Note:   Advance written questions by WTO Me mbers and the replies provided by Brazil are 
reproduced in document WT/TPR/M/140/Add.1 and will be available online at:  
http://www.wto.org/english/tr atop_e/tpr_e/tp_rep_e.htm.  WORLD TRADE  
ORGANIZATION  WT/TPR/M/140 
24 January 2005 
 (05-0272) 
Trade Policy Review Body 
29 November and 1 December 2004  
 
  
  
TRADE POLICY REVIEW 
 
BRAZIL 
 
Minutes of Meeting  
 
Chairperson:  H.E. Mrs. Puangrat Asavapisit (Thailand) 
 
 
    Page 
 
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3 
 
II. OPENING STATEMENT BY THE REPRESENTATIVE OF BRAZIL 4 
 III. STATEMENT BY THE DISCUSSANT 8 
 
IV. STATEMENTS BY MEMBERS 12  
V. REPLIES FROM THE REPRESENTATIVE OF BRAZIL AND 29 
 ADDITIONAL COMMENTS   
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 40 
 
 WT/TPR/M/140 
Page 3 
 
 
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The fourth Trade Policy Review of Brazil was held on 29 November and 1 December 2004.  
The Chairperson (H.E. Mrs. Puangrat Asavapisit) welcomed H.E. Minister Piragibe dos Santos 
Tarragô, Director of the Economics Department from th e Ministry of Foreign Affairs as head of the 
delegation, and the rest of the Brazilian delegation.   The Chairperson also welcomed H.E. Mr. David 
Spencer (Australia) who had kindly agreed to act as the discussant for this Review.  As usual, the 
discussant would speak in his personal capacity and not as a representative of his Government and, in accordance with the establish ed procedures, he had made availabl e in advance outlines of the main 
issues he intended to raise (WT/TPR/D/114). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures of the meeting.  The Report by Brazil was contained in document WT/TPR/G/140 and 
that of the WTO Secretariat in document WT/TPR/S/140. 
3. Copies of advance written questions submitted by  Indonesia;  Hong Kong, China;  Canada;  
Chile;  Australia;.  New Zealand;  Japan;  the Separate Customs Te rritory of Taiwan, Penghu, Kinmen 
and Matsu;  the United States;  Argentina;  Kenya;   the European Communities;  Korea;  Mexico;  
Switzerland;  the Philippines;  Colombia;  Costa Ri ca;  Turkey;  Thailand;  and Norway had been 
transmitted to the delegation of Brazil.  These questio ns and the replies provided by the delegation of 
Brazil are reproduced in WT/TPR/M/140/Add.1. 
4. The Chairperson noted the efforts made by Brazil to maintain fiscal discipline and keep 
inflation under control during the period since its last Review in 2000.  The Secretariat Report noted 
the important role of external demand in promoting growth, which had remained subdued during most 
of the period under review but had been picking up  since late 2003.  Export-led growth had been 
facilitated by Brazil's reform process and increasing integration into the world economy.  Brazil had continued to liberalize, and enhance the transpar ency of its trade regime, making the economy more 
flexible and resilient to shocks.  However, barri ers to market access persisted in some areas and 
export incentives and government support schemes remained a key element of Brazil's trade policy.  
She queried the Brazilian authorities with respect to the further reforms they envisaged to continue 
enhancing the efficiency and competitiveness of the economy. 
5. While stressing that Brazil was one of the most active participants in the WTO and had been 
taking an active role in the Doha negotiations, the Chai rperson noted that it had not participated in the 
ITA negotiations nor had it ratified the Fourth or Fi fth Protocol to the GATS.  In this respect, she 
believed that Members would be interested to k now how Brazil planned to enhance its commitments 
and contributions to the multilateral trading syst em, which would not only increase the predictability 
of its trade regime, but would also attract the fore ign investment the country needed to attain its 
growth objectives. WT/TPR/M/140 
Page 4 
 
 
II. OPENING STATEMENT BY THE RE PRESENTATIVE OF BRAZIL 
6. The representative of Brazil  expressed his appreciation for ha ving the privilege to head the 
Brazilian delegation to the Fourth Trade Policy Review  of Brazil.  He welcomed the opportunity to 
discuss Brazil's trade policy with interested Members.   He referred to the broader context of reforms 
undertaken by Brazil since the early 1990s, which were aimed at creating the conditions for the 
increasingly competitive insertion of Brazil into the global economy.  While preserving the role of the 
State in promoting development, these reforms ha d included a substantial privatization programme 
and the creation of an enabling environment for growth and development, which had comprised 
economic stabilization and trade liberalization. 
7. Brazil's participation in previous TPRs reflected  the evolution of this reform process.  In 
1992, the Brazilian Government had presented the outlines of a major shift of the Brazilian economy, 
from an inward-looking, import-substitution model, to  one characterized by outward, market-oriented 
policies.  In 1996, the progress achieved by the stabilization programme, known as Real Plan, and the 
increasing integration of the Brazilian economy at th e international and regional levels had been 
emphasized.  In 2000, references had been made to the consolidation of the economic model and to 
the deepening of the structural reforms.  Today, Br azil could describe the period since its last Review, 
in 2000, as one of further reform progress and institu tional and policy consolidation, with a view to 
preserving the achievements of the previous fourte en years, and with a renewed emphasis on the 
search for solutions to Brazil's structural shor tcomings, most notably in the social area. 
8. For Brazil, the last four years had been partic ularly difficult, characterized by a sequence of 
domestic and external shocks, which had ha d a negative impact on economic growth.  
Notwithstanding, Brazil had carried out the deep ad justments required by the macroeconomic stability 
plan, which should strengthen its resilience to exte rnal shocks.  In partic ular, he underscored the 
continuation of tight fiscal policies, inflation cont rol, and a floating exchange rate regime.  The 
achievement of a strong export performance had been key to a sound management of external 
accounts.  Brazil had been successful over the past four years in achieving strong export growth, 
mostly in exports of manufactures.  This had been possible by means of efforts for product and market 
diversification and an increase in the number of exporters.  The increase in exports had accompanied 
by a gradual recovery in imports. 
9. Economic growth, which had been modest in th e period under review, was forecast to reach 
4.5% in 2004 and 3.5% in 2005.  Reflecting the higher importance foreign trade had acquired for 
Brazilian corporations, trade and current account su rpluses were estimated to reach US$32 billion and 
US$9 billion respectively, by the end of 2004.  Foreign investment was expected to reach 
US$15 billion by the end of 2004, a net inflow abou t 50% higher than that of 2002.  The ratio of 
external debt to exports was almost half the 2000 le vel, which demonstrated that Brazil's resilience to 
external shocks had improved significantly. 
10. The Brazilian economy was currently striving to combine the necessary attributes to support 
sustained growth:  price stability, fiscal discipline, re latively lower levels of real interest rates, and 
trade and current account surpluses.  The Brazilian Government regarded macroeconomic stability as 
the centrepiece to achieve sustained economic grow th with social justi ce.  Targeted social 
programmes that had been put in place would contri bute decisively to the reduction of poverty and 
social inequalities.  The Zero Hunger Programme, a central initiative, identified hunger as a national 
political issue, not as merely an individual fatalit y.  This policy was aimed at enhancing social 
inclusion, by extending fundamental social rights to all, such as access to food, education, social 
welfare, and employment generation and protection.  However, much needed to be done to correct 
shortcomings and forge a strong social and economic  base.  Brazil was still a developing country. 
11. At the microeconomic level, a number of ins titutional improvements were contemplated in a 
comprehensive reform agenda aimed at freeing the productive sector from unnecessary regulations, WT/TPR/M/140 
Page 5 
 
 
rationalizing the tax structure, and fostering entrep reneurship, innovation, and credit markets.  These 
reforms included a comprehensive tax overhaul and soci al security restructuring.  New legislation was 
under consideration, including the projected Bankr uptcy Law and other improvements in financial 
markets, in order to strengthen capital and credit ma rkets and provide less expensive financing for the 
productive sector.  A sounder regulatory system, w ith a new law strengthening and unifying the 
structure of the agencies, would further increase ove rall efficiency by reducing transaction costs and 
providing greater stability for business. 
12. A reinforced multilateral trading system remained  a priority in Brazil's agenda.  Brazil was 
fully committed to making the Doha negotiations a complete success and was translating the Doha 
mandate into concrete and credible developmen t gains.  Brazil attached great importance to 
agriculture and to the need to secure  market liberalization in this area.  Progress in this sector lay, in 
Brazil's view, at the core of a successful round.  Havi ng that in mind, and in order to ensure balanced 
conditions for the agriculture negotiations, Brazil a nd other developing trading partners had created 
the G-20. 
13. Agriculture was the area where the most visibl e benefits from internal reforms undertaken by 
Brazil could be seen.  The remarkable competitiven ess and growth of Brazil's agriculture had been 
attained through a combination of factors, such as  market-oriented trade with no subsidies and low 
border protection.  Moreover, Brazilian producers, w ith the help of new planting techniques and better 
use of irrigation, were starting to take advantag e of the climate and vast amount of arable land 
available for production, without damage to the e nvironment.  As noted in the Report by the 
Secretariat, Brazil was one of a handful of countr ies where agriculture tariffs were lower than non-
agriculture ones, and the very modest support prog rammes mainly targeted low-income farmers and 
small producers, which attested to their non-trade distorting nature.  
14. Brazil and other developing countries could be nefit considerably from fair and market-
oriented trade in agriculture.  Many developed Members resorted to massive volumes of trade-
distorting domestic support and of export subsidies in  various forms.  These distortions and other 
protection mechanisms penalized competitive Member s, like Brazil.  For th ese reasons, agriculture 
was a priority for the successful conclusion of th e Doha Round negotiations.  Since agriculture was, 
par excellence , an area where developing countries had most to gain in international trade, a positive 
outcome in the negotiations in agriculture would be  critical to achieve the development objectives of 
the Round. 
15. Throughout its membership in the WTO, Brazil had sustained the need to improve subsidies 
and anti-dumping rules.  Brazil's objective was to ensure that these ru les were not used for 
protectionist purposes, that they levelled the conditions for export fina ncing, especially among 
developed and developing Members, and that th ey allowed developing countries to pursue their 
developmental goals. 
16. Brazil had made less recourse to trade re medies during the period under Review;  the 
application of new contingency measures on impor ts had fallen since 1999.  Since 2000, there had 
been no complaints against Brazil related to trade defence measures under the WTO Dispute 
Settlement Mechanism, which could be construed as a demonstration of the consistency of the 
Brazilian use of contingency measures with WTO ru les.  However, on the export side, unfair trade 
and economic distortions continued to  harm Brazilian exporting interests, especially in the agriculture 
sector.  Brazilian exporters had prepared themse lves to defend their trade interests through 
multilateral mechanisms.  
17. Despite the challenges posed by external adjustment, which had required posting trade 
surpluses to restore a healthy balance of paymen ts, Brazil had refrained from adopting protective 
measures.  Applied tariffs, by far the most signi ficant instrument of Brazil's trade policy, had 
remained well below bound rates, and the Governme nt's policy has been to progressively open the WT/TPR/M/140 
Page 6 
 
 
market on an autonomous basis.  The average applied MFN tariff had shrunk from 13.7% in 2000 to 10.4% in 2004.  Unlike many WTO Members, Braz il had a transparent and predictable system, in 
which all tariffs lines were bound, a nd all duties were bound and applied in ad valorem  terms, both 
for agricultural and non-agricultural goods.  More over, Brazil had a relatively homogenous tariff 
profile, with no bound tariff peaks.  The coefficient of tariff variation (standard deviation corrected by 
the average) was much lower than that of its ma jor trading partners, which showed that Brazil's 
exports were more affected by tariff escalation a nd peaks from those partners, than the opposite.   
18. With respect to trade regulations and procedures, Brazil's Customs Administration had 
endeavoured to further enhance the transparency and reduce the complexity of its trade regime.  It had 
intensified its work in order to speed up custom s clearance of goods, including electronic procedures, 
and modernize risk analyses techniques according to in ternational standards.  Greater transparency in 
sanitary measures and technical regulation had also been put in place.  An Inter-ministerial Commission on trade facilitation had been created to reform and simplify procedures and other 
bureaucratic requirements.  Such work was expected to further lower foreign trade transactional costs. 
19. The successful reforms started in the previ ous decade had restored macroeconomic and 
financial stability and growth and,  consequently, Brazil's traditional attractiveness to foreign direct 
investment (FDI).  In the 1990s, FDI inflows ha d been boosted by the privatization programme in 
service industries.  Today, albeit at lower levels, FD I inflows were considerably higher than in any of 
the years preceding 1996, showing remarkable re silience in spite of the global FDI downturn 
experienced since 2000.  Brazil accepted FDI in n early all business activities, especially since the 
constitutional distinction between fo reign and national ownership of i nvestment had been removed in 
1995.  National treatment was the cornerstone of Br azil's approach to FDI, once a foreign company 
was incorporated in the country.   
20. Brazil's privatization programme had been one of the largest in the world:  during the period 
1991-2002, total sales of state-owned companies to private investors amounted to $105 billion.  
Domestic and foreign investors had each accounted fo r half of the purchases.  Services had dominated 
the programme, accounting for almost three quarter s of total sales, with telecommunications and 
electricity representing the bulk, at 31% each. 
21. Trans-national corporations (TNCs) had ha d a significant presence in Brazil for many 
decades, especially in capital and technology-inten sive manufacturing industries.  Since 1995, the 
number of foreign affiliates had almost doubled, from around 6,000 to over 11,000.  TNC presence 
had increased in traditional areas and expanded to new activities, services in particular. 
22. For Brazil, as well as for many developing countries, an active investment policy was 
necessary in order to achieve such development objectives as:  better regional distribution of industrial activities, increased technological content of  exports, and job creation.  In this regard, and 
for the benefit developing countries, Brazil favoured  a degree of flexibility in relevant multilateral 
rules.  Since Brazil's last TPR, there had been a process of consolidation of several regulatory 
agencies, covering for example, water, waterways transportation, land transportation, health and 
sanitary surveillance, telecommunications, elect ricity, and petroleum.  These agencies were 
responsible for the implementation of a regulator y framework that sought to combine technical 
efficiency and social policy objectives.   
23. Legal and regulatory, institutional and social developments had impr oved the protection of 
intellectual property rights, including the establishment, in 2001, of an inter-ministerial anti-piracy 
committee, focused on the prevention and repression of violations of copyrights and neighbouring 
rights, and, more recently, the Parliamentary Inqu iry Commission, which had investigated actions of 
piracy and tax evasion.  Effectively integrating intellectual property rights and development policy 
remained a major challenge for the international co mmunity.  It behoved the WTO to ensure that the 
intellectual property system, anchored on the TRIPS Agreement, became responsive to the WT/TPR/M/140 
Page 7 
 
 
"development dimension".  For this reason, Brazil had been strongly supportive of and had 
participated actively in the negotiations that had le d to the landmark adoption of the Doha Declaration 
on the TRIPS Agreement and Public Health.  Ensuring compatibility between TRIPS and the 
Biodiversity Convention was another objective pursued by Brazil in the negotiations on 
Implementation in the Doha Round. 
24. Brazil believed that bilateral and regional trade agreements were a useful complement to the 
multilateral system since they promoted deeper integr ation of markets, a reinforcement of the role of 
trade in economic growth, and gains of scale for domest ic firms.  It was from that perspective that 
Brazil placed MERCOSUR as the cornerstone of its trad e policy.  Brazil also participated in other 
regional agreements within LAIA (Latin-America  Integration Association) and was engaged in 
negotiations with important partners under the Free  Trade Agreement of the Americas, and the Bi-
regional Association Agreement EU-MERCOSUR.  Brazil (through MERCOSUR) was also currently 
negotiating preferential trade agreements with I ndia and the Southern Africa Customs Union, and 
attached great importance to the new round of the Global System of Trade Preferences among 
Developing Countries, which it saw as an opportunity to further south-south trade. 
25. In summary, Brazil had pursued two avenues in its economic agenda.  On the one hand, it had 
sought to implement deep macroeconomic stability me asures and a comprehensive reform agenda;  on 
the other, it was striving for greater benefits in tr ade and investment through deeper integration in 
world trade.  From a trade policy perspective, Braz il would continue to play an active role in the 
WTO and in building economic and trade associations at the regional level. WT/TPR/M/140 
Page 8 
 
