International Trade Comparative Guide

• Law Firm: Fraga, Bekierman & Cristiano Advogados
• Subject Matter: International Law, International Trade & Investment, Export Controls & Trade & Investment Sanctions
• Author: Ms Lycia Braz Moreira
• Published date: 11 January 2023

1 Trade agreements

1.1 Which bilateral, regional and multilateral trade agreements have effect in your jurisdiction?

Multilateral and regional trade agreements: The following multilateral and regional trade agreements apply in Brazil:

• The General Agreement on Tariffs and Trade (GATT) 1947 sets out rules aimed at reducing tariffs and other trade barriers and eliminating discriminatory treatment in international commerce. Brazil incorporated it through Law 313/1948. In 1994, the World Trade Organization incorporated GATT 1994 and Brazil has been a member since 1995 (Decree 1355/1994).
• Mercosur (the Southern Common Market) is an economic bloc resulting from the Asunción Treaty, regulated by Economic Supplementation Agreement 18/1991 (ACE 18). Brazil incorporated it through Decree 550/1992. Mercosur's members are Brazil, Argentina, Paraguay, Uruguay and Venezuela (suspended since 1 December 2016). Its associated countries are Bolivia, Chile, Colombia, Ecuador, Guyana, Peru and Suriname.
• The Agreement on Trade Facilitation sets out rights and obligations aimed at
• • modernising and harmonising customs procedures globally; and
  • promoting reductions in the costs and timeframes of foreign trade operations.
• Brazil incorporated it through Decree 9326/2018.

Bilateral and regional trade agreements: Brazil has entered into numerous trade agreements within the scope of the Latin American Integration Association (ALADI), which was established in 1980 with the aim of gradually and progressively establishing a Latin American common market - mainly through the adoption of tariff preferences and the elimination of non-tariff restrictions. Its members are Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Paraguay, Panama, Peru, Uruguay and Venezuela.

The main trade agreements in effect in Brazil within the scope of ALADI are as follows:

• Brazil/Uruguay Economic Complementation Agreement (ECA) 2 regulates trade in automotive products between Brazil and Uruguay. Brazil incorporated it through Decree 88419/1983.
• ALADI Regional Tariff Preferences Agreement 4 (RTPA-4) establishes tariff preferences, with reductions in import tax according to the development level of the exporting country. Brazil incorporated it through Decree 90782/1984.
• The ALADI Regional Agreement on Cooperation and Exchange of Cultural, Educational and Scientific Goods (RA 7) aims to promote the free circulation of cultural, educational and scientific materials. Brazil incorporated it through Decree 97487/1989.
• Brazil/Argentina ECA 14 sets out the conditions for establishing a common market between Brazil and Argentina. Brazil incorporated it through Decree 60/1991. After the creation of Mercosur, it was overturned by ACE 18, except in relation to automotive products.
• Mercosur/Chile ECA 35 aims to establish a free trade zone and expand the economic space through economic, energy, scientific and technological cooperation. Brazil incorporated it through Decree 2075/1996.
• Mercosur/Bolivia ECA 36 aims to establish a free trade zone. Brazil incorporated it through Decree 2240/1997.
• Brazil/Mexico ECA 53 aims to establish a free trade zone. Brazil incorporated it through Decree 4383/2002.
• Mercosur/Mexico ECA 54 aims to establish a free trade zone. Brazil incorporated it through Decree 4598/2003.
• Mercosur/Mexico ECA 55 supports the trade of products in the automotive sector. Brazil incorporated it through Decree 4458/2002.
• The Brazil/Guyana/Saint Kitts and Nevis Partial ECA (PECA.A25TM-38) was initially signed by Brazil and Guyana in 2001; Brazil incorporated it through Decree 3989/2001. After Saint Kitts and Nevis joined in 2012, Brazil incorporated the new agreement through Decree 8200/2014.
• The Brazil/Suriname Partial ECA (PECA.A25TM-41) governs the rice trade. Brazil incorporated it through Decree 5565/2005.
• Mercosur/Peru ECA 58 aims to establish a free trade zone. Brazil incorporated it through Decree 5651/2005.
• Mercosur/Andean Community ECA 59 aims to establish a free trade zone with the countries of the Andean Community (Colombia, Ecuador and Venezuela). Brazil incorporated it through Decree 5361/2005.
• Mercosur/Cuba ECA 62 aims to establish a free trade zone. Brazil incorporated it through Decree 6068/2007.
• Mercosur/Venezuela ECA 69 aims to establish a free trade zone. Brazil incorporated it through Decree 8324/2014.
• Mercosur/Colombia ECA 72 aims to establish a free trade zone. Brazil incorporated it through Decree 9230/2017.
• Brazil/Paraguay ECA 74 aims to establish a free trade zone. Brazil incorporated it through Decree 10448/2020.

