Brazil’s Foreign Trade: Non Protectionists Foreign Trade Policy
Fernando Pimentel, H.E. Minister of Development, Industry and Foreign Trade (H.E. Ministro do Desenvolvimento, Indústria e Comércio Exterior)
H.E. Minister of Development, Industry and Foreign Trade discusses the trade in Brazil, its prospects and the overall economy and the future of Brazil.
Interview with Fernando Pimentel, H.E. Minister of Development, Industry and Foreign Trade (H.E. Ministro do Desenvolvimento, Indústria e Comércio Exterior)
Brazil slapped on a 30 percent points increase in import tariffs of automobiles (the Mercosur trade block and Mexico are exempted). A major objective of this tariff is to slow surging imports from China. In September, Brazil enacted important tariffs on certain steel products from China. China is the largest trade partner of Brazil, which both heavily imports from and exports to China. History has shown that prosperity and trade go hand in hand. When trade dries up – no matter whose fault it is – economies usually suffer. By undervaluing its currency, China has accumulated a huge hoard of foreign exchange reserves. How would you characterize Brazilian trade policy? What is Brazil’s strategy when it comes to trade?
The Brazilian foreign trade policy has focused on the unfettered observance of contracts and by the compliance with the World Trade Organization rules. Brazil has positioned itself firmly and in a clear way against the protectionist policies allowing access to its big and growing consumer market to companies in several sectors of activity and from all over the world. Similarly, it has searched for access to markets in the entire world, offering a wide range of products.
In that search – whose success can be measured by the significant growth of Brazilian exports, mainly this year (2011) when we beat all commodities and processed products sales records -, we have been against all illegal and disloyal way of commerce, by relying only in the WTO rules. Brazil is today one of the biggest sponsors of investigation requests within the Organization, with one of the highest success rates. More recently, it proposed the beginning of the discussion about the impact of accentuated and persistent exchange imbalances on the international commerce, in which was followed by important commercial partners like the United States or China.
But our commercial strategy is not just the commercial defense. As effective and successful has the government action is in this aspect, it could only affect around 4% of the Brazilian imports. We have pursued diligently the increasing competitiveness of the Brazilian industry, stimulating innovation and adopting measures of exemption of the productive process, like the substitution of the payroll tax in sectors with intensive labor by the profits tax and the Reintegra program that foresees the return of 3% of the taxes paid successively in four major sectors of the national economy.
This tax modernization process and the search for innovation, implemented with the release of the Plano Brasil Maior (Bigger Brazil Plan), gives a new meaning to the Brazilian commerce policy.
Is the world in 5-10 years heading down the road of protectionism or free trade?
Brazil will always work for the breaking of the tax, health or other protectionist barriers. The country doesn’t have any obstacle for foreign producers to have access to its market. But it will always defend itself from any disloyal or illegal commercial practice, recognizing the World Trade Organization as the legitimate forum for all discussions and decision/making.
Over the last two decades, thanks largely to government policy, the poverty rate in Brazil has halved. With this, income inequality (measured by the Gini coefficient) has also fallen sharply, declining on average by 1.2% a year. Brazil’s economy is forecast to grow by 3.6% this year.
Currently, Brazil is enjoying the fruits of labor. In your opinion what can put an end to the Brazilian miracle? (In other words, what are the major challenges Brazil is facing?)
I don’t believe it’s a miracle, even in a figured sense. The growth in Brazil is the result of a process initiated in the 90’s with effective anti- inflationary policies. The gains from this process allowed the implementation of a bold income distribution plan during the government of the ex-president Lula, which led to the ascension of 30 million Brazilian to the middle class.
That process wasn’t limited to the ascension, but it maintains itself with the search for the huge quota of business opportunities and qualification. With income and inflation under control, Brazilians have the possibility to plan expenditures and investments, making the economy grow sustainably.
How do you perceive the role of industry (automobile industry, petrochemicals, machinery, electronics, cement and construction, aircraft, textiles, food and beverages, mining, consumer durables, tourism) in the strategic development of Brazil?
Industry is fundamental for its capacity of transforming, generating employment and income, and for the innovation promotion and technologic advances. The Brazilian industrial park is one of the most diversified in the world. At the moment, we need to make the transition of an industry built and consolidated in the 20th century to an industry of the 21st century, capable of producing in a large scale and in an environmental and social sustainable way.
Brazil ranks 126th out of 183 economies in ease of doing business according to the World Bank. What is the ministry’s agenda for improving the business environment in 2011 and beyond?
