RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/140 
1 November 2004  
 
(04-4606) 
Trade Policy Review Body Original:  English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
BRAZIL 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Brazil is attached. 
 
 
Note: This report is subject to restricted circul ation and press embargo until the end of the meeting 
 of the Trade Policy Review Body on Brazil. Brazil WT/TPR/G/140 
 Page 3 
 
 
 CONTENTS 
    P a g e  
I. INTRODUCTION 5 
II. THE GENERAL ECONOMIC AND INSTITUTIONAL ENVIRONMENT 6 
 (1) T HE ECONOMIC ENVIRONMENT  6 
 (2) G ENERAL LEGAL AND REGULATORY FRAMEWORK  7 
III. TRADE POLICY DEVELO PMENTS (2000 – 2003) 10 
 (1) L ATEST DEVELOPMENTS IN BRAZILIAN FOREIGN TRADE  10 
 (2) P ARTICIPATION IN THE WTO 12 
 (3) P REFERENTIAL AGREEMENTS  14 
 (4) P RODUCTION AND EXPORT PROMOTION POLICIES  17 
IV. THE TRADE INSTITUTIONAL AND REGULATORY FRAMEWORK 18 
 (1) C ROSS -CUTTING ISSUES  18 
 (2) S ECTORAL ISSUES  21 
V. FUTURE DEVELOPMENTS 24 
  
 
 
 
 Brazil WT/TPR/G/140 
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 I. INTRODUCTION 
1. As many other emerging markets, especially in La tin America, Brazil has been subject to a set 
of external and internal economic shocks since its  last Trade Policy Review (TPR), in 2000.  Even 
though at the cost of low growth and high unemplo yment, the Brazilian economy has been able to 
successfully withstand these impacts. 
2. Overcoming the negative effects of the 1999 cu rrency crisis, the economy secured a strong 
recovery in 2000.  Since 2001, however, it has face d adverse international c onditions, engendered by 
a weakened global environment and heightened ri sk aversion towards emerging markets.  This 
scenario was aggravated by market  instability as the previous government was coming to an end in 
2002.  As a result, investments were curtailed,  and the economy slowed down.  Notwithstanding, 
following a smooth political transition, confidence was re stored in 2003.  Over the last twelve months, 
a number of positive developments have set the b asis for sustainable economic growth.  Production 
and consumption have rebounded, economic activity accelerated, une mployment gradually declined, 
and inflation was kept under control. 
3. Confronted with such domestic and intern ational challenges, Brazil has concentrated 
endeavors, over the last four years, to enhance in stitutions and policies, and strengthen its resilience to 
shocks.  The fall in capital flows to Brazil was faced by a swift, but flexible response, including 
further adjustment of macroeconomic policies and a dditional external financing from the International 
Monetary Fund (IMF).  The floating of the national currency has been key to allow a smooth current 
account adjustment.  On the domestic front, macr oeconomic stability has been enhanced by the 
continued operation of the inflation targeting frame work for monetary policy and by the improvement 
of the performance and quality of fiscal consolidation. 
4. Macroeconomic stability is regarded as a pr econdition to achieve, on a permanent basis, 
sustained economic growth with social justice.  Actually, social programmes are part and parcel of the country’s economic recovery.  Targeted programmes ha ve been put in place with a view to attaining 
reduction of poverty and social inequalities, an in crease in job creation, and reallocation of public 
expenditures to meet social requirements. 
5. Economic growth has been also pursued thr ough the implementation of a comprehensive 
reform agenda, which, essentially, aims at freei ng the productive sector from unnecessary regulations, 
rationalizing the tax structure and fostering entr epreneurship, innovation, and credit markets.  
Amongst such reforms, the government is implem enting a comprehensive tax overhaul, social 
security restructuring, and modernization of labour  legislation.  These reforms are set to increase 
Brazil’s productivity and growth potential. 
6. Since 2000, Brazil has continued to implement new market-based initiatives and to integrate 
itself into the world economy, despite the major cons traints imposed by external adjustment measures.  
Brazil’s trade policy has been consistent with such  developments, both in unilateral terms, through 
additional tariff reductions and improvements in tran sparency and regulation, and in international 
terms, through active participation  in the WTO, including the Doha round, and progress in starting 
and concluding trade agreements toge ther with its Mercosul partners. 
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II. THE GENERAL ECONOMIC AND INSTITUTIONAL ENVIRONMENT 
(1) THE ECONOMIC ENVIRONMENT  
7. The Brazilian economy currently combines strong a ttributes in support of sustained growth: 
price stability, fiscal discipline, lower levels of real  interest rates, and both trade and current account 
surpluses.  This favorable scenario  is anchored in the consistenc y of macroeconomic policies that 
have been in place since 1999, mainly through rigo rous fiscal discipline and debt management, an 
inflation targeting monetary regi me and a floating exchange rate. 
8. Once the stabilization had been assured in res ponse to the currency crisis in 1999, the 
economy expanded at 4.4% in 2000.  This perform ance was affected by an unfortunate sequence of 
domestic and external shocks.  On the internati onal front, the Argentinean crisis, the uncertainties 
related to the recovery of the world economy, pa rticularly in light of the slowdown in the 
United States, the concerns over terrorism since September 11 and a series of corporate scandals, as well as a rebound of oil prices were detrimental to emerging markets such as Brazil.  On the domestic front, an energy shortage crisis led to substa ntial rationing of electric energy from June 2001 to 
February 2002 and to a severe contraction of i ndustrial growth, from 6.6% in 2000 to 1.6% in 2001.  
The external and domestic shocks constrained the expansion initiate d in 2000 over the following year.  
Therefore, growth rates were modest in 2001 and 2002, at 1.3% and 1.9% respectively.  Moreover, 
the economic environment showed some sensitiveness to political prospects in the context of the 2002 
presidential elections.  This coincided with the peak  in country-risk in 2002, amplified due to current 
account deficit and high exposure of  exchange rate-indexed debt. 
9. Notwithstanding, the Brazilian government has managed to maintain its macroeconomic 
policies on track.  It has pursued fiscal primary surp luses, kept inflation under control, and preserved 
the floating exchange rate regime.  The primary fiscal  surplus target raised to 4.25% of GDP in 2003, 
from the previous 3.75% of GDP, paving the way fo r the reduction of the public debt-GDP ratio over 
the medium and long term.  This has been possi ble through a combination of increases in revenues 
and curtailment of expenditures.  The debt manageme nt and its impact on the debt dynamics have also 
been addressed by, inter alia,  reducing the share of foreign exchange-indexed securities.  At the same 
time, interest rates were reduced from 23% by the end of 2002 to 17% by the end of 2003.  Inflation was also lowered from 12.5% (2002) to 9.3% (2003),  despite the sharp currency devaluation.  As a 
result, both country-risk and exchange rate vola tility were reduced.  Alth ough for 2003 as a whole 
GDP registered a 0.2% contraction, there was a positive change in the level of activity and in 
expectations in the last quarter. 
10. The economic recovery has also been charact erized by a benign role of the external 
adjustment.  Due to competitive and flexible exch ange rates, an increase in commodity prices and 
growing demand worldwide, Brazilian exports peaked to an accumulated US$88.9 billion in 
the 12 months ending in August 2004, mostly in manufacturing exports.  The trade surplus was 
US$24.8 billion in 2003, leading to the major positiv e shift observed in the current account.  Having 
remained in deficit for eleven years, at above  4% of GDP from 1999 to 2001, the current account 
deficit was reduced to 1.7% of GDP in 2002 and turn ed to a surplus of 1% in 2003.  In the twelve-
month period ended in July 2004, the surplus attained  1.7% of GDP.  The increase in exports is being 
accompanied by a gradual expansion in imports, improving competition in the domestic market.  
Foreign direct investment decreased annually from 2000 to 2003.  In tandem with the improvement in 
economic conditions, however, prospects for FDI have been shifted upwards.  Foreign investment is 
expected to reach US$15 billion by the end of 2004, a net inflow about 50% higher than that of 2002. Brazil WT/TPR/G/140 
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 11. Meanwhile, thanks to the external adjustments ove r the last four years, Brazil’s resilience to 
external shocks has been significantly improved.  The ratio of external debt to exports is almost half 
the 2000 level.  Moreover, the country-risk premiu m has fallen substantially, and the debt service 
ratio has also undergone some improvement. 
12. In 2004, the economy embarked on a solid path to sustained growth.  As in the previous two 
consecutive quarters, in the second quarter of 2004, GDP presented variation above 6% in annualized 
terms.  Domestic demand has achieved a sust ained growth pace, and consumer confidence has 
attained in 2004 the highest levels since 1999.  The economy is forecast to grow at 4.5% in 2004 and 
3.5% in 2005.1  It is expected that, by the end of the current year, inflation will remain within the 
target, close to 7%, and that the fiscal primary su rplus will be increased.  The new target for such a 
surplus has been set at 4.5% of GDP.  Thanks to  a higher growth trend and to comparatively lower 
domestic real interest rates, prospects for the de bt dynamics have been ameliorated.  External 
adjustment is being further reinforced, with trad e balance and current account surpluses expected at 
US$32 billion and US$9 billion respectively, by the end of 2004. 
(2) GENERAL LEGAL AND REGULATORY FRAMEWORK  
13. In addition to sound macroeconomic policies, Br azil has been pursuing a number of structural 
and microeconomic reforms aiming at the improve ment of the institutional framework and the 
business environment.  These reforms have been c onceived and implemented to meet the challenges 
of economic and social development over the medium and long term.  Overall, they are geared to 
improve the conditions for entrepreneurship, to put into place effective and a ffordable social security, 
and to enhance institutional building in line  with fiscal and monetary responsibility. 
Pension Funds and Tax Reform 
14. In 2003, the National Congress approved a compre hensive reform of the public pensions 
system, which will reduce the costs of civil servant pensions for the federal budget.  It includes the 
taxation of retired civil servants’ pension earnings  and the availability of complementary pension 
schemes for civil servants. 
15. Progress has been made towards a comprehensiv e Tax Reform.  Initial steps of the reform 
have been accomplished in the period under review , including the approval of  required constitutional 
amendments by Congress.  The approved reforms in clude reductions in tax es levied on capital goods 
and measures to rationalize and simplify the tax structure, by replacing, for example, cumulative taxation on added value.  When fully implemented, it will result in enhanced overall tax efficiency. 
Data Dissemination and Transparency 
16. In March 2001, Brazil subscribed to the IMF's Special Data Dissemina tion Standard (SDDS), 
thus enhancing transparency and diffusion of information about the economy.  Monetary policy 
decisions, fiscal results, other economic policy reports and documents, as well as statistical information, have also been made available to  the public on the website of the Central Bank and 
competent Ministries and agencies. 
                                                     
