Report Sample on Brazil Trade Barriers

Introduction

Trade barriers include policies that are imposed on international trade that are regulated by the World Trade Organization. These are policies that dictate the nature of exports and imports through tariffs. Trade barriers include both non-tariff and tariffs that countries or companies impose when receiving imports. Tariff simply relates to the tax levied on products when they cross a national border. The most known tariff is the import tariff levied on products imported. An import tariff is usually collected right before a shipment is unloaded in a domestic port; the money collected here is called custom duty. The other tariff is the export tariff imposed on products exported (Carbaugh, 2014). In most cases, the tariff is imposed for the protection of revenues. A revenue tariff is usually imposed on the generation of revenues and can be imposed on both imports and exports. The essay will look at the case of Brazil and how trade barriers have influenced trade balance, employment, and also the general economic growth.

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Evolution of Trade Policies in Brazil

Restrictive policies have been a major element in the economic policies of Brazil right from the 1990s. Industrialization in Brazil was highly promoted through immense protection, while on the other hand, Agriculture suffered from policy discrimination. The general system of incentive for the promotion of industrial growth included the adoption of various policy instruments such as exchange controls, exchange rates, credit6 subsidies, and indirect and direct fiscal subsidies (Tyler, and Gurgel, 2009). The most dominant policy, in this case, was import restrictions, which were meant to protect domestic producers in the domestic market by shielding them against foreign competition. Because of this protection, the economy of Brazil was ranked to be the world's most closed where there existed many non-competitive sectors and a resultant low production and low economic growth. The overall policies in trade imposed a relevant bias in anti-exports.

Trade policy in Brazil began right in 1988 based on proposals that were given by the commission of trade Policy in Brazil. Regimes of Special imports were then reduced, surcharge taxes were ended and average tariffs and tariff peaks were then reduced. The tariff reforms were however followed in a way to present protection accorded to producers domestically through the countries elaborates incentive system or has little impact on imports. Tariff peaks were reduced, but non-tariff trade restrictions remained.

Beginning of 1990, the regime of special imports was further reduced. Most notable was the barriers to non-tariffs were then pruned, with the remaining few being related to national defense, health, and the environment. Non-tariff barriers having being eliminated, the central reforms on trade policy lead to tariff revamping. A system for the reduction of the tariff was then introduced for a period of four years in 1990. The objectives of the program were to realize a nominal mode of a tariff of twenty percent by the year 1994, these also included effective rates of tariff for the industry being approximated at a similar twenty percent.

Effects of Trade Policies and Trade Liberalization in Brazil

Disappointing export Growth – economic theories suggest that trade barriers lead to improved performance on exports and increased exports. This however has not been the case in Brazil since the introduction of the barriers. Comparing other countries, the export growth of Brazil has since been lackluster. Over the last 50 years, there has been an expansion in trade globally. Many countries have been able to enjoy the benefits of the trade expansion through accelerated growth; Brazil on the other hand has been greatly left behind (Selby, 2017). As observed in the graphical presentation below, Brazil's share in the total exports in the world has taken a decline over the last 50 years, taking a toll from 2 percent of the total exports in 1948 to one percent in 2000 which is less than its share in the world's gross domestic product.

Trade liberalization in Brazil points to having a positive impact on the economy although some sectors will have to lose. This is so since having open trade impacts different sectors in a country differently. The economic impact of a country largely depends on the location of industries in the country. Active market policies for labor that selects the regions likely affected by the liberalization of trade and the related regional shocks help the industries to adjust better to the trade policies. These trade policies should present training programs that will assist workers to get jobs in the competitive economic sectors. This is a reflection on how trade liberalization affects employment growth in every sector of the economy. Brazil boasts of a growing domestic economy and thus the inducement on labor laws through trade policies has great effects on the countries general performance locally and also internationally. The introduction of open trade in Brazil has seen major success in the country’s general economic performance because long before in the 1990s the country had been going through immense economic turmoil because of increased trade tariffs that were scaring away foreign investment. Trade liberalization policies that were later introduced saw immense growth in the country's economy with every sector reaping the benefits of open trade policy.

Brazil has been ranked 109 of the 190 nations by the World Bank in the category of countries with ease of business. Brazil has proved to be a challenging economic hub for business, partly because of its regulatory trade barriers. Brazil again ranks 137 of the 138 nation economies with a regulation burden, closely ahead of Venezuela. The United States has often identified duplicative, discriminatory, and arbitrary regulations as the trade barriers for products that the United States export to Brazil. United State companies also identify high tariffs, custom systems that are uncertain, and unpredictable tax burdens. United States companies in companies relating to health, medical devices, and the various safety products that experience challenges in navigating regulations and rules In Brazil.

Conclusion

The World Trade Organization head, Roberto Azevedo protested over trade barriers noting that they lock foreign rivals and only encourage competitive industries in producing more. Roberto comes from Brazil, a country that used trade barriers and subsidies in forcing big industries like Ford, and Volkswagen for developing factories in the country (Gil-Alana, et al, 2019). It was not until the 1990s that the country opted to loosen up on their trade tariffs but the concept of protectionism still stands as the most important ingredient in forcing market placers to manufacture their products locally. Brazil now stands as the ninth biggest economy of the world thanks to the letting go of the trade tariffs which were derailing their economic growth and national productivity. Trade tariffs in Brazil have been the most significant elements that have shaped the economic growth of the country since the liberalization of trade policies in the 1990s. Trade tariffs are an important sector of the economy as it shapes the progressive economic growth or failure as it has been with Brazil.

References

Carbaugh, R. J. (2014). International economics.

Diógenes, J. R. F., Claro, J., & Rodrigues, J. C. (2019). Barriers to onshore wind farm implementation in Brazil. Energy Policy, 128, 253-266.

Gil-Alana, L. A., dos Santos Figueiredo, O. H., & Wanke, P. (2019). Structural breaks in Brazilian tourism revenues: Unveiling the impact of exchange rates and sports mega-events. Tourism Management, 74, 207-211.

Neto, A., Hyatt, K., Godinho, D., & Schineller, L. US-BRAZIL TRADE AND FDI.

Selby, J. (2017). Data localization laws: trade barriers or legitimate responses to cybersecurity risks, or both?. International Journal of Law and Information Technology, 25(3), 213-232.

Tyler, W., & Gurgel, A. C. (2009). Brazilian trade policies: some observed and estimated effects of the 1990s liberalization. Estudos Econômicos (São Paulo), 39(1), 59-88.