WORLD TRADE WT/TPR/M/21/Add.1
14April 1997
ORGANIZATION(97-1563)
Trade Policies Review Body Original: English/Spanish
30-31 October 1996
TRADE POLICY REVIEW
BRAZIL
MINUTES OFMEETING
Addendum
Answers toWritten Questions
Thefollowing communication wasreceived on14March 1996 from theMission ofBrazil
responding towritten questions submitted byAustralia, Canada, theUnited States, theEuropean Union,
Japan, Hong Kong, Venezuela andEcuador.
_______________
Questions byAustralia
Multilateral
1) HowwillBrazilreconcileitspursuitofmultilateralprinciplesofopennessandnon-discrimination
withpreferential aspects ofregional initiatives, suchastheMercosul customs union ?
Asitwasstated intheReport bytheBrazilian Government, alongside itscommitment tooverall
economic liberalisation, Brazil haspursued thedeepening ofeconomic integration attheregional and
sub-regional levels. Thisstrategy, however, cannot beinterpreted asadeparture from Brazil s
traditional approach totrademultilateralism, which isconfirmed byitsactive participation inandsupport
formultilateral forasuchastheWTO.
Letusturntosome statistics thatwillclarify whatwemean bycompatibility between open
regionalism andmultilateralism:
a) in1995, Brazilian exports weredistributed asfollows: 20.4% toLatin America (13.9%
toMERCOSUL), 27%totheEuropean Union, 16.8% toAsia, 18.9% totheUnited
States and16.9% toother countries;
b) MERCOSUL tradegrewfromUS$3.64billion in1990toUS$12.97 billion in1995.
Inthesame period, thetotalforeign trade ofBrazil grew fromUS$52billion toUS$
96billion;
c) between 1990 and1995 Brazilian imports from theG-7grew from US$9.4billion
toUS$24.7billion (anincrease of163%); inthesame period Brazilian exports toWT/TPR/M/21/Add.1 Trade Policy Review
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these countries grew from US$15.7billion toUS$18.6billion (anincrease ofonly
18.5%);
d) given thereduction inimport tariffs from thepre-existing average levelof14.2% in
1993 totheCET level of12.6% in1995, trade diversion hashardly occurred in
MERCOSUL.
Besides theabove figures, itshould beemphasized thatregionalism hasreinforced multilateral
goals since itplays animportant roleinBrazil sinsertion inglobal markets byfostering productivity
gains andbyrequiring greater co-ordination ofpublic policies andincreased discipline.
3) Brazil sschedule ofspecific commitments contains alimitation which affects thesub-sectors
ofcommunications, landtransportation, commercial stores ingeneral, commercial offices, insurance,
advertising andhotels andrestaurants. Thelimitation isthatjuridical persons must beemployed in
aratioofatleasttwoBrazilians forevery three employees. HasBrazil anyplans toliberalize this
requirement?
Thelimitation refers totemporary visarelated tolabour contracts which entitles theholder
ofthevisaa2yearperiod renewable foranother 2years. Ifthejuridical person chooses thetemporary
visamodality, thenitwillbesubjected tothe2/3rule,i.e.forevery twolegalaliens thefirmisrequired
tohirethreeBrazilians. However, ifthejuridical person chooses thepermanent visa,thennorestrictions
apply, provided thatthefirmregisters US$200,000 andtheirforeign employees arelinked totheforeign
headquarters.(Legislation:Lei6.815/80-EstatutodoEstrangeiro,Resolução35/94ConselhoNacional
deImigra ção-CNIg, Consolida çãodasLeisTrabalhistas Art.434).
4) When doesBrazil plantoimprove itsofferintheWTO Group onBasic Telecommunications?
BrazilremainscommittedtothedeadlinesetbytheGBTitself(February1997)fortheconclusion
ofthenegotiations. Anyimprovements intheBrazilian offer willdepend ontheapproval, bythe
National Congress, ofnewordinary legislation onthetelecom sector.
5) Brazil hasmade almost nocommitments inanymode ofsupply forprofessional services. Does
Brazil plantoliberalise access andaccord national treatment forforeign professional service providers?
IsBrazil planning tomake commitments under Legal Services?
TheBrazilian Government doesnotintend tochange itsoffer forprofessional services.
6a) When doesBrazil plantopermit theparticipation offoreign capital inBrazilian financial
institutions?
Under current law,foreign banks dulyauthorised tooperate inBrazil aregranted national
treatment -i.e.,thesame treatment asthatgranted toanyother Brazilian financial institution.
Authorization fortheestablishment ofnewforeign financial institutions inBrazil istoberegulated
bytheCongress. Todate,theregulation ofArticle 192oftheConstitution aswellasoftherespective
Enabling Lawtopermit theestablishment ofnewforeign financial institutions inBrazil hasnotyet
taken place.
Asthematter israther complex, especially given thesortofrestructuring thatthebanking sector
iscurrently undergoing inthecountry, itisnotpossible, forthetimebeing, toforesee adateofits
approval.Brazil WT/TPR/M/21/Add.1
Page 3
Inthemeantime, access fornewforeign institutions inthesector hasbeenpermitted onacase
bycasebasis, subject toPresidential approval, asaresult ofinternational agreements orwhere there
isanexpress Presidential finding ofpublic interest.
Inaddition, public interest mayberelated totheprivatisation ofpublic financial institutions,
thestrengthening ofthefinancial system through thepurchase, byforeign investors, ofinstitutions
under intervention (subject toliquidation) oftheCentral Bank.
6b)When doesBrazil plantoclassify asfinancial services those service activities notperformed by
financial institutions andnotrecognised asfinancial services, andthentogrant national treatment to
suppliers ofthose services?
Thequestion doesnotmake cleartowhatkindofservices notperformed byfinancial institutions
itrefers to.
6c) When doesBrazil plantointroduce commitments permitting participation offoreign capital
intheinsurance market andintroduce criteria fortheparticipation offoreign capital ininsurance,
re-insurance andbrokerage activities?
Insurance services willalsobecovered bytheregulation ofArticle 192oftheConstitution.
Similarly tothebanking sector, todate,theoperation offoreign insurance companies inBrazil, directly
orthrough branches, agencies orrepresentatives issubject toPresidential approval onacasebycase
basis.
Withtheapproval ofConstitutional Amendment number 6,on15August, 1995, anyenterprise
settled inBrazil, nomatter theorigin ofitscapital, isconsidered aBrazilian company. Thus, a
subsidiary ofaforeign company, established inBrazil andsubject toBrazilian regulations, isconsidered
aBrazilian company foralllegalpurposes.
AConstitutionalAmendmentalreadypromulgatedendedthereinsurancemonopolybypermitting
theparticipation ofprivate reinsurers instead ofreserving itsolely fortheofficial reinsurer agency.
Such provision willhavetobeconsidered intheregulation ofarticle 192bytheCongress inthe
respective Enabling Law.
According toExplanation (“Exposi çãodeMotivos ”)number 190,dated 14May, 1996, from
theMinister ofFinance tothePresident, theGovernment hasaninterest inpromoting theparticipation
offoreign capital inthehealth insurance system inorder toencourage competition andultimately expand
insurance coverage atreduced costtotheconsumer.
7) WenotetheCNSP sroleinrelation toensuring thatconstraints faced byforeign insurance
firms operating inBrazil arereciprocal tothose applied toBrazilian firms established inorseeking
toenter thecountries oforigin ofsuchfirms. CanBrazil provide anexplanation ofhowthisis
implemented onanMFN basis?
There isnoreciprocity ruleininsurance activity inBrazil forforeign firms. Foreign capital
insurers established inBrazil under Brazilian lawhavethesame treatment asnationals.WT/TPR/M/21/Add.1 Trade Policy Review
Page 4
Regional
8) Westrongly support thepolicy ofseeking toconsistently pursue open regionalism
(WT/TPR/G/21). Could Brazil outline itsplans topursue openregionalism inthecontext ofitscurrent
policies forregional economic integration?
9) HowdoesBrazil propose toreduce thetrade diversionary effects ofthepreferential regional
arrangementsinwhichitisinvolvedorintendstobecomeinvolved(Mercosul,FTAsinvolvingMercosul
andthirdcountries intheregion, andtheFreeTrade Area fortheAmericas)?
(Seealsoanswer toquestion 1above, inthemultilateral section)
Brazil sexternal relations confirm theconcept ofopenregionalism. MERCOSUL hasalready
established freetrade areas withChile andBolivia andisintheprocess ofestablishing FTAs withthe
other neighbours aswellaswithMexico. Finally, Brazil isengaged inthehemispheric integration
initiative toconstruct aFreeTrade Area oftheAmericas (FTAA) bytheyear2005. Moreover,
MERCOSUL hassigned aninter-regional co-operation agreement withtheEuropean Union andhas
initiated aseries oftrade dialogues including partners suchasJapan, theCER andIndia.
10) WewouldbegratefulforBrazilsviewsonlikelyfuturedevelopmentsinrelationtotheMercosul
CET, including onanylikely changes intheleveloftheCETandtheproducts which might beaffected.
Inparticular, wewould beinterested inBrazil sviews onwhether there arelikely tobeanychanges
intheCETapplying toimports ofwine. Alsowewould appreciate advice onwhen Article XXIV:6
negotiations ontheCET aretobeinitiated.
Inrespect toArticle XXIV:6 negotiations, MERCOSUL hasalready disclosed thelistoftariff
lineswhose CET levels areabove theGATT/WTO bindings andhasalsoexpressed itsreadiness to
openconsultations withinterested Members.
MERCOSUL sCommon External Tariff (CET) implemented onJanuary 1,1995, admits
exemptions intwocases. Thefirstisthebasic listofexceptions, with1100items, which iscommon
tothefourmembers andconsists ofalistofcapital goods, andalistofproducts fromtheinformatics
andthetelecommunications sectors. These tariffs willconverge totheCETin1999, forcapital goods,
and2006, forinformatics andtelecommunications.
