FOREIGN TRADE UNIVERSITY CAMPUS II IN HO CHI MINH CITY ----------***---------- MID-TERM ASSIGNMENT INTERNATIONAL TRADE POLICY TOPIC: ANALYSIS OF BRAZIL’s TRADE POLICY Ho Chi Minh City, May 2022 TABLE OF CONTENTS Part 1: INTRODUCTION. Rationale of research. Aims and objectives of research. Scope of the research.
Subject of the research. Scope of the research. Contribution of the research. 3 Part 2: MAIN CONTENT.
Fundamentals of trade policy. Brief introduction to Brazil. Trade relations between Brazil and Vietnam. Brazil’s trade policy under the regulation of WTO and other FTAs.
Trade relations between Brazil and Vietnam. Opportunities for the international trade activities between Brazil and Vietnam. Challenges for the international trade activities between Brazil and Vietnam. 46 LIST OF ABBREVIATION CET Common External Tariff CMC Common Market Council GDP Gross Domestic Product Global System of Trade Preferences among Developing GSTP Countries HS Harmonized System IBAMA Institute of Environment and Renewable Natural Resources MFN Most-favored nations MFN AVG of traded TL Most Favored Nation average of traded Tariff Lines STR Simplified tax regime TBT Technical Barriers to Trade WTO World Trade Organizations IT Information technology SISCOMEX Integrated System of Foreign Trade VAT Value-added tax ALADI Latin American Integration Association ACEs Agreements for economic complementation R&D Research and Development IPI Industrialized Product Tax ICMS The Merchandise and Service Circulation tax FTA Free Trade Agreement MERCOSUR The Southern Common Market NT National Treatment ISI Import Substitution Industrialization NEP National Export Plan MDIC Ministry of Development, Industry and Foreign Trade MER Ministry of External Relations ECI Export Credit Insurance OECD The Organization for Economic Cooperation and Development IPI Industrialized Product Tax CCC Common Customs Code ACE Agreements for Economic Complementation EFTA European Free Trade Association LIST OF TABLES Table 2-1: Brazil exports to major trading partners and duties faced…………………16 Table 2-2: Brazil’s tax rate for Export Duty on some goods for some specific areas….16 Table 2-3: Top 10 services imported to Brazil from 2018 to 2020……………………20 Table 2-4: Export turnover of phones and their parts (Unit: Billion USD)……………31 Table 3-1: Group of merchandise having limited import value from Brazil in 2020….39 LIST OF GRAPHS Graph 2-1: Total value of products that Brazil exports to the world………………….7 Graph 2-2: Brazil’s 10 export markets in 2021…………….………………9 Graph 2-3: Brazil’s 10 exporting goods in 2021……………………………………………….9 Graph 2-4: Brazil’s main agricultural exports from 2017-2021…………………………….11 Graph 2-5: Brazil’s main non-agricultural exports from 2017-2021………………….………13 Graph 2-6: Brazilian services trade flow in USD million, 1995-2014……………….………14 Graph 2-7: Import Statistics of Brazil in goods from the world……………….………………18 Graph 2-8: Countries that Brazil most imported from……….……………19 Graph 2-9: The share of Brazil’s imported products in 2021……….19 Graph 2-10: The share of imported inputs in 2016……….………20 Graph 2-11: Total value of products and services imported to Brazil…….………21 Graph 2-12: Tariff to intermediate and capital products .22 Graph 2-13: Tariff escalation, by 2-digit ISIC industry, 2017 .23 Graph 2-14: Duty-free tariff lines percentage of import goods……………………….………24 Graph 2-15: The importation of goods and services from 2007 to 2014………………………25 Graph 2-16: Brazil import tariff rate (%), 2000-2020 period…………………………………27 Graph 2-17: Top 5 Non-tariff measures that affected sum of gross import (2000- 2020)…………………………………………………………………………………………28 Graph 2-18: Top 8 products with greatest exports from Vietnam to Brazil in 2020 (in Million USD)…………………………………………………………………………… ………….31 Graph 2-19: Top 5 products with largest export ratio from Brazil to Vietnam in 2010….………………………………………………………………………………………33 Graph 2-20: Top 5 products with largest export ratio from Brazil to Vietnam in 2020….………………………………………………………………………………………33 Graph 2-21: Top 8 products with greatest exports from Brazil to Vietnam in 2020 (in Million USD).…………………34 Graph 2-22: Brazil’s tariffs imposed on specific goods….35 Graph 2-23: Products with highest import tariffs from Vietnam entering Brazil (2019).
Rationale of research As the largest country located in South America and the world's ninth-largest economy, Brazil plays a vital role in the international trade network and has a certain influence on global affairs. After surviving successfully during the economic crisis, recession, and recently the COVID-19 epidemic, Brazil’s economy has steadily recovered and its GDP ranked 8th in the world at the end of 2021 based on purchasing power parity. All these achievements are all thanks to the implementation of new economic reform policies to sustain positive growth, which helps the economy of Brazil recover and even exceed its performance positive growth statistics. Moreover, Brazil ranks 25th among countries that have the largest exports in the world, which results from the increasingly effective trade openness and trade liberalization programmes that have created many preferential conditions and supporting schemes that help export-oriented companies in Brazil create their own competitive advantages over other nations.