 
III. STATEMENT BY THE DISCUSSANT 
26. The discussant  (H.E. Ambassador David Spencer) noted that Brazil's economy and trade were 
changing quite dramatically, and that its importan ce in terms of participation in the multilateral 
trading system was growing every day.  Also nota ble was that the degree of transparency of its 
economic and trade policies had improved considerably. 
Macroeconomic environment 
27. The discussant noted that the Brazilian Government  had made a major and successful effort to 
fulfil its commitments to fiscal discipline and to co mbat inflation.  The period under review, namely 
mid 2000 to mid 2004, had not been easy for a large number of countries.  Brazil had experienced a combination of both external and domestic shocks.  On the external front, it had felt the aftermath of 
the 11 September attacks;  the Argentinian crisis and its direct and indirect effects on Brazil;  and the 
slowdown of growth in the main economies.  Amon g domestic shocks, were the energy sector crisis 
in 2001 and capital outflows in 2002.  As a result, economic growth in Brazil was modest during the period, and there was a mild recession in 2003.   
28. However, as noted both in Brazil's and the S ecretariat's reports, the Brazilian economy had 
weathered these shocks successfully.  Moreover, the Government's efforts seemed to have started to 
pay off in terms of growth, especially as from the last quarter of 2003.  GDP growth of over 3% was now expected in 2004, attributable in part to buoyant exports and strengt hening domestic demand.  
Higher growth was expected in 2005;  reportedl y, growth in the second quarter of 2004 had been 
running at 5.7% over the previous year. 
29. As Brazil's report pointed out, macroeconomic  stability was regarded as a precondition for 
sustained economic growth;  this would probably requi re lower interest rates.  One of Brazil's major 
economic achievements in recent years had been th e reduction of inflation.  These lower inflation 
rates had helped to lower interest rates although th ey were still stubbornly high in real terms.  High 
interest rates and large spreads between lending and borrowing rates seemed to be one of Brazil's 
major structural challenges.  Apart from keeping in flation under control, the Government's economic 
policy priority was to achieve a sustainable fiscal  position.  In this respect, the Government had 
remained committed to maintaining a primary fiscal  surplus during the period under review.   
30. One of the main problems on the economic front re mained the high level of external debt, and 
its adverse effects, directly and indirectly, on th e Brazilian economy.  The public debt to GDP ratio 
had increased to 56% in mid 2004, fr om some 49% in 2000.  However,  the ratio of public debt to 
exports had fallen, mainly as a result of a sharp increase in exports.   
31. A remarkable event during the period under review, had been the strong and, as it 
increasingly appeared, lasting turnaround in the current account balance.  Brazilian exports had 
performed strongly between 1999 and 2003, increasing by over 50% in U.S. dollar terms.  In this 
respect, it could be said that Brazil had benefite d from its increasing participation in the global 
economy. 
32. Like most other countries, Brazil welcomed fo reign direct investment.  However, after 
showing strong results in the late 1990s, FDI flows into Brazil had declined significantly since 2000.  
This had been probably due to a number of factors,  including reduced investor confidence, an unstable 
global economic environment, the deceleration of th e privatization process, and the relatively weak 
performance of the Brazilian economy.   WT/TPR/M/140 
Page 9 
 
 
Trade policy regime 
33. The discussant noted that Brazil had continue d to undertake major liberalization efforts 
during the period under review.  Its trade and inv estment regime had continued to move towards 
enhanced transparency, the elimination of rest rictions, and the streamlining of procedures. 
34. The multilateral trading system continued to be of major importance to Brazil, which 
conducted most of its trade on an MFN basis.  Brazi l saw its participation in  the multilateral trading 
system, as well as the active use of trade policy, as a means to foster sustainable economic growth.  
This was supported by a policy of seeking closer regional economic integration. 
35. Brazil was one of the most active Members of the WTO, which was reflected in the large 
number and scope of its contributions in the variou s bodies of this organization.  It had adopted a 
leadership position among developing countries, as witnessed  by its role of coordinator of the G-20.  
As noted in Brazil's report, Brazil considered that priority in the DDA should be assigned to "a successful and meaningful agreement" on agriculture .  Brazil was also pushing for tariff peaks and 
escalation to be addressed in the context of the NAMA,  while applying the principle of "less than full 
reciprocity" for developing countries' concessions. 
36. Brazil regarded preferential agreements as a complement to and not a substitute for the 
multilateral trading system.  For over a decade, Braz il had been a participant in the Southern Common 
Market (MERCOSUR), through which it had conclude d preferential trade agreements with Bolivia, 
Chile, and Peru, now associate members of MERCOSUR,  and preferential agreements with the three 
other countries of the Andean Community.  MERCO SUR had also concluded framework agreements 
with India, Mexico, and South Africa, was nego tiating a preferential trade agreement with the 
European Union, and participated in the Free Trad e Area of the Americas initiative.  Brazil also had a 
number of bilateral preferential agreements with  other LAIA members, but the scope of these 
agreements was generally more limited. 
37. Brazil had largely liberalized its investment re gime, which was now open to foreign investors, 
though with some exceptions.  There were still a nu mber of market access a nd investment limitations 
for foreigners in, for example, mining, financial services, and transport.  Although some of these 
restrictions were waived in practice, they re mained on the books, and could tend to undermine the 
predictability of the investment regime.  While Braz il had signed bilateral investment agreements with 
several countries, including within MERCOSUR, the Brazilian Executive had decided to withdraw all 
of these from the consideration of the Congress.  It would be interesting to hear from the Brazilian 
delegation the reasons for this withdrawal, and wh ether this could undermine efforts to negotiate 
future international agreements. 
38. He noted with satisfaction that Brazil had con tinued to enhance the transparency and reduce 
the complexity of its trade regime since the last Review in 2000.  The Secretariat report highlighted 
the reforms introduced to streamline and facilitate the import process.  It was also worth noting the 
widespread use of the transaction value for custom s valuation purposes and the relatively scant use of 
non-tariff barriers to trade. 
39. Brazil had bound its entire tariff mainly at ceiling levels that were significantly above applied 
rates.  The average applied MFN tariff had fallen from 13.7% in 2000 to 10.4% in 2004.  This reduction reflected, to a large extent, the stepped e limination of the general tariff increase adopted in 
1997.  Tariffs were, on average, lower on agri cultural goods (10.2%) than on non-agricultural 
products (10.5%), which made Brazil one of the few countries in this situation and fortified its stand 
towards agricultural liberalization.  But the inciden ce of tariff protection was still significant in some 
areas and discouraged the importation of goods with a higher value added.  At the same time, Brazil 
had in place a number of temporary tariff-concession schemes, mainly to reduce the cost of imported 
capital goods or goods not produced in the MERCOSUR area. WT/TPR/M/140 
Page 10 
 
 
40. An important achievement since Brazil's last Review, had been the revision of the import 
licensing regime.  Before 2003, all goods imported into Brazil had been subject to licensing 
requirements.  These requirements had been modified  and, as a general rule, Brazilian imports were 
now exempt from import licensing. 
41. Brazil continued to use anti-dumping actions ac tively, although the pace seemed to have 
slowed down somewhat.  A feature of Brazilian inv estigations was the sparing use of provisional 
measures.  This had limited the deterrent effects that AD investigations could have on the imports 
under investigation.  However, according to the Secr etariat report, Brazil intended to make more use 
of provisional measures in the future. 
42. The Export Financing Programme (PROEX) continue d to be one of the main tools for export 
promotion.  The PROEX had been modified twice since the last Review as a result of DSB 
recommendations, and although financing was at inter est rates representative of the market it was still 
subject to domestic-content requirements. 
43. Brazil was not a party to the WTO Plurilateral Agreement on Government Procurement.  The 
Secretariat report noted that, although, in general, national treatment was afford ed to foreign suppliers 
legally established or represented in Brazil, dom estic law granted preferential treatment to 
telecommunications and informatics products devel oped within Brazil.  On intellectual property 
rights, Brazil had made enforcement efforts,  but piracy continued to be a problem. 
Sectoral policies 
44. The Secretariat report noted that Brazil had continued to promote greater competition and 
efficiency within sectors, notably in services.  However, it also not ed that Brazil had maintained a 
tariff structure that protected a number of manufact uring activities while implicitly taxing agriculture 
and mining. 
45. The discussant noted that Brazil was an impor tant agricultural producer and exporter.  
Exports of agricultural products ha d totalled US$30.6 billion in 2003, and were expected to exceed 
that amount in 2004.  The main export products were soybeans, wood, meat, leather, sugar, and 
coffee.  Border policy was relatively liberal:  tari ff protection to agriculture was below the general 
average in Brazil, and tariff quotas were only used to  grant preferences.  Assi stance to agriculture in 
Brazil was limited in scope and modest in terms of explicit disbursements. 
46. Brazil was a strong supporter of agricultural lib eralization in the WTO.  As a large and 
growing exporter of agricultural products, Brazil would benefit substantia lly from the reduction of 
distortions in world agricultural markets and, t hus, had over the years been engaged actively in WTO 
negotiations. 
47. State participation remained important in the hydrocarbons industry.  PETROBRAS 
continued to dominate the production and distribution of petroleum and natural gas in Brazil.  It 
controlled almost the totality of Brazil's pr oduction of refined products .  Although PETROBRAS had 
been partly privatized, it remained a government-cont rolled enterprise.  Brazil had a large alcohol-fuel 
industry.  The Secretariat report noted that this industry, connected to agricultural production, had 
been largely liberalized.  While the Brazilian delega tion might wish to confirm this, it appeared that 
the only form of state support was Government financing of alcohol-fuel stocks for energy security reasons. 
48. Brazil had a large and diversified manufacturing sector.  Although policies in most economic 
sectors were increasingly market-oriented, manufactur ing continued to be protected by a number of 
active industrial policy measures, which included the use of tariffs, contingency measures and 
support.  As a result, while some industries had become world-class producers, others had WT/TPR/M/140 
Page 11 
 
 
increasingly sought protection against import competition.  For example, most AD duties applied 
were on certain manufactured products, such as steel, cement, and chemical products.  Also, 
protection through higher-than-average tariffs was provided to activities such as beverages, transport 
equipment, clothing, and footwear;  and speci fic support programmes continued to benefit the 
automobile, shipbuilding, and aircraft industries. 
49. The Secretariat report noted that Brazil had continued to liberalize its services sector in recent 
years, which in turn had promoted efficiency gains.   Liberalization had been particularly noticeable in 
telecommunications, financial services, and port and airport services.  However, at the same time, the 
report stressed that the State was still an important  supplier of banking and insurance services, and 
that the State could establish limits to foreign investment in telecommunications and financial 
services.  Moreover, Brazil had no WTO commitments on telecommunications, and limited ones on financial services, and had not ratified eith er the Fourth or the Fifth Protocol. 
50. The discussant congratulated Brazil for the steps taken during the period under review to 
enhance the openness and transparency of its policies,  as well as for its active participation in the 
multilateral trading system and its role as a spearhead for developing countries. WT/TPR/M/140 
Page 12 
 
 
IV. STATEMENTS BY MEMBERS 
51. Members welcomed the Brazilian delegation,  and thanked Minister Tarragô for his 
introductory remarks, the discussant for his lively cont ribution.  A number of Members referred to the 
questions they had submitted to the Brazilian delega tion in writing;  they looked forward to receiving 
the replies to these questions.   
52. The representative of Indonesia  noted that Brazilian economic growth had been modest since 
the last Review, reflecting factors such as international events and domestic difficulties.  Energy 
supply shortages, weak domestic dema nd – particularly consumer spending − and capital outflows 
had been closely related to low GDP growth, alth ough this situation had been reversed later by 
increasing exports and domestic demand, and GDP gr owth in 2004 was expected to exceed 3%.  The 
Brazilian Government had undertaken a policy to stre ngthen its fiscal position, and had set a target of 
4.25% for the primary surplus of the non-consolid ated public sector.  However, the primary surplus 
was insufficient to cover debt payments, as overa ll debt servicing was two-thirds of the budget.  
Indonesia recognized the measures taken by Brazil to redress fiscal accounts and reduce the debt 
burden and hence foster investment and allow the re sumption of self-sustained growth.  Indonesia also 
noted that as part of its monetary policy, Braz il continued to maintain a low inflation rate. 
53. Brazil continued to take measures to enhance trade liberalization and transparency.  The 
average applied tariff had declined to 10.4% , and import licensing requirements had been 
considerably reduced.  However, Indonesia was concer ned by some barriers still maintained to protect 
domestic consumers and producers, as well as by  the use of anti-dumping measures.  Brazil had 
imposed anti-dumping duties on Indonesian exports of  desiccated coconut products.  Indonesia also 
noted the policies adopted by Brazil to boost expor ts, like credit and credit facilitation and export 
support programmes.  Indonesia sought further clarifi cation with respect to the conformity of these 
policies with Brazil's WTO obligations. 
54. Brazil was an active user of the Dispute Settleme nt Mechanism;  its participation was highly 
appreciated as part of the efforts to strengthen GATT rules and disciplines.  Indonesia was aware that 
Brazil had a long-standing commitment to the multilat eral trading system, and appreciated its active 
participation in the DDA negotiations.  In agricu lture, Brazil had played a major role and had 
contributed positively to the post- Cancun negotiations.  As a foundi ng member of the G-20, Brazil 
had tabled many proposals of interest to developi ng countries;  it had also tabled proposals on special 
and differential treatment for developing countries,  rules, market access, and implementation issues, 
among others. 
55. As a member of MERCOSUR, Brazil attached  considerable importance to the use of 
preferential tariffs to foster trade among members.  Through MERCOSUR, Brazil's MFN tariff had declined from 13.7% in 2000 to 10.4% in 2004.  Braz il had also played a major role in boosting the 
regional economy through agreements with Colombia , Ecuador, and Venezuela.  Indonesia believed 
that this regional cooperation was in conformity  with and supported the multilateral trading system. 
56. The representative of Hong Kong, China
 noted that Brazil was its largest trading partner in 
Central and South America.  Bilateral trade re lations between Brazil and Hong Kong, China had 
become closer over the years, and had been marked  by an absence of disputes and the presence of 
potential for expansion.  At the multilateral leve l, Hong Kong, China appreciated the leadership 
demonstrated by Brazil as a founding member of the G-20, and its key role in securing the July 
package and in moving the negotiations to a ne w phase.  Hong Kong, China welcomed Brazil's 
constructive engagement in shaping the DDA and its affirmation to contribute to a successful conclusion of the Round, and looked forward to Brazil' s continuing leadership in the work towards the 
Sixth Ministerial Conference in Hong Kong, China. WT/TPR/M/140 
Page 13 
 