Thesecond isthat,aside fromthebasic listofexceptions, eachcountry ofMERCOSUL was
allowed alimited number ofexceptions totheCET, inthecaseofBrazil 300items, thatwillconverge
totheCETnotlaterthanJanuary 1,2001. TheBrazilian listconsist ofagroup ofproducts thatinclude
food-stuffs, (powdered milk, rice), rawmaterials (chemicals, petrochemicals, fuels, petroleum)
intermediary goods andfinished goods (home appliances, automobiles, bicycles, etc.)
Todate,Brazil haseliminated fromitsexception listasmany as35products, andhasaccelerated
theconvergence ofsome other products towards theCET.Brazil WT/TPR/M/21/Add.1
Page 5
Bilateral
11) IstheAdditional Freight TaxfortheRenovation oftheMerchant Marine (theShipping Freight
Tax)currently under review ?Willitberevised aspartoftheForeign Trade Council s“Single Trade
Law”proposal?
No.
12) Does Brazil haveanyplans toeliminate thediscriminatory impact oftheShipping Freight Tax
associated with thecompetitive disadvantage thatthetaxcreates forlong distance suppliers of
commodities?
TheAdditional Freight TaxfortheRenovation oftheMerchant Marine isonlydueonimports,
andthismayaffect thefinalprices ofthose commodities. Though, asthetaxapplies equally toforeign
andBrazilian flagvessels, Brazil doesnothaveplans toreview thissituation, which isnotperceived
bytheBrazilian Government asinconsistent withitsobligations under GATS (seealsoreply tothe
nextquestion).
13) WenotethatBrazil grants exceptions totheShipping Freight Taxtosome countries. Onwhat
basisdoesBrazilgrantsuchexemptions?DoesBrazilintendtoextendsuchexemptionstoothercountries?
Theexceptions granted totheShipping Freight Taxarebased onlyonregional agreements
(ALADI andMERCOSUL). Only countries belonging tothose regional agreements areentitled to
theexemptions, which arepermitted byGATS. Inthisframework, theexemptions cannot beextended
toanycountries outside these tworegional groups.
14) HowistheBrazilian Government attempting toreduce thecostofdoing business inBrazil -
theso-called “Custo Brasil ”?Inparticular whatmeasures havebeentaken orareplanned tosimplify,
quicken orreduce thelevelofcustoms clearance fees,regulations andcharges, including forfreight
companies?
Firstofall,itisimportant tounderstand what ismeant by“custo Brasil ”.Itpertains tothe
costofproducing goods andservices inBrasil thatresult frompublic policies --thetaxpolicy, costs
ofworker policies orcosts related toeconomic infrastructure, suchasthose related toports, to
transportation andcommunication. Itaffects notonlythecapacity ofBrazilian firms which produce
goods andservices tocompete abroad, butalsotheircapacity tocompete imported goods andservices
inthedomestic market.
Themeasures thatarebeing implemented inthelasttwoyears toreduce thecostsofimported
goods andservices are:
- elimination ofthePortTariff Additional;
- facilitation ofcustoms procedures, withtheintroduction of“dryports”forcustoms clearance
intheinterior ofthecountry;
- reformulation oftheportuary system involving notonlythereduction ofthecostofmovement
ofcargo, butalsotheprivatization ofports; andWT/TPR/M/21/Add.1 Trade Policy Review
Page 6
- theintroduction, foreseen for1997, ofacomputerized system forprocessing andregistering
imports, which willresult inasignificative simplification ofprocedures andreduction of
administrative costs.
Domestic
15) Can Brazil advise ontheprogress ofitsplans tointroduce competition inbasic
telecommunications?
TheBrazilian strategy fortheliberalization ofthetelecommunications sector consists ofthree
basic steps. Thefirststephasalready beentaken withtheapproval oftheminimum lawoncellular
telephony, cellular mobile services, satellites, value-added services andlimited services, inJuly1996.
Thechoice ofthese specific segments ofthemarket hadtodowiththefactthatthissector canserve
tomobilize foreign anddomestic capital, asitisanareaofgreatinterest toinvestors, and,consequently,
itcould speed upthewhole process from thestart. Asecond stepintheliberalization process will
begiven bythepassing ofanewlawthat,combined withthelawoncellular telephony, willconstitute
thenewBrazilian Code ofTelecommunications. Thissecond lawwillcontain provisions onan
independent regulatory bodyaswellastheguidelines forpromoting thecomplete privatization ofthe
system. Therestructuring andfinalprivatization oftheTelebrás System isthethird andlaststep.
Thetentative model forthisrestructuring, which isstillunder study bytheBrazilian Government,
comprisesthemergingofthe27enterprisesthatconstitutethesysteminto4bigconcessionaries,dividing
thecountry intofourregions. These fourenterprises would beputunder private control within a
timeframe tobedecided bythefuture regulatory body.
16) Werefer toVariable Import Levies (WT/TPR/S/21, page50,para46).CanBrazil confirm
thatitnolonger applies VILtowheat (consistent withitsUruguay Round commitments)?
Variable Import Levies towheat werelastapplied in1994, thatis,before theentry intoforce
oftheWTO andofCET(Common External Tariff) ofMERCOSUL. Therefore, VILcannot andwill
notbeapplied byBrazil inthefuture.
17) Wenotethereference toan"agriculture umbrella mechanism" including theuseofa"price
bandsystem" (WT/TPR/S/21, page124,para12).Could Brazil elaborate onwhatdevelopments there
havebeenontheintroduction ofaprice bandsystem? What isintended byan"agriculture umbrella
mechanism"?
During theMERCOSUL implementation process, thecountries involved initially sought to
create anintegrated agriculture policy. Atthatmoment, theconcepts of"agriculture umbrella" and
"price band" werediscussed. Theeffort wasabandoned, however, when Members realized thatWTO
rules onagriculture naturally setalimitandaframework tothatexercise. Accordingly, priority is
nowgiven tothecreation oradaptation ofthenational legislation toWTO rules, aswellasthe
implementation, within MERCOSUL, ofatrade protection system, nowunder discussion.
18) Werefer tothequantification ofgovernment intervention inparagraph 28onpage127of
WT/TPR/S/21. Could Brazil elaborate onanynewforms ofgovernment intervention introduced since
theconclusion oftheUruguay Round?Brazil WT/TPR/M/21/Add.1
Page 7
There hasnotbeenanynewformofGovernment intervention introduced since theconclusion
oftheUruguay Round. Truly enough, Brazil hassought tosolve some oldoutstanding difficulties
through newsolutions ,buttheseshallnotoutlive theexisting problems. What weshould keepinmind
isthatBrazilian agricultural policy isthrough adeeptransformation process inwhich stateintervention
wasnoticeably reduced. Along theselines, ithasbeenoneofthemainconcerns within theGovernment
tostrengthen market mechanisms astheultimate force driving economic decisions. Asanexample
ofthistrend theGovernment hascreated the"Cédula deProduto Rural "(CPR) andthe"Contrato
deOpções,newways offinancing andmarketing oftheagricultural activity, increasingly under free
market conditions.
19) Wenotethatthezero-ratedquotaonwheathasbeenwithdrawnunderArticleXXVIIIprocedures
(WT/TPR/S/21, page133,paras 51,53, andpage50,para44). WhyhasBrazil withdrawn itstariff
quota onwheat? Wewould begrateful ifBrazil could explain whataction itproposes totakeinre-
binding thetariff onwheat.
TheBrazilian wheat market isacompletely freemarket. Since 1990, trading wheat inBrazil
-imports andlocaltrade -areentirely free. Itisahugeimporting market -6million tonsayear -
withnobureaucratic obstacles. Therefore, atariff quota isnottheonlydoorthrough which foreign
wheat canaccede totheBrazilian domestic market. Ontheverycontrary, wheat enters theBrazilian
market entirely freely andtheBrazilian authorities consider theexisting tariff quota tobemore ofa
complicating factor thanafacilitating one. Tariff quotas, under suchcircumstances, represent an
undesirable lackoftransparency nomatter thesystem onechooses toadminister it,besides requiring
theputting intoplace ofaheavy bureaucracy tocopewithit.Thebestwaytoadminister thewheat
market istoletitoperate freely. Onthequestion ofthepresent ceiling binding forwheat, Brazil does
notconsider thatthewithdrawal thequota should automatically entail anewceiling binding.
Questions bytheEuropean Union
1) TheTPRindicates thattheprovisions oftheMercosul agreement onthefreecirculation of
services havenotbeenimplemented todateandthatMercosul members areintheprocess ofnegotiating
aframework agreement intheservices area. Could Brazil indicate what isthelikely timetable for
thenegotiation ofsuchframework agreement? howistheframework agreement likely toaffect the
stateofliberalisation andregulation ofservices ingeneral andofthedifferent service sectors inparticular
inBrazil?
Financial Services
2) Theexisting constitutional banonnewforeign entries orinincreased participation offoreign
capital intheBrazilian banking, insurance andsecurities sector isstillinforce. Initsschedule ofspecific
commitments onservices, Brazil hasindicated thatitwillintroduce further commitments within two
years afteradoption byCongress ofpossible newlegislation allowing foreign entry intotheirfinancial
market.
There areindications thatsuchlegislation isunder preparation oreveninthehands ofCongress.
Yet,theTPRreport,indescribingrecentregulatoryreforms,doesnotcontainmuchconcreteinformation
concerning thesechanges. Onlyforinsurance, thereport refers toCongress considering newlegislation.WT/TPR/M/21/Add.1 Trade Policy Review
Page 8
Could Brazil shedsome lightonthepresent stateofplay. Could itconfirm thatlegislation
isalsobeing prepared oralready considered byCongress forthebanking andsecurities sector? Ifso,
whatisthecurrent stateofplay? What istherecent situation withregard totheproposed legislative
changes intheinsurance sector? Would itbepossible toindicate theintended increase offoreign capital
participation?CouldBrazilprovideatime-frameofpreparation,adoptionandimplementationofpossible
newlegislation?
Banking
Under current law,foreign banks dulyauthorized tooperate inBrazil aregranted national
treatment -i.e.,thesame treatment asthatgranted toanyother Brazilian financial institution.
Authorization fortheestablishment ofnewforeign financial institutions inBrazil istoberegulated
bytheCongress. Todate,theregulation ofArticle 192oftheConstitution aswellasoftherespective
Enabling Lawtopermit theestablishment ofnewforeign financial institutions inBrazil hasnotyet
taken place.