 
1 Market expectations refer to the median of aggregates, as in the Market Readout , Banco Central do 
Brasil, October 8, 2004. WT/TPR/G/140 Trade Policy Review 
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Financial System and Credit Market 
17. Financial institutions were able to weather th e impacts of the many different shocks that 
affected the Brazilian economy since the adoption of th e floating exchange rate regime.  In order to 
improve the soundness of the financial system, a new Brazilian payment system ( Sistema de 
Pagamentos Brasileiro ) was implemented in 2002, which c ontains systemic risks by providing 
automated real-time settlements in inter-bank operati ons.  Moreover, a Bill was sent to Congress to set 
up a framework to subject the financial system to the anti-trust Authority (the Brazilian System of 
Competition Policy).  This Bill aims at greater co mpetition in financial inter-mediation and, as a 
result, a reduction in the cost of credit. 
18. In order to further develop credit markets and increase the availability of resources at lower 
costs, particular attention has been given to the reduction of spreads.  Loans guaranteed automatically 
by payroll with debt repayments made directly from checking accounts ( crédito por consignação ), 
originally limited to civil servants, have been  extended to employees of the private sector and 
pensioners.  Private pension funds  have also established similar loans for their participants.  
Furthermore, financial institutions have been grante d the right to securitize in only one instrument a 
set of bank credit operations with borrowers.  Othe r instruments to expand credit and lower costs are 
being considered on the basis of a ppropriate collateral or guarantees a nd reduced insolvency risk.  An 
example is the Positive Credit Data Base ( Cadastro Positivo ), which will provide financial institutions 
with better information about borrowers (in part icular, credit history) and reduce information 
asymmetry in the credit market. 
19. The Bankruptcy Law, under examination in Congr ess, seeks to preserve the bankrupted firms' 
assets (tangible and intangible), in a business-oriented way.  This approach can assure creditor’s rights 
and create conditions for economically viable compani es to resume their activities.  Such a framework 
might also lead to a reduction in the cost of capital and promote further business and investment 
activities. 
Investments 
20. A series of measures have been taken to impr ove the environment for foreign investment 
in Brazil:  the use of electronic declaratory re gistration, designed to speed up the registration 
process;  the Investment Account Law, which gran ts tax facilities to financial applications;  the 
reduction of income tax on long-term investment;  and the implementation of CMN Resolution 2,689 
(January 2000), which provides foreign investors w ith the same rights as domestic investors in the 
Brazilian financial and capital markets. 
21. The National Investment Information Networ k (RENAI) was launched in February 2004, 
with the objective of monitoring and diffusing invest ment activities in Brazil.  In 2001, the Central 
Bank started, on an annual basis, to conduct the Census on Brazilian Capital Abroad, in order to 
provide information about Brazilian investments in other countries.  This activity complements the 
one carried out by the Central Bank on foreign investments in Brazil. 
Entrepreneurship, Innova tion and Competitiveness 
22. An Industrial, Technological and Foreign Trade Policy has been implemented to promote 
innovation, productivity and competitiveness of the Br azilian industry.  Under this policy, some 
measures have been adopted, such as the reduction from 4% to 2% of the ad valorem  tax on IT and 
capital goods, and the reduction of the Tax on Industr ial Products (IPI) on machines and equipment.  
These measures will stimulate new investments and the modernization of the productive capacity, 
raising the industry ge neral competitiveness. Brazil WT/TPR/G/140 
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 23. A Technological Innovation Bill is under consid eration in Congress.  It seeks to promote 
partnership arrangements between universities and enterprises for the development of new products 
and processes, and to divert more resources from the private sector into R&D.  It also aims at 
increasing patent registrations.  It is seen as a key policy instrument to foster the transfer and 
dissemination of knowledge.  Another Draft Law to  establish an Industrial Development Agency is 
under discussion in Congress. 
24. A wide debate has been promoted on entr epreneurship, innovation and competitiveness 
through such means as the Competitiveness Fora a nd the Industrial Devel opment National Council, 
both gathering representatives from Government, Congress, private sector and trade unions.  
Mercosul, promoting similar exchanges and closer  industry integration among its member countries, 
has launched the program Mercosul Co mpetitiveness Forum in December 2002. 
25. In order to promote entrepreneurship and job creation and, at the same time, reduce 
informality in the economy, special incentives in the form of tax and labor policies, oriented towards 
small enterprises have been created.  Elimina tion and simplification of formalities and other 
requirements to start up companies have been considered. 
Regional Policies 
26. As part of the policy to reduce the regional inequalities throughout Brazil, two basic support 
mechanisms have been implemented:  (a) a system  of income tax exemptions and reductions for 
industrial or agricultural companies in the less developed North and Northeast regions;  and (b) 
the Constitutional Funds, to finance productive capac ity in the North, Northeast and Mid-west 
regions (FNO, FNE and FCO).  In the period be tween 2000 and 2003, those regions received about 
US$3 billion for projects in several sectors, such as  agribusiness, mining, industry, tourism, infra-
structure, and services. 
Social Policies 
27. Policies designed to combat poverty have been  adopted in the areas of social welfare 
assistance, income transfer, food security, and hunge r eradication.  These activities are integrated 
under the Family Stipend Programme, which articulates the goals to be attained.  The Programme is 
part of a public policy named Zero Hunger Prog ramme, aimed at eradicat ing hunger and social 
exclusion.  The Zero Hunger Programme identif ies hunger as a national political issue, and not as 
merely an individual fatality.  This policy is  geared towards social inclusion, through the 
universalization of citizenship rights, by tackling initi ally the fundamental social rights, i.e. access to 
food, education, social welfare, and employment pr otection.  The programme is expected to contribute 
to the improvement of living standards in the shor t and long-terms, and to ensure that the next 
generation can break the vicious circle of poverty and exclusion. 
Family Farming 
28. As a central element of the Zero Hunger Pr ogramme, family farming accounts for about 40% 
of agricultural production in Brazil and is spread  around 4.1 million farms, accounting for 84% of 
agricultural properties in the country.  It plays a key role in social development and in distributing economic growth and income more evenly around the country.  It is also a tool in reducing rural 
exodus to large metropolitan areas.  Family farmin g is supported through na tional programmes, such 
as the PRONAF (for the strengthening of family fa rming), PAA (for food acquisition) and PNRA (for 
agrarian reform). WT/TPR/G/140 Trade Policy Review 
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29. PRONAF reported a record expenditure of US $1.86 billion in the financing of family 
farming, 40% above the average of the previous year s.  The ceilings of expenditure and investment of 
this Programme were raised on average by 20%, though in specific areas — such as in farming 
projects for women, young farmers, tourism, and ecolo gy — the ceilings were raised in higher ranges.  
The agricultural microcredit facility, used for fightin g poverty in rural areas, has also been increased 
substantially:  in the 2003-2004 Harvest Plan, fi nancial resources were 219% above the 2002-2003 
level.  Since its inception, in August 2003, the PAA has invested more than US$55.20 million in the 
purchase of produce from family farming.  Aiming at  improving the competitiveness of the family 
farming producers and making food available for th e Zero Hunger Programme and other social 
projects, PAA benefited more than 80 thousand fam ilies across the five regions of Brazil.  In 2003, 
the PNRA settled in plots 36,301 families and provi ded staple food for 219,786 people.  Up to 
May 10, 2004, 15,407 families had been settled. 
Sustainable Development and Environment Responsibility 
30. The National Water Agency (ANA), created in 2000, is linked to the Ministry of the 
Environment and was established under a special regi me with administrative and financial autonomy.  
Its goal is to regulate the use of water in rivers and lakes under federal jurisdiction, ensuring quality 
and quantity for multiple uses.  It is also respons ible for implementing the National Water Resources 
Management System, a set of legal and administra tive mechanisms that aim at the sound management 
of water, together with local and state governme nts as well as civil society, including the search for 
solutions to two serious problems in the country:  pollution in rivers and prolonged droughts in the 
Northeast Region. 
31. Pilot initiatives such as the Sustainable Busin ess Project, supported by UNCTAD, have been 
implemented to support local community initiatives in the Amazon in the field of biotrade.  Pilot experiences of this kind are now being examined to  become part of a National Biotrade Programme. 
32. The Amazonian Ecotourism Development Progr amme (PROECOTUR) was adopted in 2000, 
with a view to providing a sustainable form of deve lopment to the Northern region of Brazil.  In 2003, 
a similar programme (the National Ecotourism Pr ogramme), established to encourage sustainable 
tourism projects, was extended to the whole country. 
III. TRADE POLICY DEVELOPMENTS (2000 – 2003) 
(1) L
ATEST DEVELOPMENTS IN BRAZILIAN FOREIGN TRADE  
33. Since the previous Review, Brazilian foreign trade has expanded significantly.  The average 
openness ratio (exports plus imports  of goods and services divided by GDP) has risen from 18.1% in 
the 1996-1999 period to 27.3% in 2000-2003.  The economy has attained the highest degree of openness in its post-war history.  Exports and im ports of goods have increased, on average, from 
8.0% to 14.1% over the two periods, and of services from 10.1% to 13.2%.  Both exports and imports 
of goods and services are historically at their highest levels in relation to GDP. 
34. The growth of exports in goods has been partic ularly fast, outpacing the growth of imports, in 
both absolute and relative to GDP terms.  Such an achievement has been driven by the diversification 
of products and markets, growth in the export shar e of non-traditional Brazilian states, and increase in 
the number of exporters.  Commodities exports have  also grown, largely thanks to the rising 
international prices, and manufactured exports showed a steep increase in volume.  The main industrial items exported by Brazil during the period under review have been civil aircraft, vehicles 
and parts, steel, chemicals, machinery, electric and electronic equipment, paper and pulp, and 
footwear.  As for commodities, soya beans, ores, oil, meat, coffee, sugar and tobacco maintained a Brazil WT/TPR/G/140 
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 leading share.  Fruits, maize and cotton have raised their share in the total exported.  Overall, goods 
exports rose by an average of 9.9% during the 2000-2003 period.  Commodities shipments, which 
account for almost one third of all exports, grew 19. 0% yearly on average, and manufactures, 7.2 %.  
Exports of goods as a proportion of total GDP rose from 9.1% in 2000 to 14.8% in 2003.  Until 
August 2004, goods exports ha d showed a 34.8% increase in comparison with the same period of last 
year. 
35. In parallel to the growth in exports volume, Brazil has diversified its trading partners.  
Brazilian exports between 2000 and 200 3 were higher not only to the major trading regions, such as 
the United States (26.4% growth) and the European Union (24.9%), but significantly to regions 
hitherto with rather small share in Brazil's trade:   Africa displayed an 112.3%  increase as recipient of 
Brazilian exports;  Middle East, 109.7%;  Easter n Europe, 108.6%;  As ia, 84.6%;  and LAIA, 
excluding Mercosul, 40.2%. 
36. More firms have been involved in export activ ities, which has proven to be a successful 
formula to boost sales, foster better-paid employment  and modernize domestic industry.  Access to 
new markets also opens up possibilities for acquiri ng quality inputs and new technologies to enhance 
productivity and expand capacity of the domestic industry.  The numbe r of exporting firms in Brazil 
has increased by 9.2%, from 16,246 exporters in 2000 to 17,743 in 2003. 
37. Brazilian imports of goods and services as a pr oportion to GDP peaked in 2001 (14.1%) and 
have undergone marginal decrease s in the following years, on account of the economic slowdown and 
exchange rate adjustment.  In absolute terms,  imports decreased from US$55.8 billion in 2000 to 
US$48.3 billion in 2003.  The figures of 2003 reveal a recovery in imports that  is gaining momentum 
in 2004.  Until August 2004, Braz ilian imports have increased 24.7% as compared to the same period 
in 2003.  Imports are growing at the fastest rates in the manufacturing sector, both in terms of inputs and raw materials and capital goods. 
38. The sustained growth of exports from 2000 to 2003, which was accompanied by a 
comparatively steady flow of imports, has turned th e trade balance from deficit into surplus.  The 
trade surplus attained a historical record of US$24 .8 billion in 2003.  In 2004, until August, the trade 
surplus in absolute terms grew 45% over the same period of 2003. 
39. The expansion of Brazil’s foreign trade, in particul ar of its exports, in the last four years has 
contributed to greater integration into the global economy.  However, Brazil accounts for only 1% of 
world trade.  Substantial increases in Brazil's share in world trade hinges not only on further 
expanding the foreign trade to GDP ratio, but also  on gaining better market access in international 
trade negotiations, particularly in sectors in whic h Brazil is more competitive, such as agriculture. 
40. It is worth noting that, though having undergone strong external adjustment, in which it had to 
produce trade surpluses to restore a healthy balance of payment, Brazil has refrained from reinstating 
protective measures.  On the contrary, tariffs, by fa r the most significant instrument of Brazil's trade 
policy, have been further lowered in the period under review.  The average applied MFN tariff shrank 
from 13.7% in 2000 to 10.4% in 2004.  Moreover,  the import-weighted average tariff rate has 
undergone a significant shift downwards.  At the sa me time, the coefficient of tariff variation 
(standard deviation corrected by the average) has be en much lower than in its major trading partners, 
revealing, for instance, that Brazil's exports might be affected by tariff escalation and peaks from the 
latter. WT/TPR/G/140 Trade Policy Review 
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(2) PARTICIPATION IN THE WTO 
41. Brazil has been actively involved in the WTO,  as it regards multilateralism as a cornerstone 
of its foreign policy, as well as one of the main p illars for the establishment of a fair and balanced 
global economic system, which can foster welfare an d mitigate poverty worldwide.  Consistently with 
those guidelines, Brazil was a strong advocate of the launching of the Doha Round.  In particular, it 
was a driving force behind the Doha Declaration on TRIPS and Public Health.  It remains engaged in 
contributing to a successful conclusion of the R ound, which it hopes can become a truly Development 
Round. 
WTO Regular Activities 
42. Between 2000 and 2003, Brazil ac tively participated in the wo rk of the WTO Market Access 
Committee, having submitted the required mandato ry notifications.  The negotiations regarding 
adjustment in the Brazilian Schedule of Tariff C oncessions (Schedule III) to the changes in the 1996 
Harmonized System (HS) were completed.  Ther eafter, Brazil notified the changes to the 2002 HS, 
which have modified the Brazilian Schedule of Tariff Concessions.  Likewise, Brazil has actively 
participated in the discussions concerning the Wo rk Programme for the Harmonization of Rules of 
Origin, in the WTO Committee on Rules of Origin.  It has submitted several proposals, concerning 
specific origin requirements as well as the general ar chitecture of the Agreement. Furthermore, Brazil 
has addressed the implications of the harmonized rul es of origin for other WTO Agreements.  It has 
also attached great importance to the regular activities of the Committees on Import Licensing, Customs Valuation (CV), Technical Barriers to Trad e (TBT), and to the Textiles Monitoring Body 
(TMB).  It has circulated over 145 TBT notifications .  Moreover, Brazil has participated in various 
Working Groups for accession of new Members. 
43. In the context of the Agreement on Sanitary and Phytosanitary Measures, Brazil has notified 
17 SPS measures, besides taking part in discussions fo r the implementation of the Agreement.  It has 
followed closely the implementation of the commitments undertaken by Members under the 
Agreement on Agriculture, with a view to clarif ying specific aspects and ensuring full compliance 
with the provisions of the AoA.  Likewise, Brazil has been an active participant in the sessions of the 
Trade Policy Review Mechanism (TPRM). 
Participation in the Doha Round 
44. In the Doha Round, Brazil considers that priority should be assigned to a successful and 
meaningful agreement on agriculture, since the sect or remains subject to a wide array of trade 
distortions and protectionism in world trade, wh ich hamper effective exploitation of developing 
countries' competitiveness in that sector.  Brazil is one of the founding members and is currently the coordinator of the G-20.  It has played a leading role  in the agriculture negotia tions that resulted in the 
framework approved by the General Council on 1 August 2004.  The emergence of the G-20 during 
the preparations for the V Ministerial Meeting in  Cancún (2003) responded to the need to keep 
agriculture at the core of the negotiations and,  at the same time, guarantee prospects for the 
achievement of meaningful results in line with the level of ambition of the Doha Mandate.  The G-20 
represents a major breakthrough in the WTO, enabli ng developing countries to actively participate in 
its decision-making process.  The Group seeks to address distortions and restrictions affecting agricultural trade in three pillars:  (i) reducing, w ith a view to phasing-out, export subsidies and other 
export enhancement measures;  (ii) reducing an d further disciplining trade-distorting domestic 
support;  and (iii) substantially improving market acce ss, especially for developing countries products.  
Furthermore, the Group sustains that operational and effective special and differential treatment 
(S&D) should be part and parcel of an agreement on  agriculture, in particular to cover food security Brazil WT/TPR/G/140 
 Page 13 
 
