New agreement to improve Brazilian trade with U.S.

. Sep 30, 2020
Brazil-U.S. trade could get a boost Containers in the Port of Santos, Brazil's busiest. Photo: Alf Ribeiro/Shutterstock

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Today, Brazil and the U.S. try to improve trade relations. Brazilians’ distrust for science. Senate tries to uphold company payroll cuts. And a Supreme Court trial that will affect Petrobras.


On Tuesday, the Federal Police launched an operation against two state secretaries in Pará, accused of embezzling money earmarked for healthcare. Now, the police are carrying out a similar operation targeting Santa Catarina Governor Carlos Moisés. He is suspected of siphoning money from the purchases of ventilators for Covid-19 patients.

Brazil-U.S. trade could get a boost

Brazil and the U.S. have reportedly concluded

negotiations over a plan to facilitate trade between the two countries — which should be signed within the next few days. The idea is to reduce costs with bilateral exchange (USD 29.8 billion between January and August) by 15 percent. </p> <p><strong>What is on the table.</strong> The agreement is predicated upon three pillars: trade facilitation, regulatory practices, as well as anti-corruption efforts. That would help eliminate red tape and facilitate customs control.</p> <ul><li>Brazil already has similar trade deals with Chile, the European Union, and Mercosur.</li></ul> <p><strong>Global Entry as a trade booster.</strong> Another move to boost exchanges between the U.S. and Brazil is Washington&#8217;s decision to launch the second phase of the Global Entry program, which allows fast-tracked clearance at airports for pre-approved, low-risk travelers. Today, 20 executives from the Brazil-U.S. Business Forum, a group aimed at improving trade ties, benefit from the program — which is now set to be extended to a total of 100 executives.</p> <hr class="wp-block-separator"/> <h2>Brazilians skeptical about scientists</h2> <p>A new <a href="">survey</a> published by the Pew Research Center shows Brazil as the country in which fewer people trust that scientists do what is best for society, among 20 surveyed nations. While in most of the countries skepticism towards science runs along political lines — with the right wing tending to be less trusting of scientists — there is no such ideological cleavage in Brazil: only 22 percent of Brazilian right-wingers trust scientists &#8216;a lot&#8217;, the exact same rate among left-leaning individuals.</p> <p><strong>Why it matters.</strong> The findings suggest Brazil is fertile ground for anti-scientific discourse. During the pandemic, a disregard for scientists&#8217; recommendations — often coming from the far-right government — has been an obstacle in controlling the spread of the coronavirus.</p> <div class="flourish-embed flourish-scatter" data-src="visualisation/3881615" data-url="" aria-label=""><script src=""></script></div> <p><strong>Mistrust and disgust.</strong> Brazilians distrust institutions in general. The country has some of the lowest trust rates for government (9%), news media (12%), or business leaders (just 4%). There is also a significant self-image problem, as three in four Brazilians say they are unsatisfied with how things are going in their country —&nbsp;the third-highest rate out of 20 surveyed nations. As part of that general sentiment of frustration, positive perceptions about the country&#8217;s scientific achievements are disproportionately low when compared to other countries —&nbsp;usually in the single digits.</p> <ul><li>The result is a country in which just 41 percent of people believe decisions should be made by experts. Most Brazilians say &#8220;practical experience&#8221; is a bigger asset for decision-making.</li></ul> <p><strong>Brain drain.</strong> The biggest problem for Brazilian science, however, is not a lack of high-quality scientists — but rather a scarcity of funds and structure. Funding for scientific research in public universities has been cut to the bone over the past decade, and many of the country&#8217;s top-notch scientists have <a href="">left to work at foreign institutions</a>. And the Education Ministry has already announced that it will make further cuts to the budget for federal research institutes and universities.</p> <ul><li>The <a href="">Maglev-Cobra</a> project, a superconducting magnetic levitation train prototype developed by the Federal University of Rio de Janeiro, reached a technology readiness level of 7 (out of 9) and had transported over 20,000 people on an experimental capacity — but was halted due to a lack of funding.