 
57. Brazil had made efforts to reduce its aver age applied MFN tariff from 13.7% in 2000 to 
10.4% in 2004, but there was a 20 percentage point  gap between bound and applied rates.  Hong 
Kong, China questioned the need for this very  generous safety margin, and urged Brazil to 
demonstrate leadership in narrowing the gap, in fu rther reducing applied rates, and in eliminating 
tariff escalation.  Hong Kong, China applauded Braz il's efforts to liberalize the services sector in 
recent years, which had increased competition and prom oted efficiency gains.  It encouraged Brazil 
not only to continue with this liberalization, but al so to play a leading role, engaging substantively in 
the market access negotiations on trade in services with  a view to improving the quality of the offers 
on the table.  A high level of ambition in servi ces was essential both for th e credibility of the WTO 
and for the success of this Round. 
58. On anti-dumping, Hong Kong, China had nothing good to say, and was sorry to see Brazil 
infected by this contagious disease.  Hong Kong, China hoped that the gradual decrease in the number 
of AD initiations, from a total of 63 in 1996-99, to 40 in 2000-03, was evidence of recovery.  Since its 
last Review in 2000, Brazil had developed about 1,700 standards, and only 19% had been adopted 
directly from ISO or IEC standards;  the rema inder had been developed from purely domestic 
initiatives or adapted from international standards.  Hong Kong, China urged Brazil to step up efforts 
to harmonize its national standards with international ones, so as to  facilitate the free flow of goods.  
Hong Kong, China commended Brazil for the increa sing use of electronic technology in government 
procurement and the resulting enhanced transparen cy, but encouraged it to improve its regime, 
particularly in respect of the granting of preferen ces to domestic goods and services in the IT sector.  
It also commended Brazil for its efforts on enforcem ent of intellectual property rights, evidenced by 
the sharp increase in the value of merchandise in viola tion of copyright that had been destroyed in the 
first half of 2004 compared with the same period the previous year. 
59. The representative of Canada  highlighted the particular usefulness of an analysis of Brazil 
under the Trade Policy Review Mechanism, follo wing the many economic developments that had 
taken place since the last review in 2000, as well as the increasing integration of the economies of the 
Southern cone in the MERCOSUR and their interest  in engaging with other negotiating groups or 
countries.  Brazil was one of Canada's key trading pa rtners and Canada's larg est bilateral market in 
South America.  In 2004, two-way trade with Brazil had surpassed US$2 billion.  Cumulative Canadian investment had reached an estimated total of US$5.9 billion.   
60. Canada was taking steps to reinforce its trade and investment relationship with Brazil, which 
had officially been designated a priority partner,  and was increasing collaboration in a number of 
fields, including science and technology and educati on.  The Canadian Prime Minister had recently 
visited São Paulo and Brasilia and Canada's Minister of Interna tional Trade had led a 50 member 
business delegation to São Paulo and Rio;  they ha d received a warm reception.  Canada was also 
pleased with the strong and constructive partnershi p it had developed with Brazil in the multilateral 
sphere, including cooperation in the Cairns Group, aimed at producing a more level playing field for 
agricultural exports.  There was also the Canadi an partnership with Brazil in the pursuit of 
hemispheric trade liberalization and sustainable de velopment through enhanced integration.  Although 
Canada was disappointed that the benefits of a FTA A would not be realized as quickly as envisioned, 
the vision behind this initiative remained valid.  As such, Canada looked forward to working with 
Brazil to successfully conclude a comprehensiv e and high quality agreement, one that would 
encourage increased trade and investment throughout  the hemisphere.  Canada also took particular 
interest in the developments within MERCOSUR,  as it continued to evolve, both internally and 
through its various international accords.  Canada would look to its members to ensure the group's 
continued outward orientation, in a manner both c onsistent with, and supportive of, the principles and 
goals of multilateralism.  
61. Since its last trade policy review in 2000, Braz il's economic growth had been modest due to a 
number of external and domestic factors;  howev er 2004 had been a much more positive year and 
Canada shared Brazil's hope that the targeted gr owth of 4.5% for 2004 and 3.5% for 2005 would be WT/TPR/M/140 
Page 14 
 
 
realized.  The sustainability of Brazil's recovery depended upon staying the course on fiscal discipline 
and reducing the debt burden.  This would be a ch allenge, but Canada was confident that Brazil would 
tackle these issues with the same determina tion it had shown in making the many economic 
adjustments to date.  Brazil needed  to stimulate strong growth in pr ivate consumption and investment.  
Concerted efforts were required to improve the investment climate for both national and foreign 
investors, as their participation was essential to drive the economic recovery.  Canada found much to 
commend in Brazil's overall performance.  Expor t performance had been remarkable, with a 
significant broadening into non-traditional markets a nd increased diversification of products.  In 
addition to a record commercial surplus, inflation had remained within pre-set targets and there had 
been a significant decrease of country risk, with a resulting upgrade in Brazil's credit risk rating from 
B2 to B1.  
62. Canada was encouraged that an Inter-Minist erial Commission on Trade Facilitation had been 
created to reform and simplify procedures and ot her bureaucratic requirements to further customs 
modernization;  further progress would be welcomed in this ar ea.  As highly trade-dependent 
economies, Canada and Brazil both benefited greatly from a strong rules-based multilateral trading 
system.  Canada shared many common interests w ith Brazil in the Doha round, including on the core 
issues of fundamental agricultural trade refo rm, market access for goods and services, and 
establishing a fair, rules-based system.  Canada l ooked forward, along with Brazil, to playing an 
active and constructive role in  the Doha round negotiations. 
63. The representative of Chile  highlighted Brazil's active role in the WTO.  Chile and Brazil 
shared the same global vision with respect to the WT O:  in agriculture both participated in the G-20 
and the Cairns Group, and they shared the goal of  eliminating export subsidies;  in rules, both 
countries sought enhanced disciplines, even though Brazil continued to be a major user of AD 
measures.  In the DDA, both Brazil and Chile looked  forward to balanced results in all areas of 
interest to developing countries, starting with agri culture.  Their bilateral relationship, based in the 
Economic Complementation Agreem ent between MERCOSUR and Chile , was characterized by an 
increasing trade.  Trade flows between the two countri es had risen by an annual average rate of over 
20%, four times the rate of expans ion of Brazilian total foreign trade.  Of the almost US$3 billion of 
bilateral trade in 2003, US$2 billion were Chil ean imports from Brazil, and US$1 billion Brazilian 
imports from Chile.  The Economic Complement ation Agreement between MERCOSUR and Chile 
had been affected by the depreciation of the real  since 1999.  Chile had proposed deepening this 
agreement to extend it to services.  On the bilate ral level, Chile and Brazil had signed a Memorandum 
of Understanding for the promotion of trade and investment. 
64. Chile regretted the withdrawal from the consider ation of Congress of all bilateral investment 
agreements, including one signed with Chile in 1994.  Chile wished to know whether these agreements would be resubmitted to Congress in the short run and if there options to overcome this 
impasse. In the absence of agreements of this kind , Chile asked what measure s Brazil intended to use 
to ensure the protection of foreign investors. 
65. The representative highlighted three areas of con cern in his country's bilateral relationship 
with Brazil, which had also been dealt with in th e Secretariat's report.  The first concerned import 
licences, which continued to apply on a large number of tariff lines, and were in many cases difficult 
to obtain.  The second was the details to obtain work  permits for temporary contracts for the provision 
of professional and technical services.  The third was the requirement for importers to contract 
maritime transport insurance with Brazilian compan ies, at a generally higher cost than in the 
international market. 
66. Since its last Review, Brazil had continued to use trade policy as an instrument to foster 
development and reduce poverty.  There had been advances with respect to  the transparency and 
simplification of the trade regime, like the cons olidation of regulations and the reduction of 
bureaucratic impediments.  In summary, Chile cons idered Brazil to be an active and trustworthy WT/TPR/M/140 
Page 15 
 
 
Member of the multilateral trading system, with wh ich it shared many interests and expectations.  
Chile hoped to continue working with Braz il in the WTO, regionally, and bilaterally. 
67. The representative of Australia  noted that his country enjoyed a productive trading 
relationship with Brazil.  The value of bilateral trade had increased steadily over the years and Brazil 
had recently regained its position as Australia's larges t trading partner in Latin America with trade in 
excess of $A1 billion.  Australia also has an increasing investment inter est in Brazil.  Australian firms 
had invested in the Brazilian mining sector and steel industry as well as chemicals, information 
technology, and insurance.  Australian and Brazilia n senior officials had held talks on economic and 
trade issues of mutual interest under the umbr ella of the MERCOSUR–CER Dialogue High-level 
Official meeting held on 22 November.  This di alogue framework provided the opportunity to discuss 
their respective trade liberalization efforts, revi ew internal developments, and exchange views on 
possible initiatives for expanding trade and investment between the two blocs. 
68. Brazil's economy was clearly strengthening and the growth outlook was positive.  This was 
due, in no small way, to the trade-opening progr amme launched in the 1990s, and the move away 
from import substituting industrializa tion policies and protection afforded by high tariff and non-tariff 
barriers in specific sectors.  The creation of the MERCOSUR had accelerated this process.  Australia 
welcomed Brazil's commitment to press on with the implementation of its comprehensive reform agenda.  Although continued struct ural reforms would not be easy to reconcile with social and 
development policies, their implementation w as important for longer-term economic growth.  
Infrastructure problems, including bottlenecks at ports and the limited capacity of rail and road 
systems, would require ongoing attention.  Also, investment in Brazil's mining sector could be enhanced through further reform  and strengthening of the sector's regulatory framework and 
implementing greater transparency. 
69. Australia appreciated Brazil's commitment to a strong and ope n multilateral trading system 
and its leadership role among developing countries in  the WTO.  Australia also appreciated Brazil's 
vigilance in maintaining the integrity of WTO Agreem ents and its preparedness to ensure that other 
Members complied with the rules through dispute settle ment action.  Like Australia, Brazil had been a 
strong advocate of agricultural trade reform thr ough its leadership of the G-20 and longstanding 
membership of the Cairns Group.  Both countries w ould continue to cooperate closely in this next 
phase of agricultural negotiations, to ensure the Doha Round delivered on th e promise of genuine 
agricultural reform embodied in the mandate:  to make  deep cuts in agriculture  subsidies in all their 
forms and to deliver real gains in market access.   Both countries were committed to ensuring the 
Round could finally address the many distortions and inequities in intern ational agricultural trade.  On 
other DDA issues, Australia encouraged Brazil to support ambitious outcomes that would promote genuine liberalization for all Members, especially in NAMA and services.  Brazil placed emphasis on 
developing country concerns in NAMA, especially on  the principle of less than full reciprocity.  On 
the other hand, Brazil's rapid export growth, increasing number of exporting firms, and export 
diversification into the African, Middle Eastern,  and Asian markets woul d seem to suggest that 
improved market access − deep cuts in tariff peaks, high tariffs  and tariff escalation in both developed 
and developing country markets − should also be at the forefront of Brazil's approach to the 
negotiations.  Australia would also expect Braz il to make a significant contribution to the NAMA 
negotiations, commensurate with its status as a wo rld class producer in several sectors.  These 
included automobiles and auto parts, chemicals, minerals, and forestry-related products, some of 
which continued to be shielded by high effective rates of tariff protection.   
70. On services, Australia encouraged Brazil to br ing its schedule of commitments more into line 
with those normally expected of an advanced deve loping country of its economic size and stature.  
The formal absence of any commitments on telecommuni cations, and the delays in ratifying the Fifth 
Protocol on Financial Service, were particularly  notable in this regard, especially against the 
background of the autonomous liberalizati on carried out by Brazil in these areas. WT/TPR/M/140 
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71. Australia's questions for this trade policy review  reflected the strength of Australian interests 
in the Brazilian market, and focused across th e range of the Brazilian economy, including on 
agriculture, industrials, mining, services, and competition policy. 
72. The representative of New Zealand  noted that the change of government in Brazil in 2002 had 
precipitated a period of market instability that had threatened to undermine Brazil's ongoing economic 
development.  This had not happe ned, largely due to the responsible policy direction set by the 
Government, in particular the targeting of inflati on and the maintenance of rigorous fiscal discipline.  
The success of these policies was pe rhaps the best news to be derived from the Review documents, 
and New Zealand congratulated the Gove rnment of Brazil on its achievements. 
73. New Zealand also acknowledged Br azil's leadership role at th e WTO, particularly in the 
context of the Doha Round.  New Zealand appreciated the efforts made by Brazil to develop and 
maintain momentum in the Round, through the G-20 a nd on its own.  Brazil needed to show further 
leadership, through market access contributions, to help ensure a substantial result in the non-
agriculture market access negotiations.  In contrast to the international norm, Brazil's average tariff on 
agricultural products was lower than on non-agricu ltural products, albeit with dairy products as a 
notable exception. 
74. Within this generally positive context, there re mained some aspects of Brazil's trading regime 
that could still be improved.  Uppermost was what was referred to as the " custo Brasil ", the cost of 
doing business in Brazil.  Relevant issues here we re the nature of the regulatory environment, the 
complicated legal system, and the many non-tariff charges outlined in the Secretariat's report.  
New Zealand urged Brazil to make improvements in th is area as a major priority for the period ahead.  
New Zealand also urged Brazil to consider:  the removal of non-automatic import licensing 
requirements;  the reduction of tariff escalation in key industries;  continued improvements in customs 
procedures;  and the further liberalization of trade in services.  New Zealand was currently the subject 
of anti-dumping duty on dairy products in Brazil, and would be very concerned if steps were taken to 
extend this duty beyond its current expiry date. 
75. This was an interesting and historic time fo r Brazil.  Significant changes and reforms were 
taking place.  The potential for advances in a ra nge of social and economic areas was enormous.  
Brazil's trade policy was an important factor in rea lizing this potential;  much had been achieved, and 
more could be done. 
76. The representative of Japan  observed that his country and Brazil had enjoyed amicable 
relations for over a century, including the active movement of persons emigrating from Japan to 
Brazil starting in 1908.  The number of people of Japanese descent in Brazil was now 1.4 million and 
the number of Japanese national residents in Brazil was 70,000, the second largest number of Japanese national residents abroad, after United Stat es.  In September 2004, Prime Minister Koizumi 
had made an official visit to Brazil, and in the Joint Statement with President Lula, the two leaders 
had committed to a revitalization of the bilatera l economic relationship between the two countries.  
Japan recognized that Brazil had been making effort s to liberalize and assure transparency, but a 
number of concerns remained.   
77. Prime Minister Koizumi had emphasized the importance of strengthening ties between 
MERCOSUR and Japan.  In this regard, Japan was payi ng great attention to the fact that Brazil, as 
one of the leading figures in MERCOSUR, was embarking on negotiations for FTAs, including negotiations with other regional entities such as the Eu ropean Union.  Japan believed that the fruits of 
liberalization should be shared among the parties c oncerned and expected FTAs to comply fully with 
WTO agreements and not create further trade barriers to third countries. 
78. Japan appreciated the role Brazil had been playing in maintaining and strengthening the 
multilateral trade system.  In particular, Japan appr eciated Brazil's contribution to the consensus for WT/TPR/M/140 
Page 17 
 
 
the July package.  Japan hoped that Brazil would c ontinue to play the role of facilitator of the 
negotiations among developing c ountry Members.  Japan was extending development assistance 
programmes to Brazil so that Brazil could, in turn , provide assistance to other Latin American and to 
African countries in the context of south-south co operation.  Japan hoped that Brazil would play an 
active role in the capacity-building of LDCs, for exam ple, by sharing its experience of participation in 
the dispute settlement system in the WTO with other developing country Members.  
79. The representative of the Separate Customs Te rritory of Taiwan, Penghu, Kinmen and Matsu  
noted the considerable progress made by Brazil sin ce its last Review in 2000, both in terms of 
liberalization and in improving the transparency of  its trade regime.  Brazil had progressively reduced 
its applied tariff rates, down to an average MF N rate of 10.4%, against a bound average of 30.2%, 
and, at the same time, had considerably reduced its licensing requirements.  Although Brazil had not 
ratified the Fourth or Fifth Protocol to the GA TS or participated in the Information Technology 
Agreement negotiations, it had been one of the most active participants in the WTO since the 
completion of the Uruguay Round.  Further enha ncing its multilateral commitments would improve 
the predictability of Brazil's trade regime, and make it an even more attractive investment destination.  
He encouraged Brazil to narrow the gap between its  applied and bound tariff rates, and to expand the 
scope of its GATS commitments in the Doha Round;  it  had been particularly instrumental in securing 
the adoption of the July package. 
80. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Mats u regarded Brazil as 
one of its main trading partners.  The average annual value of two-way trade between 2001 and 2003, 
had been close to US$1.15 billion, making the Se parate Customs Territory of Taiwan, Penghu, 
Kinmen and Matsu Brazil's fourth largest export market in East Asia.  Given the comparative 
openness of Brazil's trade and investment regimes, there was great potential to further strengthen bilateral economic ties in the years ahead. 
81. Brazil continued to be one of the most active users of anti-dumping measures.  During the 
period 1 January, 2000 to 30 June 2004, Brazil had initiated 43 anti- dumping investigations.  The 
Department of Commercial Defence (DECOM) provi ded Brazilian exporters facing anti-dumping or 
countervailing measures, or subject to safeguard investigations abroad, with information and a 
comprehensive range of advice and assistance in  preparing their defence and in answering 
questionnaires, accompanied them on verification vis its, and provided other technical assistance as 
required.  It would be interesting to hear from Brazil whether this assistance was offered free of 
charge, and about the conditions of eligibility for su ch assistance.  While foreign banks established in 
Brazil before 5 October 1988 could not open new branches, the number of branches for banks 
authorized after that date was subject to the cond itions set out at the time of authorization;  the 
representative requested clarification of the rationa le behind these restrictions, and an indication of 
when they were likely to be lifted. 
82. The representative of the United States
 noted that his country had always viewed Brazil as a 
close friend in the hemisphere.  Brazil and the United States faced many common challenges, from combating terrorism and money laundering to figh ting poverty and stimulating economic growth.  
They had been partners in Geneva since the early  days of the GATT, and Brazil had long been a key 
player in multilateral trade negotiations.  Amba ssador Zoellick personally had cited Minister 
Amorim's "can do, can be done" approach to ach ieving the July framework, and the United States 
looked forward to Brazil's bringing a "must do" attitude to completing the negotiations. 
83. It was clear that Brazil was one of the world' s top trading countries, and that it had been 
flexing its muscles and influence as an exporter.  In  this regard, the United States was pleased to note 
from the very first statement in the Secretariat Repor t, that "Brazil had continued to liberalize, and 
enhance the transparency of, its trade regime".  Th ere had been positive steps by Brazil since the last 
Review, including a reduction in average app lied MFN tariffs to 10.4%, a reduction of import 
licensing requirements, and a reduction in the time required to clear goods through customs.  The WT/TPR/M/140 
Page 18 
 
