Bridges Weekly Trade News Digest • Volume 13 • Number 9 • 11th March 2009
WTO Calls on Brazil to Focus on Market Competition
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Despite recent economic reforms, Brazil should promote market competition and guard against protectionism to help sustain its economic growth, a WTO review of Brazil’s trade policies concluded this week. To that end, Brasilia should by reduce import prohibitions and help ensure greater predictability for foreign investment and trade, the report said.
The Trade Policy Review Body, which met 9 and 11 March to review the report, praised Brazil for continued strong output growth, declining unemployment rates, growing diversified exports, and intensively diversifying its export markets. Thanks in part to such reforms, the Brazilian economy grew at an average rate of 4.5 percent per year between 2004 and 2007, the WTO said in the review, and posted an impressive 6.3 percent growth rate in the 12 months leading up to September 2008. Nevertheless, inflation and high interest rates pose a problem for Brazil’s potential growth and should be closely monitored and controlled, the WTO cautioned.
Brazil is the world’s tenth-largest economy in terms of GDP and represents of the most dynamic traders in the world. Brasilia has long regarded the multilateral trading system as a strong priority in its foreign trade policy, the WTO said.
Brazil is the world’s second-largest producer of ethanol and the leading exporter of the biofuel, supplying the United States, Central America, Caribbean countries, and the Netherlands. Since 2003, production of ethanol fuels has increased by an average 11.7 percent per year; the WTO estimates that production reached almost 27 million cubic metres in 2008. Between 2002 and 2007, the market price of ethanol jumped by 45 percent, the report noted. Brasilia de-regulated ethanol prices in 1998.
In its response to the review, the European Union raised concerns about trade barriers in the country and encouraged Brazil to align its trade policies with international standards.
“Unfortunately, not much is known about Brazil’s regional trade policy. As we all know, transparency is a key pillar within the WTO, and we urge Brazil to comply with its transparency obligations in terms of WTO notification of its regional trade initiatives,” the EU Trade Commission said Monday.
The WTO examines each of its Member’s trade policies at regular intervals; this was Brazil’s fifth Trade Policy Review.
ICTSD reporting.
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