Trade Policies of Bric
Brazil
Throughout the last 100 years, few countries have seen the level of political conflict and change that Brazil has experienced. Before the 1990s, Brazil was notorious for its “inward oriented policies”. In the early 1990s, however, Brazil became one of the last countries in the region to finally move into a regime characterized by open trade policies. Brazil quickly began working to liberalize trade, which included strong unilateral and regional goals. Within the next five years, Brazil had effectively cut tariffs substantially, removed non-tariff barriers (NTBs), and brought about the existence of Mercosur. It was this initial momentum that allowed Brazil to achieve its status as a BRIC country, the fastest developing countries in the world. Due to complications in the mid-1990s, however, Brazil lost much of the momentum of those five years. The country failed to adopt sound fiscal and monetary policies, which ultimately lead to unstable inflation and exchange rate fluctuations. Brazil also had its fair share of external shocks as well. Despite the loss of momentum, not all benefits were lost. Today, Brazil’s regime is more protectionist that other Latin American and Caribbean countries. In 2007, Brazil ranked 92nd out of 125 according to the Trade Tariff Restrictiveness Index (TTRI). Brazil remains stuck at a level of protectionism that, while it is not as extreme as the 1980’s, continues to prevent Brazil from boosting productivity, experiencing substantial welfare, and enjoying growth gains. High protectionism also is risky as production becomes more fragmented. In addition, there are many benefits to be enjoyed by joining global value chains that require lower trade costs. Not only must a country open its markets up to the global market but also become more active in the global market. Currently Brazil has focused on South-South Agreements. The limited size of the market seriously constrains any attempts to exploit scale and efficiency gains.
Throughout the last 100 years, few countries have seen the level of political conflict and change that Brazil has experienced. Before the 1990s, Brazil was notorious for its “inward oriented policies”. In the early 1990s, however, Brazil became one of the last countries in the region to finally move into a regime characterized by open trade policies. Brazil quickly began working to liberalize trade, which included strong unilateral and regional goals. Within the next five years, Brazil had effectively cut tariffs substantially, removed non-tariff barriers (NTBs), and brought about the existence of Mercosur. It was this initial momentum that allowed Brazil to achieve its status as a BRIC country, the fastest developing countries in the world. Due to complications in the mid-1990s, however, Brazil lost much of the momentum of those five years. The country failed to adopt sound fiscal and monetary policies, which ultimately lead to unstable inflation and exchange rate fluctuations. Brazil also had its fair share of external shocks as well. Despite the loss of momentum, not all benefits were lost. Today, Brazil’s regime is more protectionist that other Latin American and Caribbean countries. In 2007, Brazil ranked 92nd out of 125 according to the Trade Tariff Restrictiveness Index (TTRI). Brazil remains stuck at a level of protectionism that, while it is not as extreme as the 1980’s, continues to prevent Brazil from boosting productivity, experiencing substantial welfare, and enjoying growth gains. High protectionism also is risky as production becomes more fragmented. In addition, there are many benefits to be enjoyed by joining global value chains that require lower trade costs. Not only must a country open its markets up to the global market but also become more active in the global market. Currently Brazil has focused on South-South Agreements. The limited size of the market seriously constrains any attempts to exploit scale and efficiency gains.