In Geneve, worries about Brazilian protectionism

WTO headquarters in Geneve

Entrepreneurs gathered in World Trade Organization (WTO) headquarters in Geneve showed concern about the direction of Brazilian trade policy.

# 1 “protected” economy among G-20

According to the  International Chamber of Commerce (ICC), most G-20 countries – which gathers both the largest developed and emerging economies – have adopted more protective measures. But an ICC index points Brazil as the most protectionist in the G-20, with more restrictive trade policy than countries such as Argentina, China and Russia.

” Brazil has an important economic growth, but at the same time is a less open market we’re seeing,” said in an interview the vice president of ICC, Harold McGraw III.

For WTO, Brazil is following trade agreements

On the other hand, Pascal Lamy, director of WTO, said the organization is monitoring what happens in global trade but so far, no country has imposed import tariffs beyond what promised to adopt in multilateral agreements.

Pascal Lamy

In fact, Brazil has average import tariff of 10%, but may increase rates to 35% without breaking WTO commitments.

On the other hand, Lamy seems to be more circumspect about the argument that protection in Brazil is necessary because of the currency war. ” The relationship between the level of exchange rate and trade flow is extremely complex,” he said. Source: Assis Moreira | Jornal Valor. 

Go further on the topic

FT blog  (Sept 16, 2011) on the recent 30-point increase in the country’s industrial-product tax on cars on account of the Brazilian currency depreciation.

Insurers of Europe  (Jan 13, 2012) highlights the danger of Brazilian protectionism.

Understanding Brazilian trade policy recent history check Eliana Cardoso’s (professor of FGV) article.  (Mar 28, 2009).

Also Joe’s post about The Economist on Dilma Presidency

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About Hildete Vodopives

Hildete de Moraes Vodopives is founder of Brazil Global and of the Harvard Strategists Bureau. She is a member of the Brazilian Investment Analysts Association (APIMEC-Rio) where she served as Corporate Relations Director and later, on the board. Hildete advises companies doing business in Brazil. She lives between Paris and Rio and is a member of the Harvard Club of Paris and of the Mercosur Women’s Forum.
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3 Responses to In Geneve, worries about Brazilian protectionism

  1. Leon says:

    Hi Hildete,

    I believe that Brazil as a new player in the G20, is still learning how to be a protectionist. We are stepping in a new field and recently Brazil had suffered with a tsunami of multinational companies. Since the 80’s the brazilian companies have been disappeared due to huge differences between brazilian and the incoming ones with better conditions of the technical and technological know how whose advances they were bringing down here.
    Probably this protectionism in this period which we are preparing to the world soccer games cup is a good opportunity to gain the market share that have been lost from the recent years. Even tough USA has shown historically as the most inflexible country talking about the commerce. Also, once the biggest economies are claiming about our protectionism because they are suffering by looking emerging countries doing well and better, they should not forget this recent past or they are not counting on it.
    Maybe it’s our time to play this way.
    But we could not forget that brazilian infrastructure is so bad and a big obstacle to trade with other countries. That’s my opinion.
    Regards

    Like

  2. With other countries competing for the global demands, any country that over-protects itself could looking at an empty bag full of promises.

    Whether for national pride, monetary reasons, and/or economic reasons, limiting competition only dulls innovation, the thought process needed to create and develop new ideas. Could Brazil be making the same mistake Portugal did when they were a power nation? Or have many forgotten their history?

    Brazil has MANY options in front of it – but limitation should NEVER be any of them, unless it sacrifices their national security. By placing limits, the Brazilian government could find itself making concessions with one company after another, and/or one country after another – losing that balance it so strives to maintain. Not to mention, once any country limits what they will do, then the buyer will look elsewhere… and will maintain buying elsewhere as they already have the necessary foundation to maintain a commercial relationship.

    Like

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