Asthematter israther complex, specially given thesortofrestructuring thatthebanking sector
iscurrently undergoing inthecountry, itisnotpossible, forthetimebeing, toforesee adateofits
approval.
Inthemeantime, access fornewforeign firms inthesector hasbeenpermitted onacase-by-case
basis, subject toPresidential approval, asaresult ofinternational agreements orwhere thereisanexpress
presidential finding ofpublic interest.
Inaddition, public interest mayberelated totheprivatization ofpublic financial institutions;
thestrengthening ofthefinancial system through thepurchase, byforeign investors, ofinstitutions
under intervention (subject toliquidation) oftheCentral Bank.
Insurance
Insurance services willalsobecovered bytheregulation ofArticle 192oftheConstitution.
Similarly tothebanking sector, todate,theoperation offoreign insurance companies inBrazil, directly
orthrough branches, agencies orrepresentatives issubject toPresidential approval onacase-by-case
basis.
Withtheapproval ofConstitutional Amendment number 6in15August, 1995, anyenterprise
settled inBrazil, nomatter theorigin ofitscapital, isconsidered aBrazilian company. Thus, a
subsidiary ofaforeign company, established inBrazil andsubject toBrazilian regulations, isconsidered
aBrazilian company foralllegalpurposes.
AConstitutionalAmendmentalreadypromulgatedendedthereinsurancemonopolybypermitting
theparticipation ofprivate reinsurers instead ofreserving itsolely totheofficial reinsurer agency.
Such provision willhavetobeconsidered intheregulation ofArticle 192bytheCongress inthe
respective Enabling Law.
According toExplanation (“Exposi çãodeMotivos ”)number 190,dated 14May, 1996, from
theMinister ofFinance tothePresident, theGovernment hasaninterest inpromoting theparticipation
offoreign capital inthehealth insurance system inorder toencourage competition andultimately expand
insurance coverage atreduced costtotheconsumer.Brazil WT/TPR/M/21/Add.1
Page 9
Telecommunication Services
3) The30April 96Brazilian schedule onbasic telecommunications indicates thatBrazil will
introduce intoitsschedule commitments related tothesupply ofpublic telecommunications services
binding therelevant partsintheterms ofMarket Access oftheNewTelecommunications Act,within
twoyears afteritsapproval bytheNational Congress. However, theTPRonlyindicates inpoint 30
page158thatsome “changes ”tocertain services arebeing considered anditrefers tothe“partial
liberalization ”oftelecom services. CanBrazil bemore specific astowhatisthecurrent stateofplay
ofthislegalreform? whatisthetimetable foradoption oftheNewTelecommunications Act?what
services precisely willbeliberalized bytheNewTelecom Actwhen adopted?
4) Also, theTPRrefers inparagraphs 31to33inpage158tothefactthattheNational Congress
“wasconsidering inearly96”adraftbillwhich would relaxforeign participation restrictions incellular
telephone, satellite andvalue added services. Could Brazil indicate whatisthestateofplayofsuch
bill?hasitalready beenadopted? ifso,hasitentered intoforce? ifno,whatisthetimetable forits
adoption andentry intoforce?
Telecommunications
Constitutional amendment No.8(August 15,1995) provided thattheRepublic could freely
grant concessions toprivate sector companies toprovide telephone andtelecommunication services
anddatatransmission services. OnNovember 28,1995, theGovernment issued three decrees aimed
atthefurther restructuring ofthesector. OnJuly19,1996, LawNo.9,295 wasapproved which
provided forforeign ownership ofupto49%ofcellular, satellite andcable concessions forthe3years
ending July19,1999, andasmuch as100% thereafter. Brazil istobedivided into10concession
areas forprivate cellular telephony andconcession contracts areexpected tobeawarded inearly1997.
5) Paragraph 33page158indicates thatthedraftbillconsidered bytheNational Congress by
early 96provides forthecreation ofanindependent National Communications Commission totake
overthepresentregulatoryfunctionsoftheMinistryofCommunications.However,inpage157point29
itisindicated thattheseparation ofoperational andregulatory functions willbeaddressed bythenew
Telecommunications Acttobeadopted inthefuture. CanBrazil specify whatlegislation willdowhat
inthisrespect?
Inaccordance toLaw9295/96, of12August 1996 itwillbecreated thenational Agency for
Telecommunication. Inthemeantime theirattributions willbeunder theMinistry ofCommunications.
6) Onforeign investment restrictions, point 31inpage158indicates thatthedraftbillconsidered
bytheNational Congress byearly 96willallow foreign interests tocontrol upto49%ofthevoting
capital ofatelecom firm. Itisalsoindicated thatsuchrestriction would remain forthree years until
thelegislation comes intoforceandwould thenbeadjusted ifrequired bythe“national interest ”.Could
Brazil specify whatarethe“national interests ”tobetaken intoaccount? doestheBillspecify anyset
ofcriteria which willbetaken intoaccount sothatthere issome more legalcertainty inthisrespect?
Inthisspecificsituation“nationalinterest”meansthat,inthebeginningoftheprocessofopening
upthetelecommunications sector toexploration bytheprivate sector, aconsistent levelofparticipation
ofcapital ofdomestic origin beguaranteed. Thetransitional nature ofthissafeguard ismandated by
thesoleparagraph ofArticle IIofLaw9295of19July1996, which guarantees theprohibition ofany
kindofrestriction totheparticipation offoreign capital intheenterprises which receive permissionsWT/TPR/M/21/Add.1 Trade Policy Review
Page 10
tooffermobile cellular services andservices oftransportation oftelecommunication signals bysatellite
starting on20July 1999.
7) Could Brazil indicate whatistheregulatory regime ifanyfortheprovision ofInternet services
inBrazil?
Services thatprovide access totheinternet areconsidered asbeing value added services, as
defined inthesoleparagraph ofArticle 10ofLaw9295, asfollows: Avalue added service isthe
activity characterized bytheaddition ofresources toatelecommunications service which itgives it
support, creating newusesrelated totheaccess, storage, presentation, movement andretrieval of
information, notcharacterizing theexploration ofatelecommunications service.
Thesame lawalsoguarantees toanyparty interested inproviding avalue added service the
useofthepublic telecommunications network.
8) Point 20inpage156indicates thatBrazil sregulatory framework distinguishes between public
andnon-public services anddefines “nonpublic services ”as“those provided toclosed usergroups
connected tothepublic network, subject torestrictions ”.Could Brazil specify whether thereisaprecise
definition ofclosed usergroups? Also, itisunderstood fromthedefinition ofnon-public services that
aservice isconsidered non-public when isprovided toclosed usergroups andtherearetwoconnection
points tothepublic network. Could Brazil confirm this?Finally, could Brazil specify whatarethe
“restrictions ”which areconsidered inthedefinition ofnon-public telecom services?
There isaprecise definition of“closed usergroups ”.Itisprovided inthesecond paragraph
ofArticle 2ofLaw9295, asfollows: Aclosed usergroup isagroup ofnatural orjuridical persons
characterized bytheundertaking ofaspecific activity.
Services notopentopublic correspondence (“nonpublic ”)destined toclosed usergroups or
theuseoftheexecutant itself aredefined inLaw9295 aslimited services.
The conditions ofinterconnection ofnetworks ofLimited Services tothePublic
Telecommunications Network arebeing defined incomplementary regulation toLaw9295, andwill
bemade available bytheMinistry ofCommunications.
9) Could Brazil indicate whether thecurrent on-going telecom reform willsubstantially affect
thestructure oftheTELEBRAS system (with its28public controlled firms, 27ofthemproviding basic
telecom inparticular Brazilian states andEMBRATEL providing interstate andinternational telecom
services)? Arethereprovisions atpresent toensure thatnocross-subsidies takeplacebetween thevarious
firms oftheTELELBRAS System?
TheGeneralLawonTelecommunicationsthatwassenttotheNationalCongresson12December
1996admitsthepossibilityofrestructuringoftheTelebrasSystemandtheprivatizationofitsenterprises,
aswellastheprogressive elimination ofcrossed subsidies.
10) Professional services arenotcovered intheReport andthesector asawhole remains largely
closed toforeign service suppliers; Arethere anyplans toopen-up theprofessional services sector
andpermit greater access toforeign professionals?
Answer stilltobeprovided.Brazil WT/TPR/M/21/Add.1
Page 11
11) Paragraph 83inpage166indicates thattheuseofpilotage, towing andtugassistance, navigation
aids,berth andberthing services andother terminal facilities ismandatory atallports. Could Brazil
indicate whether allthese facilities arenecessary atallports andunder allcircumstances? Paragraph
83alsosaysthat“crews arenotallowed toundertake stevedoring ”.Could Brazil indicate whether
theycanwork aboard theirshipanduseonboard equipment when thelatter isfittothecircumstances.
Finally, thesame paragraph indicates thatinsome ports theuseofthefacilities mustberelated topre-
established activities; Could Brazil shedsome lightastothemeaning of“pre-established activities ”?
On8January 1997, theBrazilian Government enacted newlegislation regarding themaritime
transportation sector (Law 9,432). Inaccordance withArticle 3oftheGATS, thislegislation will
bedulynotified.
12) Inparagraphs 88and89,page167,itisindicated thatrevisions tothecorresponding regulations
areinprogress andthattherestrictions onshares andvoting rights areunder review byCongress;
Could Brazil update onthecurrent stateandenvisaged timetable ofthese legislative review processes?
Seeanswer toquestion 11.
13) Finally, paragraphs 89and92inthesame pagerefertofiling oftariff schedules “andother
information ”or“complementary data”;Could Brazil specify theexact meaning ofthese references?
Seeanswer toquestion 11.
Questions byJapan
1)
i) Secretariat sreport, pagexiii,paragraph 12
Concerning Brazil sprovisional safeguard measures forimported toys, itseems thatcertain
products, which arenotproduced inBrazil orwhose imports havebeenreduced, aresubject ofthese
measures, andthatBrazilian authorities mayhavedecided thesemeasures without carefully monitoring
theneeds oftherelated industries. How doestheBrazilian government justify this?