 
Secretariat Report further noted that these effort s had helped to make the Brazilian economy "more 
flexible, as evidenced by the resilience shown to a series of shocks during th e period under review".  
The United States agreed with this statement, but also  drew attention to the re ference on page 4 of the 
Secretariat Report that much of Brazil's recent economic growth had been driven primarily by 
external demand, including robust growth of g oods and services exports, which had increased by a 
third in value terms between 1999 and 2003. 
84. The United States considered that further moves by Brazil along a trajectory of trade 
liberalization could go a long way in stimulati ng domestic demand and increasing Brazil's GDP per 
capita, which had stagnated in real terms between  1999 and 2003.  The United States understood that 
Brazil wanted to improve its external balance, but underscored the importance of imports as well as 
exports in sustaining economic growth.  It was not clear how much import substitution and export 
promotion policies were really doing in the aggregat e to promote Brazil's growth and development, as 
special programmes targeted at se lected producers or industries invariably distorted capital markets 
and led to a misallocation of resources.  Even th e most well-intentioned gov ernments were rarely 
successful in trying to allocate scarce resources for growth. 
85. There were some specific areas where Brazil c ould take further action to improve its trade 
regime, such as further streamlining its import li censing system, strengthening its enforcement of 
intellectual property rights, and further liberalizing specific services sectors.   
86. On services, Brazil had not ratified the Fourth Pr otocol of the GATS, nor had it submitted an 
acceptable schedule of commitments on basic telecommunications.  Moreover, Brazil had ratified neither the Fifth Protocol to the GATS nor its  1997 financial services commitments.  Following 
through on its promises to the world trading communi ty would promote Brazil's integration into the 
global economy and bolster Brazil's stature in the global trading system.  Brazil applied a special tariff regime for goods imported through the mail, with a rate of duty of 60%.  The United States asked why 
these products were not subject to the normal duty ra tes for each product.  U.S. exporters of many 
products, ranging from forestry products to chemical s to motorcycles and automobiles, continued to 
have difficulties with Brazil's complicated and non-transparent import licensing procedures.  The 
Secretariat of Foreign Trade had implemented a computerized trade documentation system in early 1997 to handle import licensing.  However, for specific imports requiring special authorization from specific Ministries or agencies, Brazil maintained a non-automatic licensing system.  U.S. exporters 
had had difficulty using this system, in part b ecause the government of Brazil no longer published a 
list of products subject to the non-automatic license s.  The only method available to determine if a 
product required an import licence was to check the computerized system, wh ere access was restricted 
to registered importers.  This non-automatic syst em presented a significant barrier to market entry 
because suppliers had no means of discovering in  advance which products required licences, or 
whether they would be subject to minimum price and payment terms as a condition for receiving licences.  Sanitary and phytosanitary me asures remained significant barriers for several 
U.S. agricultural products.  As an example, Brazil continued to prohibit the entry of poultry and 
poultry products from the United States because of an alleged lack of reciprocity, contrary to WTO 
rules which dictate that Members must base thei r sanitary and phytosanit ary determinations on 
sufficient scientific evidence.  Th e effective enforcement of copyright law was vital to economic 
growth in the information age.  While Brazil's cr eation of a National Council to combat piracy was 
welcome, it would be in the best interest of Brazi l's creative artists if it moved boldly to enforce 
copyright law in a manner that would deter escalati ng copyright piracy.  The United States had made 
every effort to work with the Brazil on this issue,  but rampant copyright piracy remained a problem.  
87. The United States welcomed further cooperation on trade matters with Brazil, at the WTO 
and in the context of their positive a nd growing bilateral relationship.   
88. The representative of Argentina
 stated that during the period under review, the Brazilian 
economy had gone through substantia l reforms geared at facing adverse international economic WT/TPR/M/140 
Page 19 
 
 
conditions and domestic challenges.  The results of these efforts had been a solid economic recovery 
in 2004, backed by a strong increase of foreign tr ade and a reduction in domestic interest rates.  
Brazilian exports had increased by a third during the pe riod under review, or at an annual average rate 
of 11% between 2000 and 2003.  Hence the importan ce granted by Brazil to the multilateral trading 
system. 
89. Brazil was Argentina's main trading partner in the MERCOSUR, and both countries had been 
working to deepen this regional integration pro cess, and reinforce the coordination and convergence 
of policies and interests.  Argentina and Brazil,  together with other MERCOSUR members, would 
continue to support the completion of a develo pment round.  Argentina recognized the efforts 
undertaken by Brazil to consolidate the trade libera lization process as one of the pillars of economic 
stabilization. 
90. The representative of Kenya  commended and encouraged Brazil for the continued 
comprehensive reforms that had en abled its economy to become resilie nt to internal challenges as 
well as external shocks.  Reform efforts, which had been geared towards investing in people, 
increasing productivity, achieving a stable macroeconom ic environment, and expanding the provision 
of government services, had achieved dramatic r esults in improving living conditions and reducing 
social and economic inequality.  Brazil had also  risen to the challenge posed by HIV/AIDS, 
pioneering a strategy that had become an inte rnational model by guaranteeing universal access to 
retroviral medication.  
91. In the area of trade, Kenya was pleased to note that Brazil had continued to undertake 
measures to promote transparency, efficiency, compe tition, and the diversification of its economy.  As 
a result, Brazil had a well diversified manufacturing sector with a broad range of activities, competing 
actively in world markets.  Also, in the case of ag riculture and mining, Brazil continued to be an 
efficient producer and a major player.  Brazilian exports had performed strongly during the period 
under review, increasing by over 50%, and raising th e share of goods and services trade in GDP from 
22.9% in 2000 to 30% in 2003.  This demonstrated the importance of trade in promoting economic 
growth and development in Brazil,  as well as in poverty reduction.   Trade liberalization, at the 
multilateral, regional, and bilateral levels, had contributed to the expa nsion of Brazil's exports and to 
the attraction of FDI inflows.  Kenya shared Brazil's views that regional trade arrangements were a complement to and not a substitute for the multila teral trading system.  Kenya believed that the 
experiences derived from the regional integration process enhanced the participation of many 
developing countries in multilateral trade arrangeme nts and therefore the two processes should be 
seen as mutually supportive.   
92. Kenya also shared the views of Brazil on the need  to enhance south-south trade, while at the 
same time recognizing the need fo r more flexible rules for devel oping countries at the multilateral 
level.  Kenya appreciated Brazil's active participation in the WTO and its role as a leading voice 
among developing countries in term s of defending and articulating their interests in the multilateral 
trading system.  In the DDA, Brazil had made pr oposals on a number of issues that carried on board 
the concerns and interests of many developing countries, including Kenya.  His country looked forward to working closely with Brazil in the ongoi ng negotiations with a view to ensuring effective 
implementation of the "development content" of the DDA, and appreciated H.E Ambassador Seixas 
Correa's commitment and constructive role in the WTO and in particular the current negotiations. 
93. The volume of trade between Brazil and Kenya was relatively small, but had been growing 
steadily overtime.  Currently, Kenya was one of the major importers of coffee processing machinery 
from Brazil.  The spheres of cooperation between Kenya and Brazil had con tinued to expand and he 
hoped that this process would intensify for the mutual  benefit of both countries, particularly in the 
context of south-south cooperation. WT/TPR/M/140 
Page 20 
 
 
94. The representative of the European Union  noted that the relationship between Brazil and the 
European Union was historic and consolidated thr ough economic ties, and that trade remained at the 
heart of it.  The EU market was the main destin ation for Brazil's merchandise exports, and Brazil was 
an important market for EU exports of goods and ser vices.  The EU joined others to acknowledge and 
praise Brazil's efforts to respond to the crises and shocks it had faced.  Measures included an increase 
in the transparency of the trade regime, a reduction in its complexity, attracting further investment and 
increasing domestic competition.  While recognizing the steps taken by Brazil to liberalize, he 
remarked that a number of barriers remained in accessing the Brazilian market, like licensing 
requirements, customs procedures, the different app lication of the value-added tax for local products 
and imports, the application of trade defence in struments and other measures.  These remained 
obstacles to free trade in goods.   
95. Brazil's strategy seemed to be to boost exports while, in some cases, maintaining a protected 
domestic industry.  While advo cating subsidy reductions, Braz il had put in place a number of 
incentives and assistance schemes both at the federal and state levels, and had introduced support 
schemes dependent upon domestic-content and/or ownership requirements.  This local/domestic 
preference was echoed in government procurement,  thus preventing taxpayers from profiting from 
goods and services procured at competitive prices.   Although much had been done to enhance 
transparency, Brazil had not fulfilled its WTO notifi cation obligations with respect to state trading 
enterprises and agriculture. 
96. The EU held the view that although Brazil had ta ken steps to further liberalize certain core 
sectors that were central to creating a solid  foundation for national development, like 
telecommunications, financial, and transport services,   more could be done in this respect, since 
foreign ownership restrictions remained in the transport sector, and there were limitations to the openness of other sectors. 
97. Others had already raised the point that Braz il had not ratified importa nt GATS protocols.  
Like the EU, Brazil attached importance to strengt hening the multilateral trading system.  The EU had 
enjoyed working closely with Brazil in the DDA and saluted its leadership in forming and promoting 
the G-20.  Brazil had worked intensively with the EU , in particular in agriculture, to find a framework 
for modalities, the cornerstone to  the July package.  The EU counted on Brazil's constructive 
engagement in other areas, like NAMA and services, wh ere considerable work remained to be done to 
achieve an ambitious outcome. 
98. Brazil had, through MERCOSUR, participated in establishing a platform for continuing 
regional market-opening.  However, the full benefits of this would not be realized if the remaining 
elements for establishing a customs union by 1 Janua ry 2006 were not fully implemented.  A common 
automotive policy had not entered into force and, even if it were to do so, it would contain limitations 
to duty-free trade because of arrangements on trad e-balancing among members, quotas, and rules of 
origin requiring a minimum regional content of 60%.   Also, contingency measures would continue to 
exist for intra-MERCOSUR trade.  Brazil maintained a number of exceptions to the common external 
tariff of MERCOSUR, some of which were permanen t.  Further, the free movement of goods within 
the customs union was not guaranteed, and lists were dr awn up to enable goods to be subject to duties.  
Non-originating goods could be charged duties twice.   
99. Noting that President Lula had committed to grant non-reciprocal trade preferences to the 
least developed countries, the EU expressed interest in learning about the current state of play of this 
initiative, including with respect to its geographical  and product coverage, a nd the planned date for 
entry into force.  The EU expressed its wish to work  with Brazil and others to ensure that all, in 
particular the poorer developing countries, enjoyed an increase in prosperity through participation in 
global trade.  WT/TPR/M/140 
Page 21 
 
 
100. The representative of Korea  noted that his country and Brazil had enjoyed a close bilateral 
relationship, and that their bilateral trade tur nover had reached US$2.76 billion in 2002, and was 
expected to continue to grow both in 2004 an d 2005.  Brazil was a rising economic power with 
enormous potential, and was expected to enjoy c ontinued economic growth.  Brazil had participated 
in the WTO actively and had continued to liber alize its trade regime, which should be duly 
recognized.  Such efforts were necessary to the fu rther development of the Brazilian economy, in an 
era when trade played an increasingly important role .  Although further efforts could be made in some 
areas, Brazil was commendable for its efforts at libera lization.  Noting that in some services sectors, 
including telecommunications, the Executive maintain ed the right to establish limits to foreign 
participation, Korea encouraged Brazil to continue  liberalizing.  This would further enhance the 
capacity of the Brazilian economy and make it more competitive.   
101. The representative of Mexico  noted that Brazil was the eleven th main destination for Mexican 
exports and that Mexico was the sixth main destin ation for Brazilian exports.  Total trade had reached 
over US$3.6 billion in 2003, and had increased by 26.5% in the first half of 2004.  Mexico and Brazil 
had held common positions in Geneva, through their participation in the G-20 and in areas like anti-
dumping.  
102. Despite this, Mexico considered that Braz il should adopt additional measures to accelerate 
and guarantee sustainable economic growth and to a ttract more foreign investment.  These measures 
would be, for example, a reduction of the gap between applied and bound tariffs, and enhancement of 
Brazil's GATS commitments.  Mexico was worried by the large number of technical regulations and 
sanitary and phytosanitary measures applied by  Brazil and by the difficult procedures and 
requirements to be met by Mexican exports to  enter the Brazilian market.  These measures 
undoubtedly affected normal trade flows between the two countries. 
103. The representative of Switzerland  stated that Brazil was his c ountry's most important trading 
partner in the region, representing 35% of Switzerla nd's trading volume with Latin America.  Brazil 
was the second most important destination of Swi ss FDI in Latin America, after Mexico, with a 
capital stock of SFr 3.7 billion in 2002.  Switzerla nd was pleased to note that economic growth in 
Brazil had picked up by 4% in 2004 and that a trade surplus of around US$30 billion would be 
reached.  This performance clearly showed Brazi l's enormous economic potential and its worldwide 
competitiveness, not only in agricultural products. 
104. Switzerland wished to commend Brazil for its macroeconomic discipline, its cautionary 
monetary policy and its diligence in meeting fiscal targets.  It was a positive signal that the public-
sector primary surplus target of 4.25% of GDP had been exceeded in 2003 and that a surplus of 4.5% 
of GDP was foreseen for 2004.  Despite a modest easing of constraints on public spending, the overall fiscal stance would remain tight.  Although any exch ange-rate slippage could have a negative effect 
on the debt stock and debt service, the vulner ability of the fiscal accounts to exchange-rate 
fluctuations had diminished by reducing exchange-r ate-linked debt.  Other financing risks had also 
diminished in recent years, owing to the shift in  the composition of the debt, away from private and 
towards public debt.  
105. Brazil's trade regime had been simplified, a nd transparency had been enhanced with the 
reduction of the average applied MFN tariff to 10 .4%.  However, there was still a margin for 
improvement with regard to simplification.  Also , market access barriers persisted in several areas, 
hindering the access of domestic consumers and pro ducers to some of the world's most competitive 
products and inputs.  Concerning investment, Switzer land noted that Brazil's investment regime was 
open to foreign investors, with the exception of mining, financial services, and transport;  these 
industries should also be opened to foreign investor s in the future.  In December 2002, the Brazilian 
Executive had withdrawn a number of bilateral ag reements on the protection and promotion of 
investments signed with several countries, includi ng Switzerland, from the consideration of the WT/TPR/M/140 
Page 22 
 
