TRADE POLICY

Trade Policy

Trade Policy of Japan and Brazil

Introduction

Trade theory assumes that trade is liberal that is devoid of government restrictions, and at the same time is the justification for liberal trade policies. Actual trade, however, occurs in an institutional framework in which government-directed commercial policy plays a vital role. Common instruments used by governments, to inhibit imports, for example, tariffs and quotas. Tariffs are taxes on imported goods that governments have used both to raise revenues and to protect domestic producers from trade competition, by offsetting other countries' advantages in production costs.

Quotas are limitations on the physical quantity of imports; only so many square meters of cloth can be imported, for example, or so many automobiles. Such a physical limitation not only raises the price of the imported good by inducing its scarcity, it also allows for domestic monopolies to form among a country's individual producers. Recent multilateral trade agreements have had the general trend of reducing tariffs and quotas in the interest of promoting more trade, under a neoliberal mind-set. Such agreements have also encouraged the reduction of other means of limiting imports, such as the requirement that they meet certain environmental or safety standards in their production.

While much commercial policy is focused on limiting imports, some of it is aimed at promoting exports or supporting high prices for export goods in other countries' markets. Export processing zones have been established by many countries, as geographical areas in which producers enjoy special tax rates and other benefits as long as they are engaged in producing goods for export. Governments also try to manipulate exchange rates in such a way that the goods produced in their own country are relatively inexpensive in other countries, while imported goods remain highly priced. Export prices in some markets are encouraged to remain high if demand can still be sustained. The Organization of Petroleum Exporting Countries, for example, is a cartel of suppliers that use internal production quotas to target prices in the global oil market. More general trade agreements among several countries are referred to generically as customs unions, but those agreements can take many forms. Some countries combine into free-trade areas, in which goods and services may pass across common borders (nearly) without restriction as long as the member countries are places of production.

Brazil

For ten years, Brazil has experienced increased integration into the global economy was characterized by significant growth in exports and by increasing the weight of this country in international trade negotiations. The aim of this paper is to provide an overview of the Brazilian trade policy conducted during the last decade. Initially, an overview of trade flows, particularly mentioning the main partners in Brazil and the main products traded, will be presented. Attention will be paid to trade with the EU. In a second step, the trade policy strategies adopted by Brazil will be briefly analyzed to assess the impact on the current negotiations taking place at the World Trade Organization ...