During theinvestigation conducted toapply theprovisional safeguard measure totheimport
oftoys,Brazil followed, strictly, theWTO procedures. Thereasons fortheapplication ofthemeasure
totheproducts which aretheobject oftheinvestigation arementioned inthenotification made tothe
Committee onSafeguards on12July1996 (document G/SG/N/7/BRA/1).
ii) Secretariat sreport, page66,paragraph 96
Thereport states thatBrazil notified totheWTO asanational regulation forsafeguards Decree
No.1488inMay1995, butaccording toparagraph 97thisdecree wasmodified byDecree No.1936
of20June1995. Isthisamendment notified toWTO according totheSafeguard Agreement Article
12?
Decree 1936, dated 20June1996, alters article 4ofDecree 1488 onlyinorder toadequate
thejuridical nature ofthesafeguard, under theform ofatariff measure, totherequirements ofthe
Federal Constitution. Thenotification, including itstranslation intoEnglish, hasalready beenmade
totheCommittee onSafeguards.WT/TPR/M/21/Add.1 Trade Policy Review
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iii) Secretariat sreport, page67,paragraph 99andpage71,paragraph 24
Thereport, onpage71,para. 24,states thatthenational safeguard measures areapplied on
MFN basis, however onpage67,para. 99,states thatunder theMercosul agreement anysafeguard
actions onintra-regional tradehavenotbeenpossible since1January 1995. Howdoesthegovernment
ofBrazil justify theconsistency ofthisdifference?
Asaresult oftheestablishment oftheMercosul Customs Union, virtually alltrade barriers
within thetradeblock havebeeneliminated. Residual restrictions weretransformed intotariffbarriers,
incorporated intotheso-called “adequation list”,which willbegradually eliminated. Additional
mechanisms ofintra-zone safeguard arenotforeseen.
During theMercosul summit ofFortaleza, which tookplace inDecember 1996, theproject
ofacommon safeguard lawwasapproved. According toit,Mercosul willbeentitled toapply safeguard
measures inthename ofoneormore ofitspartners. While theaforementioned lawisnotenforced,
national legislations ofeachoftheparties remain applicable. InthecaseofBrazil, national legislation
establishes application onanmfnbasis.
2) Other tariffs oncars
Secretariat sreport, page146,BoxVI.3
Thefourth paragraph mentions theagreement which allows Argentina toexport closer 85,000
carstoBrazil dutyfreebetween 1996and1998. Isthisagreement consistent withArticle 1ofGATT?
Mercosul isacustoms union consistent withtheprovisions oftheWTO. Intheautomotive
sector, Mercosul contemplates duty-free treatment andacommon external tariff bytheyear2000.
Theduty-free importation of85,000 vehicles fromArgentina fortheperiod 1996-98, without anexport
performance requirement islinked totheimplementation ofsuchmechanism within theframework
ofMercosul. Themeasure isfullyconsistent withtheprinciples andobjectives oftheCustoms Union
anddoesnotprejudice therights ofthirdparties.
3) Quantitative restrictions andrelated regulations
Secretariat sreport, page55,paragraph 55andpage102,paragraph 29
Thereport states thatsome products foruseinscientific andtechnological research maybe
subject ofdutyfreeimport under some conditions, howdoestheBrazilian government justify the
consistency between thismeasure andArticle 3ofGATT 1994? Besides, itseems thatnon-Brazilian
companies arerequired toexport orbalance theirimports andexports, what isthejustification of
Brazilian government oftheconsistency withTRIM Agreement?
Theanswer isprejudiced.
4) Standards andcertifications
i) Secretariat sreport, page57,paragraph 55.
a) TableIII.1liststheproductswhicharesubjecttopriorimportauthorization,whatisthenecessity
ofthisauthorization?Otherwise,fortheseproducts,arethereanycompulsorystandardsforauthorization?Brazil WT/TPR/M/21/Add.1
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Import license procedures apply basically forstatistical purposes toimports ofmostproducts.
Licenses areissued automatically unless theproduct issubject topriorauthorization fromthecompetent
sectors. Thisisthecaseofweapons andguns, products fromthenuclear industries orrelated substances,
andthose subject toenvironmental restrictions, inaccordance withArticles XXandXXIoftheGATT.
b) Forthestandardsrelatedtotheabovementioned(a)arethereanyinternationalstandardsapplied?
Ifso,what istherelation between these international standards andthenational compulsory
standards?
Article 2.2oftheAgreement onTechnical Barriers toTrade establishes thatthelegitimate
objectives forthepreparation, adoption orapplication ofatechnical ruleare,interalia,theprotection
ofhealth orhuman safety. Specifically ontheevaluation ofconformity, inArticle 5.1.2 thissame
legitimate objective isforeseen forthepreparation, adoption orapplication ofprocedures forthe
evaluation ofconformity.
c) Itseems thatimport procedure formedical equipments aredifferent fromother goods, why?
Therequirements forimport ofmedical equipment differ slightly from other products only
incasetheyareinthemedium orhighriskclassification established bytheMinistry ofhealth..
ii) Secretariat sreport, page59,paragraph 70.
a) CantheBrazilian delegation explain andclarify themeaning of“modification ”inthe4thline
oftheabove-mentioned paragraph? What istheobjective ofthisregulation?
Toobtain animport license forvehicles, importers “bothindividuals andjuridical persons,
including dealers ”,must demonstrate thattheproducts comply with environmental andtraffic
requirements. Once suchrequirements areset,issuance ofthelicense isautomatic. Thesame
environmental andtraffic norms areapplicable bothtoimported vehicles ofanysource, ormanufacture,
andtolocally made products. Therequirements have notundergone anymodification since the
implementation oftheautomotive regime inDecember 1995.
b) Concerning textiles imports, whatistheconcrete contents of“requirements ”which concern
Brazilian products exports? What istheobjective ofthisrequirement forimported products?
Theobjective istoverify ifimported products comply withinternal regulations related toraw
material, product identification etc.thatareapplied todomestic products.
5) Agriculture andfishery products.
Itseems thatexport taxes imposed onsome Brazilian rawmaterial orsemi-products willbe
abolished in1997, whatarethedetails?
Animportant measure withrespect totaxreform wasapproved on13September 1996
(Complementary Law87/96), which exempts fromtheimposition ofthestatevalue-added tax(ICMS)
theexports ofprimary andsemi-manufactured goods. Thisisoneofahostofmeasures which will
permit toincrease thecompetitiveness ofBrazilian exports, inaccordance with Brazil 'sWTO
commitments.WT/TPR/M/21/Add.1 Trade Policy Review
Page 14
6) Government Procurement
i. Secretariat sreport, page102,paragraph 31.
What isthereason whyBrazilian government doesnotplantosignthePlurilateral Agreement
onGovernment Procurement?
Government procurement inBrazil isregulated byLaw8.666 which determines theprocedures
tobefollowed bygovernmental agencies andcompanies attheFederal, State andMunicipal levels
intheiracquisition ofgoods andservices. Withtherevocation ofArticle 171oftheConstitution, and
theelimination ofthedistinction between a“Brazilian company ”anda“Brazilian company ofnational
capital ”,bidshavebeenmade openonequal terms tonational orforeign suppliers. Inthescope of
theFederal government, ministerial agencies make theiracquisitions andareaccountable notonlyto
theirrespective internal control offices butalsotothecentral control agency oftheExecutive Branch.
Moreover, theExecutive issubmitted toauditing bytheAccounting Tribunal oftheUnion (TCU).
Atthestateandmunicipal levels, government procurement issubmitted toauditing bytherespective
legislative chambers. Atalllevels thegovernment isfocused ontransparency, aswellasonexpeditious
procedures andbureaucratic streamlining.
TheBrazilian Government isalsoclosely following thediscussions ongovernment procurement
proposals presented attheregional andmultilateral levels.
ii) Secretariat sreport, page103,paragraph 36
What istheconcrete contents of“buynational policy ”which seems tobeofficially abolished
bytherecent constitutional amendment? What isthecontents ofthemargin ofpreference which seems
tobestillvalid bythecurrent regulations andapplied tolocalsuppliers?
Constitutional Amendment 6/95, dated 15August 1995, revoked Article 171oftheFederal
Constitution of1988. ThisArticle distinguished between aBrazilian company andaBrazilian company
ofnational capital, allowing preferential treatment tothelatter, insome cases. Infra-constitutional
legislation isbeing issued toregulate thematter.
7) Services
i) Secretariat sreport, page162,paragraph 51
TheReport states thatunder the1988Constitution, theparticipation offoreign firms inBrazilian
banking system isrestricted. Isthisrestriction planned tobeabolished inthenearfuture? Besides,
evenifthePresident oftheRepublic authorizes anexemption, itseems thatthere aresome conditions
suchas“reciprocity ”or“national interests ”.What isthejustification ofthis“reciprocity ”withMFN
principles ofGATS andwhatisthedefinition ofcriteria ofthis“national interest ”?
There arenoforecasts concerning lifting theconstitutional restriction totheparticipation of
foreign capital intheBrazilian banking system. TheBrazilian offerisconditioned bythisconstitutional
change.
Inaccordance withProvisional Measure 311,dated 23August 1995, theauthorizations for
participation orincrease ofparticipation inthecapital ofnational financial institutions havebeenmadeBrazil WT/TPR/M/21/Add.1
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based ontheprinciple thatthese institutions beincluded inthePrivatization Program orpromote the
strengthening ofthefinancial system.
Thecriteria ofreciprocity hasnotbeenused.
ii) Secretariat sreport, page168,paragraph 93-95
Thereport states thattheconstitutional amendment eliminated restrictions andreduced former
requirements inthetransport sector, inparticular maritime navigation. What isthecurrent progress
ofthisliberalisation andthenational legislation since theconstitutional amendments?
On8January 1997, theBrazilian Government enacted newlegislation regarding themaritime
transportation sector (Law 9,432). Inaccordance withArticle 3oftheGATS, thislegislation will
bedulynotified.