Brazil is seeking to modernize its industrial park and the government, on its side, is seeking tax modernization. We can’t expect a reform to solve all of our problems at once. That’s why we are trying to go ahead with chirurgical interventions like the Reintegra and the exemption of pay slip announced in August. These two measures, at the moment, restrict to sectors with intensive labor, will serve as a beacon for the possibility of extending the tax benefits to other sectors until 2014.
What is your vision for Brazil?
Brazil is living one of its best moments of its recent history. We are a consolidated democracy that respects treaties, deals and contracts, in which the alternation in power has been made smoothly. The press acts in an independent way, respecting the rules of democracy.
We’ve transformed ourselves into one of the biggest consumer market of the world with an additional advantage: we do not lack natural resources, agricultural areas, production technology and cumulative knowledge. That conclusion leads us to believe in a long and sustainable growth and progress period.
Brazil slapped on a 30 percent points increase in import tariffs of automobiles (the Mercosur trade block and Mexico are exempted). A major objective of this tariff is to slow surging imports from China. In September, Brazil enacted important tariffs on certain steel products from China. China is the largest trade partner of Brazil, which both heavily imports from and exports to China. History has shown that prosperity and trade go hand in hand. When trade dries up – no matter whose fault it is – economies usually suffer. By undervaluing its currency, China has accumulated a huge hoard of foreign exchange reserves.
How would you characterize Brazilian trade policy? What is Brazil’s strategy when it comes to trade?
A política de comércio exterior do Brasil tem se pautado pela observância irrestrita de contratos e pelo cumprimento das regras da Organização Mundial de Comércio. O Brasil tem se colocado de maneira firme e clara contra políticas protecionistas e permitido o acesso a seu grande e crescente mercado consumidor a empresas dos mais variados setores e de todas as partes do mundo. Da mesma forma, tem buscado acesso a mercados de todo o mundo, oferecendo uma variada gama de produtos.
Nessa busca – cujo sucesso pode ser medido pelo expressivo crescimento das exportações brasileiras, notadamente neste ano de 2011 quando batemos todos os recordes de vendas de commodities e produtos industrializados -, temos combatido toda e qualquer forma de comércio desleal e ilegal, valendo-nos unicamente das regras estabelecidas pela OMC. O Brasil é hoje um dos maiores patrocinadores de pedidos de investigação no âmbito da Organização, com um grau de sucesso dos mais elevados. Mais recentemente, propôs o início da discussão sobre o impacto de desequilíbrios cambiais acentuados e persistentes sobre o comércio internacional, no que foi seguido por importantes parceiros comerciais como Estados Unidos e China.
Mas nossa estratégia comercial não passa apenas pela defesa comercial. Por mais efetiva e bem sucedida que seja a ação de governo nesta seara, ela teria potencial para afetar cerca de 4% das importações brasileiras apenas. Temos perseguido com afinco o aumento da competitividade da indústria brasileira, estimulando a inovação e adotando medidas de desoneração do processo produtivo, como a substituição da taxação da folha de pagamento de setores intensivos em mão de obra pelo imposto sobre o lucro e a o programa Reintegra, que prevê a devolução de 3% de impostos pagos em cascata por quarto setores importantes da economia nacional.
Esse caminho da modernização tributária e da busca pela inovação vai dar, implementado como o lançamento do Plano Brasil Maior, dá o novo tom da política de comércio do Brasil.
Is the world in 5-10 years heading down the road of protectionism or free trade?
O Brasil sempre trabalhará pela queda das barreiras protecionistas, sejam tarifárias, sanitárias ou de qualquer outra ordem. O país não tem imposto qualquer obstáculo para que produtores estrangeiros tenham acesso a seu Mercado. Não abrirá mão, no entanto, de se defender de qualquer prática comercial que julgue desleal ou ilegal, reconhecendo na Organização Mundial de Comércio o fórum legítimo para as discussões e tomadas de decisão.
Over the last two decades, thanks largely to government policy, the poverty rate in Brazil has halved. With this, income inequality (measured by the Gini coefficient) has also fallen sharply, declining on average by 1.2% a year. Brazil’s economy is forecast to grow by 3.6% this year.
Is the world in 5-10 years heading down the road of protectionism or free trade?
O Brasil sempre trabalhará pela queda das barreiras protecionistas, sejam tarifárias, sanitárias ou de qualquer outra ordem. O país não tem imposto qualquer obstáculo para que produtores estrangeiros tenham acesso a seu Mercado. Não abrirá mão, no entanto, de se defender de qualquer prática comercial que julgue desleal ou ilegal, reconhecendo na Organização Mundial de Comércio o fórum legítimo para as discussões e tomadas de decisão.
