Brazil-US Prepare Agreement That Will Simplify Trade Rules
The director of the Brazil-U.S. Business Council of the U.S. Chamber of Commerce describes the negotiation situation, which could lower costs even if it does not reduce tariffs.
The unprecedented pandemic and global recession have not stopped Brazil and the U.S. from getting to the table to discuss a trade agreement. The two countries remain firm in their (virtual) work with the goal of finalizing a trade agreement, likely in the coming months. Even before the agreement is finalized, the effort and the intense work of the Brazilian and American technical teams to finalize bilateral agreements on the rules of trade is, without a doubt, a great accomplishment.
One should not underestimate an agreement on the rules; on the contrary, it should be seen as a solid base for bilateral cooperation that can have a direct impact on the industries of both countries and their consumers. According to the World Trade Organization, commitments related to the facilitation of trade, even if they do not include tariff reductions, can reduce the cost of international business up to 14%. Still, it must be remembered Brazil is able to enter a non-tariff agreement without its Mercosur partners.*
The text should contain simple rules which reduce the bureaucracy of the import-export process, and bring more transparency to the customs process, facilitating the opening of markets, among other benefits. We also hope for rules of good regulatory practice that promote quality control, with an assurance that any rules are necessary and that they pass through a cost-benefit analysis. Commitments to good regulatory practices are important because they generate a lean regulatory framework, one of efficiency and quality. Brazil is working hard to decide on commitments in this area that are reasonable for the country’s current reality, but also have a focus on an ambitious future of harmonizing the process of creating rules applicable to the entire administration.
Technical groups also preliminarily discussed the possibility of digital commerce and anticorruption measures. Everyone in the Brazil-U.S. corridor will lose a golden opportunity if the two countries are not able to reach firm and innovative agreements in digital commerce, especially considering the increasing importance of the digital industry to solve global crises like the current pandemic. In the area of anticorruption, the two countries are already part of various international efforts, and both have major domestic legal frameworks. A bilateral agreement in this arena reinforces the commitment of both Brazil and the U.S. to fight against corruption and elevates the issue's importance in the bilateral sphere.
The Brazilian government knows that commitments in an agreement with the U.S., which strives for progressive and international rules, will have an effect that goes far beyond the bilateral relationship. This exercise with the U.S. will better prepare Brazil for its work with the Organization for Economic Cooperation and Development. It’s work that needs to be completed sooner or later by Brazil, if it continues to aspire to join OECD.
The finalization of a bilateral agreement on trade laws could have bigger implications than we are able to see at the moment. For now, we know that the agreement would establish a precedent for Latin America, it would strengthen the bilateral relationship and it could be the first step toward future negotiations around a bigger free trade agreement between Brazil and the U.S. This agreement would be a landmark accomplishment between Brazil and the U.S. at such a challenging time on the world stage. Let's hope that there are no complications, and that the work is successfully completed.
Renata Brandão Vasconcellos is senior director of the Brazil-U.S. Business Council of the U.S. Chamber of Commerce, with headquarters in Washington, D.C. This article expresses the author’s opinion, and does not necessarily represent the institutional opinion of the U.S. Chamber of Commerce.
*Editor’s note: Mercosur is a South American trade bloc established in 1991.
The unprecedented pandemic and global recession have not stopped Brazil and the U.S. from getting to the table to discuss a trade agreement. The two countries remain firm in their (virtual) work with the goal of finalizing a trade agreement, likely in the coming months. Even before the agreement is finalized, the effort and the intense work of the Brazilian and American technical teams to finalize bilateral agreements on the rules of trade is, without a doubt, a great accomplishment.
One should not underestimate an agreement on the rules; on the contrary, it should be seen as a solid base for bilateral cooperation that can have a direct impact on the industries of both countries and their consumers. According to the World Trade Organization, commitments related to the facilitation of trade, even if they do not include tariff reductions, can reduce the cost of international business up to 14%. Still, it must be remembered Brazil is able to enter a non-tariff agreement without its Mercosur partners.*
The text should contain simple rules which reduce the bureaucracy of the import-export process, and bring more transparency to the customs process, facilitating the opening of markets, among other benefits. We also hope for rules of good regulatory practice that promote quality control, with an assurance that any rules are necessary and that they pass through a cost-benefit analysis. Commitments to good regulatory practices are important because they generate a lean regulatory framework, one of efficiency and quality. Brazil is working hard to decide on commitments in this area that are reasonable for the country’s current reality, but also have a focus on an ambitious future of harmonizing the process of creating rules applicable to the entire administration.
Technical groups also preliminarily discussed the possibility of digital commerce and anticorruption measures. Everyone in the Brazil-U.S. corridor will lose a golden opportunity if the two countries are not able to reach firm and innovative agreements in digital commerce, especially considering the increasing importance of the digital industry to solve global crises like the current pandemic. In the area of anticorruption, the two countries are already part of various international efforts, and both have major domestic legal frameworks. A bilateral agreement in this arena reinforces the commitment of both Brazil and the U.S. to fight against corruption and elevates the issue's importance in the bilateral sphere.
The Brazilian government knows that commitments in an agreement with the U.S., which strives for progressive and international rules, will have an effect that goes far beyond the bilateral relationship. This exercise with the U.S. will better prepare Brazil for its work with the Organization for Economic Cooperation and Development. It’s work that needs to be completed sooner or later by Brazil, if it continues to aspire to join OECD.
The finalization of a bilateral agreement on trade laws could have bigger implications than we are able to see at the moment. For now, we know that the agreement would establish a precedent for Latin America, it would strengthen the bilateral relationship and it could be the first step toward future negotiations around a bigger free trade agreement between Brazil and the U.S. This agreement would be a landmark accomplishment between Brazil and the U.S. at such a challenging time on the world stage. Let's hope that there are no complications, and that the work is successfully completed.
Renata Brandão Vasconcellos is senior director of the Brazil-U.S. Business Council of the U.S. Chamber of Commerce, with headquarters in Washington, D.C. This article expresses the author’s opinion, and does not necessarily represent the institutional opinion of the U.S. Chamber of Commerce.
*Editor’s note: Mercosur is a South American trade bloc established in 1991.
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