Questions byCanada
Tariff Questions
1) BrazilstatesthatdeparturefromtheCET(commonexternaltariff)arepermittedforthefollowing
items: thebasic national list,capital goods, informatics items, andafurther listof“additional ”items
(purported tobetemporary). Thetotalofexempted goods accounts forapproximately 1442tariffitems
(16% oftotaltariffitems). Does Brazil haveanyplans toa)reduce thenumber oftariffitems affected
(other thanthetemporary items) bythisdeparture orb)accelerate thetariff reductions toreach the
CET more quickly?
InApril 1996, thetemporary list(150tariff items) tocopewithshortages expired anditwas
replaced byaregional mechanism, allowing atotalof20tariff items andsubjected toaverystrict
consultation process within Mercosul. With respect tothenational, capital goods andinformatics
exception lists,itisimportant tonotethatallgoods aresubjected topredefined convergence schedules.
There isnointention toreduce thesizeoftheexception listsortoaccelerate theconvergence schedules.
2) Brazil states thatitadded products tothemodified “additional ”listoftariff items (published
inFebruary 1996) inorder topreclude “undesirable imports ”.Please define theterm“undesirable
imports ”.What criteria areusedtoascertain whether ornotanimport meets thisdefinition?
Theterm“undesirable ”imports hasnomeaning totheBrazilian Government. Moreover, the
referred additional listexpired inApril 1996.
Questions onAgriculture &Phytosanitary Measures
1) How didtheVariable Import Levy system thatwasapplied towheat in1994-1995 operate?
WillBrazil 'smembership inMERCOSUL limit, inanyway,Brazil 'sability toapply suchmeasures
inthefuture? When atemporary change ismade inthetariff foracommodity (i.e.avariable import
levyapplied), arepotential supplying countries notified ofthechange, andifso,how?WT/TPR/M/21/Add.1 Trade Policy Review
Page 16
TheVILsystem wasinplace during the1994 harvest period. SixCIFprice bands forwheat
werethendefined andtoeachoneacorresponding tariff ratewasassigned. Within thepresent legal
framework established bytheWTO Agreements andtheCommon External Tariff ofMERCOSUL,
Members arenolonger allowed toapply suchmeasures. Accordingly, Brazil willnotreinstate
mechanisms suchastheVIL. Other possible notifications asmentioned inthequestion aretoo
hypothetical atthisstage toallow foraconcrete answer.
2) Fortheagriculture andagri-food sector, doguidelines andprocesses similar tothose ofthe
national Council ofMetrology, Normalization andIndustrial Quality existfortheprior notification
oftechnical regulations totheWTO Secretariat? Would Brazil describe indetail theinstitutions and
processes through which suchnotifications aretransmitted?
No.Although therearenorms thatwillbedescribed below, inagriculture thereisnotaprocess
similar totheonedescribed forindustrial goods. Thetechnical regulations inplace inBrazil aimat
thequality andtheidentification oftheproduct withaview toensure theconsumer 'sprotection.
Therefore, there arenopolicies ormeasures thatimply notification obligations byBrazil under either
theSPSortheAgriculture Agreements. Within thescope oftheSPSAgreement, weshould liketo
inform thatBrazil, asamember oftheInternational Plant Protection Convention (NPPO) routinely
converts intonational guidelines thedecisions andrecommendations issued bythatorganization. The
implementation andsurveillance deriving fromNPPO arecarried outbytheDepartamento deDefesa
eInspeçãoVegetal, oftheSecretaria deDefesa AgroPecuária ,bothpartoftheMinistry forAgriculture.
Notifications ofthenorms indicated above areautomatically made whenever theyaredeemed
toaffect international trade.
3) Forwhich agricultural goods andproducts havenewphitosanitary rules beenintroduced as
aresult oftheMERCOSUL harmonization process? Forwhich products isitanticipated thatnew
ruleswillbeintroduced? Inbothcases, whatprinciples arefollowed andcriteria applied indetermining
whether changes arerequired? What newthirdcountry import requirements havebeen, orarelikely
tobe,introduced?
Thefollowing products hadphitosanitary measures introduced asaresult oftheMERCOSUL
harmonization process: colza alfalfa, ryegrass, edible beans, sunflower, sorghum, trefoil, wheat,
Lothus comiculatus ,garlic, peach, apple, pear, tobacco, tomato, pimento, grape, citrus andonions.
Thefollowing products willhavenewMERCOSUL harmonized rulesintroduced inshort ormedium
term: coffee, melon, strawberry, soybeans, pineapple, cotton, rice, cocoa, maize, oat,peanuts,
Brachiaria spp,barley, mango, Mellotus albus, Melilotos officinalis ,Panicum spp,apricot prune, beet,
cabbage, hazelnuts, Eucalyptus spp,walnuts, avocado, peas, cherries, Prunus dulcis ,Sectaria spp.
Until afewyears ago,Brazil didnothaveageneral system ofprinciples andguidelines forpestcontrol
attheimport level. Measures weretaken onacasebycasebasis, assoonasvegetable health authorities
would become aware ofdisease insome exporting country. Thisisnolonger thecase. Immediately
before thecoming intoforce oftheWTO andataspeedier paceafterwards Brazil hasputinplace
acomprehensive system ofpestcontrol applying toimports aswellastolocalproduction. General
andpractices were adopted andnotified totheSPSCommittee, some asaresult ofMERCOSUL
harmonisation process (Notifications G/SPS/N/BRA/1, 2,3,5,6,7,8,9,10and11). Such new
principles andpractices areinconformity withtheSPSAgreement andfollow therulesforPestRisk
Analysis, based onscientifically established guidelines. Brazil hasnowinplace athorough SPSlegal
system which contains broad principles applying tomost products andallcountries. Forthisvery
reason,onabilateralbasisBrazilisseekingtosetspecificguidelinesthatcorrespondtopeculiarsituations
andconditions ofanindividual country. Thisharmonization andspecification process wasconductedBrazil WT/TPR/M/21/Add.1
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withallMERCOSUL countries andisgoing onwithseveral others among them Canada (forapples
andpotatoes,for example).
4) Hasaction beentaken inregards tonewsanitary measures forwheat imports andwhy? Ifso,
against wheat imports from which countries?
Brazil established phitosanitary measures forwheat imports inorder toprevent theintroduction
intothenational territory ofpests suchasTilletiaindica andTilletia controversa .Those measures
areinforce forallcountries where these pests canbefound intheproduction area.
5) Arethereparticular Brazilian andMERCOSUL institutions responsible fortheharmonization
ofsanitary, phitosanitary andother technical standards thataffect themovement ofagricultural and
foodproducts?
Yes. InBrazil, theagency responsible fortheestablishment ofsanitary andphitosanitary
measures applied onimports istheSecretaria deDefesa Agropecuária ,adivision oftheMinistério
daAgricultura edoAbastecimento (Ministry forAgriculture). These measures havebeenestablished
based onregional standards elaborated bytheworking groups ofMERCOSUL andbytheregional
organizations forsanitary andphitosanitary protection: COSAVE andCORESA. Thiswork isbeing
doneinfullconformity withWTO SPSagreement.
6) What arethefiscal reforms mentioned inpage123thatarebeing considered andareexpected
tochange implicit taxation andanti-export bias? Have theybeenundertaken? Howdoesthenational
congress expect thatthereforms willchange theimplicit taxation andanti-export bias?Iffiscal reforms
havenotyetbeenconsidered todate, aretheytobeconsidered and/or undertaken inthefuture?
Answer stilltobeprovided
7) HowdotheGovernment acquisition program andtheFederal loanprogram operate forwheat?
Dotheprograms operate independently, ordotheyoperate intandem? Onwhatbasis isthemarket
priceofwheat quoted (location andgrade), andhowhaveminimum prices forwheat compared tomarket
prices? Given Brazil 'sposition onwheat, whatsafeguards areinplace toprevent imports fromfinding
theirwayintothese programs?
AGF andEGFareprograms designed tosupport avariety ofagricultural products, suchas
wheat, rice,cotton, edible beans,maize, cassava, soybeans among others. AGF isaprogram through
which theGovernment guarantees thepurchase oftheproduction output ofthegrower incaseheor
shecannot findsuitable prices forhisorhercrop. Incontrast, EGFisaloangranted bytheGovernment
tothegrower aftertheharvest sothatheorshecanpaybackthedebts heorsheacquired during the
production period. ThustheEGFallows thegrower tosellhisorherproduct atimproved conditions.
TheEGFloanmayberefunded either byamonetary payment orbythehandling overtotheGovernment
oftheagricultural product. Thislastalternative ishighly discouraged bytheGovernment, which does
notwant tofinditself evolved inmarket activities soastosellitsstocks. EGF andAGF operate
independently. Theminimum price isestablished taking intoaccount several parameters suchas
international prices, wholesale price, production costsamong others. Thefactthatinternational prices
aretaken intoconsideration inthese programs offers anatural safeguard toprevent imported products
from benefitting from EGFandAGF.
8) How dotherural programs summarized inTable V.6compare interms ofshare ofpublic
expenditure onagriculture? Given theimportance ofthese programs could Brazil provide additionalWT/TPR/M/21/Add.1 Trade Policy Review
Page 18
details onhowtheyoperate? Dotheeligibility criteria differ from those required forloans provided
bytheprivate sector, andifso,howdotheydiffer?
Table V.6summarizes thesources ofincome thattheGovernment mobilizes forfinancing its
supportforagriculturalprograms.ItdoesnotrepresenttheBrazilianagriculturalprograms,andtherefore
doesnotshow which isthepublic spending withagriculture. Asfarasthefinancing ofagricultural
activities isconcerned, Table V.6presents 9different sources offunding. Before proceeding, itshould
benoted thatthepublic share inagricultural funding hasbeengradually decreasing these pastyears,
giving waytoaneverincreasing presence ofprivate sources offunds. Only2oftheprograms mentioned
inTable V.6arepublic, theremaining 7being private. Among thepublic sector programs, the
Promotion Program usespublic funds tofinance production andmarketing ofminiandsmall growers,
atastatecontrolled interest rate. Constitutional Funds, funded byfederal revenues, aimatfinancing
growers inlessdeveloped areas, alsoatstatecontrolled interest rates. Theother 7programs mentioned
inTable V.6aredestined toanygrower seeking financial support forhisactivity. Eligibility criteria
aresome established bytheprivate banks themselves, based ontheirassessment oftheborrower 's
capacity ofreimbursement. Itshould alsobestressed thatinterest rateshereareestablished bythe
freefinancial market, without anygovernment intervention (with theexception oftherural saving
programs, inwhich theGovernment makes upforthedifference between themarket interest ratesand
agovernment fixed rate). Starting in1995, seeking forfunds foragriculture ininternational markets
became legal. Theshare ofthisincome source inagriculture funding inBrazil tends toincrease, mainly
forcommodities.