 
 and livelihood concerns of rural populations.2  Besides that, Brazil is a member of the Cairns Group 
and works in close coordination with it. 
45. Developing countries concerns are central to  Brazil in non-agricultural market access 
(NAMA) negotiations, especially as regards the princi ple of “less than full reciprocity”, the challenges 
of addressing tariff peaks, tariff escalation, and non-tariff barriers, as well as of providing more 
transparent rules to anti-dumping and subsidy inv estigations.  Thus, in the Negotiating Group on 
Rules (NGR), Brazil has been playing an active role in the identification of areas of the Agreements 
on Anti-dumping and Subsidies and Countervaili ng Measures that require clarification and 
improvement, as mandated by the Doha Ministerial Declaration.  It has already tabled 25 submissions 
to the NGR, of which 21 in conjunction with the "Friends of Antidumping".  The main topics of 
concern to Brazil have been, inter alia , sunset reviews, zeroing, the use of the lesser duty rule, export 
credits, implementation and countervailing duties. 
46. Brazil is committed to achieving progress in th e services negotiations, which, in its view, 
should move in parallel with other areas, mainly agriculture.  Brazil submitted its initial services 
market access requests in July 2002 to eighteen  WTO Members and received initial requests from 
approximately twenty Members.  In additio n, the country presented its initial offer3 for the Doha 
negotiations on July 21, 2004, with substantive impr ovements in several sectors.  Fourteen new sub-
sectors have been included.  Brazil advocates the e nhancement of the development component in the 
services negotiations, through the implementation of S&D and focus on sectors, issues and modes of 
supply of interest to developing countries (i.e. tour ism, Mode 4).  It has circulated several proposals 
addressing a number of sectors such as computer an d related services, distribution, audiovisual, and 
construction services.  Brazil is committed to st rengthening the rules of the Services Agreement 
(domestic regulation, safeguards, subsidies) as  a way to improve security and stability for an 
expanded world trade in services. 
47. Regarding implementation issues, Brazil along with other developing countries has put 
forward proposals on the compatibility between the TRIPS agreement and the Convention on 
Biodiversity (CBD), to better protect genetic res ources, and on flexibilities to implement TRIMs, in 
order to give some policy space for developing coun tries to pursue proper public measures to achieve 
their development goals.  On S&D, Brazil is fully committed to strengthening those provisions and to 
fully integrating them into the WTO architecture. 
Dispute Settlement 
48. Brazil has been a major user of the WTO dispute settlement system.  Since 1995, it has 
appeared as complainant or respondent in 34 cases submitted under the “Understanding on Rules and 
Procedures Governing the Settlement of Disputes” (DSU), ranking first among developing countries. 
Considering all WTO Members, Brazil ranks fourth in terms of participation in that mechanism, after 
the USA (161 cases), the European Communities (113) and Canada (38 cases).  As a complainant, it 
has appeared in 22 disputes, ranking fourth af ter the USA (78 cases), the European Communities 
(64 cases) and Canada (26 cases). Taking also in to account the disputes in which Brazil has 
participated as third party, it has appeared in 51 cases out of the 316 disputes registered by the WTO 
since 1995.  Brazil's participation in the WTO disp ute settlement system ep itomizes its reliance on a 
mechanism designed to guarantee the implementation of the obligations undertaken by the Members 
                                                      