Outside ALADI, the leading trade agreements executed by Brazil under Mercosur are as follows:

• The Mercosur/India Preferential Trade Agreement comprises 450 tariff lines offered by India and 452 items offered by Mercosur, with preference margins of 10%, 20% or 100%. Brazil incorporated it through Decree 6864/2009.
• The Mercosur/Israel Free Trade Agreement comprises 8,000 tariff lines offered by Israel and 9,424 items offered by Mercosur, with tariff elimination schedules of eight and 10 years, respectively. Brazil incorporated it through Decree 7159/2010.
• The Mercosur/Southern African Customs Union (SACU) Preferential Trade Agreement encompasses 1,026 tariff lines offered by SACU (South Africa, Namibia, Botswana, Lesotho and Swaziland), and 1,076 items by Mercosur, with preference margins of 10%, 25%, 50% and 100%. Brazil incorporated it through Decree 8703/2016.
• The Mercosur/Egypt Free Trade Agreement aims to open up the bilateral market for goods, covering approximately 9,800 tariff lines, and contains an evolutionary clause on the possibility of future understandings for access to services and investments. Brazil incorporated it through Decree 9229/2017.
• The Mercosur/European Union Bi-regional Association Agreement eliminates import taxes for more than 90% of the goods traded between the countries of the two blocs after a transition period of up to 15 years. In addition, the agreement foresees
• • greater openness, transparency and legal security in the services, investment and government procurement markets;
  • the reduction of non-tariff barriers;
  • the consolidation of a schedule of good regulatory practices; and
  • the establishment of modern regimes in trade facilitation and intellectual property, among others.
• The parties reached agreement on the trade pillar in June 2019 and concluded negotiations on the political and cooperation bases in June 2020. The agreement's text is currently undergoing the legal scrubbing process. Once this stage has concluded, the text will be ready for formal signature and, subsequently, for the internal parliamentary approval procedures. Due to its economic importance, this is the broadest and most complex agreement ever negotiated by Mercosur.
• In August 2019, negotiations concluded on a free trade agreement between Mercosur and the European Free Trade Association - a bloc made up of Switzerland, Norway, Iceland and Liechtenstein. It aims mainly to trade facilitation and customs. The text of the agreement is currently undergoing the legal scrubbing process.

Brazil is negotiating trade agreements under Mercosur with Canada, South Korea, Indonesia, Lebanon and Vietnam; and has concluded negotiations with Palestine and Singapore.

Bilateral agreements: Brazil recently executed the Protocol for the Trade and Economic Cooperation Agreement with the United States, which aims to facilitate trade and customs administration, good regulatory practices and anti-corruption. Brazil incorporated it through Decree 11092/2022.

In addition, Brazil has signed agreements on cooperation and facilitation of investments (ACFIs) with Angola and Mexico. Negotiations for ACFIs with Colombia, the United Arab Emirates, Ecuador, Ethiopia, Guyana, India, Malawi, Morocco, Mozambique and Suriname have concluded.

1.2 Which authorities are responsible for the negotiation of trade agreements? What does this process typically involve and how long does it take?

The president of Brazil has exclusive authority to enter into international treaties, conventions and acts, subject to a referendum of the National Congress (Federal Constitution, Article 84). The president negotiates trade agreements with the support of the Ministry of Foreign Affairs and the Special Secretariat for Foreign Trade and International Affairs of the Ministry of Economics.

After the conclusion of the negotiations and approval of the final text of the agreement, the process of giving effect to international agreements may take up to three years. It involves the following phases:

• signing of the agreement;
• approval of the agreement by the National Congress, through a legislative decree;
• ratification of the agreement by the head of state, usually through the exchange of notes and notifications; and
• enactment of the agreement, though a presidential decree.

1.3 Do interim...