Besides, Brazil is well-known for its significant trade protectionism which places the very high tariffs for imported goods in order to protect the domestic markets from fierce competition with foreign enterprises, however, after realizing the detrimental impacts of this trade policy, Brazil has considerably reduced its tariff rates to attract more foreign direct investment (FDI), encourage domestic companies to create functional products, and being able to cater the demand of customers for foreign goods more effectively. As a result, Brazil ranks 29th for countries having the largest amount of imported goods in the world average. Because of the outstanding accomplishments and transformation of Brazil in international trade activities, Vietnam can gain numerous valuable lessons from learning Brazil's experience so that Vietnamese governments can establish effective trade policies that can facilitate the exporting procedures of Vietnam, and consequently can boost the economic growth and improve the living standards for Vietnamese citizens. Moreover, up until now Vietnam and Brazil have not signed any free trade agreement (FTA), therefore, it is extremely important and essential for Vietnamese authority officials to investigate and discover more deeply about Brazil’s international trade policy so that they can make the more careful preparations to sign the FTA with Brazil in the near future.
Besides, in recent years, the importance of establishing effective trade policies is emphasized and highlighted in many discussions and meetings because some significant changes in trade relations can seriously influence the economic development and the 1 prospective relationships between two nations. To be more specific, international trade enables countries to identify and specialize in the goods or services that correspond to their comparative advantages, and then concentrate on developing and producing these types of goods to become the world’s leading exporter for this commodity. Moreover, having a desirable trade policy can allow two countries to import raw materials or factors of production at lower prices, which will be profitable for manufacturers between two countries. Therefore, it is really crucial to have the deeper and more thorough analysis and research into Brazil's trade policy and bilateral relations between Brazil and Vietnam so that these two nations can cooperate with each other more effectively and consequently be able to maintain the sustainable economic development.
Understanding the significant impacts of trade policy issues, the authors propose the scientific research topic: “Brazil’s trade policy” for the purpose of collecting and summarizing some key points related to the establishment of trade policy in Brazil, and then apply the knowledge gained into Vietnamese trade development programmes. Aims and objectives of research 1. Aims The aim of the research is to synthesize and analyze some main policies of Brazilian trade activities and their impacts on the bilateral trade relations with Vietnam, and consequently pointing out the opportunities and challenges that can constraint the development of trade relations between these two countries. Subsequently, Vietnamese governments can draw some conclusions and implications for developing the strategies to enter the Brazilian markets.
Objectives To achieve the aim set above, there are some main objectives need to accomplish: First, analyzing economic situations and trade policy reform of Brazil through comparative analysis with WTO regulations. Second, conducting deep research and analytical models of Brazil’s trade bilateral relations with Vietnam. Finally, based on the analytical results, pointing out the opportunities and challenges of Brazil-Vietnam trade relation and drawing the implications for Vietnam to develop strategies for the implementation of international trade in Brazil. Scope of the research 1.
Subject of the research Brazil’s trade policy. Scope of the research ● Chronological: using the database and statistics from Brazil and Vietnam’s trade exchange activities regarding exports, imports and trade regulations ● Geographical: The research and analysis cover 2 nations, including Vietnam and Brazil 1. Research methods This paper uses the following research methods: - Analytical and synthesis methods: which is the primary method used throughout the research based on the relevant theory and documentation analysis, especially in chapter 1, this method is beneficial for gaining relevant trade policy elements. - Comparative method: This method is applied during the process of analysis and synthesis of collected data to figure out the increase, decrease or the percent of change.
Besides, we also use this method to compare data in different years, creating graphs and tables, and draw conclusions about the current situation of Brazil’s trading activities. - Synthesis method: we use this method to summarize our key points and important results that we can get from our research paper, then we can conclude some important implications for our research. Contribution of the research Vietnam is a developing country that has a lot of potential natural and social resources to promote economic development. Recently, parallel to the rate of globalization, Vietnam trade activities have dramatically increased, Vietnam is also involved in more international trade relations and affected by many trade policies as well as trade agreements.
However, previous research and articles into trade policy and its impact on Vietnam are limited and insufficient. Therefore, we conduct this research including notable previous findings, new conducted information, and analysis about trade policy of Brazil and its influences on Vietnamese trade policy. This study can benefit future researchers as they can get the needed information to base on and develop new recommendations. Research structure The research consists of 42 pages.
Except for a list of abbreviations, list of charts and tables. This research paper is organized in 3 chapters as follows: Chapter 1: Introduction about Brazil’s trade policy and also some mentions about the aim, objectives, scope and methods for conducting research. In this part, we also provide our contributions to the research paper. 3 Chapter 2: Overview of Brazil trade policy and its impact on economic relations with Vietnam.
Chapter 3: Conclusion of about the significant features regarding Brazilian trade policy and mention some implications related to bilateral trades between Vietnam and Brazil. 4 Part 2: MAIN CONTENT 2. Fundamentals of trade policy To better understand Brazil’s trade policy and analyze relevant statistics more effectively, we need to have a clear understanding of some terms and definitions, the importance when establishing the effective trade policy, and finally some special characteristics that create the fundamental features of trade policy. Trade policy can be defined as decisions and actions of the Government that affect trading activities including national regulations, agreements, tariffs, subsidies, quotas,.
Trade policies are an efficient tool that the Government uses to strengthen domestic competition, improve productivity and encourage economic growth. Nowadays, with the development of transportation and technology, international trade is the potential sector that every country wants to promote and take advantage of. As a result, there is a need for developing international trade policy to govern the trade activities between countries. However, international trade policy of a specific country is supposed to be generated based on the economic status, trade organizations and trade agreements that it is involved in.
Regarding the importance of international trade, countries that have the high rates for trade openness can grow more considerably, boost the economic development more effectively by providing higher incomes and more opportunities for people. Open trade is also beneficial for lower-waged households because they can get access to products from foreign countries with lower prices. Besides, the economic integration between different countries into the global value chain can create long-lasting relationships among various nations, which in turn will develop the world economy more effectively.