2 More information on the G-20 can be found on the web site www.g-20.mre.gov.br. 
3 TN/S/O/BRA. WT/TPR/G/140 Trade Policy Review 
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in the various agreements.  In the period under re view (2000-03), Brazil has appeared in 15 cases as 
complainant and in 4 cases as respondent4. 
(3) PREFERENTIAL AGREEMENTS  
49. Brazil believes that bilateral and regional trade agreements can be a useful complement to 
the multilateral system, by deepening the integration of markets, reinforcing the role of trade in 
economic growth, and promoting gain s of scale for domestic firms.  From that perspective and in 
accordance with WTO disciplines on regional trade agreements, Brazil continued to place Mercosul 
as the centrepiece of its trade policy.  Brazil also participates in other regional agreements within 
LAIA (Latin-America Integration Association) an d is engaged in negotia tions with important 
partners, such as the United States, under the Free Trade Agreement of the Americas (FTAA), and the 
European Union, under the Bi-regional Association Agreement E.U.-Mercosul.  As far as other developing countries outside LAIA are concerned, Brazil (through Mercosul) is currently negotiating 
preferential trade agreements with India and the Southern Africa Customs Union (SACU), and 
attaches great importance to the new round of the Global System of Trade Preferences among 
Developing Countries (GSTP) as an opportunity to increase South-South trade. 
MERCOSUL 
50. Brazil’s main trade agreement is Mercosul, a backbone for further regional integration and 
negotiation of extra-regional agreements.  During the period under review, Brazil achieved further 
convergence of a large number of tariff headings towards the Common Extern al Tariff (CET), through 
measures such as (i) the reduction in the number of items in the exception list to the CET, currently 
limited to 100 tariff headings;  (ii) the conclusi on of the convergence schedule for capital goods;  and 
(iii) the elimination of the temporary tariff increase to the CET. 
51. Regarding trade in services, the fourth r ound of liberalization in service sectors was 
completed, and a fifth round is under way.  The Mercosul Council of Common Market approved, in 
December 2003, two important instruments to deepen  integration:  (i) the Mercosul Visa, which 
contains common rules for temporary movement of services providers, and (ii) the Mechanism for the 
temporary exercise of professional services, whic h lays down directives to celebrate mutual 
recognition agreements between professional entities as well as disciplines to grant temporary 
licenses. 
                                                     
