Domestic and Foreign Market Access

Overview: Trade Policy and Business Environment

The Federative Republic of Brazil is classified as an upper middle income country. The country enjoyed export increases at an average rate of 8.6 per cent between 2007 and 2012, reflecting strong external demand particularly for its commodities. Brazil maintains a strong position in the world market, however the government has long-standing structural problems affecting competitiveness such as infrastructure shortfalls, insufficient access to credit, a very high tax burden as well as high protectionism which impact on market access. These factors are reflected in Brazil’s mid-level ranking, 84th out of 132 countries, in the latest World Economic Forum (WEF) Enabling Trade Index, which measures institutions, policies and services to facilitate trade in countries. Chile is leading the regional rankings, ranked 14th, and a small open economy, Costa Rica, was ranked 43rd.

WTO, 2013, Trade Policy Review (Brazil)
WEF, 2012, Global Enabling Trade Report

Domestic Market Access The pillar assesses the level and complexity of a country’s tariff protection as a result of its trade policy. This component includes the effective trade-weighted average tariff applied by a country, the share of goods imported duty free and the complexity of the tariff regime, measured through tariff variance, the prevalence of tariff peaks and specific tariffs, and the number of distinct tariffs. 108 4.01
Foreign Market Access The pillar assesses tariff barriers faced by a country’s exporters in destination markets. It includes the average tariffs faced by the country as well as the margin of preference in destination markets negotiated through bilateral or regional trade agreements or granted in the form of trade preferences. 77 2.38
Tariff rate (%) This indicator is calculated as a trade-weighted average of all the applied tariff rates, including preferential rates that a country applies to the rest of the world. The weights are the trade patterns of the importing country’s reference group (2012 data). An applied tariff is a customs duty that is levied on imports of merchandise goods. 117 11.43
Complexity of tariffs , index 1-7 (best) This indicator is calculated as the average of the following indicators: Tariff dispersion, Specific tariffs and Number of distinct tariffs. See description of each individual indicator for more details. Prior to averaging, values for each indicator were transformed to a 1–7 score, using the min-max method. 23 6.62
Tariffs dispersion (standard deviation) This indicator reflects differences in tariffs across product categories in a country’s tariff structure. The variance is calculated across all the tariffs on imported merchandise goods, at the 6-digit level of the Harmonized Schedule. 82 8.49
Tariffs peaks (%) This indicator is the ratio of the number of tariff lines exceeding three times the average domestic tariff (across all products) to the MFN (most-favoured nation) tariff schedule. The tariff schedule is equal to the total number of tariff lines for each country. These tariffs are revised on a yearly basis. 25 0.02
Specific tariffs (%) This indicator is the ratio of the number of Harmonized System (HS) tariff lines, with at least one specific tariff, to the total number of HS tariff lines. A specific tariff is a tariff rate charged on fixed amount per quantity (as opposed to ad valorem) 1 0.00
Number of distinct tariffs This indicator reflects the number of distinct tariff rates applied by a country to its imports across all sectors. 52 19.00
Share of duty-free imports (%) Share of trade, excluding petroleum, that is imported free of tariff duties, taking into account MFN tariffs and preferential agreements. Tariff data is from 2013 or most recent year available and imports data is from 2012 99 33.06
Tariffs faced (%) This indicator is calculated as the trade-weighted average of the applied tariff rates, including preferential rates that the rest of the world applies to each country. The weights are the trade patterns of the importing country’s reference group (2012 data). A tariff is a customs duty that is levied by the destination country on imports of merchandise goods 51 5.31
Index of margin of preference in destination markets, 0-100 (best) This indicator measures the percentage by which particular imports from one country are subject to lower tariffs than the MFN rate. It is calculated as the average of two components: 1) the trade-weighted average difference between the MFN tariff and the most advantageous preferential duty (advantage score), and 2) the ratio of the advantage score to the trade-weighted average MFN tariff level. This allows capturing both the absolute and the relative margin of preference. 81 18.19

Trade Policy and Market Access

 The simple average MFN tariff applied in 2012 was 11.7 per cent. Brazil aims to strengthen regional economic integration and is a founding member of the Southern Common Market (MERCOSUR), which is the world's fourth-largest trading bloc after the European Union (EU), North American Free Trade Agreement (NAFTA), and the Association of South East Asian Nations (ASEAN). MERCOSUR consists of Bolivia, Chile, Colombia, Cuba, Ecuador, Mexico, Peru, and the Bolivarian Republic of Venezuela that share a Common External Tariff (CET). MERCOSUR members agreed to allow member countries to increase import duty rates temporarily to a maximum rate of 35 per cent on 100 items until December 2015 (European Commission 2014). Brazil issued its list of 100 products subject to this tariff increase in 2012. Although it remains within the bound tariff limits, given the large disparities between bound and applied rates, the government often changes tariffs in order to stimulate domestic production and to manage price and supply. Brazil also has preferential trade agreements under MERCOSUR with India and Israel as well as under Latin American Integration Association (LAIA) with Guyana and Suriname. Additionally, MERCOSUR is currently negotiating with the European Union for a bi-regional Association Agreement.

European Commission, 2014, Trade Market Access Database

United States Trade Representative, 2013, National Trade Estimate Report on Foreign Trade Barriers (Brazil)

WTO, 2013, Trade Policy Review (Brazil)

Standard Compliance and Other Relevant Import/Export Restrictions

 The Brazilian Association for Technical Standardization is in charge of developing voluntary standards, while 31 federal agencies issue mandatory technical regulations, according to their respective competence. Brazil does not grant equivalence to technical regulations adopted by any trading partner, but accepts equivalence in test results. Between January 2009 and January 2013, Brazil adopted 782 standards, 359 technical regulations, including those harmonized at MERCOSUR level, and 53 compulsory conformity assessment procedures. Moreover, the Ministry of Agriculture, Livestock and Food Supply (MAPA), through its Secretariat of Agricultural Protection (SDA), is responsible for the protection of animal and plant health; the control of the sanitary and phytosanitary (SPS) aspects of production; and international trade. One of the government’s concerns is restrictions imposed on imports of food products made with Brazilian beef meat and bones (hereinafter, Brazilian beef) by eight WTO Members: China, Japan, Jordan, Peru, Saudi Arabia, South Africa, South Korea and Taiwan.

WTO, 2013, Trade Policy Review (Brazil)