Currently, Brazil is enjoying the fruits of the labour. In your opinion what can put an end to the Brazilian miracle? (In other words what are the major challenges Brazil is facing)
Não acredito que estejamos diante de um milagre, ainda que no sentido figurado. O crescimento verificado no Brasil é fruto de um processo iniciado ainda nos anos 1990 com o combate eficiente à inflação. Os ganhos advindo desse processo permitiram a implementação de um ousado plano de distribuição de renda no governo do ex-presidente Lula, que levou à ascensão à classe media de aproximadamente 30 milhões de brasileiros.
Esse processo não se esgota na ascensão, mas se mantém com a busca desse enorme contingente por oportunidades de negócios e qualificação. Com renda e inflação sob controle, os brasileiros têm a possibilidade de planejar gastos e investimentos, fazendo com que a economia do país cresça de forma sustentável.
How do you perceive the role of industry (automobile industry, petrochemicals, machinery, electronics, cement and construction, aircraft, textiles, food and beverages, mining, consumer durables, tourism) in the strategic development of Brazil?
A indústria é fundamental, seja pela capacidade transformadora e geradora de emprego e renda, seja pela promoção da inovação e do avanço tecnológico. O parque industrial brasileiro é um dos mais diversificados do mundo. Neste momento, precisamos fazer a transição de uma indústria construída e consolidada no século 20 para uma indústria do século 21, capaz de produzir em larga escala e de forma sustentável ambiental e socialmente.
Brazil ranks 126th out of 183 economies in ease of doing business according to the World Bank. What is the ministry’s agenda for improving the business environment in 2011 and beyond?
O Brasil está buscando a modernização do parque industrial e o governo, por sua vez, buscando a modernização tributária. Não podemos ficar esperando uma reforma que resolva todos os nossos problemas de uma vez. Por isso, estamos buscando avançar com intervenções cirúrgicas como o Reintegra e a desoneração da folha, anunciados em agosto. Essas duas medidas, neste momento, restritas a setores intensivos em mão de obra, servirão como baliza para que os benefícios fiscais possam ser estendidos a outros setores até 2014.
What is your vision for Brazil?
O Brasil vive um dos melhores momentos de sua história recente. Somos uma democracia consolidada, que respeita tratados, acordos e contratos, em que a alternância de poder tem sido observada sem sobressaltos. A imprensa age de forma independente, dentro da estreita observância das regras democráticas. Temos nos transformado em um dos maiores mercados consumidores do mundo com uma vantagem adicional: não nos faltam recursos naturais, área agricultável, tecnologia de produção e conhecimento acumulado. Essa constatação nos leva a acreditar num longo e sustentável período de crescimento e avanços.
Brazil slapped on a 30 percent points increase in import tariffs of automobiles (the Mercosur trade block and Mexico are exempted). A major objective of this tariff is to slow surging imports from China. In September, Brazil enacted important tariffs on certain steel products from China. China is the largest trade partner of Brazil, which both heavily imports from and exports to China. History has shown that prosperity and trade go hand in hand. When trade dries up – no matter whose fault it is – economies usually suffer. By undervaluing its currency, China has accumulated a huge hoard of foreign exchange reserves. How would you characterize Brazilian trade policy? What is Brazil’s strategy when it comes to trade?
The Brazilian foreign trade policy has focused on the unfettered observance of contracts and by the compliance with the World Trade Organization rules. Brazil has positioned itself firmly and in a clear way against the protectionist policies allowing access to its big and growing consumer market to companies in several sectors of activity and from all over the world. Similarly, it has searched for access to markets in the entire world, offering a wide range of products.
In that search – whose success can be measured by the significant growth of Brazilian exports, mainly this year (2011) when we beat all commodities and processed products sales records -, we have been against all illegal and disloyal way of commerce, by relying only in the WTO rules. Brazil is today one of the biggest sponsors of investigation requests within the Organization, with one of the highest success rates. More recently, it proposed the beginning of the discussion about the impact of accentuated and persistent exchange imbalances on the international commerce, in which was followed by important commercial partners like the United States or China.
But our commercial strategy is not just the commercial defense. As effective and successful has the government action is in this aspect, it could only affect around 4% of the Brazilian imports. We have pursued diligently the increasing competitiveness of the Brazilian industry, stimulating innovation and adopting measures of exemption of the productive process, like the substitution of the payroll tax in sectors with intensive labor by the profits tax and the Reintegra program that foresees the return of 3% of the taxes paid successively in four major sectors of the national economy.
This tax modernization process and the search for innovation, implemented with the release of the Plano Brasil Maior (Bigger Brazil Plan), gives a new meaning to the Brazilian commerce policy.
Is the world in 5-10 years heading down the road of protectionism or free trade?
