The Trade Facilitation Agreement and its Impacts to the Brazilian Transformation Industry

Brazil - 1 August 2015

Trade facilitation has been in WTO agenda since 1996 and only in 2013 WTO Members were able to conclude an agreement to deal with that important issue to guarantee a freer international trade.
From a marginal topic in the Doha Round negotiations, trade facilitation has become one of the issues that might help the WTO from complete failure. Reducing customs-delay costs is as relevant as negotiating tariffs as this paper suggests. Hummels and Schaur (2013) have demonstrated that each day a merchandise remains at customs represents from 0.6 to 2.1% as equivalent tariff.
For developing and least-developed countries, reducing customs-delay costs is an opportunity to enhance their exports competitiveness. Furthermore, an intelligent and efficient process at customs can attract more business, more investments and more trade.
This paper is divided in three sections. The first section aims to explain the main topics advanced by the WTO Agreement on Trade Facilitation (TFA), especially for what concerns Brazilian government actions to implement its commitments whether they are Category A, B or C. Therefore, it is necessary to ascertain the extent of the obligations enshrined in the TFA and what topics remain sensitive to the Brazilian economy.
The second section will examine what are the actions that the Brazilian government is taking in order to fully implement the TFA and what the state of play is. Albeit Brazil has only left a few commitments out of Category A, it does not mean that it will be a real challenge to make all relevant government agencies to work in a single project to facilitate the analysis of requests for imports and exports in Brazilian customs. We suggest that Brazil still has some work to do. On the opposite, the Portal Único Program is ambitious and aims to encourage other government agencies to consider harmonizing their practices and optimizing the time of exporters and importers to the benefit of improving Brazil’s position in the international trade.
The third section will deal with the economic model developed to ascertain the effects of Brazil’s Portal Único Program in the efficiency of Brazilian economy by determining tariff equivalents to importing applied tariffs in order to verify the indirect costs of customs delays. The simulations suggest that Brazilian exports, imports, trade balance and GDP growth all would have a better performance if the program is carried out by 2017 as planned by the Brazilian government.

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