 
Congress.  Switzerland remained interested in stre ngthening its ties with Brazil in this field and 
looked forward to constructive proposals from the Brazilian authorities. 
106. Switzerland hoped that the complementary law on  reinsurance pending in Congress would be 
enacted as soon as possible in order to permit the ratification of the Fourth and Fifth Protocols to the GATS.  This would make Brazil more attractive to fo reign investors.  Switzerland was confident that 
Brazil would pursue its leading role in the multilatera l trading system, and expected Brazil to make a 
substantial contribution to the DDA negotiations, in pa rticular in the areas of industrial products and 
services.  Engagement was needed from Member s like Brazil to bring these negotiations to a 
successful conclusion.  
107. The representative of Colombia
 noted the close relationship between her country and Brazil, 
which would be fortified by the implementati on of the Economic Complementation Agreement 
between Colombia, Ecuador and Venezuela, and MERCOSUR.  This agreement represented an 
opportunity for Colombian exporters to accede in pr eferential conditions to one of the American 
continent's largest markets, and to reverse the de ficit Colombia had traditionally posted in its trade 
with Brazil.  Brazil had combined a strategy of  open regionalism with special attention to the 
multilateral trading system. 
108. Colombia highlighted Brazil's e fforts to face the domestic and external shocks during the 
period under review.  The process had been comp lex, but as a result, the main macroeconomic 
conditions had improved, and short and medium-term expectatio ns had improved.  Colombia was 
confident that these results and continued reforms in the fiscal area, as well as in the trade regime, and 
in labour and social security, would allow Brazil to  attain sustainable economic growth.  Colombia 
also highlighted the increase in transparency and th e enhanced liberalization of the trade regime.  The 
innovation promotion and technological progress stra tegies were also noteworthy, as well as the 
means to translate these achievements into industria l or agricultural productivity increases.  With 
respect to services, Colombia enc ouraged Brazil to continue in its liberalization efforts, to take 
advantage of the sector's huge potential. 
109. Brazil was an example of the benefits for a de veloping country of making participation in the 
multilateral trading system the foundation of its foreig n policy.  Colombia wished to continue working 
closely with Brazil in the WTO and other fora. 
110. The representative of Costa Rica  observe that his country shared interests with Brazil in 
several areas of the DDA, particularly agricultu re, and recognized Brazil's effort to strengthen 
the multilateral trading system.  Trade flows be tween Brazil and Costa Rica remained modest, 
with a clearly positive balance for Brazil.  Co sta Rican exports to Brazil in 2003 had totalled 
US$17.4 million, and imports from Brazil had reached  US$210 million.  Only 0.3% of Costa Rica's 
exports had been directed to the Brazilian market , while imports from Brazil represented only 2.7% of 
total imports.  Costa Rica hoped to increase its trade with Brazil. 
111. The representative of Turkey  noted that Brazil had overcome the negative effects of the 1999 
currency crisis and the adverse international and domestic political and econom ic conditions that had 
prevailed until 2003.  The Brazilian economy had been moving in a positive direction since 2003, 
achieving stable prices, and trade and current account surpluses, and it was moving towards a sustainable trade and growth pattern.  Brazil had al so consolidated its latest economic achievements 
with reforms in various areas including import licensing,  social security, the tax structure, financial 
markets, the investment environment, social, regiona l, and environmental policies.  Brazil had also 
become further integrated into the world ec onomy, by increasing its openness ratio from 18% to 
27.3%. 
112. Turkey appreciated Brazil's active involvement in the multilateral trading system, its 
increased openness, and its emergence as one of the major players in the global economy.  Bilateral WT/TPR/M/140 
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trade between Brazil and Turkey was limited consid ering their economic size.  Turkey was expected 
to import Brazilian goods for US$600 million in 2004, a nd to export just one tenth of this amount.  
Turkey imported mainly iron and steel, machinery,  transportation equipment, and agricultural goods 
from Brazil, and exported machinery, textiles, tr ansport equipment, and agricultural products. 
113. The Turkish authorities had declared 2005 as the "Latin American Year".  Consequently, 
Turkey was organizing special trade, economic, and cultural activities to increas e ties with the region, 
including enhancing commercial and investment ties with Brazil. 
114. The representative of Thailand  noted that, despite a series of shocks during the period under 
review, Brazil had continued to liberalize and enhan ce its trade regime, resulting in a more flexible 
economy.  It was encouraging to note the relatively open and transparent trade and foreign investment 
regimes in Brazil.  However, Thailand was concer ned about the persistence of barriers to market 
access in some areas as well as the existence of  export incentives and as sistance schemes, which 
remained a key element of Brazil's trade policy.  Thailand also recognized the important role of trade in the Brazilian economy.  Brazil and Thailand enjo yed a mutually beneficial trade and economic 
partnership.  Bilateral trade had been expanding and diversifying over the years.  Thailand hoped that 
trade would increase as the Brazilian economy rec overed, and encouraged Brazil to continue 
diversifying its markets to Asia, including Thaila nd.  Thailand commended Brazil for placing strong 
importance on the multilateral trading system and for its active participation in the WTO. 
115. The representative of Norway
 noted that the Brazilian economy had traditionally been 
characterized by fluctuations, with bouts of hyperi nflation and high public debt.  Brazil had always 
managed to recover as witnessed by the stabilizati on from the currency crisis of 1999 and the rapid 
recovery from the recession of 2003.  Inflation w as now relatively low, at 9.3% in 2003, and was 
projected to decrease to 7% in 2004.  Although the stabilization programmes seemed to have worked, 
there remained important challenges for Brazil.  The economy had contracted by 0.2% in 2003, and 
even if Brazil were to reach the projected growth of  4.5% in 2004, this followed a number of years of 
low or negative growth.  This, combined with popula tion growth at a higher pace than GDP growth in 
the past five years, a high foreign debt to GDP ratio , and a lack of sufficient fiscal revenues, indicated 
the need for further reform to create a climate for increased economic activity.  It seemed that Brazil 
not only recognized these challenges, but was poised to  undertake important steps to alleviate some of 
the problems.  A pension reform programme had been undertaken in 2003, and work on a 
comprehensive tax reform programme was ongoing.  Reforms were also being undertaken to improve 
the environment for foreign investment in Brazil.   
116. Norway considered that trade was one of the tools to achieve Brazil's economic policy goals.  
Export-led growth was supposed to go hand in hand  with import growth.  Although Brazil's tariff had 
fallen to about 10%, the share of imports to do mestic consumption was still relatively modest 
compared with other countries of similar size.  This seemed to indicate that the Brazilian economy 
remained relatively closed, with a protected home  industry.  There was also tariff escalation for 
finished products in important sectors, and it see med that import substitution was still considered an 
important policy element.  The Secretariat report had highlighted a number of different non-tariff 
barriers, from non-automatic import licensing require ments to other duties and charges.  This 
description complemented the reports received from No rwegian firms.  Norway therefore urged Brazil 
to adopt measures to further reduce th e complexity of its trade regime. 
117. Norway and Brazil had an excellent bilateral trade relationship, and Brazil was Norway's 
largest trading partner in South America.  Norway  believed that there was good potential to increase 
trade with Brazil.  He also noted that Brazil was an important player in the WTO, both because of the 
size of its international trade, and because of its leadership role among developing countries.  Brazil 
had contributed importantly to the ongoing DDA negotiations, particul arly through its G-20 
membership.  Norway understood the importance of agri culture for Brazil.  However, and in light of 
the macroeconomic challenges that Brazil was faced  with, progress in the NAMA and services areas WT/TPR/M/140 
Page 24 
 
 
would also benefit Brazil.  Agricultural exports alone could not solve Brazil's problems.  Norway 
hoped that Brazil would seize the opportunity to libera lize in NAMA and services.  While Brazil's and 
Norway's priorities had differed in the agriculture  negotiations, Norway understood the importance of 
improved access to developed country markets for agricultural products.  There was, however, a balance to be struck between all legitimate inter ests in the negotiations.  For Norway, this implied 
maintaining an agricultural production deemed necess ary to safeguard its non-trade concerns.  While 
Norway and Brazil had different priorities in cer tain areas, they were working closely on anti-
dumping, and shared the commitment to real reform  in the Rules negotiations, and cooperated in the 
field of TRIPS. 
118. Brazil had embarked upon an expansive set of free-trade agreements not only with 
neighbouring countries, but also with other countries in the Americas, the EU, South Africa, and 
India.  Through such initiatives, and also through the GSTP, Brazil seemed set to enhance south-south 
trade.  Norway welcomed this approach since trade barriers among developing Members were higher 
than barriers to trade with developed countries.  Brazil should be reminded, however, that ambitious 
results in the ongoing NAMA negotiations held the pr omise of similar results for south-south trade, 
both faster and more efficiently. 
119. The representative of China
 stated that his country had always shown great interest in 
economic developments in Brazil, as well as in the e volution of its trade regime and its policy-making 
process.  The economy was gradually recovering from recession and was showing a healthy momentum of sustainable development.  China a ppreciated the domestic reform process carried out 
by Brazil in production, taxation, credit market, a nd social security, which was ongoing.  The reform 
process would undoubtedly strengthen Brazil's competitiveness and improve its potential for 
economic development.  
120. Brazil was a very important and friendly trading partner for China.  The past few years had 
witnessed a rapid development in the Sino-Brazilia n economic relationship.  The bilateral trade 
volume between China and Brazil in 2003 had r eached US$8billion, a 78 .7% increase over the 
previous year.  Brazil was China's largest tradi ng partner in Latin America.  Two weeks before, 
Chinese President Hu Jintao had paid a very successf ul visit to Brazil.  A number of cooperation 
projects had been signed during the visit and an  announcement had been made regarding Brazil's 
recognition of China's full market economy status.  This was an objective reflection of China's 
development.  China hoped that this would help  further enhance bilateral trade and investment 
cooperation.  
121. Brazil had made enormous efforts to push the Doha Development Agenda negotiations 
forward.  As the leading member of the G-20, Brazi l had played a key role in the conclusion of the 
July package.  China highly appreci ated Brazil's efforts in further liberalizing its trade regime and its 
contribution to the multilateral trading system, and congratulated Brazil on these continued efforts and 
on its positive and constructive role in the DDA negotiations.  China would continue to work closely 
with Brazil for the further strengthening and improvement of the multilateral trade regime.  
122. The representative of Jamaica
 congratulated the Brazilian Gove rnment and population, for the 
steadfastness and the consistency shown in su ccessfully confronting the economic difficulties of 
recent years.  Jamaica was pleased to note the positi ve results in regard to macroeconomic stability 
and in trade performance, particularly export perform ance, as well as the gains in social equity that 
had resulted from the policies being pursued by th e Brazilian Government.  Jamaica considered the 
achievements so far to be commendable, but noted that sustainable growth would require further 
advances in areas such as reduction of real interest rates, investment growth, and employment.  These were areas of difficulty with which many develo ping countries seeking to pursue growth in a low 
inflation environment continued to  grapple, and Jamaica was confident that, given its resources and 
capabilities, Brazil would continue to build on the foundation laid. WT/TPR/M/140 
Page 25 
 
 
123. Brazil and Jamaica enjoyed excellent bilate ral relations.  They had also cooperated 
constructively in the hemispheric framework and in the multilateral arena where Brazil had 
traditionally demonstrated leadership among developing countries.  In the WTO, Brazil had been 
particularly active in the various negotiating groups , as well as in other bodies, and in particular on 
agriculture through the G-20.  Jamaica noted Brazil' s active use of the dispute settlement process.  
Jamaica expected the vital interests of all Members to  be taken fully into account in the resort to and 
use of the WTO's legal processes, and all interests to be equitably protected and promoted under these 
processes. 
124. Brazil was a leader in promoting south-south trade cooperation, which remained a 
complement to, and not a substitute for north-south trad e.  Brazil participated in a number of bilateral 
and regional agreements, which provided welcome pot ential for increasing south-south trade.  Given 
Brazil's size and economic importan ce, small economies, such as those of the Caribbean, would be 
keenly interested in opportuniti es for increased trade and economic intercourse with Brazil.  Jamaica 
was the largest importer of Brazilian ethyl alcohol in  the Americas and Jamaican hotel interests were 
active in Brazil, a country to which tourism was also of great importance. 
125. The representative of Mauritius  stated that her delegation had been struck by the many 
similarities in policy approach and strategies be tween Brazil and Mauritius, on issues such as the 
importance of bilateral and regional trade agreemen ts, the provision of effective and meaningful 
special and differential treatment, the harmonious deve lopment of rural areas, the promotion of green 
energy and the importance of south-south trade.   Mauritius had also been struck by the dynamism, 
diversity, and growth potential of the Brazilian econo my;  the remarks in the Secretariat report that 
"Brazil was one of only a handful of countries where output could grow by expanding both the 
extensive and the intensive margins of production" were the best illustration of this dynamism and 
potential. 
126. Touching on the similarities between the two countries, Mauritius noted that Brazil believed 
in bilateral and regional trade agre ements and accordingly, had entere d or was planning to enter into 
several such agreements.  Mauritius, for its part, was engaged in the Economic Partnership 
Agreements with the EU and was also actively fo stering regional integration.  Brazil and Mauritius 
were proponents of effective and meaningful special  and differential treatment (S&D) for developing 
countries, although their specificities and situa tion brought about nuances in how they saw the 
operationalization of S&D measures.  In this re gard, Mauritius wished to place on record its 
appreciation for the various steps taken by Brazil to support Mauritius on S& D and preferential trade 
issues.  Brazil had lent support to the ACP in re spect of the waiver for the Cotonou Agreement.  
Mauritius was particularly heartened by the statemen t by Minister Amorim in the July 2004 G-90 
meeting in Mauritius, when he pointed out that Braz il would be prepared to come up with solutions to 
ensure that the ACP countries were least affected by a negative outcome of the Sugar Panel.  She 
noted that the Panel Report was out and that it wa s likely that the finding and the recommendations of 
the Panel would be appealed. 
127. Mauritius shared Brazil's vision on the harmonious development of the rural areas and the 
prevention of mass migration of rural people to urba n areas.  This approach had been the cornerstone 
of Mauritius' socio-economic strategy and had been  instrumental in maintaining social peace and 
harmony in a society that harboured people of several ethnic origins.   
128. Mauritius' sugar policy was based on fair distribu tion of wealth and protection of thousands of 
vulnerable employees and planters.  The fulfilment of this policy, together with the better use of the 
by-products of sugar, had been possible through the provision of stable earnings derived from preferential trade. 
129. The promotion of green energy was another area of convergence between Brazil and 
Mauritius.  Brazil was a world leader in ethanol.  Mauritius looked to it for advice and transfer of WT/TPR/M/140 
Page 26 
 
 
technology, and had taken note of Minister Amorim's offer in the G-90 meeting to provide support to 
the G-90 countries in mastering the production of green  ethanol.  In Mauritius, the ethanol option was 
under consideration, and the envir onmental dimension was being looked at.  From the green energy 
perspective, Mauritius had been able  to use bagasse to generate some  20% of its electricity demand, 
avoiding the importation of significant amounts of fossil fuels. 
130. Brazil and Mauritius were believers  in south-south trade.  Despite the distance between the 
two countries, there was trade, with Brazilian expor ts, mainly vegetable oils and fats, meats and 
ceramics products, totalling Rs310 million in 2003 , and Mauritian exports, mainly apparel and 
clothing, totalling only Rs3 milli on, down from Rs8 million in 2002. 
131. Despite these converging points, there were some divergences between the two countries' 
approached to multilateral trade, the main reason be ing their very different situation.  Brazil was a 
multi-commodity exporter, the largest world exporter of coffee, sugar, tobacco, soybeans, and orange 
juice.  It was a vast country, endowed with vast  agricultural and natural resources, whilst Mauritius 
was a small island, with one single commodity and b eset by numerous physical constraints.  Brazil, 
through its natural endowments, its economies of sal e, and its large population was, and could become 
even more, competitive, whilst Mauritius could at best achieve some limited improvement in its 
competitiveness.  Brazil was self-sufficient in food and had great possibilities to diversify its 
production base and economy.  Mauritiu s imported all of its food and di versification possibilities were 
quite limited.  Accordingly, Mauritius' view of the scope and place of preferential trade in the 
multilateral trading system differed from that of Brazi l.  Mauritius needed rules to protect its fragility 
and a moderate pace of trade liberalization, whilst Brazil needed rules to favour strong liberalization 
and at a fast pace.  Notwithstanding their divergen ces, Mauritius and Brazil had shown in the past that 
they could join forces on several issues wh ere they had commonalities of interest. 
132. The representative of Malaysia  noted that, since overcoming the adverse effects of the 1999 
currency crisis, Brazil had achieved an encourag ing economic comeback, with growth in 2004 
expected to exceed 3%.  Strong efforts had been made  to combat inflation and to ensure a sustainable 
fiscal position and debt management;  the twin challe nges of inflation and debt  had defined the fiscal 
and monetary policies of Brazil since the 1980s.  Ma laysia noted that strong export growth, with an 
increase of over 50% between 1999 and 2003, was driving the Brazilian economy, with trade 
surpluses increasing at a rapid rate.  The rising share of trade with non-traditional partners in recent 
years, particularly in Asia, was evidence of the diversification of Brazilian trade. 
133. Malaysia welcomed Brazil's applied tariff reduc tion, from 13.7% in 2000 to 10.4% in 2004, 
and noted that tariffs on agricultural products were lower than on industrial products.  Furthermore, all 
duties were ad valorem , thus ensuring greater tariff regime simplicity.  However, bound rates 
remained relatively high at 30.3%, with rates on agricultural products bound higher at 35.3%, and 
non-agricultural rates at 29.6%.  Malaysia invite d Brazil to address this gap between applied and 
bound rates in the current negotiations. 
134. Brazil was an active user of contingency measures, with 48 AD measures currently in place.  
It had also applied safeguard measures on two product s, toys and coconut.  Malaysia appreciated that 
Brazil had, in accordance with Article 9.1 of the Safeguards Agreement, excluded from safeguard 
measures developing countries fulfilling the de minimis  criteria.  However, in the post-imposition 
phase, safeguard measures had been imposed on h itherto excluded developing countries without 
corresponding pre-requisite investig ations been undertaken, and Malays ia sought clarification of this 
situation. 
135. Brazil was an important trading partner in Sout h America.  Malaysia and Brazil shared an 
important economic partnership through their memb ership in the G-15, the GSTP, and the Cairns 
Group. There was much potential for trade between the two countries and Mala ysia looked forward to 
improving bilateral and investment ties with Brazil.  Brazil was an important and active participant in 
the WTO process.  Malaysia commended Brazil for its active engagement in the WTO, which was WT/TPR/M/140 
Page 27 
 
