Brazil is often painted as a country selling raw materials like coffee and cotton s to its big prosperous neighbour, the United States and buying manufactured goods such as cars in return. Today, the process of economic liberalization initiated in 1990s has produced significant changes in Brazil's trade regime: agricultural exports became less important than manufactured exports and the EU, the United States, and Argentina become the main trade partners. Favourable economic and investment climate results in substantial increase of foreign direct investment (FDI) since 1997. As the economy has become more open and competitive, competition policy is gaining importance in Brazil.
This report aims to critically evaluate the Brazil's International Trade Policy in term of key trade issues and primary benefits and limitations of current trade policy are identified. For the tariff and non-tariff barrier, although Brazil has liberalised its trading regime in a substantial manner during the past ten years, but still maintains various barriers to trade of both a tariff and a non-tariff barrier nature hamper its products' access to the world's principal markets and it must be lifted to liberalize international trade. A number of standard methods of export financing are used in Brazil, government direct financing, tax concessions and the Export Finance Programme (PROEX) plays a key role for encouraging export production.
But it is necessary to broaden the scope of the Export Financing Program to access to a larger number of companies and improve the competitiveness of Brazilian products on the international market. Although some unfair trade practices still inflict upon Brazil export, the government has increasingly utilising the WTO dispute settlement mechanism to tackle trade dispute. Globalisation indicates Brazil's current import and export trade is becoming deeply intertwined with foreign countries and provides immense opportunities for Brazil to balance import and export trade in principle of free trade.
In order to overcome the barriers that restrict free flow of International Trade, Brazil's future trade policy is noted in the light of globalization opportunities and internal trade mechanism. This option would be greater trade openness on a strong adherence to WTO rules and procedures basis to commit to free trade.
Some recommendations on the basis of Brazil's future trade policy are presented to accelerate import and export trade like stabilize and simplify the trade-related laws and regulations to enhance its transparency, negotiate with the U.S. and other Latin American countries to join an FTAA, further its autonomous liberalization programme, including the elimination of import prohibitions, reductions in the average tariff, removal of non-tariff barriers and committed to tax reform, etc.
Finally absolute and comparative advantage trade theories from Brazil perspective are discussed and imply that Brazil should focus on train qualified labour and export most efficient output to trade with foreign countries in order to maintain the national competitiveness in international trade.