Legal Guide for Foreign Investors in Brazil - Apex-Brasil

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Legal Guide for Foreign Investors in Brazil 24.5. Latin America After World War II, Brazil played a major role in efforts to establish a free trade zone in Latin America, and was one of the founders of the Latin American Free Trade Association (LAFTA), created under the Montevideo Treaty of February 16, 1960, signed by Brazil, Argentina, Bolivia, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela. With the signing of the Montevideo Treaty of August 12, 1980, those same states founded the Latin American Integration Association (LAIA), “in order to advance the integration process, and to promote economic and social development, harmony, and balance throughout the region”. Within the scope of limited trade agreements (enabled under the LAIA Treaty of 1980) Brazil and Argentina signed important bilateral treaties, laying the groundwork for a fast growing bilateral common market area. These included: the Integration Development and Cooperation Treaty, signed in Buenos Aires on November 29, 1988; twenty-four Protocols, followed by other bilateral agreements on specific topics, including a Treaty for the Establishment of a Statute for Brazilian-Argentine Bi-national Companies, signed on June 6, 1990. In 1995, Brazil signed multilateral agreements of an economic nature with Argentina, Chile, Mexico, Uruguay and Venezuela. It has also signed bilateral Economic Assistance Agreements with Chile (1996), Bolivia (1997), Mexico (2002) and a Limited Economic Assistance Agreement with Suriname (2005). 24.6. MERCOSUR The Treaty of Asunción, signed in Paraguay, on March 26, 1991, announced the creation of the Common Market of the South - MERCOSUR (MERCOSUL in Portuguese) - with the aim of establishing a common market between Brazil, Argentina, Uruguay, and Paraguay. Venezuela, which was an Associate Member since 2004, signed the Framework Agreement on July 4th, 2006 and is now waiting for Paraguay and Brazil’s congressional ratifications to join MERCOSUR as full member. The Treaty of Asunción set the following goals, which still remain in force: (a) free circulation of goods, services, and production factors among the component nations, by means of elimination of tariff and non-tariff barriers to trade among member countries; 195
Legal Guide for Foreign Investors in Brazil (b) setting a common external tariff, and adoption of a common trade policy at the regional and international levels; (c) coordination of macroeconomic sectoral policies among member countries, in such areas as foreign trade, agriculture, industry, tax issues, foreign exchange, capital, services, customs policy, transport and communications, and any other items that might subsequently be agreed upon; (d) commitment on the part of Member States to harmonize their laws, with a view to achieving full integration. Associate members of MERCOSUR include Chile and Bolivia (both since 1996), Peru (since 2003), Colombia, and Ecuador (since 2004). By signing Economic Complementation Agreements, a free trade zone in which special tariff conditions are to prevail, will be established between MERCOSUR and each of these countries. . Five Annexes have been added to the Treaty of Asuncion, under the terms of article 3 thereof, namely: I) Trade Liberalization Program; II) General Rules of Origin; III) Settlement of Disputes; IV) Safeguard Clauses; and V) Working Groups of the Common Market Group. Moreover, specific Protocols on the aforementioned issues have been signed. The institutional framework of MERCOSUR is based upon rules established under the Treaty of Asuncion and the Ouro Preto Protocol, and aim to promote consolidation of the common market. The institutional bodies of MERCOSUR are: (a) The Common Market Council (CMC) – made up of Ministers of Foreign Relations and of the Economy (or equivalent) of the Member States. As the highest institutional body with decision-making power within MERCOSUR, the CMC is responsible for ensuring compliance with rules established under the Treaty of Asuncion. Moreover, the CMC is the body that represents MERCOSUR in negotiations, and that is authorized to sign agreements with non-member states, international institutions, and other nations in general; (b) The Common Market Group (GMC) - made up of four permanent members and four deputies appointed by each of the Member States, representing the following bodies: I) Ministry of External Relations, II) Ministry of the Economy (or equivalent), and the Central Bank. It is the executive body of MERCOSUR and is responsible for implementing decisions made by the CMC, supervising activities of the MERCOSUR Trade Commission (CCM) and of administrative bodies, proposing measures for implementing a trade 196
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Legal Guide for Foreign Investors in Brazil - Apex-Brasil

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