Brazil will always work for the breaking of the tax, health or other protectionist barriers. The country doesn’t have any obstacle for foreign producers to have access to its market. But it will always defend itself from any disloyal or illegal commercial practice, recognizing the World Trade Organization as the legitimate forum for all discussions and decision/making.
Over the last two decades, thanks largely to government policy, the poverty rate in Brazil has halved. With this, income inequality (measured by the Gini coefficient) has also fallen sharply, declining on average by 1.2% a year. Brazil’s economy is forecast to grow by 3.6% this year.
Currently, Brazil is enjoying the fruits of labor. In your opinion what can put an end to the Brazilian miracle? (In other words, what are the major challenges Brazil is facing?)
I don’t believe it’s a miracle, even in a figured sense. The growth in Brazil is the result of a process initiated in the 90’s with effective anti- inflationary policies. The gains from this process allowed the implementation of a bold income distribution plan during the government of the ex-president Lula, which led to the ascension of 30 million Brazilian to the middle class.
That process wasn’t limited to the ascension, but it maintains itself with the search for the huge quota of business opportunities and qualification. With income and inflation under control, Brazilians have the possibility to plan expenditures and investments, making the economy grow sustainably.
How do you perceive the role of industry (automobile industry, petrochemicals, machinery, electronics, cement and construction, aircraft, textiles, food and beverages, mining, consumer durables, tourism) in the strategic development of Brazil?
Industry is fundamental for its capacity of transforming, generating employment and income, and for the innovation promotion and technologic advances. The Brazilian industrial park is one of the most diversified in the world. At the moment, we need to make the transition of an industry built and consolidated in the 20th century to an industry of the 21st century, capable of producing in a large scale and in an environmental and social sustainable way.
Brazil ranks 126th out of 183 economies in ease of doing business according to the World Bank. What is the ministry’s agenda for improving the business environment in 2011 and beyond?
Brazil is seeking to modernize its industrial park and the government, on its side, is seeking tax modernization. We can’t expect a reform to solve all of our problems at once. That’s why we are trying to go ahead with chirurgical interventions like the Reintegra and the exemption of pay slip announced in August. These two measures, at the moment, restrict to sectors with intensive labor, will serve as a beacon for the possibility of extending the tax benefits to other sectors until 2014.
What is your vision for Brazil?
Brazil is living one of its best moments of its recent history. We are a consolidated democracy that respects treaties, deals and contracts, in which the alternation in power has been made smoothly. The press acts in an independent way, respecting the rules of democracy.
We’ve transformed ourselves into one of the biggest consumer market of the world with an additional advantage: we do not lack natural resources, agricultural areas, production technology and cumulative knowledge. That conclusion leads us to believe in a long and sustainable growth and progress period.
Brazil slapped on a 30 percent points increase in import tariffs of automobiles (the Mercosur trade block and Mexico are exempted). A major objective of this tariff is to slow surging imports from China. In September, Brazil enacted important tariffs on certain steel products from China. China is the largest trade partner of Brazil, which both heavily imports from and exports to China. History has shown that prosperity and trade go hand in hand. When trade dries up – no matter whose fault it is – economies usually suffer. By undervaluing its currency, China has accumulated a huge hoard of foreign exchange reserves.
How would you characterize Brazilian trade policy? What is Brazil’s strategy when it comes to trade?
A política de comércio exterior do Brasil tem se pautado pela observância irrestrita de contratos e pelo cumprimento das regras da Organização Mundial de Comércio. O Brasil tem se colocado de maneira firme e clara contra políticas protecionistas e permitido o acesso a seu grande e crescente mercado consumidor a empresas dos mais variados setores e de todas as partes do mundo. Da mesma forma, tem buscado acesso a mercados de todo o mundo, oferecendo uma variada gama de produtos.
Nessa busca – cujo sucesso pode ser medido pelo expressivo crescimento das exportações brasileiras, notadamente neste ano de 2011 quando batemos todos os recordes de vendas de commodities e produtos industrializados -, temos combatido toda e qualquer forma de comércio desleal e ilegal, valendo-nos unicamente das regras estabelecidas pela OMC. O Brasil é hoje um dos maiores patrocinadores de pedidos de investigação no âmbito da Organização, com um grau de sucesso dos mais elevados. Mais recentemente, propôs o início da discussão sobre o impacto de desequilíbrios cambiais acentuados e persistentes sobre o comércio internacional, no que foi seguido por importantes parceiros comerciais como Estados Unidos e China.