 
consistent with the importance Brazil placed on the mu ltilateral trading system and the role of trade in 
economic development, views also shared by Malaysia. 
136. The representative of India  stated that the lively discussion testified to Brazil's growing role in 
international trade and to its emergence as a pivotal  player in the Doha round of negotiations.  India 
complimented Brazil on the dynamism of its recent economic performance, in the face of continuing 
structural difficulties.  This achievement should gi ve much satisfaction to the Government and people 
of Brazil, vindicating the Government's sophisticat ed economic management, through a synergic mix 
of fiscal, monetary, and trade policies.  The phenomen al expansion of Brazil's exports in recent years 
was particularly welcome.  The high degree of openness of Brazil's trade regime, reflected in the share of its trade to GDP should also be noted.  India wi shed the Government of Brazil continued economic 
success. 
137. India also appreciated Brazil's systemic cont ributions to the strengthening of multilateral 
trade.  The range and depth of Brazil's participa tion in the various bodies of the WTO had enhanced 
the quality of their work.  Ambassador Felipe Seixas  Corrêa's distinguished leadership of his highly 
professional team in Geneva had won much admirati on.  Brazil had played a pioneering role in the 
conception of the G-20 and continued to contribut e to its effectiveness and cohesion.  A common 
commitment to the G-20 had provided the basis for the close partnership that India and Brazil had 
developed over the multilateral trade agenda.  India was convinced that the G-20 would further enrich 
the ongoing negotiations in agriculture and contribut e to enhancing the development content of the 
outcome.  India looked forward to accelerating joint e fforts with Brazil in this direction.  He also 
mentioned the India-Brazil collaboration over the issu e of TRIPS and public health.  Despite the long 
distance separating them, India and Brazil had de veloped a close friendship, and had laid the 
foundations of a strong economic and trade relationship in recent years.  The businesses from both countries had greatly expanded their interacti on towards harnessing the enormous potential of 
bilateral trade.  India had hosted President Lula at  its Republic Day celebrations  in January 2004.  The 
visit had provided the occasion for the signing of a Framework Agreement on a Preferential Trade 
Area between India and MERCOSUR.  Negotiations  on technical issues and on tariff concessions 
were making good progress. 
138. The representative of Pakistan
 noted Brazil's emphasis on reforms and openness, as witnessed 
by the increase of the share of trade in GDP.  Paki stan commended Brazil for its active involvement in 
the DDA negotiations.  Brazil's active use of the di spute settlement system had been appreciated by 
other developing countries.  Although trade between Pa kistan and Brazil had been  limited in the past 
by the geographical distance between the countries, he hoped that this would change in the future. 
139. The representative of Cuba  stated that her country and Brazil maintained close historical and 
cultural ties.  Trade flows between them had in creased by 9% in 2003.  There was a large 
complementarity potential between the two economies in strategic sectors.  Brazil was an important trading partner for Cuba, and the two countries co llaborated in the development of initiatives to 
deepen their bilateral ties.  In that context, Braz ilian President Luis Ignacio Lula da Silva had visited 
Havana in September 2003 and the Cuban Trade Minist er had headed an official visit to São Paulo 
and Brasilia.  In August 2004, the bilateral tari ff preferences under the Economic Complementation 
Agreement in the framework of th e LAIA had been enhanced.  This  was one of Cuba's furthest 
reaching agreements with regard to tariff concessi ons.  Brazilian investment in Cuba had increased 
and there was ongoing work with respect to the cr eation of new economic associations.  Cuba and 
Brazil shared the same view with respect to sout h-south trade and backed the initiation of the Third 
Round of Trade Negotiations in the framework of the GSTP. 
140. Brazil had demonstrated that a market-opening po licy combined with an adequate role of the 
State, not only translated into higher growth, but also promoted sustainable development.  Cuba shared the same interests and expectations as Brazil  in the bilateral, regional, and WTO frameworks.  
They shared the view that multilateralism was th e cornerstone for the establishment of a fair and 
balance world economic system, enabling the prom otion of welfare and the fight against poverty WT/TPR/M/140 
Page 28 
 
 
worldwide.  Cuba commended Brazil for the results reached and its active participation in the WTO 
negotiations and in the DDA work programme to defend the concerns of developing countries.  
Brazil's leadership in the negotiati ons on agriculture, coordinating and articulating the G-20 interest 
was commendable. 
141. The representative of Rwanda  noted that his country believed in the opportunities offered by a 
multilateral system based on fair rules.  For this  reason, Rwanda commended Brazil's engagement to 
increase the transparency and fairness of the multilate ral trading system.  Rwanda appreciated Brazil's 
efforts in the DDA.  Moreover, the Brazilian G overnment's political engagement in favour of 
development inspired hope among least develope d countries such as Rwanda, both in terms of 
commercial opportunities and from the development dimension.  Rwanda appreciated Brazil's 
engagement to grant non-reciprocal preferences to  least developed countries, through the GSTP.  
Rwanda invited other developing countries to follow Brazil's example so as to promote trade with the 
poorest countries and contribute to the reduction of poverty.  
142. Both the Secretariat report and the report by  Brazil highlighted the commercial and social 
measures taken since the last Review, such as pr ogrammes geared towards reduction of poverty and 
inequalities, and measures to achieve economic stabilit y, and to enhance transparency.  Thanks to 
these measures, and despite domestic and foreign economic shocks, Brazil ha d managed, during the 
past 12 months, to re-establish an environment fa vourable to sustainable economic growth, to tame 
inflation and to reduce unemployment.  Rwanda hope d that the Brazilian economy could stay on this 
positive course. 
143. The representative of Venezuela  highlighted the deepening of b ilateral trade relations between 
his country and Brazil in recent years, and the wide  convergence of interests in several areas.  Trade 
flows had remained stable between 1999 and 2003, excep t in the latter years, when they had declined 
considerably.  Preliminary figures showed that the decline would be reversed in 2004.   The trade 
balance between the two countries was favourable to  Venezuela in 1999-2002 and to Brazil in 2002 
and 2003.  Venezuela was convinced that tr ade relations between the two countries would 
benefit from the consolidation of the Economic Complementation Agreement between MERCOSUR 
and the Andean Community.  Venezuela acknowledge d Brazil's role in the current DDA negotiations, 
especially in the consolidation of the July pack age.  Venezuela hoped Brazil's involvement in the 
DDA would continue. 
144. The representative of Angola  noted the historical, cultural, political, and trade links between 
his country and Brazil, which had been the first country to recognize Angola's independence and was 
now one of its main partners.  Brazil offered sustained support for the economic development and 
poverty reduction efforts undertaken by the Government of Angola, mainly in the industrial, mining, construction, and services sectors.  Angola hoped to ma intain its partnership with Brazil and wished to 
see it play a more important role in the reinforc ement of Angola's human, institutional, and supply 
capacities, in south-south cooperation in genera l, and among Portuguese-speaking countries in 
particular. 
145. The representative of South Africa
 stated that, her delegation had noted various issues in the 
reports by the Secretariat and Brazil, in particul ar a quote that "macroeconomic stability was regarded 
as a precondition to achieve, on a permanent basis, su stained economic growth with social justice".  
South Africa shared this view.  Economic growth  should not be pursued for the sake of economic 
growth.  South Africa noted that the Brazilian appro ach of integrating social programmes as "part and 
parcel of the country's economic recovery" placed macroeconomic policies firmly at the heart of a 
broad-based development strategy to create work and improve opportunities for the poor.  Pursuing 
higher economic growth as a part of sustainable st rategy was an effective means of addressing poverty 
and social inequalities.  Brazil had made efforts to integrate itself into the global economy, in the face 
of international and domestic difficulties, inter alia  by enhancing the transparency and predictability 
of its trade regime.   WT/TPR/M/140 
Page 29 
 
 
V. REPLIES BY THE REPRESENTATIVE OF BRAZIL AND ADDITIONAL 
COMMENTS 
146. The Chairperson  congratulated the representative of Br azil on his appointment as Ambassador 
the previous day.  The Chairperson invited the re presentative of Brazil to focus his responses on three 
main themes:  (i) economic and institutional environm ent, (ii) trade policies by measures, and (iii) 
sectoral policies. 
Macroeconomic and institutional environment 
147. The representative of Brazil  noted the remarks by Members and the discussant regarding 
Brazil's importance as a trading pa rtner, and its tight macroeconomic  stability measures being taken to 
improve its capacity to serve and reduce its exte rnal and domestic debt as a share of GDP, and to 
restore confidence in the economy to achieve sustained growth, through, inter alia , increased foreign 
investment. 
148. Some Members had inquired as to the reasons that led to the withdrawal of bilateral 
investment treaties from Congress for ratification, a nd the effect this could have on Brazil's capacity 
to attract foreign investments.  The withdrawal w as due to the incompatibility of certain clauses in the 
BITs with constitutional provisions, as was explai ned in the written answers.  The Government, 
however, was reviewing the agreements to assess whether it would resubmit a modified version for consideration by the respective co-signatories. 
149. Brazil had traditionally received valuable forei gn direct investment (FDI);  more than 
US$100 billion invested in Brazil as a result of the pr ivatization of state companies.  The reduction of 
FDI over 2000-04 over 1999, was attributed to a numbe r of factors, such as the conclusion of the 
major batch of privatizations in that year, and a widespread reduction in FDI flows to emerging 
markets, for reasons related to risk-aversion and the 11 September events, compounded by lower 
growth in Brazil due to the energy shortage, s tiffer measures to control inflation, and political 
uncertainties, among others. 
150. As also noted by some Members, Brazil had undertaken macroeconomic adjustments without 
raising the protection of its market or resorting to subsidies;  on the contrary, it had made use, 
extensively, of market-based me asures to address the imbalances and inefficiencies of the economy. 
151. The discussant
 commended the Brazilian Governme nt for its economic reforms and 
liberalization efforts, which were starting to pa y dividends in terms of providing the basis for 
sustainable growth.  Based on recent forecasts fo r 2004 and 2005, economic growth seemed to be 
improving.  Domestic reforms had facilitated the pr ocess of further integrating the Brazilian economy 
into the world economy.  Clearly, the strong rebound in export growth had pulled the economy out of the recession and had set the basis for more balanced growth.  As growth cont inued, it would suck in 
imports and would benefit Brazil's ne ighbours in terms of their recovery and in general all of Brazil's 
trade partners.   
152. The increased openness of the economy would cont ribute to meeting the fiscal targets by 
promoting growth and lower inflation and by re ducing costs paid by consumers.  Challenges 
remained, the first was to reign in the foreign debt, which was still a very heavy burden on public 
finances, constrained the Governme nt's ability to maintain a high  operational fiscal surplus, and 
hindered public investment levels.  The second challe nge was to maintain sust ainable lower interest 
rates so as to reduce the cost of business and prom ote financial reform.  These two issues could be 
related since a high debt level led to high interest  rates and crowded out public investment.  As the 
general business environment improved further inv estment would flow back into Brazil.   WT/TPR/M/140 
Page 30 
 
 
(ii) Trade policies by measure 
153. The representative of Brazil  noted that the TPR had provided an opportunity for Brazil to 
provide clarifications on customs procedures and cust oms valuation.  More de tails had been provided 
in the written answers.  Technical explanations had been given on the ri sk-assessment mechanism 
designed to select the different levels of custom s control (i.e. four-channel mechanism) and on the 
guarantees contained by Brazilian legislation to protect  the confidentiality of information presented in 
the context of customs operations. 
154. Several Members had recognized the progress on th e average time for customs clearance, as a 
result of a modernization programme that included th e development and use of the Integrated System 
of Foreign Trade (SISCOMEX) informatics progr amme.  SISCOMEX was c onstantly being updated 
to include new features and further enhance the effi ciency of the Brazilian Customs Administration.  
Since the entry into force of the SISCOMEX Mana gement Section, incentives were given to speed up 
the clearance of goods even before expected deadlin es.  Brazil was happy to share its experience in 
modernizing customs operations with interested pa rties in the DDA, especial ly in the context of 
capacity building and trade facilitation. 
155. There had been a number of questions regarding Brazil's practice on the issuance of automatic 
and non-automatic licences.  These questions gave  Brazil an opportunity to emphasize that the 
importation of products into Brazil was, as a genera l rule, exempted from licensing, either automatic 
or non-automatic.  Products subject to import licensi ng, the comprehensive list of which was available 
in the Internet, were identified acco rding to the criteria of Article XX of GATT.  The vast majority of 
import licences, both automatic and non-automatic,  were processed within 24 to 48 hours. 
156. With regard to the several questions on Brazil's tax regime, he clarified that Brazil:  (i) did not 
apply minimum prices;  (ii) did not apply export taxes, except on a very limited number of products, 
and in cases where they were needed to ensure supply for domestic consumption;  and (iii) did not 
discriminate between domestic and imported products in the appli cation of other charges that 
indirectly affected imports, like PIS/COFINS , or the tax on industrial products (IPI). 
157. With regard to ICMS (a tax under the competen ce of local states), the Secretariat had noted a 
possible discrimination between imported and locally produced goods.  While this was still subject to 
internal inquiries, the representativ e of Brazil noted that, if confirme d, the Central Government would 
not have condoned such unwelcome behaviour.  With  respect to the PIS/COFINS, a credit mechanism 
was in place to offset tax liabilit y in cases where PIS/COFINS were co llected both at the moment of 
importation and of selling domestica lly, so as to avoid accumulation. 
158. Several Members had made observations on Brazil' s tariff profile.  The tariff profile of the 
MERCOSUR Common External Tariff established differe nt tariff levels according to the value-added 
content of goods and their sensitivity for the domes tic producer.  Many questions had been raised 
about tariff escalation.  Brazil did not have tariff peaks and, as a general rule, tariff escalation in 
MERCOSUR was limited to a progressive scale betw een 10% and 20%, which was very moderate 
compared with the level of escalation of many other WTO Members. 
159. It had been noted that a large number of applie d tariffs were much lower than bound tariffs.  
In this respect, although Brazil considered that its  application of level of protection well below its 
multilateral commitments should have been recognized  by Members, it was ready to review the gap 
between applied and bound in the tariff negotiations  of the Doha Round.  The difference between the 
bound and the applied rates simply reflected Brazil' s need, like many other developing countries, to 
maintain flexibility to adjust the level of protection of its economy.  As to predictability, it should be 
born in mind that Brazil's applied tariffs were f undamentally determined by MERCOSUR’s CET.  In 
that context, regular modifications in the C ET and in MERCOSUR’s Common Nomenclature were WT/TPR/M/140 
Page 31 
 
