FTAs - Free Trade Agreements | KPMG | BR

FTAs

FTAs - Free Trade Agreements

In order to boost foreign trade, countries worldwide seek to implement increasingly more encompassing trade agreements.

In order to boost foreign trade, countries worldwide seek to implement increasingly ...

FTAs - Free Trade Agreements

In order to boost foreign trade, countries worldwide seek to implement increasingly more encompassing trade agreements that will make trading rules  and provide better trade off terms in order to maximize exports gains and to promote the economic complementarity required for development. 

In the 1990s Brazil realized it needed to increase its exports. Therefore, it has opened a wide array of markets for Brazilian products and has shown that foreign trade is the key element of the efforts aimed at increasing industry competitiveness. These initiatives have allowed Brazil to develop trade preference agreements with Mercosur, Mexico and Andean Community countries in subsequent years, causing an increase in trade flows and productive investments in Brazil's industrial base.

The main purpose of Free Trade Agreements is to promote import and export flows by reducing tariff barriers, non-tariffary barriers and customs bureaucracy between the signatory countries. Therefore, it aims to create a positive economic competition environment for companies that have a trading environment with fewer customs barriers.

The main Free Trade Agreements encompass many sectors and allow higher levels of economic and technological interchange generated by commerce and increased competitiveness. Creating opportunity to boost technology breakthroughs and productivity gains on exports for signatory and non-signatory countries. 

The purpose of the National Exports Plan is to increase the number of trade agreements signed by Brazil, under the assumption that entering into new trade agreements under the WTO system and with major global players is of key importance. To that end, Brazil and Mercosur are currently negotiating with the European Union to create a Free Trade Zone. Increasing Brazil's share of world trade is both the reason for and the purpose of the actions devised under the National Exports Plan in connection with the agreements Brazil has entered into and seeks to sign. Brazil is following a world trend of increasing bilateral and multilateral trade agreements, which ensure the possibility of facilitating access to new markets and allow companies from all industries to have a chance of becoming global.

Several types of agreements are in place for facilitating and increasing exports, targeting 32 markets considered as of high priority. Brazil has been holding discussions with countries to reduce trade barriers and among the types of agreement in which major breakthroughs have been done, is the customs facilitation to improve trade with the Authorized Economic Operator program. Initiatives such as the completion of the Agreement on Cooperation and Facilitation of Investments signed with Latin America, Africa and Middle East countries, and the resumption of negotiations with the European Union to sign a Free Trade Agreement are priorities to increase the competitiveness of Brazil's trade.

Among the trade agreements signed by Brazil are the following:

  • ALADI - Latin American Integration Association
  • MERCOSUR
  • GSP – Generalized System of Preferences
  • GSTP – Global System of Trade Preferences 
  • Mercosur – SACU (Southern Africa Customs Union).
  • Brazil Mexico Auto Trade Agreement.

> Know further details about the agreements signed by Brazil
> Access here the KPMG White Paper - Thomsom Reuters about FTAs

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