Measures Affecting Imports
1) WhydoestheMaritime Freight Surcharge (AFRMM) havethree categories ofratesbased on
theoriginoftheproductandthemodeoftransportation?Whatcommodityorcountryspecificexemptions
could Brazil identify?
Answer stilltobeprovided.
2) Withrespect toother charges affecting imports mentioned inTable III.7, dotheyapply toall
products andallcountries oforigin, orarethere commodity orcountry specific exemptions ?
Theonlyexemption onthose charges refers totheFreight Surcharge forRenovation ofthe
Merchant Maritime Fleetinsome regional tradeagreements under ALADI, formerchandise thatfulfil
therequirements oftherules oforigin.
Questions bytheUnited States
Q: Brazil sexport financing program, PROEX, appears toprovide asubsidy toBrazilian exports.
Please clarify howthisprogram works andhowitisjustified under theWTO.
A: Twotypes offinancing areoffered under PROEX: i)direct financing, granted bytheBrazilian
Government totheexporter (supplier 'scredit) ordirectly totheimporter (buyer 'scredit, iftheimporter
isaforeign government) forpayment onsighttotheexporter; andii)an"interest equalization" scheme
tolower theinterest rateondomestic commercial export finance loanstoratesprevailing ininternational
markets. Interest ratesonPROEX loans arepegged totheLIBOR (plus amargin). Thedegree ofBrazil WT/TPR/M/21/Add.1
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interest equalization depends onthematurity oftheloan, which maybeofuptotenyears. PROEX
maycover upto85%ofthevalue ofexport.
There isnosubsidy inthePROEX since theprogram merely equalizes export credit financing
totheconditions prevailing intheinternational market insimilar transactions; therefore, PROEX is
inaccordance withWTO rules.
Q: Brazil hasshortened thevalidity period ofimport licenses from 90to60days, andcharges
R$66,70 perlicense. HowdoesBrazil justify thishighfeeforwhatissupposed tobeanautomatic
license? Isthere anyevidence toindicate thisistheactual costofsupplying animport license? The
combination ofhighfeeandshort validity period seems adeliberate impediment ofimports. How
doesthispractice comport withBrazil sobligations under theimport licensing agreement?
A: Banco doBrasil isresponsible forissuing thelicences andfollows therules established by
theSecretariat ofExternal Trade oftheMinistry ofIndustry, Trade andTourism. Modifications
introduced intheprocedures forissuance ofthelicense, since1992, make thisissuance veryexpeditious
andittakesjustacouple ofhours toprocess alicense. Thefeecharged byBanco doBrasil isapayment
fortheservice provided, andrepresents revenue fortheinstitution.
Theimport licence reveals theintention toimport andmayencompass more thanonetariff
item. Thecombination between thefeecharged andthereduction inthevalidity termdoesnotimply,
inanycase, arestriction onimports. Moreover, from 1997 onwards theimport procedure willbe
replaced bytheelectronic system (SISCOMEX/Importa ção).
Q: Brazil assesses anumber ofcharges andtaxes exclusively onimports. Many ofthese charges
areassessed onanadvalorem basis, andthecharges therefore bearnoassociation tothecostofservices
provided. No“other duties orcharges ”werelisted inBrazil sWTO schedule III.HowdoesBrazil
justify these costs ?
A: Concerning charges applied onimports only, theAirWarehousing Contribution iscalculated
ona“advalorem ”basis, anditaimstorefrain importers toutilize public buildings, designed only
forpurposes ofcustoms clearance, aswarehouses bytheincrease ofthecostforitsutilization. With
thecreation ofspecific designated areas forcustoms clearance outside theprimary zonethisproblem
tends tobereduced.
Q: Inparagraph 47,Table III.7there arereferences toNon-preferential Customers. Who are
non-preferential customers ?
A: Infact,whatexists isafeetocover thecostofissuing animport license oradditional documents
ofR$66,70 andR$50,00, respectively. Theissuing bank maycharge adifferent amount forthose
importers thatareatthesame timetheircustomers.
Q: What sortofservice isbeing performed fortheR$50Additional document surcharge?
A: Theservice performed forissuing theso-called additional document onimport license is
relatively thesameservice performed bytheissuance ofalicense, sincethisadditional document refers
tomodifications ofanyitemofthelicense, including merchandise, volume, quantity, value, among
others.WT/TPR/M/21/Add.1 Trade Policy Review
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Q: HowarethePortTariff Surcharge andtheFreight Surcharge forRenovation oftheMerchant
Marine Fleetjustifiable under GATT/WTO rules? Imported goods appear tobeartheburden ofharbour
andfleetimprovements through these taxes, which arenotapplied todomestic shippers.
A: Answer stilltobeprovided.
Q: How istheAirWarehousing Contribution, which appears tobebased onadvalorem rates,
justified under theWTO? Suchcharges should bebased onthevalue oftheservice foreachshipment
andnotapercentage ofvalue oftheshipments basis.
A: Asmentionedbefore,theobjectiveofchargingonanadvalorembasisistopreventtheutilization
ofalimited public areadesignated onlyforpurposes ofcustom clearance asawarehouse. Charges
thatwere applied inthepastfavoured theuseofverylimited public space asprivate warehouses.
Q: TheSecretariat sreport references a“certificate ofcompliance ”withBrazilian automotive
standards, which isrequired before animport license formotor vehicles isgranted. How hasthis
requirement changed since theimplementation oftheautomotive regime wasestablished inDecember
1995 andwhatisitseffect onautomotive imports from theU.S.andother countries?
A: Toobtain animport license forvehicles, importers “bothindividuals andjuridical persons,
including dealers ”,must demonstrate thattheproducts comply with environmental andtraffic
requirements. Once such requirements areset,issuance ofthelicense isautomatic. Thesame
environmental andtraffic norms areapplicable bothtoimported vehicles ofanysource, ormanufacturer,
andtolocally made products. Therequirements have notundergone anymodification since the
implementation oftheautomotive regime inDecember 1995.
Q: HowdidBrazil allocated quota under itsrecently announced TRQforautomobiles? What time
period didBrazil examine toestablished historic trade trends forautomobiles?
A: Thetariff quota system wasestablished onthebasis ofpastimport performance during the
period January 1993-April 1996.
Q: Brazil stated initssubmission totheCommittee onAgriculture (G/AG/N/BRA/5) thatBrazil
didnotuseexport subsidies in1995. However, Brazil noted thatunder Special Export Programs export
incentives areprovided bywaiving orreducing import duties forvarious products. Dataprovided
byBrazil indicate thatUS$536million infoodproducts were exported under thisprogram. Does
thisprogramconstituteanexportsubsidy?Ifso,whywasitnotnotifiedtotheCommitteeonAgriculture?
A: TheUnited States asked thissame question during theSeptember meeting oftheCommittee
onAgriculture. Ouranswer thenasnowisthatBrazil didnotgrant export subsidies toagricultural
productsin1995.BEFIEXdoesnotconstituteanexportsubsidiesprogramunderthedefinitioncontained
inArticle IXoftheAgreement onAgriculture, thisbeing thereason whyitwasnotnotified tosaid
committee. Further details maybefound intheBrazilian answer given totheCOA lastOctober 29.
Q: Brazil banstheimport ofusedgoods. How doesBrazil justify thisimport ban?
A: Import ofusedgoods ispermitted under specific circumstances andincludes capital goods,
machinery andequipment. Also, asmentioned inthereport bytheSecretariat, import ofusedconsumer
goods ispermitted inthecaseofdonations forhumanitarian purposes.Brazil WT/TPR/M/21/Add.1
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Q: Para. 6and7reference directives establishing prices andprice lists. Paragraph 6references
amodule which, purportedly, willenable detection ofunder -orover-invoicing andofdumping or
subsidized imports. Additionally, acomplementary database willbedeveloped containing ahistorical
price series forcertain products. Paragraph 7makes reference toimport prices formotor vehicles
which aresetaccording tocriterion identified inDirect No.360/90 ofNovember 25,1994. Also,
factory listprices areusedinsome instances, while published prices inthesecond-hand market are
usedforother types ofpurchases.
These means ofestablishing orverifying prices maybeakintominimum values, which isnot
inkeeping withtheprinciples ofappraisement under theWTO. Please confirm thatBrazil hasnot
implemented asystem ofminimum values.
A: Brazil hasnotimplemented asystem ofminimum price. What isaddressed onpara. 6,page
35,istheconcept developed forthepurpose oftheSISCOMEX-Import Module todetect practices
ofunder -oroverinvoicing anddumped orsubsidized imports.
Thepractice described onpara.7, page36,refers onlytomotor vehicles anddoesnotconsist
ofaminimum price forpurposes ofcustoms valuation ordutycollection. Infact,thepurpose ofthe
mechanism isonlytodistinguish those imports made byauthorized dealers -orthose imports made
directly fromthemanufacturer, fromthose imports made byindependent dealers fromtheretailmarket,
notonlyfrom thecountry oforigin ofthemanufacturer butalsofrom thethirdcountries.
Q: Discriminatory localproduction andassembly requirements forgovernment procurement exist
inthetelecommunications, computers, anddigital electronic goods andservices. Regulations produced
in1992 allow considerations ofnon-price factors andpreferences inthese areas andstipulate local
content requirements foreligibility forfiscal benefits. These provisions, ineffect, function like
performances requirements, dictating thetypes ofactivities required, levelofvalue added, etc.Are
these measures stillinplace? Ifso,howarethese measures compatible withWTO Commitments?
A: Thegovernment procurement requirements mentioned above were based onArticle 171of
theConstitution which wasrecently amended byECNo.6ofAugust, 15,1995. Consequently, these
requirements havenotbeenapplicable since thatdate.