 
carried out twice a year, at the beginning of each semester, allowing for sufficient planning for 
traders. 
160. With respect to duties applied on mail orders, the simplified regime created for imports by 
mail was a voluntary option, geared to help small importers.  The simplified tariff regime (RTS) was 
an alternative import system, known as “ importa fácil ” (easy importation), where a tax of 60% 
replaced the many taxes that were levied on the purchased product, including not only the import duty (II), but also the industrial tax (IPI), and PIS/COFINS.  The II could have varied from 0% to 55%, the 
IPI from 0% to 60%, and PIS/COFINS from 0% to 9.25%, according to the goods. 
161. Regarding contingency measures, Brazil reasserted its position against the indiscriminate and 
abusive way in which the Anti-Dumping Agreement wa s sometimes employed in order to serve as a 
veiled protection to inefficient sectors of the economy.  Brazil believed that an effort at clarifying the many imprecise provisions of the Agreement would promote its uniform and predictable application 
by Members, in cases where there was unfair behaviour  by the exporter causing injury to the domestic 
producer.  In this regard, the assistance that Brazilian exporters could get from investigating 
authorities helped them to understand the legisla tion, concepts, and procedures related to trade 
defence investigations.  Free of charge, this assistance  aimed to ensure that Brazilian exporters did not 
have their legitimate interests unduly ha rmed in any investigation abroad. 
162. The status of all anti-dumping investigations  and measures conducted or imposed by the 
Brazilian authorities, was updated until 30 Ju ne 2004, and could be found in document 
G/ADP/N/119/BRA (and Corr.1).  All legislation app licable to anti-dumping investigations had also 
been notified to the Secretariat.  According to the procedures of the Brazilian system of trade defence, 
the investigating authority proposed provisional measures whenever there was a positive preliminary 
determination of dumping, injury, and causal li nk, before 120 days from the initiation of the 
investigation.  The idea was to enable interested  parties to know as soon as possible what was being 
considered by investigating authorit ies in their analysis.  The status of all countervailing duty actions 
conducted or imposed by the Brazilian authorities, had been updated until 30 J une 2004, and could be 
found in document G/SCM/N/113/BRA.  Brazil had notified the Committee on Subsidies and 
Countervailing Measures of all measures in force falling under the obligation of Article 25 of the 
SCM Agreement.  All legislation applicable to subsidies and countervailing duties had also been 
properly notified to the Secretariat. 
163. With respect to safeguards, he noted that th e full reasoning of the motives that had led to 
the extension of the safeguards applied on imports of toys was f ound in the pertinent notifications 
to the Safeguards Committee (documents G/SG /N/8/BRA/2/Suppl.2, G/SG/N/10/BRA/2/Suppl.2, 
G/SG/N/11/BRA/1/Suppl.2).  All non-confidential ev idence and information regarding any decision 
by the investigating authorities was always made ava ilable to interested parties.  Authorities carefully 
followed all adjustment plans by the domestic indus try in order to ensure that they were being 
properly fulfilled. 
164. Brazil attached great importance to transparency , which explained its active role in terms of 
notifications to the TBT Council.  The internal  dissemination of notifications from other WTO 
Members was also carried out on a regular basis.  Additionally, in order to facilitate trade and avoid 
creating unnecessary barriers, new technical regulations, when they were prepared, always had 
international standards as their reference.  Members had raised questions on issues regarding 
transparency, especially on notifications, drafti ng procedures, scope, MRAs, and measures at state 
level.  All these had been properly answered in writing. 
165. Brazil had received a series of questions on sanita ry and phytosanitary measures.  Its attitude 
towards these issues had always b een driven by the need to obser ve full compliance with the WTO 
SPS Agreement and with the relevant  international scientific agreemen ts.  Decisions were anchored 
on the best available scientific information. WT/TPR/M/140 
Page 32 
 
 
166. As a country that constantly faced many no n-tariff barriers to trade, proper use of SPS 
measures was of utmost importance for Brazil.  Brazil was pleased that all the written questions 
presented were intended to seek clarification.  This exercise in transparency was very important and it 
was hoped that Brazil's answers had clarified par ticular points and provided a better understanding of 
its SPS legislation.  One specific point raised during the first session referred to restrictions applied to 
poultry imports by Brazil.  As indicated, Brazil's approach to SPS matters was based on scientific 
evidence.  In this specific case,  the decision to restrict imports had derived from outbreaks of 
Newcastle disease and aviary influenza.  Actio n had been taken with a view to avoiding 
contamination and, thus, preserving a significant exporting sector in Brazil.  However the issue 
continued to be monitored by Brazil's sanitary authorities.  
167. Copyright piracy was considered without doubt a serious problem.  In fact, elevated piracy 
rates could be found in all corners of the globe, both in developed and deve loping countries.  Brazil 
was doing its utmost to take effective measures to  address this problem, in accordance with its TRIPS 
commitments.  These efforts included both legisla tive and institutional measures, as well as education 
and public awareness campaigns.  Moreover, a seri es of concerted actions by police and customs 
authorities had led to considerable progress in the se izure of pirated goods in recent years.  During the 
first semester of 2004, for example, the destruc tion of pirated products by Brazilian authorities had 
been 467% higher than during the same period in  2003.  Similarly, between 1999 and 2003, the 
software piracy rate in Brazil had been reduced from 90% to 55%.  The rate was still high but Brazil 
was doing its utmost to reduce it.  The establishment in October 2004 of the National Council to Combat Piracy and other Intellectual Property Viol ations, which had been mandated to, among other 
things, develop a national action plan to combat piracy, was testimony to the commitment of the 
Government of Brazil to seriously addressing this issue. 
168. An equitable system for intellectual property protection should address the concerns of all 
stakeholders, both from developed and developing countries.  Braz il was gravely concerned with 
another kind of piracy, no less serious one than  the traditional one, namely, “bio-piracy” and the 
misappropriation of genetic resources and associated  traditional knowledge, which Brazil expect its 
trading partners to address as effectively as they repressed copyright piracy.  Brazil, together with 
other developing countries, had tabled proposals fo r multilateral commitments in this regard in the 
TRIPS Council, in the context of the Doha Deve lopment Round, which Brazil encouraged all of its 
partners to consider. 
169. The discussant
 noted that progress had been achieved, but that there were still a couple of 
questions about transparency and predictability rela ted to the SISCOMEX system.  Under this regime 
the tariff and other policy measures were constantly modified through ministerial acts.  Information 
on these changes as well as on the import licences and other import measures was available on the SISCOMEX system.  He asked for confirmation that  the most up-to-date information and specific 
details on these changes could only be retrieved by those with registered accessed to SISCOMEX.  He 
wondered whether there was any difference betw een the general inform ation provided and the 
definitive detailed information many traders wanted but that was only available to certain registered 
users.   
170. The discussant welcomed Brazil's comment that it would look at any potential discrimination 
between imported and locally produced goods.  In formation from the Brazilian authorities in this 
respect would be very much appreciated by trading partners with concerns about discrimination.  He 
observed that the process for clearing imports through the mail seemed complex:  if the normal route 
of clearing the product was chosen, normal duties were  applied, but if speedy process was sought, the 
importer would have to pay a highe r rate of duty, of 60%.    
171. The Secretariat had noted that Brazil had not used provisional measures in the past.  Whilst 
this had not completely eliminated the deterrent ef fect of anti-dumping inves tigations, it certainly had 
given the exporter breathing space at least during the investigation.  According to the Secretariat, WT/TPR/M/140 
Page 33 
 
 
there had not been any surge in imports during the period under review, but Brazil was looking to 
make more use of provisional measures in the futu re.  He asked whether Brazil could elaborate as to 
why it thought it should move in that direction.   
172. Brazil had a number of support programmes ba sed on domestic-content requirements.  He 
wondered if Brazil was expecting any modification to  those programmes.  Preferences at the federal 
level appeared to be limited in government proc urement but local representation requirements could 
have been hindering foreign partic ipation.  Brazil was not party to the GPA, and he wondered if it was 
prepared to participate in it.   
173. The representative of the United States  commended Brazil for all the information provided in 
the course of the Review.  The Government of the United States was looking forward to receive an 
answer on the licensing requirements questions prev iously submitted, particularly concerning lithium 
products.  He thanked Brazil for the clarification on how duties were handled with products that were 
shipped through the mail and the clarification that the duty was an alternative system.  He noted that if 
any other issue concerning duties for products shipped through the mail came up, it would be 
followed bilaterally.  He expressed his apprecia tion to Brazil for its commitment to study and 
eliminate any discriminatory taxes and charges applied on imports vis à vis  domestic products.   
174. The discussant  noted that the rationale advanced fo r maintaining automatic licensing was to 
deal with Brazil's international agreements, partic ularly with those within the multilateral system.  
Brazil had mentioned that the share of its imports  subject to licensing had declined.  He wondered 
why Brazil needed any licensing system at all and whether other countries in similar conditions also 
needed a licensing system.  Noting that Australia did not use such a licensing system, he invited 
Brazil to provide clarifications on the matter.   
175. The representative of Brazil  noted that the alternative import system for products imported 
through the mail was a simplified procedure available to importers.  This was particularly the case for 
small importers that had trouble ge tting through the paperwork and it helped them to avoid the normal 
procedures for the importation of goods.  Those im porters could import small quantities through the 
mail by paying a generic tax of 60% irrespective of  the classification of the product.  However, the 
importer was free to choose the original importati on system, and according to the product and tariff 
classification, could end up paying import duties and other taxed of less or more than 60%.   
176. In general imports were not required to be licensed.  Some products, such as some 
pharmaceutical products and food pr oducts for example, depended on approval for importation by 
government agencies.  Such products were conne cted to the SISCOMEX system so that all 
information was processed in a computerized system.  All the information was available on the Foreign Trade Ministry's web page.  All informati on given to SISCOMEX had been given as part of 
the process of accreditation by compani es interested in operating in foreign trade.  In this sense, those 
companies would have had to register with SISCOMEX.   
177. Brazil agreed with the discussant that it should m ove in the direction of abolishing automatic 
licensing, which, he noted, was already taking place;   Brazil was constantly reviewing the system to 
improve and reduce, to the extent possible, unn ecessary regulations and requirements on traders so 
that the entire process for foreign transactions  was reduced to the minimum necessary.   
178. Reminding Members that the GPA was a Plurilate ral Agreement, the representative of Brazil 
noted that his country had no plans to join it, since many of its provisions posed difficulties for 
Brazilian companies.  Government procurement was one of the few areas in Brazil where some 
industrial policy could be impl emented since, due to the constraints imposed by its WTO 
commitments, the Brazilian Government's involvement in industrial policy in ot her areas was limited.  
Government procurement policies were used to promote increases in production capacity and 
government procurement in itself was a very impor tant source of demand for companies' products. WT/TPR/M/140 
Page 34 
 
 
179. Changes to the domestic-content requirement regi mes were under consideration, so as to carry 
out industrial policy in a manner that did not impo sed unnecessary burdens on the functioning of the 
Brazilian markets.  Brazil had been trying to impr ove the functioning of markets and certain aspects 
of domestic-content requirements could create hindran ces to these objectives.  Fo r this reason, Brazil 
was constantly reviewing these requirements to see if  they could be adjusted to fit the objectives of 
improving market efficiency and help some sectors to operate on their own in the future.   
180. Brazil's use of provisional anti-dumping measures was provided for in Article VII of the 
ADA, and was a common practice by many Members.  Although Brazil did not anticipate the use of provisional measures, it wished to retain the possibility to use them.  Provisional measures provided interested parties with information on the anti-dum ping investigation carried out and as such Brazil 
believed they could have ha d benefits for the parties involved.  They also provided predictability to 
the procedure.   
181. The representative of the United States
 enquired about the availability of information on non-
automatic import licences in the Inte rnet, and asked whether registration was needed in order to use 
the web page.   
182. The representative of Brazil  replied that all information concerning non-automatic import 
licences, and in general import procedures, was readily  available on the Ministry of Foreign Trade's 
website.    
(iii) Sectoral policies 
183. The representative of Brazil  noted that his country considered the TPR to be an important 
opportunity to clarify some aspects of its agriculture sector, in light of some misconceived 
assumptions.  Brazil's agriculture had a well rec ognized natural competitive advantage.  Credit 
programmes and price support mechanisms, as clarif ied in the written answers, were designed to 
provide resources to poor producers or family farmers in  the form of a social safety net.  Thus, Brazil 
was comfortable to state that all the programmes liste d in the Secretariat Report were in accordance 
with the commitments undertaken by Brazil in the Agreement on Agriculture.  Moreover, the modest 
amounts of support and the nature of the assistance  provided, which was mainly non-product-specific, 
resulted in a minimally distorting impact on trade. 
184. Another important point clarified related to the ethanol industry.  Following the general 
characteristics of Brazil's agriculture, Brazilian nati onal sugar and alcohol indus tries were amongst the 
most competitive in the world.  After the pri ce setting of hydrous alc ohol was freed in 1998, 
government intervention in the market had by and large stopped.  Today Brazilian authorities’ 
regulatory role in the market was limited to defining  the blending rate for anhydrous alcohol.  This 
regulatory role responded essentially to environmental concerns. 
185. Sugar cane grown in the south-east and north -east of Brazil had a natural competitive 
advantage.  The gross feedstock cost per litre of fuel ethanol produced from sugar cane in Brazil was 
US$0.08 per litre, compared with US$0.25/litre for beet and US$0.24/litre for corn.  Brazil's total 
production of anhydrous fuel ethanol and hydrous fu el ethanol was 12.6 million cubic metres in 2002. 
186. Another important issue referred to the upda ting of Brazilian notifications.  Brazil was 
finalizing the notification of agriculture domestic s upport to cover 1999 to 2003.  As soon as the final 
statistics were collected and compiled, these notifi cations would be presented to the Secretariat.  
Brazil expected to be in a position to do this by th e first quarter of 2005.  Brazil was also working to 
update its notifications on state trade enterprises (STEs) in 2005. WT/TPR/M/140 
Page 35 
 
 
187. Brazil was convinced that notifications were an  essential instrument for the monitoring of 
commitments undertaken by Members, and this is  why it championed the question of monitoring 
during the framework negotiations.  Brazil invited ot her Members also to update their notifications. 
188. The import regime for cars was considered adequate  by the Brazilian authorities.  It followed 
a policy agreed amongst all MERCOSUR members and there were no plans to revise it in the short 
term.  The tariff on imported cars, currently 35%, was a duty agreed under the Automotive Policy of MERCOSUR.  To change that policy, agreement among all four MERCOSUR members was needed. 
189. Brazil had been active in the negotiations on basic telecommunications and had joined the 
Fourth Protocol of the GATS on 15 February 1997, with commitments that reflected the beginning of 
the evolution of the regulatory framework, fro m a monopolistic market towards competition.  
However, Brazil had also committed to submit a re vised Schedule of Specific Commitments on Basic 
Telecommunication Services once the new regulatory framework, at that time already submitted to 
Congress, was approved.  Following enactment of the new Brazilian General Telecommunication Law on 16 July 1997, some additional language needed  to be added to the GATS Schedule in order to 
comply with the new framework.  Therefore,  Brazil submitted a new draft GATS Schedule of 
Commitments in telecommunication services in 2001, to gether with a draft decision to maintain the 
MFN exemption listed during the negotiations of the Fourth Protocol.  The draft schedule had been 
objected by some Members, and, as a result Brazil had had to withdraw it. 
190. The Brazilian Government had taken all the n ecessary steps for the approval of the Fifth 
Protocol by Parliament, which was a pre-condition to its ratification by Brazil.  A time-frame for 
approval could not be determined, as the Br azilian Congress had no time limit to conclude 
examination of legal instruments.  The adoption of  a complementary law regarding reinsurance could 
be necessary for Brazil to fulfil its additional commit ment on reinsurance, according to which a future 
opening of that sector to competition must be cons olidated in the schedule, but there was no direct 
link between the adoption of that law and the legi slative process necessary for the ratification of the 
Fifth Protocol. 
191. The establishment in Brazil of new branches of  financial institutions domiciled abroad, as 
well as the increase in the participation of indi viduals or foreign entities domiciled abroad in the 
capital of financial institutions with headquarters in  Brazil, was prohibited under Article 52 of the 
Temporary Constitutional Provisions Act.  However,  this prohibition did not apply when special 
authorizations were granted for reasons of national in terest, as a result of international agreements or a 
reciprocity condition.  Since 1995, not a single licence had been denied to foreign investors and 140 Presidential Decrees had been promulgated approvi ng foreign capital par ticipation in Brazilian 
financial institutions. 
192. The Brazilian insurance market provided broa d access for foreign companies, which operated 
in a climate of open competition.  There were no limitations to foreign ownership of insurance 
companies, once allowed to establish in Brazil.  Mo difications to the insurance regulations were not 
currently under consideration.  Therefore, cross-bor der insurance would continue to be prohibited in 
Brazil.  Regarding licensing requirements in reinsura nce, in order to protect the interests of policy-
holders, an insurer had to be licensed before it coul d operate in a jurisdiction.  This requirement was 
in accordance with International Association of Insu rance Supervisors (IAIS) Core Principles (ICP 6).  
Foreign insurance companies had to be incorporat ed under Brazilian law reflecting the need for due 
supervision and enforcement, wh ich would be hindered if the company was not incorporated in 
Brazil.  Allowing direct branching of foreign insurance companies was not currently under consideration.  As to reinsurance, the legal fra mework was still not appropriate to allow foreign 
companies to operate in Brazil.  The Government  could not indicate when the current monopolistic 
situation would end. WT/TPR/M/140 
Page 36 
 
