Going back on joining the OECD would not be beneficial for Brazil, says Britcham president

​The UK is looking for new trading partners after leaving the European Union, and Brazil can take the opportunity to expand its presence in international trade. To do so, however, it will have to do its “homework” on topics such as the environment, tax reform and improving the business environment. On this last point, continuing, for example, the process of joining the OECD.

The statements are from Ana Paula Vitelli, president of Britcham (British Chamber of Commerce and Industry) Brazil since 2020.

Re-elected last week for another two-year term at the head of the Chamber, Vitelli says that the time is ripe for a rapprochement between the two countries, whose trade flow has shrunk in the last ten years.

In addition to the trade issue, which has been addressed through proposals sent to Brazil and a series of visits by British representatives to the country, the United Kingdom wants to be a base for Brazilian companies that want to act internationally as if they were British. There is already a local government group advising Brazilian companies in this regard.

In a period of ten years, the flow of trade between the two countries fell from around US$ 8.5 billion to less than US$ 5 billion, with both exports and imports falling. As a result, the British are not among Brazil’s main trading partners.

“There is a huge space of opportunity to have more exchanges between Brazil and the United Kingdom”, says Vitelli. “The United Kingdom is ready to negotiate, and we also heard from the Brazilian side that there is enormous space to advance this agenda.”

The UK imports 50% of the food and drink it consumes. These products originated mainly from the European Union. With Brexit, they can come from other markets.

But the objective is to go beyond commodities, and opportunities in the hygiene, cosmetics, footwear and technology segments have already been mapped.

“With Brexit, the need to look for other suppliers became imminent, and the United Kingdom has shown interest in Brazil being a partner in this new phase, in looking for these suppliers here in Brazil”, says Renata Sucupira, president of the trade committee. and Britcham’s international investments.

Vitelli cites a series of issues seen as fundamental by the British to make progress in the relationship between the two countries. One of them is the environmental issue, which has also been an obstacle to the implementation of the agreement between Mercosur and the European Union.

The chamber also sees a reform that simplifies the national tax system as necessary. A proposal to that effect is under discussion in the Senate. It unifies five taxes on consumption in the three spheres of government, but is resisted, mainly by the mayors of large capitals, who fear loss of revenue, and the service sector, which fears being encumbered.

Another discussion is an agreement that puts an end to double taxation on the results of multinationals operating in one or another country.

The president of Britcham also mentions the progress of the agenda linked to Brazil’s accession to the OECD (Organization for Economic Cooperation and Development). Brazil’s entry into the group has the support of the United Kingdom and has advanced in the administration of Minister Paulo Guedes (Economy), who visited the entity’s headquarters last week.

To join the group, the country needs to change a series of rules. Two measures in this regard were the gradual reduction of the IOF on foreign exchange operations and the Additional Freight for Merchant Marine Renovation, from 25% to 8%.

Negotiations with the entity came to a halt during the Lula and Dilma Rousseff governments and are still resisted by some leaders linked to the PT.

Vitelli says that joining the OECD would give the country a seal of quality in terms of the business environment and legal certainty. “I don’t see much room for going back, and it wouldn’t be something beneficial for Brazil.”

For her, Brazil has shown commitment to adapt to a series of OECD regulations and instruments. “[Isso] it opens up the possibility for us to do some homework, work with tax reform, move forward on some internal issues. Implementing this type of reform makes us also build a more competitive business environment, which has legal certainty and is more consistent.”

Since leaving the European Union in early 2021, the United Kingdom has closed agreements with several countries. In the Brazilian case, this is an issue that would have to go through Mercosur, but Britcham sees room to advance in trade facilitation measures.

Vitelli says the UK is aiming to have 80% of international trade based on free trade agreements, representing £1 trillion in exports, by the middle of this decade.

“So we are talking about a relatively short time horizon, but an agenda that has already been discussed, and we have seen some advances. on both sides.”