After being internally approved by Brazil and the United States, the protocol on trade and transparency rules between the two countries came into force. The document was signed in October 2020 and modernizes the 2011 Economic and Trade Cooperation Agreement (Atec). Based on the United States-Canada-Mexico Agreement, the protocol adds new commitments on trade facilitation, good regulatory practices, and anti-corruption.
The preparation of the document has been discussed for more than ten years. Last April, President Jair Bolsonaro sent annexes prepared by the Ministries of Economy and Foreign Affairs to Congress. The material comprises details of understandings on trade facilitation and customs administration, good regulatory practices, and anti-corruption. The annexes were approved by the deputies and senators.
Although they are no longer Brazil’s largest trading partner (they are in second place, behind China), the United States sold and bought unprecedented amounts from the country last year. Trade between the two countries reached US$70.5 billion in 2021, with domestic exports totaling US$31.1 billion – up 45% from 2020, which had seen a 23% drop. Even so, the bilateral balance was negative for Brazil by US$ 8.3 billion, the biggest deficit of this bridge since 2013.
According to a government source interviewed by Broadcast, the protocol will facilitate trade primarily in relation to the reduction of non-tariff barriers.
In any case, this is yet another isolated undertaking in relation to Mercosur, since the agreement is valid only for Brazil, and not for the bloc. At the beginning of the discussions, Mercosur was one of the points debated, but it ended up not developing. “The protocol is an opportunity for Brazil to demonstrate its willingness and ability to comply with high standards of governance and transparency,” said Ambassador Jayme White in an official note released by the US government.
When it passed the Senate, the project’s rapporteur, Senator Kátia Abreu (PP-TO), said that the protocol is supported by two other pillars, in addition to trade facilitation: good regulatory practices and anti-corruption measures. Therefore, according to her, the document will provide legal certainty and stimulate trade flows between the two countries. The first intention of a Brazil-United States Agreement on Trade and Economic Cooperation was signed in 2011.