 
4 (a) As complainant:  DS208 – Turkey – Anti- dumping duty on steel and iron pipe fittings;  
DS209 – European Communities – Measures affecting soluble coffee;  DS216 – Mexico – Provisional 
anti-dumping measure on electric transformers;  DS217 – United States – Continued Dumping & 
Subsidy Offset Act of 2000;  DS218 – United States – Countervailing duties on certain carbon steel products from Brazil;  DS219 – European Communities – Anti-dumping duties on malleable cast iron 
tube of pipe fittings from Brazil;  DS222 – Canada  – Export credits & loan guarantees for regional 
aircraft;  DS224 – United States – U.S. Patents Code;  DS239 – United States – Certain measures regarding anti-dumping methodology;  DS241 – Argentina – Definitive anti-dumping duties on poultry from Brazil;  DS250 – United States – Equaliz ing excise tax imposed by Florida on processed 
orange and grapefruit products;  DS259 – United States – Definitive safeguard measures on imports of 
certain steel products;  DS266 – European Communities – Export subsidies on sugar;  DS267 – 
United States – Subsidies on upland cotton;  DS269 – European Communities – Customs classification of frozen boneless chicken.  (b) As  respondent:  DS046 – Brazil – Export financing 
programme for aircraft (brought by Canada);  DS197 – Brazil – Measures on minimum import prices 
(brought by the USA);  DS199 – Brazil – Measures aff ecting patent protection (brought by the USA);  
DS229 – Brazil – Anti-dumping duties on jute bags from India (brought by India). Brazil WT/TPR/G/140 
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 52. Moreover, the Council of the Common Market a dopted Mercosul's Protocol on Government 
Procurement, which will enter into force upon ratifica tion by two of the four member countries.  The 
Protocol improves the transparency of governme nt procurement and contains MFN and national 
treatment clauses.  It provides for the opening to other Mercosul countries of the purchases by central 
government of goods and services above US$75,000 (s ubject to country-specific reservations) and of 
public works above US$3,000,000. 
53. The Olivos Protocol, signed in February 2002, entered into force in January 2004, bringing 
innovations to the regional dispute settlement me chanism, especially with the creation of the 
Permanent Review Court (PRC), which may confirm,  modify or revoke the juridical basis and the 
decisions of the ad hoc  Arbitration Court.  The constitution of  the PRC with permanent arbitrators is 
designed to generate a coherent and systematic case-law, seeking a standardized interpretation of 
Mercosul rules, as well as preventing conflicting decisions on similar issues. 
MERCOSUL and Regional Agreements 
54. Brazil, as member of Mercosul, benefits from a broad range of free trade agreements 
subscribed by that customs union — within the frame work of LAIA — with Bolivia, Chile and Peru, 
separately, and a plurilateral one with Colombia, Ec uador, and Venezuela.  The latter, as well as the 
Agreement with Peru, have not had their LAIA pr otocol processes concluded yet.  In July 2002, a 
partial scope agreement providing for free trade in the automotive sector after a transition period 
lasting up to 30 June, 2011 was si gned between Mercosul and Mexico.  It should be noted that since 
30 June, 2001 Mercosul member countries are not allowed to sign individually trade preference 
agreements with third parties, accord ing to a Common Market Council Decision.5  The remaining 
agreements previously concluded by each Merc osul member country are being replaced by 
agreements that involve Mercosul as a whole. 
55. Preferential margins granted within the frame work of the free trade agreements between 
Mercosul, Chile and Bolivia have been regularly  expanded since the entry into force of the 
corresponding agreements (in 1996 and in 1997, r espectively).  Chile and Bolivia became Mercosul 
associate members, upon their request, after the conc lusion of the mentioned free trade agreements.  
In December 2003, Peru became the third associate member of Mercosul6, after the signature of LAIA 
Economic Complementation Agreement No. 58, whic h provides for the establishment of a free-trade 
area within a maximum transition period of fifteen years.  In July 2004, Mexico announced its 
intention to apply to become a Mercosul associate member. 
56. On 16 December 2003, the Mercosul countries and three members of the Andean Community 
(Colombia, Ecuador and Venezuela) signed an ag reement aiming at the establishment of a free trade 
area between the two blocks within a maximum transition period of fifteen years.  Asymmetry concerning the level of development of the member countries was duly taken into consideration.  The 
agreement concluded a process la unched in 1998 and revived in Dece mber 2002 with the signature of 
a framework agreement. 
57. Besides the aforementioned agreements in the framework of Mercosul, Brazil has bilateral 
fixed tariff preferences agreements with Cuba (since the latter's accession to LAIA, in 1999;  new 
preferences have been agreed upon in the last m eeting of the Administrative Committee, in Havana, 
August 2004), the Andean Community countries but  Bolivia (also from 1999, still in force in 
attendance of the conclusion of the protocol processes of Mercosul’s agreements with Peru and with 
                                                     
 
5 Decision CMC/DEC/32/00. 
6 Decision CMC/DEC/39/03. WT/TPR/G/140 Trade Policy Review 
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Colombia, Ecuador and Venezuela), and Mexico (signe d in July 2002, in the context of a Mercosul-
Mexico Framework Agreement from the same year).  Brazil has also a Special Scope Agreement with Guyana, signed in 2001, in which nearly all the negotiated products enjoy 100% tariff preference. 
MERCOSUL and Extra-Regional Agreements 
58. Also as a member of Mercosul, Brazil has taken pa rt in the negotiations for the creation of an 
Inter-Regional Association between Mercosul and the European Union, wh ich encompasses political 
dialogue, and commercial and cooperation aspects.  The trade chapter of the agreement under 
negotiation aims at the establishment of a Merc osul–EU free trade area, covering agricultural and 
non-agricultural goods, services, investments, intellectual property, rules of origin, competition 
policy, anti-dumping, government procurement,  sanitary and phytosanitary measures, dispute 
settlement and business facilitation measures.  The c onclusion of the agreement was initially foreseen 
for October 2004 in order to allow its entry into force in 2005.  Negotiations, however, were still under way when this report was drafted. 
59. Mercosul and South Africa signed a framework  agreement in December 20000, with a view 
to negotiating a free-trade agreement.  In 2003,  the other SACU (South African Customs Union) 
members joined the negotiations.  Currently the two blocks are discussing a preferential trade 
agreement as a first step to achieve free trade.  Likewise, Mercosul and India signed a Framework Trade Agreement
7 in June 2003, aimed at strengthening re lations between the parties, promoting 
expansion of trade and the negotiation of a free-trad e area agreement in conformity with the rules and 
disciplines of the WTO.  The Framework Agreement provides, as a first step, for the negotiation of a 
partial scope agreement, aimed at increasing bila teral trade flows through the granting of mutual 
concessions.  The main text of a preferential trade agreement between Mercosul and India was signed on January 2004, containing general disciplines on safeguards, anti-dumping, countervailing 
measures, technical barriers to trade, sanitary an d phytosanitary measures, and dispute settlement 
procedures.  Additional disciplines on these matters , as well as lists of concessions, are still under 
negotiation. 
Free Trade Area of Americas (FTAA) 
60. Brazil has taken part in the negotiations for th e establishment of the Free Trade Area of the 
Americas (FTAA), which has, as its main target, the progressive reduction of barriers to trade in 
goods and services among thirty-four countries of th e Western Hemisphere as of 2005.  Discussions 
have been held in negotiating grou ps dealing with market access; agriculture;  subsidies, anti-dumping 
and countervailing duties;  investments;  governme nt procurement;  intellectual property rights;  
services;  competition policy;  and dispute settlement. 
61. During the 8th FTAA Ministerial Meeting, held in Miami, in November 2003, Ministers 
recognized the need for flexibility in the negotiations  taking into account the needs and sensitivities of 
all FTAA partners.  It was decided that countries w ould be allowed to assume  different levels of 
commitments in the agreement.  They would seek to develop a common and balanced set of rights and 
obligations applicable to all countri es.  In addition, nego tiations would also allow for countries, within 
the FTAA, to agree to additional obligations and be nefits.  One possible course of action would be for 
those countries to conduct plurilateral negotiations w ithin the FTAA to define the obligation in the 
respective individual areas. 
62. In February 2004, the Trade Negotiations Co mmittee held a meeting to discuss the common 
set of rights and obligations, but no consensus was reac hed at the time.  Consultations ensued in order 
                                                     
