Brazil takes more than four years to forge deals with other countries

A gap of over four years separates the official photos of signing ceremonies of deals inked by the Brazilian government and the day the new rules are brought into effect in domestic law. According to the National Confederation of Industry (CNI), this delay keeps the productive sector from quickly benefiting from free trade deals that could draw investment as well as treaties ending double taxation.

Slashing paperwork would also bring another much sought-after advantage to executives: a significant tax reduction in the costs Brazilians incur when they are transferred to positions overseas. Today, any Brazilian employee sent abroad to work is charged taxes even in plane tickets.

CNI mapped the progress of 27 international agreements signed by Brazil from 2003 to 2017, which executives investors believe are crucial for ensuring competitiveness in the Brazilian economy. Of these, a mere 18 have been enacted so far. The remaining nine have been submitted to Congress and are pending a presidential decree, which usually lasts about a year.

“The Executive spends a lot of time just on bureaucratic procedures. Only the Legislative can deliberate on the approval of a text,” said CNI Director for Industrial Development Carlos Abijaodi.

After the signature, CNI reports, the deal is submitted to the Executive, where it lingers about a year hopping from one ministry to another, just so as all parties involved can become acquainted with the matter. Next, the chief of staff passes the message over to Congress, where it stays for an average of 808 days being studied. Once approved, the piece of legislation goes back to the Executive, where it spends another year before its enactment.

It is virtually impossible to follow the deliberations in the Executive, Abijaodi says, as their progress is not shown online, unlike what happens in the Legislative and the Judiciary. “It's not so transparent. Sometimes they say it's at a specific ministry, but it's been at another for over a month,” he says.

The long path Brazilian agreements have to travel within the government is even a more serious issue when there is a term for the implementation of the measures after they are brought into effect. An example is the free trade pact between Mercosur and the European Union, which began to be negotiated in 1995. If it is signed in December 2017, it should be brought into force in 2022. With a ten-year deadline for cutting import taxes, the total effects of the agreement would not be seen before 2032.

Brazilian neighbors

Deliberations, however, are quicker among Brazil's partners from Mercosur. The Mercosur-India Preferential Trade Agreement, signed in March 2005, was approved by Paraguay's Parliament in November 2005. In Brazil, the Executive only notified Congress in October that year. The decree from the Legislative was published in September, 2008, and the presidential decree was only signed in June, 2009.

There are extreme cases, like that of the Mercosur-SACU Preferential Trade Agreement, which took seven years and one month to be brought into effect. The presidents of the two blocs signed the deal on September 2011. Brazil's chief of staff only submitted the message to Congress over a year later, in April 2010. Congress approved the text, but the Foreign Ministry subsequently identified more than a hundred errors in the translation from English to Portuguese. The document was sent back to Congress and was only internalized on April 2016.

The treaty aimed at averting double taxation between Brazil and Russia spent 12 years and 11 months to be enacted. Congress also had to consider it twice, as the Executive submitted the document with one of its pages missing. The double taxation treaty between Brazil and Venezuela took nine years and 11 months to be approved.

Translated by Fabrício Ferreira