 
193. The telecommunications sector in Brazil was qu ite open to foreign participation and was 
regulated in a strongly pro-competition fashion.  The regulatory framework was evolving on the basis 
of the General Law on Telecommunications.  The po ssibility of establishing limits to foreign capital 
in the telecommunications sector stemmed from Article 18 of the General Law on Telecommunications (LGT).  No measure was currently being considered in that direction.  Supply of 
telecommunication services (fixed and mobile te lephony) was allowed by companies that had 
commercial presence in Brazil. 
194. With respect to maritime transport, the repre sentative of Brazil indicated that changes in 
regulations regarding the lighthouse service fee (TUF), nationality requirements, cabotage, and 
reserved cargo were not foreseen.  There was no limi t for foreign capital participation in the Brazilian 
shipping industry and port services, and port servi ces charges were applied on the same conditions 
and bases to national and foreign flag vessels. 
195. Environmental services were normally supplied through concessions and, in principle, there 
were no restrictions to foreign suppliers wishing to participate in bids announced by the public 
authorities, normally at municipal level.  New legi slation that created parameters for the water and 
sanitation sector across the country was under consider ation by the Parliament.  Cross-border supply 
in environmental services (sewage, sanitation, etc.) see med to be inapplicable.  With respect to land 
transport, the restrictions related to foreign ownership of Brazilian companies were intended to 
preserve the domestic industry.  Restrictions deriving from the International Land Transport 
Agreement (ATIT) were currently under review. 
196. The discussant
 wondered if the Brazilian Government had contemplated the possibility of 
getting fast-track authority from the Brazilian Congress.  He also mentioned that there had always 
been an issue with providing small farmers with credit.  As he saw it, the manner in which the 
Brazilian Government ensured that sufficient credit was provided to small farmers was by directing 
the banks to provide a small percentage of their de mand deposit portfolio to credits for the agriculture 
sector.  The only way in which banks could do that w as either by charging higher interest rates to the 
non-agriculture sector or paying very low interest rates on deposits.  He wonde red about the status of 
the credit situation for small farmers.   
197. The representative of the European Union  sought clarification from Brazil on tariff peaks.  
With respect to automotive products, the representa tive of Brazil had mentioned that there were no 
plans to revise the car policy and that a duty of 35% was applied on a number of products.  Also, while the representative of Brazil had mentioned th at his country had no tariff peaks, the average 
bound tariff rate was 30.4%, twice the level of an in ternational peak.  He understood that the applied 
rate for certain car products was also a high 35% , and wondered whether th e Brazilian delegation had 
a different understanding of what tariff peaks were. 
198. The representative of Australia
 raised two follow-up questions  in relation to the answers 
provided by Brazil, one on automobile tariff, the ot her on the Fourth Protocol.  He questioned whether 
the 35% tariff was justified.  Brazil had mentioned that the duty had been agreed by Argentina and 
Brazil under MERCOSUR's automotive policy and that to change the duty would require agreement 
of all MERCOSUR members.  He asked whether Brazil had considered the longer term effect of the high tariff regime.  Australia's experience in the auto mobile sector was that high tariffs sheltered the 
sector but that shielding it from foreign competiti on made it less productive, less innovative and less 
competitive, over time to the point that it started to ossify.  Only during the 1970s-80s, when the 
tariffs had begun to be brought down exposing the sector to foreign competition, had the industry 
regenerated itself.  The sector had been  transforme d and was regarded in Australia as a success story 
in terms of its international competitiveness and ability  to export worldwide.  Brazil had a world-class 
automotive industry and he wondered whether Brazil had considered the long- term implications of 
shielding the sector with a high tariff and linking it to its re gional partners.   WT/TPR/M/140 
Page 37 
 
 
199. Brazil's detailed written response to Australia's  question on the Fourth Protocol was an 
accurate description of what had transpired in 2 001 when Brazil had presented its offer.  He was 
interested in knowing what the future would bring wi th respect to the Fourth Protocol.  It concerned 
Australia that the negotiation to finalize and impl ement the Fourth Protocol had stalled and broken 
down.  As a result, Brazil seemed to have been free-riding on the MFN commitments that had been 
taken by others, including 60 othe r developing countries Members.  He expressed concern that Brazil 
might want to link the Fourth Protocol negotiati on with the DDA service negotiations, which were 
viewed by Australia as separate exercises.   
200. The representative of Brazil  noted that the Government of Brazil was, to some extent, 
contemplating asking for fast-track authority from Congress.  Fast-track had been part of lengthy discussions in the Brazilian Congress in order to speed -up the legislative process to meet the demands 
from the Brazilian public at large.  The use of provisional measures to speed up the approval of 
legislation considered to be urge nt had brought mixed results, and the best procedure to resolve the 
problem of delays in Congress had not been found yet.  He reassured Members that the Government 
of Brazil was concerned about the problem and th at this was part of a wider political reform 
discussion that was taking place and that fast-track authority was expected to be a new feature of the reform. 
201. With respect to credit support to small farmers under the PRONAF programme, this was 
provided in part from public budgetary resources and in part from the private sector at a government 
controlled rate.  The remaining credit, which w as not under PRONAF, was only granted by the private 
sector at fixed interest rates.  The gap between the market rate and the controlled rate had been 
notified to the WTO and was available to all Memb ers.  The credits to family farmers were not 
product specific and were geared, basically, to incr ease domestic production of staple foods such as 
black beans and manioc, which were part of the basic diet of poor people in Brazil.   
202. He agreed that there were discrepancies betw een the average applied tariff rate of 10% and 
the 35% tariff rate applied to automobiles.  In Br azil's view this constituted a national tariff peak but 
not necessarily an international tariff peak.  A lthough Brazil did not foresee any changes in the 
automotive regime agreed within MERCOSUR, all ta riffs were up for negotiation in the context of 
NAMA within the DDA, including automobile tariffs.  The adoption of a core modality to deal with 
tariff peaks would likely solve the problem insofar as automobiles were concerned.  He agreed with 
the Australian representative in the sense that high ta riffs might not be market-effective, because they 
shielded producers from competition and increases in  competition.  The transnational companies in 
Brazil were happy with the 35% tari ff rate on automobiles and would like it to stay at that level.  
However, consistent with Brazil's policy of providing greater efficiency to the functioning of markets, 
Brazil's automobile industry would have to accept th e decisions related to tariff rates adopted by 
Brazil as a result of negotiations in the DDA.   
203. Regarding services, no sector or mode of supp lied was excluded from consideration in the 
preparation of Brazil's revised offer.  Brazil did not envisioned any changes to the General 
Telecommunications Law in order to alter Article 18, which was considered an impediment to the 
acceptance of Brazil's offer in 2000. 
204. The discussant
 remarked that Brazil's argument with respect to tariff rates and the car 
manufacturers operating in Brazil had been the same one that Australia had provided in the 1980s to 
the Japanese car manufacturers that operated in Au stralia.  Although this argument sounded logical, 
the reality was that protected domestic manufacturers,  even when they were multinational companies, 
became ossified.  They lost comp etitiveness and started to slow down.  The Government of Australia 
had been confronted with this problem, but Austra lia had opted to cut tariffs and an FTA with the 
United States was in place, whereby import duties would be zero.  These measures had injected a 
level of competitiveness into the Australian automotive industry that no one had thought was there.  WT/TPR/M/140 
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Keeping tariffs high was not in a country's domestic in terest if it wanted its industries to become more 
competitive, as they would have to be in a globalized economy.   
205. He noted that Brazil was fully committed to th e WTO and to the multilateral trading system 
and was a founding member of GATT in 1947.  When the original signatories of the GATT came together in 1947, they were very conscious th at throughout the 1930s and 1940s one of the main 
issues had been that of discriminatory preferences.   Some historians would even argue that these 
discriminatory preferences contributed to World War II.  As a response, in 1947 the MFN rule had 
been made the centrepiece of the GATT.  However, the situation had been reversed completely, due to 
a proliferation of regional and bilateral agreements.  Preferences were the rule, and not the exception.  
While there were negotiations going on in the WT O, there was a web of regional and bilateral 
negotiations being undertaken.  He wondered if all these negotiations made sense, and noted that 
while countries stated their comm itment to the WTO they were negotiating tariff preferences under 
other auspices at the same time.   
206. Noting that the prospects for south-south trade were of great interest to all countries and 
particularly to major exporters like Brazil, he w ondered about the rationale for conducting the current 
GSTP negotiations outside the WTO, at the same time as negotiations taking place in the WTO. 
207. The representative of Brazil
 highlighted the importance that his country had attached to 
multilateralism for many decades and its intention to  keep it as the centrepie ce of all international 
trade.  In that sense, Brazil was trying to prom ote a significant agreement in the DDA in order to 
reinforce the WTO, which had been threatened by the plethora of bilateral and regional agreements.  
The trend to regionalism, bilateralism, and free-tr ade agreements had been initiated by some major 
Members of this organization a long time ago.  B ecause no response to the trend had been found in 
the multilateral negotiations, developing countries had begun to look at other possibilities.  As a 
response to preferential agreements negotiated by  major WTO Members, developing countries had 
tried to create preferential regimes and to foster tr ade amongst themselves, using preferences as a tool.  
At the same time, multilateral agreements had been  negotiated in the WTO.  He noted that Brazil 
considered regional and bilateral agreements as complementary to the multilateral agreements.   
208. If negotiations had achieved market openings th at generated significant trade, then probably 
the interest in regional and bilateral agreements would have been somewhat subdued.  But since the 
trend to regional and bilateral ag reements had increased in the past  decade to almost 300 agreements 
already negotiated between countries,  it was now difficult to reverse the trend and redirect it towards 
multilateralism as much as Brazil would have liked this to happen.  Brazil did not wish to be left out 
of important markets for its exports, and that was why it was negotiating regional and bilateral 
agreements.   
209. Great potential existed in south-south trade, wh ere on average high tariffs still existed, and 
there were great opportunities to develop preferential agreements amongst developing countries.  This 
had not been done at the WTO because it was rather difficult to negotiate amongst very different tariff 
structures.  Developed countries had low averag e tariff rates whereas developing countries had 
somewhat higher average rates.  This would have  led to a very asymmetric negotiating situation 
where developing countries would have had to pay much  more to get much less.  That was why, at the 
NAMA negotiations there was an attempt to agree on a formula on a core modality that would at least 
reduce considerably the gap between developing and developed countries, and provide developing 
countries real market access in developed ma rkets still protected by tariff peaks.   
210. Brazil would continue this line of negotiations as much as possible.  Brazil was ready to make 
important contributions in the nego tiations if its market access interests were met satisfactorily.  This 
was the case not only in NAMA but also in agricultu re and rules that guaranteed market access.  The 
GSTP was a very important agreement that develo ping countries undertook in the 1980s, and Brazil 
would have liked to see preferenc es amongst developing countries more widely spread, not limited to WT/TPR/M/140 
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one region, or within regions or within sub-regions but creating and fostering trade in the south in a 
more widespread manner.  Unfortunately, the nego tiations had not been as successful as hoped but, 
with the opportunities provided by the third rou nd of the GSTP negotiations, Brazil very much hoped 
that meaningful preferences could be negotiated that would generate trade.  Brazil was sure that trade 
generated by the GSTP would not onl y benefit developing countries but  would have certain spin-offs 
for developed countries.  This would also be the case for investment.  WT/TPR/M/140 
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VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
211. This fourth Trade Policy Review of Brazil has provided the opportunity for a fruitful dialogue 
between Brazil and other WTO Members.  We ha ve greatly benefited from the comprehensive 
engagement of the Brazilian delegation, led by Ambassador Tarragô, and by the insightful comments 
of our discussant, Ambassador Spencer.  While no ting that Brazil had been affected by adverse 
domestic and external developments during th e period under Review, Members recognized and 
welcomed Brazil's continuing reforms.  These had resulted in primary fiscal surpluses, decreased 
inflation and increased resilience to shocks.  Me mbers noted that growth had resumed, largely 
triggered by increased and diversifie d exports to non-traditional markets. 
212. Members were greatly appreciative of Brazil's active participation in the WTO, of its 
commitment to trade liberalization and of the role played by Brazil in advanc ing the DDA.  However, 
several Members noted that Brazil had not participat ed in the negotiations on ITA and had to date not 
ratified the Fourth and Fifth Protocols to the GATS.  Brazil's active involvement in WTO dispute settlement procedures was noted, as were its effort s to enhance South-Sout h cooperation.  Several 
Members also referred to the growing number of pr eferential trade agreements recently negotiated or 
currently under negotiation by Br azil, and expressed their hope that such initiatives would be 
supportive of efforts at the multilateral level.  Questi ons were raised with respect to the timetable for 
completion of the MERCOSUR integration process. 
213. Members pointed out the importance of investment , particularly foreign direct investment, for 
Brazil's future growth prospects, but expressed some concern with respect to remaining restrictions to 
foreign participation.  Members posed questions on the decision by the Ex ecutive to withdraw all 
bilateral investment agreements from cons ideration for ratification by Congress. 
214. Members agreed that Brazil's trade regime had become more open and transparent during the 
period under review, but many noted that market access  barriers persist in a few but important areas.  
Brazil's applied tariff had declined since the la st Review in 2000 but escalation and some peaks 
remained;  Members also noted that reducing th e still large gap between applied and bound rates 
would enhance the predictability of its trade regime .  Concerns were expressed about the range and 
complexity of non-tariff charges on imports, both at  the state and at the federal levels.  Members 
observed that Brazil's import licensing regime had been streamlined, but highlighted the still large number of products subject to non-automatic licensing requirements.  Brazil's continued active use of 
contingency measures was a source of concern for some Members, and Brazil was invited to exercise restraint in their use.  Questions were posed on other measures like customs procedures, technical 
regulations, and SPS requirements. 
215. Members sought clarification with respect to the rationale for maintaining a mail-order 
regime and for export taxes, and expressed concern about domestic content and other requirements for 
accessing the wide range of Brazil's support programmes.  Members also noted that several of Brazil's manufacturing industries had become internationa lly competitive but questioned the use of tariff 
escalation and other support in some industries.  Brazil was urged to make a significant contribution 
in the ongoing NAMA negotiations. 
216. Discussions on services focused mainly on the telecommunications, maritime transport, and 
on financial and professional services.  Members queried Brazil's legal provisions allowing the 
Executive to decide on foreign participation in fi nancial services and telecommunications.  Brazil was 
also encouraged to enhance its GATS commitme nts and make a substantial contribution in the 
services negotiations. 
217. In conclusion, this Review has confirmed Br azil's progress towards greater transparency in, 
and liberalization of its trade and investment regi me.  The export-led recove ry experienced over the 
last year provides concrete evidence of the benef its of Brazil's closer integration in the global WT/TPR/M/140 
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economy.  However, to ensure the sustainability of the gains already achieved, and translate them into 
higher living standards, further reforms are needed to reduce the market access barriers and internal 
inefficiencies that still create uncertainty for tr aders and investors, rise production costs and lower 
consumer welfare.  I am thus pleased to hear of the various steps being taken by the Brazilian 
authorities to address these issues.  I am also hearte ned to hear that Brazil is striving for deeper 
integration in world trade, and that it will continue to play an active role in the WTO.  Achieving both 
objectives would be greatly aided by Brazil enhancing its WTO commitments to a level 
commensurate with the major role it plays in th e multilateral system and its ambitious negotiating 
agenda in areas such as agriculture. 
218. I close this meeting by expressing again my appreciation for Brazil's constructive engagement 
in this Review, and for the numerous answers provide d to the questions asked by Members.  Members 
look forward to receiving written answers to outst anding questions.  I also  thank the discussant and 
the many Members whose participation helped make this exercise a success. 
 
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