 
7 Approved by Decision CMC/DEC/09/03. Brazil WT/TPR/G/140 
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 to finalize the “common set”.  Despite progressing so me areas, a final agreement has not yet been 
reached. 
Global System of Trade Preferences among Developing Countries 
63. Brazil, along with other 42 developing countries, is a member of the GSTP (Global System of 
Trade Preferences among Developing Countries).  Since South-South trade has been increasing well 
above world trade average growth and is, thus, becoming a significant source of dynamism for the 
global economy, the GSTP has gained more importa nce as an instrument to further enhance and 
deepen trade among developing countries.  Hence, Brazil actively promoted the launch of a third 
round of negotiations of the GSTP, which took pl ace in São Paulo, in June 2004, during UNCTAD 
XI.  Brazil will continue to be engaged in th ose negotiations and hopes that other developing 
countries, especially LDCs, take part in the R ound, since it is a timely opportunity to promote new 
markets and generate trade among developing ec onomies, within a rule-based and predictable 
framework. 
(4) PRODUCTION AND EXPORT PROMOTION POLICIES  
64. The Brazilian foreign trade policy seeks to  promote innovation and technological 
development, as well as the increase of competitiven ess for the Brazilian productive structure, in both 
the traditional sectors and those in which Brazil is still becoming competitive.  Among sectors deemed strategic, biotechnology, nanotechnology a nd biomass encompass activities that may affect 
horizontally all the productive structure.  The main  objective has been to coordinate and integrate 
Government institutions, entities and information sy stems regarding these sectors in providing a good 
environment for the participation of the private sector. 
65. The Strategic Plan of Export Promotion launche d in 2003 aims not only at increasing exports, 
but also at diversifying the export markets, e xpanding the number of exporte rs, and improving market 
information available to potential exporters. 
66. Specially designed programmes are geared to a ssist the development of entrepreneurship 
capacities with different tools, focusing on smal l and medium-sized companies, such as the 
website Portal do Exportador  (Exporter Gateway), which contains  more than 500 links to other 
websites worldwide with information and services on foreign trade.  It aims at expanding the 
insertion, the visibility, and the competitiveness of th e Brazilian exporter in the international market.  
Another programme, available in the Portal,  is Fala Exportador  (Speak, Exporter), a direct channel 
through e-mail.  Also, the Encomex  (Foreign Trade Meetings), for instance, a road-show held at 
Brazilian major cities, is designed to promote a deep integration between the private and public 
sectors, where both can share knowledge and info rmation about many aspects of the exporting 
activity.  From 2000 until August 2004, 13,959 enterprises took pa rt in Encomex.  Another 
programme is the Redeagentes  (Network Agents), which prom otes training and seminars with 
exporters all over Brazil.  Since 2000, there were ei ght thousand entrepreneurs trained by the project.  
The Exporta Fácil  (Easy Export), a logistics facility provided by specific rules for courier companies, 
is also an important tool for small and medium -sized companies.  The PROGEX, a specific support 
for SMEs, is designed to better deal with technical barriers to trade. 
Export Finance and Insurance 
67. The Export Financing Program (PROEX) is a G overnmental program of financing Brazilian 
exports of goods and services.  The Program has tw o modalities: direct financing (PROEX Financing) 
and interest rate equalization system (PROEX Equa lization).  The main purpose of the Program is to WT/TPR/G/140 Trade Policy Review 
Page 18 
 
 
make available for Brazilian exporters the same international financing conditions of exporters 
elsewhere.  With the objective of expanding the Brazilian exporter base, by the end of 2002, new 
criteria were defined for PROEX Financing, in or der to benefit micro, small and medium-sized 
companies, since these companies normally encounter more difficulty to access the credit markets.  
Furthermore, new priorities were defined for fina ncing small exporting comp anies and establishing a 
specialized department within BNDES, Br azil’s main bank for export financing. 
68. The Brazilian government established an export credit guarantee fund in 1997 and put in 
place an export credit insurance system.  The Export Credit Insurance (ECI) is one of the instruments 
that have contributed to bolster Brazilian e xports.  Between 2000 and 2003 , Brazil’s ECI-supported 
financed exports rose by 44.9% (from US$718 million to  US$1.04 billion), thus outpacing the growth 
of the Brazilian financed exports in the same period.  Civil engineering and capital goods sectors, 
which require medium and long-term payments in a ccordance with international standards, have been 
leading ECI-backed transactions.  Since 2004, there are three insurers8 that operate with their own 
resources. 
IV. THE TRADE INSTITUTIONAL AND REGULATORY FRAMEWORK 
(1) CROSS -CUTTING ISSUES  
Trade Remedies 
69. Since its last TPR, Brazil has not been brought to respond to any complaints related to trade 
defense measures in the WTO Dispute Settlement Mechanism, which emphasizes the consistency of 
Brazilian use of trade remedies with the multilateral rules.  Moreover, during the period under review, 
the application of new contingency measures over im ports in Brazil fell in comparison with 1999.  
Brazilian exports, however, remain a major target to safeguards, anti-dumping, and countervailing 
measures abroad.  The sectors most affected we re chemicals, steel, and agriculture products. 
Technical Standards 
70. Since 2000, Brazil has published about 1700 standard s, of which 19% are straight adoption of 
ISO or IEC standards.  The remaining standard s either result from national initiatives or reflect 
International Standards, with appropriate adaptati on to address fundamental climatic or geographical 
factors, as well as insufficient level of safety or tech nological problems.  The adoption of International 
Standards has concentrated in the areas of hosp ital equipment, electrical equipment, machines, 
automobiles, road machines and tools, and others  in which standards conform a reference for the 
development of technical regulations. 
Trade Legal Procedures 
71. In 2003, about 87 normative acts referring to impor t operational procedures were consolidated 
in a single document.9  The Import Administration System has been adapted to the WTO rules, with 
the introduction of automatic licensing as the st andard procedure.  Imports of capital goods, 
comprising 1600 products, were exempt from non-automatic licensing.  Other import norms and 
procedures have also been simplified and made av ailable through the internet.  New measures were 
put in place to facilitate exports10:  public notice in the internet about the consolidation of export 
procedures;  increasing the number of products a llowed to export in consignation, including 
                                                      
8 SBCE, SECRESB and EULER HERMES. 
9 Portaria SECEX No. 17, of December 1st 2003. 
10 Portaria SECEX No. 12, of September 3rd 2003. Brazil WT/TPR/G/140 
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 agricultural, semi-processed and processed goods;  elimination of the “Registro de Venda” (Sales 
Registry) — which the exporter was supposed to f ill up prior to receiving the export license — for 
aluminium, soluble coffee, and cocoa;  end of the limit of US$50,000 for a single export license with various products, at different prices, in the same HS Code (NCM). 
Customs Modernization 
72. From 2000 to 2003, Brazilian Customs Administrati on has intensified its work in order to 
speed up customs clearance of goods and modernize risk analyses techniques.  There has been a 
reduction in the average clearance time, and measure s have been put in place in line with the WTO 
rules, regarding customs valuation, rules of or igin and tariff classification, among others.  It 
recognizes the importance of the real implementation on paragraph 8.3 of the Decision on 
Implementation Issues and Concerns adopted in th e IV WTO Ministerial Conference, regarding the 
application of Article VII of the GATT 1994 .  An Inter-ministerial Commission on trade facilitation 
has been created to reform and simplify procedures and other bureaucratic requirements.  Such work 
is expected to lower foreign trade transactional costs. 
Sanitary and Phytosanitary Issues 
73. Transparency on sanitary measures and technical regulation has been enhanced in Brazil.  All 
published technical regulations relate d to food, drugs, cosmetics, medical devices, medical equipment, 
maximum pesticides residues, home sanitation product s, health services, and sanitary checks related 
to human health are regularly notified to WTO a nd made available on the internet.  A second Enquiry 
Point for the SPS Agreement was established in 2002, and since then Brazil h as been able to make 
significant contribution to the WTO SPS Committee and Codex Alimentarius meetings.  The most 
important risk analysis processes are notified to the WTO, and the relevant sanitary or phytosanitary 
events immediately reported to competent interna tional organizations and authorities of our trade 
partners. 
74. Since the WTO creation, Brazil has signed more than thirty bilateral agreements on sanitary 
and phytosanitary matters, using the SPS Agreem ent principles.  The main purposes of these 
agreements is to identify common rules, simplify import controls, harmonize certification 
requirements, and facilitate the bilateral trade and entry of selected products.  The importance of such 
agreements for Brazilian exporters and their trade partners can be measured by the increase of the 
bilateral volume of trade exports with more than one hundred countries and the integration of medium 
and small-sized agriculture producers into the inte rnational market, in such different sectors as 
honeybee, organic products, fresh fruits and flower s.  However, the full potential of Brazil’s 
agricultural exports has yet to be fully develope d, mainly due to the limited use of Equivalence 
agreements, as recommended by SPS/WTO Agreement. 
Competition Policy 
75. During the last four years, a number of provisions of the Brazilian antitrust law have been 
modified with the purpose of strengthening enforcement of anti-competitive laws and of improving 
the Brazilian System for Competition Policy (BSCP).  Thus, competent authorities have been granted 
new powers, especially during cartel investigations.  In 2003, the BSCP created an intelligence center 
for cartel investigation together with the federal police and public prosecution offices.  The first dawn 
raid related to cartel investigation was successfully carried out, and thirteen others followed; for the 
first time in the Brazilian Competition history, a leniency agreement was signed;  and the use of wire 
tapping by the criminal authorities was intensified. WT/TPR/G/140 Trade Policy Review 
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76. Brazil has put in place a post-merger  review system, which establishes, inter alia , that 
transactions must be notified to the competition aut horities within fifteen days  after its occurrence and 
that authorities may issue a “Preliminary Injunction” on complex and potentially anti-competitive merger cases.  Also, a “Fast-Track System” for simple cases has been introduced, reducing in about 
86 days the review period.  Currently, 50% of th e caseload is being reviewed under this simplified 
procedure.  In 2004, the Brazilian authorities adde d a new category of cases that are now eligible 
for the “Fast-Track”, which are t hose where the merging parties' turnover within Brazil is less than 
R$400 million (around US$135 million). 
Regulatory Agencies 
77. Since Brazil’s last TPR, there has been a process of consolidation of several regulatory 
agencies, such as the National Water Agency (ANA) , National Agency for Waterways Transportation 
(ANTAQ), National Agency on Land Transportati on (ANTT), National Health Agency (ANS) and 
National Sanitary Surveillance Agency (ANVI SA), National Telecommunications Agency 
(ANATEL), Electric Energy National Agency (AN EEL), Petroleum National Agency (ANP).  The 
Congress is discussing a Bill on regulatory agencies aiming to guarantee the autonomy of these 
entities, including the mandates of their director s, and to emphasize co-ordination among all 
competing bodies.  The proposal would strengthen the role of agencies and clarify their respective spheres of competence in relation to the Executive and to Congress.  
Intellectual Property 
78. Since 2000, legal and regulatory, institutional and social developmen ts have improved the 
protection of intellectual property rights (IPRs) in Br azil.  The IPRs’ framework  has been modified by 
the enactment of several instruments.  A m echanism of co-operation was established between 
government agencies in the analysis of pharmaceu tical patent applications, which demonstrates 
Brazil’s full commitment to the Doha Ministeria l Declaration on the TRIPS Agreement and Public 
Health.  Rules have been provided for protec tion of undisclosed information submitted to the 
authorities responsible for marketing approval, in line with Article 39 of the TRIPS Agreement.  
Provisions to facilitate collective management of  rights related to phonograms, to improve the 
enforcement of copyrights and neighbouring rights, a nd to prevent piracy have been established.  The 
legislation about the ex officio grant of compulsory licenses in the event of national emergency or 
public interest has been modified to balance prope rly the needs of patent holders and the public at 
large, as well as social, economic and technological development objectives. 
79. Among the institutional rearrangements that contri buted to a more integrated and efficient 
government co-ordination for intellectual prope rty issues, mention should be made to the 
establishment in 2001 of an inter-ministerial an ti-piracy committee (CICP), whose actions focus on 
the prevention and repression of violations of copy rights and neighbouring rights.  In that year, the 
Inter-ministerial Group of Intellectual Property (GIPI) w as given formal structure.  It plays a key role 
in the co-ordination of the government position conc erning the Brazilian IPR’s policy.  Furthermore, 
the National Institute of Industrial Property (INP I) has been strengthened, and provided with a new 
structure.  It includes, for instance, the Partners hip and Technological Information Directory with the 
aim to foster co-operation between industr y and academic research projects on science and 
technology. 
80. In May 2004, an anti-piracy working group of the Ministry of Science and Technology 
encouraged the development of studies by the private sector, with government support, on new 
technologies for the prevention of piracy.  The Parliamentary Inquiry Commission, established in Congress to investigate actions of piracy and ta x evasion, accomplished its work in June 2004 and Brazil WT/TPR/G/140 
 Page 21 
 
