The increase is one of the measures announced by the federal government with the objective of increasing foreign sales and strengthening the country's position in global trade.

The government has also decided to exempt from the Welfare Tax (PIS) and the Social Security Tax (Cofins) the purchase of national inputs destined to production for exports – the so-called drawback. So far, only imports of inputs received fiscal incentives.

Another initiative for encouraging drawback is the availability of this type of operation on the Internet. According to data supplied by the Brazilian Ministry of Development, Industry and Foreign Trade, from 10% to 15% of Brazilian imports are aimed at drawback.

Although 25% of Brazilian exports use this type of operation, only around 2,500 companies are able to benefit from the incentive in an effective manner.

"This has a bureaucratic cost, one must prove that the input purchased tax-free was used to manufacture a product destined for export. Some companies even have separate plants," explained the Foreign Trade secretary, Welber Barral, upon announcing the news, soon after the production development policy was disclosed. With the use of the Internet, the number of companies using drawback is expected to increase from 10% to 20% within three years.

The federal government also decided to eliminate income tax on remittances to foreign countries for payment of export logistics services, such as storage of goods, and extending the Export Guarantee Fund (FGE) to micro-, small- and medium-sized companies with annual exports of up to US$ 1 million. In order to reduce bureaucracy in foreign trade operations, the government raised from US$ 20,000 to US$ 50,000 the limit for the Simplified Export Statement (used in foreign sales by mail, for example).

The set of measures announced also forecasts sector incentives, such as extending the Proex financing deadline for the three sectors most harmed by the appreciation of the real against the dollar – shoes, textiles and furniture – and reducing the tax on the payroll of the information technology (IT) sector, in order to attract multinational companies in the field.

"These measures should contribute a lot to increase the competitiveness of Brazilian products, and they meet a large portion of demands by the exporting sectors," said Welber Barral.

The benefits, however, are conditioned to the meeting of specific goals for each sector. In the case of IT, for instance, one of the objectives is to export the equivalent to 3.5 million reais (US$ 2 million) in software and service exports by 2010, and to create 100,000 direct jobs during that period.

In biofuels production, one of the aims is to export 5 billion liters of ethanol by 2010. Foreign sales of meat should reach US$ 14 billion in three years, and exports of automobiles should total 910,000 units, with expansion of production from the current 2.9 million vehicles per year to 4 million by 2010.

The federal government also wants to consolidate the country's position among the world's five leading manufacturers of pulp and paper and to earn a 1% share of the global merchant navy market.

The textile, footwear and furniture industries also have ambitious goals. In the case of textiles and clothing, the goal is to increase revenues from US$ 33 billion (in 2006) to US$ 41.6 billion in three years. In the case of leather, shoes and artefacts, the goal is to increase export value by 10% per year and to occupy the second position in the global ranking of shoe producers.

For furniture and wood, the forecast is for an average growth of 15% per year in domestic sales and of 7.5% per year in exports – Brazilian companies in the sector currently answer to 3.2% of global production, and only 1% of global exports. "The goals are ambitious, but feasible," believes the secretary.

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Exports totaled US$ 2.826 billion, corresponding to a daily average of US$ 565.2 million, while imports amounted to US$ 1.751 billion, for a daily average of US$ 350.2 million.

So far this year, exports stand at US$ 89.546 billion, and imports, US$ 55.8 billion, yielding a trade surplus of US$ 33.746 billion.

Official Help

With the technical support of the Ministry of Development, Industry, and Foreign Trade, Brazilian exporters will be better prepared to meet international technical standards, thus reducing losses and expediting purchases and sales.

Firms will be able to consult the Internet to check whether their products comply with international norms and market demands, against the background of growing international trade stimulated by market liberalization.

According to the Ministry, the criteria for products to be imported and sold are set by foreign governments or the importers themselves. The Ministry plans to publicize the regulations, directives, and technical norms that determine minimal standards for product acceptance.

The orientation provided by the Ministry suggests that "products that satisfy the most rigorous norms will naturally be acceptable in countries and markets where the norms are less strict." Technical requirements are generally related to questions of health, security, environment, and social responsibility.

The consultation system was launched on Saturday, October 8, in São Paulo. The Ministry’s export incentive policy includes various other services, such as the Progex (Export Generation Program), backed by the federal government, state research institutes, and the Sebrae (Brazilian Micro and Small Business Support Service), which offers analyses of adaptations needed in products or production processes, as well as tests and trials.

The Exporter Alert, the information system run by the Inmetro (National Institute of Measurements, Norms, and Industrial Quality, linked to the Ministry of Development), also alerts exporters when a country notifies the World Trade Organization about a new requirement.

Agência Brasil

Among the 1,020 Brazilian companies that started exporting last year, around 900, or 88%, are micro and small. This information was supplied by the director of the Department of Foreign Trade at the Ministry of Development, Edson Lupatini Júnior.

This figure reveals the importance that foreign trade gained last year. This is so true that the quantity of companies that started selling outside Brazil in 2004 was well above that in 2003, when 336 companies entered foreign trade.

“This shows that the policy of support mechanisms that the federal government has been establishing aimed at increasing the export base is correct,” stated Lupatini. Brazil had revenues of US$ 96.5 billion with exports in 2004, an increase of 32% over 2003.

According to Lupatini, the year of 2004 also marked the expansion of destinations, products and export regions. Eight countries showed expressive growth in imports of Brazilian products, among them Liberia, Sudan, Cyprus, Malta and Poland.

The addition of new products to the trade basket, according to the director, represented revenues of almost US$ 1 billion in the Brazilian trade balance.

Most of the articles are manufactured, with machinery for moulding rubber, presses for extrusion of metals, cranes for towers, machinery for iron processing, medications, wind powered electric generators, and instruments and equipment for telecommunications.

From Brazil

The 2004 balance also shows greater trade of different products from different regions, adding to the Southeast and South, which are the largest exporters.

Part of this, according to Lupatini, is the result of the State Exporter project, through which the federal government provides incentives to the increase of exports from states where they do not exceed US$ 100 million.

Acre, Amapá, Pará, Rondônia, Roraima and Tocantins, all northern states, Mato Grosso and Distrito Federal, in the Midwest, Maranhão and Rio Grande do Norte, both in the Northeast, which participate in the program, managed to exceed these revenues and have now been given another target, US$ 500 million. The project will also cover other states this year.

According to Lupatini, almost all the Brazilian states increased their exports. Sixteen states had export increases over the country average, which was 32%, in 2004.

The only state where there was a decrease was Amazonas, in the North of the country, due to the increase in consumption of mobile phones on the domestic market.

Lupatini clarified, however, that removing these goods, which are the main product exported by the state, the increase in state exports was 26%.

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