Mas nossa estratégia comercial não passa apenas pela defesa comercial. Por mais efetiva e bem sucedida que seja a ação de governo nesta seara, ela teria potencial para afetar cerca de 4% das importações brasileiras apenas. Temos perseguido com afinco o aumento da competitividade da indústria brasileira, estimulando a inovação e adotando medidas de desoneração do processo produtivo, como a substituição da taxação da folha de pagamento de setores intensivos em mão de obra pelo imposto sobre o lucro e a o programa Reintegra, que prevê a devolução de 3% de impostos pagos em cascata por quarto setores importantes da economia nacional.
Esse caminho da modernização tributária e da busca pela inovação vai dar, implementado como o lançamento do Plano Brasil Maior, dá o novo tom da política de comércio do Brasil.
Is the world in 5-10 years heading down the road of protectionism or free trade?
O Brasil sempre trabalhará pela queda das barreiras protecionistas, sejam tarifárias, sanitárias ou de qualquer outra ordem. O país não tem imposto qualquer obstáculo para que produtores estrangeiros tenham acesso a seu Mercado. Não abrirá mão, no entanto, de se defender de qualquer prática comercial que julgue desleal ou ilegal, reconhecendo na Organização Mundial de Comércio o fórum legítimo para as discussões e tomadas de decisão.
Over the last two decades, thanks largely to government policy, the poverty rate in Brazil has halved. With this, income inequality (measured by the Gini coefficient) has also fallen sharply, declining on average by 1.2% a year. Brazil’s economy is forecast to grow by 3.6% this year.
Is the world in 5-10 years heading down the road of protectionism or free trade?
O Brasil sempre trabalhará pela queda das barreiras protecionistas, sejam tarifárias, sanitárias ou de qualquer outra ordem. O país não tem imposto qualquer obstáculo para que produtores estrangeiros tenham acesso a seu Mercado. Não abrirá mão, no entanto, de se defender de qualquer prática comercial que julgue desleal ou ilegal, reconhecendo na Organização Mundial de Comércio o fórum legítimo para as discussões e tomadas de decisão.
Currently, Brazil is enjoying the fruits of the labour. In your opinion what can put an end to the Brazilian miracle? (In other words what are the major challenges Brazil is facing)
Não acredito que estejamos diante de um milagre, ainda que no sentido figurado. O crescimento verificado no Brasil é fruto de um processo iniciado ainda nos anos 1990 com o combate eficiente à inflação. Os ganhos advindo desse processo permitiram a implementação de um ousado plano de distribuição de renda no governo do ex-presidente Lula, que levou à ascensão à classe media de aproximadamente 30 milhões de brasileiros.
Esse processo não se esgota na ascensão, mas se mantém com a busca desse enorme contingente por oportunidades de negócios e qualificação. Com renda e inflação sob controle, os brasileiros têm a possibilidade de planejar gastos e investimentos, fazendo com que a economia do país cresça de forma sustentável.
How do you perceive the role of industry (automobile industry, petrochemicals, machinery, electronics, cement and construction, aircraft, textiles, food and beverages, mining, consumer durables, tourism) in the strategic development of Brazil?
A indústria é fundamental, seja pela capacidade transformadora e geradora de emprego e renda, seja pela promoção da inovação e do avanço tecnológico. O parque industrial brasileiro é um dos mais diversificados do mundo. Neste momento, precisamos fazer a transição de uma indústria construída e consolidada no século 20 para uma indústria do século 21, capaz de produzir em larga escala e de forma sustentável ambiental e socialmente.
Brazil ranks 126th out of 183 economies in ease of doing business according to the World Bank. What is the ministry’s agenda for improving the business environment in 2011 and beyond?
O Brasil está buscando a modernização do parque industrial e o governo, por sua vez, buscando a modernização tributária. Não podemos ficar esperando uma reforma que resolva todos os nossos problemas de uma vez. Por isso, estamos buscando avançar com intervenções cirúrgicas como o Reintegra e a desoneração da folha, anunciados em agosto. Essas duas medidas, neste momento, restritas a setores intensivos em mão de obra, servirão como baliza para que os benefícios fiscais possam ser estendidos a outros setores até 2014.
What is your vision for Brazil?
O Brasil vive um dos melhores momentos de sua história recente. Somos uma democracia consolidada, que respeita tratados, acordos e contratos, em que a alternância de poder tem sido observada sem sobressaltos. A imprensa age de forma independente, dentro da estreita observância das regras democráticas. Temos nos transformado em um dos maiores mercados consumidores do mundo com uma vantagem adicional: não nos faltam recursos naturais, área agricultável, tecnologia de produção e conhecimento acumulado. Essa constatação nos leva a acreditar num longo e sustentável período de crescimento e avanços.