the WTO and a 
constructive role in building economic and trad e associations at all geographic levels.  The 
strengthening and development of Mercosur will continue to be an other major component of Brazil’s 
trade policy strategy, in particular with regard  to the association of new members and to the WT/TPR/G/212 Trade Policy Review 
Page 30 
 
 
conclusion of trade agreements with countries and group of countries inside and outside the sub-
region. 
146. Reinforcement of the multilateral system will re main a priority in Brazil’s endeavours to 
pursue an efficient and equitable international econom ic and trading framework.  In the context of the 
world financial crisis, Brazil will work towards the conclusion of the negotiations as a means of 
attenuating the impact of the crisis through the expans ion of international trade.  The strengthening of 
the Multilateral Trading System is paramount to Br azil and essential for the establishment of an open 
and fair trade regime. 
__________