Q: Brazil sTPRM report notes thatthegovernment ofBrazil willcreate anagency toattract foreign
direct investment andtechnology. Willtheagency address issues thatcanimpede foreign direct
investment andtechnology transfer, suchastaxes, transparency andexcessive regulation? Howwill
itimprove transparency andreduce the“Brazil cost”?
A: Theideaofcreating anagency -Front Office -toattract foreign direct investment relates to
theconcept ofanoffice capable toconcentrate alltherelevant information about theBrazilian economy,
about business opportunities andabout therelevant legislation. Withrespect totechnological transfer,
theideaistostrengthen andmodernize theNational Institute onIndustrial Property -INPI. These
measures, when applied, willcontribute toreduce theso-called “Custo Brasil ”.WT/TPR/M/21/Add.1 Trade Policy Review
Page 22
Q: Toattract technology, theGOB willhavetotakefurther steps toimprove theIPRregime.
Thenewindustrial property lawincludes compulsory licensing andlocalworking requirements. Will
thenewagency seektoattract technology byinsuring investors effective IPRprotection andaright
ofestablishment andlimitthegranting ofcompulsory licences asthecurrent lawpermits?
A: Toattract newtechnology, theGovernment ofBrazil ismodernizing theintellectual property
regime prevailing inthecountry, including aneffective plant variety protection law,asoftware law
reform, integrated circuits legislation andauthor srightlawreform.
Q: WillBrazil amend itsofferinthebasic telecommunications negotiations toreflect thepassage
ofthe“minimum law?”Thelawwillendrestrictions onforeign investment incellular/analog mobile
telephony andinsatellite services within threeyears, andtheserestrictions areincorporated inBrazil s
offer onapermanent basis.
A: TheBrazilian draftrevised offer(doc. S/NGBT/W/12/Add.21/Rev.1), from 25April 1996,
already incorporated elements ofthe"minimum law", which wasthenonlyadraftunder examination.
Therefore, itwasnotnecessary toamend theofferfollowing theapproval ofthelaw.Therestrictions
onforeign investment incellular/ analog mobile telephony andinsatellite services willbeeliminated
inthree years, buttheirremoval from theBrazilian offer willdepend onfurther consideration.
Q: Inparagraph 71,under thetitle“Recent andplanned reforms ”statements aremade regarding
foreignparticipationandforeigncapitalintheinsurancesector.DoesBrazilcurrentlyallowparticipation
offoreign capital inBrazil sinsurance market ?
Q: TheSecretariat sdocument seems toindicate thatBrazil isintheprocess ofgetting ridof
itsreinsurancemonopoly.Whatisthestatusofthelegislationthatallowsprivatereinsurancecompanies-
-including foreign ones--tooperate?
A: Answer toquestions 17and18:
Insurance services willalsobecovered bytheregulation ofArticle 192oftheConstitution.
Similarly tothebanking sector, todate,theoperation offoreign insurance companies inBrazil, directly
orthrough branches, agencies orrepresentatives issubject toPresidential approval onacasebycase
basis.
Withtheapproval ofConstitutional Amendment number 6in15August, 1995, anyenterprise
settled inBrazil, nomatter theorigin ofitscapital, isconsidered aBrazilian company. Thus, a
subsidiary ofaforeign company, established inBrazil andsubject toBrazilian regulations, isconsidered
aBrazilian company foralllegalpurposes.
AConstitutionalAmendmentalreadypromulgatedendedthereinsurancemonopolybypermitting
theparticipation ofprivate reinsurers instead ofreserving itsolely totheofficial reinsurer agency.
Such provision willhavetobeconsidered intheregulation ofArticle 192bytheCongress inthe
respective Enabling Law.
According toExplanation (“Exposi çãodeMotivos ”)number 190,dated 14May, 1996, from
theMinister ofFinance tothePresident, theGovernment hasaninterest inpromoting theparticipation
offoreign capital inthehealth insurance system inorder toencourage competition andultimately expand
insurance coverage atreduced costtotheconsumer.Brazil WT/TPR/M/21/Add.1
Page 23
Q: Para65notes thatBrazil wasasignatory totheGATT TBT. Todate, however, Brazil has
notsubmitted itsWTO TBTStatement ofImplementation asrequired under Article 15.2oftheTBT
Agreement. Also, thedocument notes thatBrazil sWTO enquiry point“foreseen ”under theAgreement
isCIDIT/INMETRO. Does thisstatement mean thattheenquiry point isnotpresently operational?
A: Brazil hasrecently senttotheWTO Secretariat itsStatement ofImplementation, asrequired
under Article 15.2oftheAgreement. TheBrazilian Enquiry Point, towhich requests forinformation
under theAgreement should beaddressed, isfullyoperational: Information andTechnological Diffusion
Centre (CIDIT), adepartment oftheNational Institute ofMetrology Standardization andIndustrial
Quality-INMETRO, isthecentral point forallnotifications under theAgreement, andtheinitial point
ofcontact forenquiries from other Members.
Q: Para. 69notes thatguidelines issued byCONMETRO provide forthe“possibility ofpublic
consultation ”.Does thismean onlyselected rulesandregulations arenotified inadvance? Aredraft
standards published forpublic comment? How arecomments addressed?
A: Notice ofproposed oradopted technical regulations isnormally published inDOU -Diário
Oficial daUnião(Official Gazette), issued byImprensa Nacional from theMinistry ofJustice, in
accordance withArticles 2.9.1 and5.6.1 oftheAgreement. Aperiod of60days, asrecommended
bytheAgreement, isgenerally allowed forpublic comments ontheadoption oftechnical regulations;
those comments mustbeaddressed totheInformation andTechnological Diffusion Centre (CIDIT),
adepartment oftheNational Institute ofMetrology Standardization andIndustrial Quality-INMETRO.
Thisinformation isprovided intheBrazilian Statement ofImplementation under Article 15.2ofthe
Agreement.
Questions byHong Kong
Q: “TheSecretariat Report (WT/TPR/S/21, p.38-39, para17)mentions thatmostgoods become
dutiable atratesranging fromzeroto20%, although higher rateswerelevied oncertain goods, including
alcoholic beverages, certain electrical andelectronic equipment, carsandtoys. Wewould liketoknow
ifBrazil intends tocarry outtariff reduction programme forthese highratesproducts. Ifso,weare
interested toknow details oftheprogramme andtimeschedule ofitsimplementation. ”
A: With theexception oftoysthatareunder provisional safeguards (Article XIX), alltheother
products mentioned arepartoftheBrazilian exceptions listtotheCommon External Tariff ofthe
Mercosul andaresubjected topredefined convergence schedules.
Alcoholic beverages
Only certain types ofwines areintheexception list.Alltheother alcoholic beverages are
attheir20%CET levels. Theconvergence schedule forwines isthefollowing
YEAR /NCM 2204.21.00 2204.29.00
1996 40% 40%
1997 36% 36%
1998 32% 32%
1999 28% 28%
2000 24% 24%
2001 20% 20%WT/TPR/M/21/Add.1 Trade Policy Review
Page 24
Electrical andelectronic equipment
Electrical andelectronic equipment qualified ashousehold durables aretaxed ateither 35%
or30%, withthefollowing convergence schedule (itisimportant tonotethatjustaportion ofelectrical
andelectronic equipment isintheexceptions list.Alltherestaretaxed atthemaximum of20%):
1996 30 35
1997 28 32
1998 26 29
1999 24 26
2000 22 23
2001 20 20
Cars
YEAR /NCM 8703
1996 70%
1997 63%
1998 49%
1999 35%
Toys
Subjected toaProvisional Safeguard Measure of50percentage points above theCET level
(20%). Valid until31.12.96.
Services
Q: “TheSecretariat Report (WT/TPR/S/21, p.158,para. 31)mentions thatinearly 1996 the
National Congress wasconsidering adraftbillthatwould relax restrictions onforeign participation
incellular telephone, satellite andvalue-added services. Wewould liketoknow thelatest position
ofthesaidbillandwhether Brazil willconsider similar relaxation onother telecom services ”
A: Constitutional amendment No.8(August 15,1995) provided thattheRepublic could freely
grant concessions toprivate sector companies toprovide telephone andtelecommunication services
anddatatransmission services. OnNovember 28,1995 theGovernment issued three decrees aimed
atthefurther restructuring ofthesector. OnJuly19,1996, LawNo.9,295 wasapproved which
provided forforeign ownership ofupto49%ofcellular, satellite andcable concessions forthe3years
ending July19,1999andasmuch as100% thereafter. Brazil istobedivided into10concession areas
forprivate cellular telephony andconcession contracts areexpected tobeawarded inearly1997. The
ongoing restructuring oftheFederal System aimsspecially attheimplementation ofguidelines towards
theprivatization oftelecom services.Brazil WT/TPR/M/21/Add.1
Page 25
Q: “Brazil hasincluded inherGATS schedule apromise tomake commitments inrelation tothe
foreign capital participation intheinsurance andbanking markets within twoyears aftertheadoption
bytheNational Congress ofLegislation permitting suchparticipation (WT/TPR/S/21, p.163and165,
para. 60and72). Weareinterested toknow thelatest progress ofthesaidlegislation. ”
A: Under current law,foreign banks dulyauthorized tooperate inBrazil aregranted national
treatment, i.e.,thesame treatment asthatgranted toanyother Brazilian financial institution.
Authorization fortheestablishment ofnewforeign financial institutions inBrazil istoberegulated
bytheCongress. Todate,theregulation ofArticle 192oftheConstitution aswellasoftherespective
Enabling Lawtopermit theestablishment ofnewforeign financial institutions inBrazil hasnotyet
taken place.
Asthematter israther complex, especially given thesortofrestructuring thatthebanking sector
iscurrently undergoing inthecountry, itisnotpossible, forthetimebeing, toforesee adateforits
approval.
Inthemeantime, access fornewforeign firms inthesector hasbeenpermitted onacaseby
casebasis, subject toPresidential approval, asaresult ofinternational agreements orwhere there is
anexpress Presidential finding ofpublic interest.
