WTO Trade Policy Review of Brazil

 

Statement by the United States

November 29, 2004

 

Thank you, Madame Chair.  The United States warmly welcomes the delegation of Brazil, led by Director-General Tarragõ, to this review.

 

The reports we have before us today reflect the excellent work of the Secretariat and the Government of Brazil.  They have laid out for us the key objectives of Brazil's trade policy since its last review, and they give us a more complete picture of Brazilian policies affecting trade.  We look forward to learning more about Brazil's trade policies in this session, and we have every confidence that David Spencer - who shared some thoughtful comments this morning - will do the same for us on Wednesday.

 

The United States has always viewed Brazil as a close friend in the hemisphere.  Our two capitals are more than 6,000 kilometers away, but years of expanding trade, capital flows, cross-border investment, and a wide range of educational, health, scientific and other joint activities have greatly expanded the political and commercial ties between our nations.  Brazil and the United States face many common challenges, from combating terrorism and money laundering to fighting poverty and stimulating economic growth.  We have been partners here in Geneva since the early days of the GATT, and Brazil has long been a key player in multilateral trade negotiations.  Ambassador Zoellick personally cited Minister Amorim's "can do, can be done" approach to achieving the July framework, and the United States looks forward to Brazil's bringing a "we must do" attitude to completing the negotiations.

 

It is clear that Brazil is one of the world's top trading countries, and it goes without saying that Brazil has been flexing its muscles - and influence - as an exporter.  In this regard, we are pleased to note the very first statement in the Secretariat Report, which states that "Brazil has continued to liberalize, and enhance the transparency of, its trade regime." There have indeed been positive steps by Brazil since the last review, including a reduction in average applied most-favored nation tariffs to 10.4 percent, a reduction of import licensing requirements, and a reduction in the time required to clear goods through customs.  The Secretariat Report further notes that these efforts have helped to make the Brazilian economy "more flexible, as evidenced by the resilience shown to a series of shocks during the period under review."  We agree with this statement, but we also draw attention to the reference on page 4 of the Secretariat Report that much of Brazil's recent economic growth has been driven primarily by external demand, including robust growth of goods and services exports, which increased by a third in value terms between 1999 and 2003.

 

Further moves by Brazil along a trajectory of trade liberalization could go a long way in stimulating domestic demand and increasing Brazil's GDP per capita, which stagnated in real terms between 1999 and 2003.  We understand that Brazil wants to improve its external balances, but we would underscore the importance of imports as well as exports in sustaining economic growth.  In this context, we wonder how much policies aimed at import substitution and export promotion are really doing in the aggregate to promote Brazil's growth and development, as  special programs targeted at selected producers or industries invariably distort capital markets and lead to a misallocation of resources.  Even the most well-intentioned governments are rarely successful in trying to allocate scarce resources for growth, although it is true that many have tried.

 

As is the case for all of us, there clearly are some specific areas where Brazil could take further action to improve its trade regime.  We pointed to some of those areas - such as further streamlining its import licensing system, strengthening its enforcement of intellectual property rights, and further liberalizing specific services sectors - in our questions.  I'd like to briefly touch on five of those issues now.

 

First, on services, the Secretariat Report notes that Brazil has not ratified the Fourth Protocol of the GATS, nor has it submitted an acceptable schedule of commitments on basic telecommunications.  Brazil has also neither ratified the Fifth Protocol to the GATS nor its 1997 financial services commitments.   Following through on its promises to the world trading community would promote Brazil's integration into the global economy and bolster Brazil's stature in the global trading system.

 

Second, the Secretariat Report notes that Brazil applies a special tariff regime for goods imported through the mail.  We note the apparently high rate of duty - 60 percent - and would like to know why these products are not subject to the normal duty rates for each product.

 

Third, US exporters of many products - ranging from forestry products to chemicals to motorcycles and automobiles - continue to have difficulties with Brazil's complicated and nontransparent import licensing procedures.  The Secretariat of Foreign Trade implemented a computerized trade documentation system in early 1997 to handle import licensing.  However, for specific imports requiring special authorization from specific ministries or agencies, Brazil maintains a non-automatic licensing system.  U.S. exporters have had difficulty using this system, in part because the government of Brazil no longer publishes a list of products subject to the non-automatic licenses.  The only method available to determine if a product requires an import license is to check the computerized system, where access is restricted to registered importers.  This non-automatic system presents a significant barrier to market entry because suppliers have no means of discovering in advance which products require licenses, or whether or not they will be subject to minimum price and payment terms as a condition of receiving licenses.  The WTO justification for some of the requirements enforced through non-automatic licensing is also unclear.

 

Fourth, sanitary and phytosanitary measures remain significant barriers for several U.S. agricultural products.  As an example, Brazil continues to prohibit the entry of poultry and poultry products from the United States because of an alleged lack of reciprocity, contrary to WTO rules which dictate that Members must base their sanitary and phytosanitary determinations on sufficient scientific evidence.

 

Fifth, the effective enforcement of copyright law is vital to economic growth in the information age.  While Brazil's creation of a National Council to combat piracy is welcome, it would be in the best interest of Brazil's creative artists if it would move boldly to enforce copyright law in a manner that would deter escalating copyright piracy.  The United States has made every effort to work with the Brazil on this issue, but rampant copyright piracy remains a significant problem.

 

Finally, Madame Chair, the United States appreciates this opportunity to comment on Brazil's trade policy.  We would like to express our appreciation to Director General Tarragõ and his team for all of the information they are providing, and we look forward to receiving the answers to our questions.  In addition, we welcome further cooperation on trade matters with our Brazilian colleagues - here at the WTO and in the context of our positive and growing bilateral relationship.  Thank you.