Tax & Accounting Blog

National Export Plan – Brazil

Blog, Global Trade, ONESOURCE July 30, 2015

Brazil Import Export

Even though Brazil presents favorable characteristics for international trade commerce, such as  the size of its territory, strong industrial and productive capacity, use  of  technology, and a scenario compatible with a vigorous growth in exports, the numbers are far from the expectations, as we can see from the chart above depicting Brazil’s International trade balance.

Despite Brazil being the seventh economy in the word, Brazilian exports are not compatible to the size of its economy.  Brazil appears to be the 25th country in exports of goods, with a market share of only 1.2% of the total export volume in the world and 0.7% if we consider only manufactured goods[1].  Besides, Brazil is a country whose sales are based in commodities which currently have their values stabilized at levels lower than expected.

Because of this less than favorable position for exports, the Brazilian government launched on June 24th 2015 the National Export Plan, aiming to increase Brazil’s goods and services Exports.  The intended result for this important incentive is to increase productivity, competitiveness, income generation and economic growth of the country.  This plan is based on projections of the International Monetary Fund, which indicates an average global growth of 4.8% in the periods of 2015-2020. This plan presents a great opportunity for Brazil to expand its network of trade agreements with countries from all regions.

The Brazilian government’s plan is based on five major pillars [2]:

  1. Market access: Create a policy focused on expanding markets, removing trade barriers and greater integration to the network of trade agreements through bilateral, regional and multilateral actions on tariff and non-tariff matters.
  2. Commercial promotion: Identification of markets with demand and offering of products, resulting in a mapping of 32 priority markets for Brazilian products. These markets account for 74% of world GDP (Gross Domestic Product), 60% of the world population, 62% of world imports and 63% of world exports. They represent a broad universe of business opportunities that, together, can reach US$ 592 billion over the next four years. These opportunities include the various sectors of the Brazilian economy, such as foods and beverage, home and construction, machinery and equipment, fashion, personal care and services. All coordinated actions by responsible agencies will focus on the opening, consolidation, maintenance and recovery of this market.
  3. Trade facilitation: Reduce bureaucracy, simplify, streamline and improve the administrative and customs procedures, aimed at reducing costs and deadlines.
  4. Financing and guarantees for exports: improvement of financing instruments to existing exports and supporting companies in export financing needs.
  5. Improvement of mechanisms and tax regimes for export support: The government seeks to simplify the various special schemes offered to exporters, for example, the Drawback (suspension or exemption of taxes in return exports planned or already occurred), the RECOF (allowing Exporter exempt themselves from the payment of federal tax over all entries when the exports occur and pay taxes over the materials purchased  and used in the production for local sales, but without  application of fines or interest rates).

From these five guidelines used to facilitate Brazilian exports, the government has set goals for each one, created measurement tools to assess whether the National Project for Export has been fulfilling its goals, and provided guidelines to detail the initiatives to be executed yearly.

Among the goals set for the year 2015 are the following: Regulatory convergence agreements and trade facilitation with the United States, negotiate the Expanded Trade Agreement between Brazil and Mexico, lead efforts with MERCOSUL partners and the European Union aiming for the exchange of market access offers in the last quarter of this year, and further negotiations on the free trade agreements between the blocs.

There is no doubt that this plan will not only be an incentive for Brazilian companies to expand their business, but also will be a channel to attract international capital for new businesses, improving Brazilian sales with innovation of products, making them more competitive and global.

To learn more about import or export, visit our ONESOURCE Global Trade page