Inaddition, public interest mayberelated totheprivatization ofpublic financial institutions;
thestrengthening ofthefinancial system through thepurchase, byforeign investors, ofinstitutions
under intervention (subject toliquidation) oftheCentral Bank.
Insurance services willalsobecovered bytheregulation ofArticle 192oftheConstitution.
Similarly tothebanking sector, todate,theoperation offoreign insurance companies inBrazil, directly
orthrough branches, agencies orrepresentatives issubject toPresidential approval onacasebycase
basis.
Withtheapproval ofConstitutional Amendment number 6in15August, 1995, anyenterprise
settled inBrazil, nomatter theorigin ofitscapital, isconsidered aBrazilian company. Thus, a
subsidiary ofaforeign company, established inBrazil andsubject toBrazilian regulations, isconsidered
aBrazilian company foralllegalpurposes.
AConstitutional Amendment (No.13,21.08.96) already promulgated ended thereinsurance
monopoly bypermitting theparticipation ofprivate reinsurers instead ofreserving itsolely totheofficial
reinsurer agency. Suchprovision willhavetobeconsidered ontheregulation ofArticle 192bythe
Congress intherespective Enabling Law.
According toExplanation (“Exposi çãodeMotivos ”)number 190,dated 14May, 1996, from
theMinister ofFinance tothePresident, theGovernment hasaninterest inpromoting theparticipation
offoreign capital inthehealth insurance system inorder toencourage competition andultimately expand
insurance coverage atreduced costtotheconsumer.
Anti-Dumping
Q: “WenotefromtheSecretariat Report (WT/TPR/S/21, p.64, para. 88)thatfurther integration
within MERCOSUL isexpected toleadtothedevelopment ofatraderemedy system forthecommon
market asawhole. Decision No.13/93 oftheCommon Market Group called fortheadoption of
common rulesonunfair trade practices bythirdcountries. TheCommerce Commission waschargedWT/TPR/M/21/Add.1 Trade Policy Review
Page 26
withdrafting suchrules. Inthemeantime, MERCOSUL members continue toapply theirnational
legislation. Anti-Dumping actions onintra-Mercosul tradewillcontinue tobepermitted untilcommon
rulesoncompetition policy areapproved. Wewould begrateful toknow more about thebackground
oftheinitiative todevelop common rulesoncompetition policy among Mercosul members, thelatest
stateofplayandtheschedule onimplementation. ”
A: TheMercosul countries arenegotiating common legislation onanti-dumping, countervailing
measures andsafeguards. Brazil isalsoengaged ontheharmonization ofcompetition policy regulation
withinMercosul.OnOctober16th,1996,theBrazilianCADEandtheArgentineanNationalCommission
oncompetition policy signed acooperation agreement. Duetomarket segmentation stemming from
alessthancomplete harmonization inareas suchastaxation, thenational legislations ontradedefence
arestillapplicable.
Q: “Itappears thatthejudiciary doesnothaveanysignificant roleintheenforcement ofcompetition
laws(WT/TPR/S/21, p.93). Wewould liketoknow ifthisisthecase. Willjudicial review beavailable
forthefindings reached orpenalties imposed bytheAdministrative Council forEconomic Defense
(CADE) andtheEconomic LawSecretariat (SDE)? Isthere anychannel toappeal suchfindings or
penalties? ”
A: There isalways thepossibility toresort tothejudiciary (Constitutional Provision) atanytime.
Until thebeginning ofthe1990s theroleoftheCADE wasrelatively lessimportant thannowwith
privatization, trade liberalization andderegulation oftheeconomy. There isaglobal trend that
competition policy systems mayprovide enough room forsettling anydisputes before resorting tothe
judiciary.
Q: “Inviewoftheinteraction between thefunctions ofCADE andother government spolicies
forinstance those onindustry andstateenterprises (WT/TPR/S/21, p.94),arethere anymechanisms
available toresolve inconsistencies orconflicts which mayarise?WilltheCADE participate inthe
formulation ofgovernment economic policies which haveabearing oncompetition ?
A: TheCADE isfocusing oncooperation mechanisms withother governmental agencies inorder
toavoidinconsistenciesthatmayariseotherwise.Inthissense,thereareinplacecooperationagreements
withtheForeignTradeBoard(tradepolicy),withtheNationalDevelopmentBank-BIDES(Privatization)
andthere areinitiatives tocooperate withtheindustrial policy area. CADE isnotinvolved directly
withpolicy formulation. CADE sponsors aseries ofseminars andworkshops withother governmental
agencies todisseminate knowledge oncompetition policy andtopromote theadoption ofacompetition
approach inpolicy making.
Questions byVenezuela
1) What istheSimilarity Lawbeing applied byBrazil andwhich sectors benefit under thatpolicy?
Thesimilar lawapplies onlytoimports benefitted byexemptions orreductions oftheimport
tax.Inorder toassess thequestion ofsimilarity three criteria aretaken intoaccount: thedelivery
period, theprice andthequality ofthegoods.Brazil WT/TPR/M/21/Add.1
Page 27
2) Cantheindustrial products fromtheManaus Free-Trade Zone besoldinBrazil freeoftariffs?
What freezoneproducts aresubject toimport quotas andwhatconditions must theymeet?
Yes. They arenotsubject toimport taxes.
3) Whataretheconditionsstipulatedforcreditattachingtocertaintextileimportsforimportlicences
tobegranted?
Imports ofcertain items ofthetextile sector aresubject toa30dayperiod forpayment.
4) Cantheagro-industrial sector import agricultural products during harvest time? Under what
conditions maythese imports bemade?
There arenolimits norconditions imposed onagricultural imports inanytimeoftheyear.
5) What typeofmarket-regulating measures arecontained inthedraft legislation nowbefore
Congress inregard tosectors thatarenolonger reserved totheState? Please answer thisquestion
inregard tothefollowing sectors: oilandgas,petrochemicals, participation offoreign capital incellular
andsatellite telephony, andvalue-added services. What sectors arestillreserved?
Constitutional amendment No.8(August 15,1995) provided thattheRepublic could freely
grant concessions toprivate sector companies toprovide telephone andtelecommunication services
anddatatransmission services. OnNovember 28,1995 theGovernment issued three decrees aimed
atthefurther restructuring ofthesector. OnJuly19,1996, LawNo.9,295 wasapproved which
provided forforeign ownership ofupto49%ofcellular, satellite andcable concessions forthe3years
ending July19,1999andasmuch as100% thereafter. Brazil istobedivided into10concession areas
forprivate cellular telephony andconcession contracts areexpected tobeawarded inearly 1997.
Withrespect tooil,gasandpetrochemicals, pending legislation hasbeensubmited toCongress
andamong other things include provisions forthecreation ofthe“National OilAgency -ANP”in
order toregulate thefunctioning ofthesector.
6) What percentage difference isthere between interest ratescharged byofficial banks andthe
market ratesforeachoftheprogrammes forthefinancing ofgoods andservices-producing sectors?
Theinterest ratesgranted bytheofficial banks arecompatible with andusually higher than
theratescharged forthelong-term loans intheinternational market.
7) Canthegovernment waive orsuspend payment ofinternal taxes and/or import-related taxes
(forexample IPI,Development oftheMerchant Fleet, Social Security tax,etc.)mentioned onpage53
oftheReport inEnglish? Ifyes,whatarethecriteria usedtodetermine suchexemptions orsuspensions?
There arenoexemptions orreductions ofthetaxes mentioned.
8) Itwould seem thatexport financing programmes areconditional upon certain local-content
requirements. Arethereplans fordismantling thistypeofprogramme? IntheviewoftheGovernment
ofBrazil, towhatextent arethese export financing programmes compatible withtheAgreement on
TRIMs andwiththeAgreement onSubsidies oftheWTO (seepages 87and102oftheReport in
English)?WT/TPR/M/21/Add.1 Trade Policy Review
Page 28
Twotypes offinancing areoffered under PROEX: i)direct financing, granted bytheBrazilian
Government toexporter (supplier 'scredit) ordirectly totheimporter (buyer 'scredit, iftheimporter
isaforeign government) forpayment onsighttotheexporter; andii)an"interest equalization" scheme
tolower theinterest rateondomestic commercial export finance loans toratesprevailing ininternational
markets. Interest ratesonPROEX loans arepegged totheLIBOR (plus amargin). Thedegree of
interest equalization depends onthematurity oftheloan, which maybeuptotenyears. PROEX may
cover upto85%ofthevalue ofexport.
There isnosubsidy inthePROEX, sincetheprogram merely equalizes export credit financing
totheconditions prevailing intheinternational market insimilar transactions.
9) What import tariffisapplied tothetariffquota forvehicles? What stipulations astotheorigin
ofthevehicles areapplicable tothequota?
Allvehicles inposition 8703 “passenger automobiles andother automotive vehicles mainly
conceived forthetransportation ofpersons ”payanimport tariffof63%starting on01.01.97 (thetariff
wasof70%in1996). Inaccordance withDecree 1987, dated 21August 1996, aquantity of50,000
vehicles, from Japan, Korea andtheEuropean Communities, payanimport tariff of35%.
Question from Ecuador
Q: DoesBrazil havesufficient information tostartamoreobjective evaluation ofthephytosanitary
aspects laiddown inDirective DDIV No.128of18July1994 concerning banana imports? Ecuador
would liketoknow thetimeframe within which suchmeasures willbereviewed, inthelightofthe
provisions ofArticles IIandVoftheAgreement ontheApplication ofSanitary andPhytosanitary
Measures.
A: Brazil isready toimport bananas from Ecuador assoon asitisscientifically established
thatthose imports willnotposeanyriskofintroducing intoBrazil thepestSigatoka Negra, according
totherules contained intheWTO SPSAgreement. Brazil andEcuador havealready discussed this
matter andBrazilian experts havealready visited Ecuadorian production zones. Further research,
however, isnecessary toassess theriskintransportation. LastJuly25,Brazil adressed aletter to
theEmbassy ofEcuador inBrasília where itsummarizes themeasures ittooktoovercome thepresent
difficulties andexplains further steps thatwillhavetobetaken beforeimports canbemade. The
Government ofBrazilis waiting forEcuador 'sreply toitsproposals.