 
 submitted its conclusions, which indicate courses of ac tion to combat piracy in Brazil.  In order to 
give effect to these conclusions, a new anti-pi racy council was established in October 2004.  
Noteworthy is the increase of 467,90% in the destru ction of pirated goods in the first semester of 2004 
compared to the first semester of 2003. 
(2) SECTORAL ISSUES  
Agriculture 
81. Recognizing the importance of agricultural trad e for the Brazilian economy, there has been a 
continuous dialogue among representatives of privat e, public, and academic geared to the discussion 
and the analysis of trends and policies, whic h can enhance a business-fri endly environment for 
agricultural trade.  Such is th e case, for instance, of the promotion of organic production methods, 
especially among medium and small-sized producers. 
82. New financial instruments have been issued to  assist farmers in marketing their production. 
The Farming Deposit Certificate and the Farming Warra nt, both in a final process of implementation, 
aim to confer greater efficiency to the agricultura l market.  In their implementation, the warehouses 
will participate as active marketing agents.  In add ition, it is under consideration a new Storage Law 
to update methods and procedures for storing food.   Another priority is the development of a 
securitization mechanism of agricu lture credits through the creation of the Certificate of Receipts 
(CRA) and the authorization for the constitution of  Special Purposes Societies, incorporated by 
private capital. 
83. Another important feature of the Brazilian modern  agriculture is the increasing use of market 
instruments to deal with risks, leading to a growi ng participation of foreign re-insurers.  Results of 
this policy can already be seen, for instance, in the number of crop insurance policies, posting an 
increase of 247% in premium income in the period of 2000 to 2003. 
Transports 
84. Given the size of Brazil's territory, foreign trade still lacks an adequate transport infra-
structure.  Basic investment in improving the tr ansport network is required.  The government is 
considering a new transportation matrix, with a bette r exploitation of the mainland river ways, coastal 
navigation, and railroads.  It has introduced in C ongress a Bill on the use of Public Private Partnership 
(PPP), which is expected to play a leading ro le in promoting investments in transport. 
(i) Land transports 
85. During the period 2000-2003, the National Agency of Land Transport (ANTT) has continued 
to develop and enhance regulation to improve the system of trans ports for goods and passengers along 
the ten bordering countries.  This task included the extension of a computer-led system to authorise 
and control the movement of goo ds through borders, which, in 20 03, reached over 10 million tons. 
(ii) Air transports 
86. The Government has paved the way for the creation of the Civil Aviation National Agency 
(ANAC), which will be in charge of regulating and inspecting Brazilian civil aviation. A Bill defining 
the operating rules for the Agency is under discussion in the Brazilian Congress. Relations with third 
countries in air services are conducted on the basis of the principle of reciprocity, enshrined in a number of international bilateral agreements. As a principle, no preferences are granted to carriers WT/TPR/G/140 Trade Policy Review 
Page 22 
 
