CHALLENGES OF DOING BUSINESS WITH BRAZIL
ARTICLE BY ROSALIENE BACCHUS

Since the early 1990s, Brazil has made great strides in opening up its borders to trade. However, a number
of challenges remain when doing business with South America’s largest economy and market.

In its Global Enabling Trade Report 2009, released in July 2009, the Swiss-based World Economic Forum
ranked Brazil in 87th place out of 121 economies covered by the report (www.weforum.org). Using data
compiled in collaboration with international trade experts and leaders in the logistics and transport industry,
the Enabling Trade Index reflects the ease of flow of goods across national borders and to their destinations.
When compared with the other BRIC emerging economies, Brazil lags behind China (49th) and India (76th)
and ahead of Russia (109th). The diagram below compares Brazil’s ranking with other selected economies.


























The factors enabling or facilitating trade analyzed for the Global Enabling Trade Report 2009 include market
access, border administration, transport and communications infrastructure, and the business environment.
An examination of Brazil’s ranking for each of these four factors reveal the major challenges faced by traders.

In the area of market access, with an overall rank of 100th, existing tariff barriers (high import taxes) for non-
agricultural products and non-tariff barriers make it difficult for exporters to compete with similar products on
the Brazilian market. Non-tariff barriers include import licensing procedures, valuation of goods at customs,
pre-shipment inspection, and rules of origin of goods.

Brazil’s performance in border administration is comparatively better in 77th position. In spite of numerous
improvements in recent years, the burden of customs procedures (116th) remains high. The World Bank’s
index for Doing Business 2010: Measuring Business Regulations, released in September 2009, throws more
light on this aspect (www.doingbusiness.org). Considering the time and cost of trading across borders, Brazil
ranks in 100th position out of 183 countries.

The World Bank’s annual report calculated the number of import and export documents, time required in
import and export processes, and the cost per container. When compared with the USA, Brazil’s export
process requires twice as many export documents and double the number of days. A container for export
costs an average of 47 percent more than a container leaving US ports. The disparity is not as great in the
import process for documents—5 in the USA to 7 in Brazil—and a 9.5 percent increase in the cost per
container. On the other hand, when compared with the USA, it takes over three times as long to clear imported
goods in Brazil.

The World Bank Doing Business Index shown for selected economies in the diagram analyzed the time and
cost of meeting government regulations for operating a business: starting a business, dealing with construction
permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading
across borders, enforcing contracts, and closing a business.

Transport and communications infrastructure also play an important role in enabling trade across borders.
Ranking in 68th position overall on the Enabling Trade Index, Brazil obtained low scores for paved roads
(116th), quality of roads (100th), and quality of port infrastructure (111th). These factors affect production
costs and result in higher prices for certain export products.

Crime and violence, corruption, and government inefficiency further contribute to the cost of doing business
in Brazil. Poor scores in these areas placed Brazil’s business environment in 93rd position on the Enabling
Trade Index.

Navigating Brazil’s highly regulated business environment and customs procedures are best achieved by
working with legally registered and experienced representatives, distributors, importers, and exporters. A
clearly defined market plan with long-term goals, coupled with large doses of patience and persistence will
ensure success.      

Article published in the Brazil Explore Magazine, Los Angeles, California, USA, January 2010.
Reprinted with permission.
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