Brazil

1
Findings from Study on Brazils Services Trade
Development Research GroupThe World Bank
2
Overview

• Review of Brazils services trade pattern
• Analysis of Brazils services trade policy
• Brazils export interests in services

3
While Brazil records a negative balance on BOP
services trade
Millions of US dollars
0
-1,000
-2,000
-3,000
-4,000
-5,000
-6,000
-7,000
Total
Transport
Travel
Insurance
Other
services
services
services
services
services
trade
Source IMF Balance of Payments Statistics
4
other services have shown fast export growth

Source IMF Balance of Payments Statistics
5
especially miscellaneous business and
professional services
Other services, 1995
Other services, 2000
Other
Other
27
48
Miscellaneous
Miscellaneous
business and
business and
professional
professional
services
services
73
52
Source IMF Balance of Payments Statistics
6
Brazil received large inflows of FDI in services
in the late 90s
Source Banco Central do Brasil
7
in a variety of services sectors
Total FDI inflows in services from 1996 to 2000
Electricity and
Other services
gas
9
16
Other business
Distribution
services
services
22
5
Computer
services
Telecommuni-
2
cations and
post
Financial
intermediation
27
19
Source Banco Central do Brasil
8
The majority of investors are European
Total FDI stock by country of origin, 2000
Other
US
22.8
24.2
MERCOSUR
(without
Paraguay)
1.5
Europe
51.5
Source Banco Central do Brasil
9
Brazils services trade policy

• What are the explicit barriers?
• Where are there trade preferences?
• Does the regulatory framework support trade
  liberalization?

10
Sectoral policy regimes broadly fall into four
categories

• Sectors with few or no explicit barriers
• Telecommunications, distribution, certain
  business services
• Sectors that are liberal, but policy is less
  certain
• Financial services, express mail/courier services
• Partially liberalized sectors
• Transport, audiovisual, construction,
  professional services
• Sectors that remain largely closed
• Postal, reinsurance services

11
Trade preferences

• Formal preferential treatment
• Transport services, certain professional services
• Reciprocity rules, requiring foreign service
  providers to be treated equivalently to Brazilian
  suppliers abroad
• Telecommunications, financial services
• In most cases, reciprocity rules do not lead to
  actual preferential treatment

12
Regulatory framework

• Regulation is necessary to remedy market failures
  (monopolies, information asymmetries) and attain
  social objectives (universal service).
• Brazils sector specific regulatory regimes
  broadly track international trends.
• One area of weakness is professional services
  outdated regulations and absence of specific
  regulations for foreigners.

13
Case studies on Brazils services exports

• Brazil has a comparative advantage in certain
  services sectors
• Do services exporters face explicit and implicit
  barriers in foreign markets?
• Case studies on three industries
• Construction services
• Audiovisual services
• Software services

14
Main findings of case studies

• Brazilian exporters of services face few explicit
  barriers, other than limitations on the movement
  of services personnel.
• Exporting firms are affected by a variety of
  regulatory measures, especially in construction
  services.
• Policy regimes in export markets are not always
  transparent and/or bound by a WTO commitment.