 
from countries other than those that signed bilate ral instruments, including those of MERCOSUL, 
since the Protocol of Montevideo has yet to be in corporated into domestic law. Brazil has subscribed 
some 58 air transport agreements and 6 Memoranda of Understanding, mostly with Latin American 
and European countries, as well as with the United States and Japan.  None of these are open-sky 
agreements.  It is worth mentioning that airport charges applied in Brazil do not discriminate between 
foreign and Brazilian airlines operating in the country. 
(iii) Ports 
87. Established in 2001, the National Agency for Waterways Transportation (ANTAQ) is 
responsible for implementing the waterways (i.e., ma ritime, inland and coastal) transportation policy 
formulated by the Ministry of Transportation an d the National Council for the Integration of the 
Transportation Policies (CONIT), subject to the pr inciples and directives established by Law, as well 
as to regulate, supervise, and control the provision of waterways transportation services and the use of 
infrastructures of ports and waterways.  The Agency  activities aim (i) to assure the trade transit of 
goods and passengers in accordance with standards of  efficiency, safety, users' convenience, timely 
services, and reasonable freight rates and tariffs, (ii) to harmonize interests of customers and services 
producers, thereby safeguarding the public interest, a nd (iii) to solve conflicts of interests that might 
arise between different parties, as well as to prev ent market situations of imperfect competition or 
contrary to the country’s public interest. 
88. Despite its short period of existence, ANTAQ has already succeeded in establishing national 
rules for the registering of Brazilian shipping comp anies, the operation of vessels flying the Brazilian 
flag, the freighting of foreign and national vessels,  and the authorization for the transportation of 
reserved cargo by foreign vessels, among other ini tiatives aiming to promote efficiency and fair 
competition in the sector, taking into account the prin ciples of reciprocity and no discrimination.  
Apart from attaining a complete privatization of port services rendered to shippers and shipping 
companies, a new security system has been implem ented in Brazilian ports and terminals, thereby 
complying with the new requirements established by IMO — the ISPS Code. 
89. The port system in Brazil has been revamped in a model that assigns port ownership to the 
Federal Government, through the Port Authority, wh ile the operation is in the hands of the private 
sector.  The new model has allowed decentralization of the sector and has generated new investments, 
by means of modernization of the cargo operations , introduction of new technologies, increase in 
productivity, and reduction in time of ships in port. 
Insurance 
90. The insurance industry has grown significantly  in recent years thanks to the favourable 
economic environment.  Betw een 2000 and 2003, insurance premium has increased by 62.3%, 
capitalization by 37.1%, and open private pension funds  by 45.5%.  This growth has been generated 
not only by economic stabilization, but also by the liberalization introduced in some sectors.  As a 
result, the participation of foreign capital in th e insurance industry premium income has risen from 
29.54% in 1999 to 31.4% in 2003. In the open privat e pension funds, the increase in foreign capital 
participation went up from 21% in 1999 to 36%  in 2003.  At the end of 2003, there were 
65 companies in operation (insurance, cap italization, and open pension funds). 
91. The national regulatory insurance agency, SUSEP,  has introduced new mechanisms of risk 
management into the insurance, open private pe nsion funds and capitalization markets. SUSEP has 
moved toward a risk based supervis ory regime consistent with inte rnational standards and practices, 
such as the IAIS Principles. Brazil WT/TPR/G/140 
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 92. Furthermore, SUSEP is encouraging the crea tion and development of popular insurance 
products meant for all layers of the Brazilian  population, especially the poor or low-income 
households.  One of these measures was the reduc tion on tax over financial operations (IOF) for life 
insurance.  The first effects of th is popular insurance policy have alr eady borne fruit.  Several insurers 
have announced the creation of new products, ex tending the coverage of the patrimony and the 
interests of the low-income layer of the population, increasing savings and the investments that can bring benefits for this segment of the population.  Taxes related to life insurances have been phased-
out, in order to reduce costs and increas e coverage for low income families. 
Securities and Corporate Governance and Responsibility 
93. The Comissão de Valores Mobiliários  (CVM) is an independent agency regulating securities 
and supervising the stock exchange, public compani es and equity investment funds.  Along with the 
Central Bank, it licenses and regulates securities broke rs and dealers, and supervises the futures and 
commodities exchange, clearing systems, and fixed income funds. The CVM has rule-making powers.  
It also issues accounting rules and provides accreditation for auditors of public firms.  The CVM can initiate administrative proceedings and impose penalties. 
94. The legal framework of the securities mark et has been substantially improved and 
modernised, especially in the last few years.  No table achievements have been made in key areas, 
such as protection of minority shareholders, corporate good governance culture, and transparency.  Consideration is being given to improve some legal and regulatory mechanisms.  These include 
legislation regarding accounting a nd auditing professions, investment advisers and the simplification 
or elimination of complexities and inconsistenc ies of some regulations regarding collective 
investment schemes as well as the legal framework for self-regulation. 
95. Among institutional developments in connecti on to corporate governance and responsibility, 
it is also worth noting that Brazil as a subscribing party participated in the 2000 revision of the OECD Guidelines for Multinational Enterprises.  The Na tional Contact Point, in its new format, was 
established in 2003 to implement the revised Guidelines. 
Private Pensions 
96. In the 2003-2004 period, the norms that define and organise the closed system of 
complementary pensions in Brazil have been revi ewed and updated.  The National Monetary Council 
(CMN) issued norms regarding investments, incl uding limits for pension funds investing abroad.  
The system of closed private pensions comprises 360 pension funds. Investments amount to 
US$82.2 billion, which correspond to 15.9% of th e GDP (as of December 2003).  The Federal 
Government has taken measures to provide the Stat e Secretariat for Pension Funds with the necessary 
tools in order to exert an adequate supervisory role of the system. 
Telecommunications 
97. From 2000 to 2003, the transition from stat e monopoly to an open and competition-based 
regime in telecommunications was reinforced.  Po licy for the sector is set by the Ministry of 
Communications (MC) and implemented by the regulatory agency ANATEL.  Competition among operators has been possible through the developmen t of a regulatory model that established clear and 
reliable rules and regulations.  This new framework has provided domestic and international investors 
with a high degree of confidence, and has targeted  rules on universal service, service continuity, and 
quality principles in order to meet the telecommunications needs of the Brazilian population. WT/TPR/G/140 Trade Policy Review 
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98. The Brazilian telecommunications regulatory mode l is based on three pillars: universality, 
competition and quality of services.  A framework of  obligations was estab lished for operators to 
provide services in areas that at first may not see m commercially viable.  Development of market 
competition was conceived in two stages:  first, up to 2002, through a duopolistic approach, in which 
incumbents in local fixed telephony were made to  compete with a "mirror" company in each given 
region; and second, mobile tele phony was opened up to competition with a transition phase based on a 
duopoly model until the year 2000.  The sector is  subject to specific legislation and has its 
competition practices supervised by a special re gulatory agency.  Within a specific regulatory 
framework, Brazil has achieved a technologically advanced telecommunication services system, in 
line with the International Telecomm unications Union quality recommendations. 
V. FUTURE DEVELOPMENTS 
99. The Brazilian economy is set to sustain its recovery and enter a long cycle of growth in the 
forthcoming years.  Following an expansion of around 4.5% in 2004, the growth rate is expected to 
surpass 3% in 2005.  Such a performance is to be accompanied by a continua tion of current conditions 
of macroeconomic stability, which are grounded in eff ective fiscal and monetary policies put in place 
since 1999 and enhanced in the last two years.  Co upled with a credible inflation targeting regime, 
fiscal consolidation and discipline will enable gradua l reduction of the public debt to GDP ratio and a 
more determined focus on social policies on the public expenditure side. 
100. Over the medium and long term, the conditions fo r sustainable growth with social justice can 
be improved thanks to advances in the approval an d the implementation of institutional, structural, 
and microeconomic reforms that have been empha sized.  The tax and social security reforms are 
expected to provide greater efficiency to the ec onomy and, jointly with other reforms, such as the 
projected Bankruptcy Law and other improvements in  financial markets, will strengthen capital and 
credit markets.  Development of these markets shoul d lead to higher levels of investments in the 
economy, including in R&D, which also might benefit from the Technological Innovation Law under 
discussion in Congress.  A stronger regulatory syst em, with a new Law strengthening and unifying the 
structure of the regulating agencies, might furthe r increase the efficiency, by reducing transaction 
costs and providing more stability for business.  The Brazilian economy is undergoing a number of institutional improvements geared to foster invest ment activities, job creation, innovation and growth 
generation. 
101. Another fundamental reform being discussed in  Congress is the judicial reform.  A set of 
proposals has been put forward in order to guarant ee an efficient and fast claim resolution, with 
incentive to mediation and to the reform of the j udicial process code.  These measures are seen to 
impact positively on the business environment and the credit system. 
102. The Government has also put forward a Draft La w on Public-Private Partnerships (PPP).  It 
might be a key complementary policy instrument to expand infrastructure investments that are crucial 
for business, including foreign trade, and sustainabl e economic and social development.  It is an 
efficient mechanism of risk-sharing to grant private long-term investment in sectors that produce wide 
social externalities.  Once put in place, it might  enlarge opportunities for domestic and international 
investments in Brazils' infrastructure, not only w ithin the country, but also along axes of physical 
integration in the South American sub-region. 
103. In addition to the improvements derived from the implementation of the macroeconomic 
stability and the comprehensive reform agenda, Braz il is gradually positioning itself to take greater 
benefits in world trade and investments, as well as in regional economic integration.  From a trade 
policy perspective, Brazil will seek to keep playing an active role at the WTO and a constructive role 
in building economic and trade associ ations at all geographic levels. Brazil WT/TPR/G/140 
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 104. Reinforcement of the multilateral system will re main a priority in Brazil’s endeavors to 
pursue an efficient and equitable international ec onomic and trading framework.  Brazil will continue 
to be actively engaged in the Doha  negotiations, seeking to translate the Doha mandate at the level of 
ambition preserved by the July Package into concrete  and credible modalities.  Brazil understands that 
it is in the best interest of all WTO members to guarantee that work on modalities be completed by the 
next Ministerial meeting in Hong Kong.  It attach es great importance to agriculture and its three 
pillars to address market liberalization and reform.  It advocates that progress in this sector lies at the 
core of a successful development round.  At the same  time, it has been working with its G-20 partners 
in agriculture and all involved parties to provide th e round with balanced and compatible results in all 
sectors. 
105. The strengthening and development of Mercosul will be another major component of Brazil’s 
trade policy strategy, in particular with regard  to the association of new members and to trade 
agreements with countries and group of countries inside and outside the sub-region.  Bi-regional 
agreements will continue to be pursued.  More over, Brazil on its own and via Mercosul will be 
engaged in fostering South-South trade not only at  the level of enhanced  cooperation and economic 
ties with key partners, but also through the recently  launched round of negotia tions within the GSTP, 
whose members account for 55% of the trade among developing countries. 
106. In 2005, the economy is expected to go on ge nerating trade and current account surpluses, 
though at lower levels than those predicted for 2004.11  A sustained growth in the next years will be 
fundamental to allow a continuation of foreign trade expansion in Brazil, cons istent with high levels 
of both export and import ratios to GDP. 
__________  
                                                      
11 Latest market projections, compiled by Market Readout of the Central Bank of Brazil 
(www.bcb.gov.br) over October 2004, have indicated a trade surplus of US$27 billion in 2005, against 
US$32 billion in 2004, and a current account surplus of US$3.5 billion in 2005, against US$9.1 billion in 2004.