</li></ul> <hr class="wp-block-separator"/> <h2>Lawmakers could strike down veto on payroll tax cuts</h2> <p>Senate President Davi Alcolumbre scheduled a vote for today on President Jair Bolsonaro&#8217;s veto of the extension of payroll tax cuts to companies in 17 sectors until the end of next year. The government tried to negotiate in favor of upholding the veto, and will try to stall the vote by convincing allies not to show up for the sitting, trying to prevent a minimum quorum from being reached.</p> <ul><li>Mr. Bolsonaro had vetoed a piece of legislation allowing companies to pay taxes based on their revenue, instead of a 20-percent rate on their payroll.</li></ul> <p><strong>Why it matters.</strong> The standoff has lasted for three months, and it is already affecting businesses&#8217; economic planning for 2021.</p> <p><strong>What they are saying.</strong> The government is trying to avoid any loss in revenue as it scrambles to come up with welfare programs for next year, when the coronavirus emergency salary will end. However, companies are lobbying hard for the tax cuts, saying that upholding the veto would force them to lay off staffers and prevent up to 6 million new jobs from being created.</p> <ul><li>The possible overturning of the veto has also been used by Mr. Alcolumbre as a bargaining chip. He wants to change the Constitution in order to get another term ahead of the Senate — and could comply with the government&#8217;s wishes in exchange for support for his strategy.</li></ul> <hr class="wp-block-separator"/> <h2>Supreme Court to rule on Petrobras privatizations</h2> <p>The Supreme Court will hold a trial today on whether state-controlled oil company Petrobras has the right to slice its assets into multiple subsidiaries in order to fast-track their privatization.</p> <ul><li>The court has previously ruled that parent companies controlled by the government need congressional approval to sell off assets — but that they would have autonomy over subsidiaries. In light of this, Petrobras decided to transfer the control of oil refineries to their subsidiary companies as a push for divestments. Congress, however, has called foul play.</li></ul> <p><strong>On the line.</strong> Petrobras is attempting to sell eight of its oil refineries through subsidiaries.</p> <p><strong>Why it matters.</strong> The decision is pivotal for Petrobras&#8217; strategy to reduce debts and focus its efforts on pre-salt deepwater reserves. The company has boosted this plan during the pandemic, as the coronavirus crisis slashed oil prices worldwide.</p> <p><strong>The trial.</strong> So far, three justices have voted — all three in favor of an injunction to suspend the privatizations.</p> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Economy.</strong> According to think tank Fundação Getulio Vargas, confidence levels among industry and commerce business owners has reached levels that exceed those of the immediate pre-pandemic period. In the case of industry, optimism got to its highest since January 2013 — that is, before the 2014-2016 recession. However, optimism in this case is purely short-term — when it comes to looking six months ahead, business owners already become less enthusiastic about Brazil&#8217;s economic outlook.</li><li><strong>Environment. </strong>A federal court in Rio de Janeiro issued an injunction to suspend decisions made by the National Environmental Council (Conama), lifting protections on coastal areas, citing &#8220;clear risks of irreparable damage.&#8221; The Solicitor General&#8217;s Office can appeal the ruling, but has refused to comment.</li><li><strong>Trump-Biden debate.</strong> When trying to make a point about U.S. President Donald Trump&#8217;s leadership, former Vice President Joe Biden <a href="">used Brazil as an argument</a>. &#8220;The rainforests in Brazil are being ripped down […] I would be gathering up and making sure we had the countries of the world coming up with USD 20 billion and saying: &#8216;Here&#8217;s USD 20 billion. Stop tearing down the forest. And if you don&#8217;t you are going to have <a href="">significant economic consequences</a>.'&#8221;</li><li><strong>Emergency aid.</strong> According to the Citizenship Ministry, roughly 5.7 million people will no longer receive the <a href="">coronavirus emergency salary</a>. Over the next four months, the government will make payments of BRL 300, and has raised the bar for people to qualify for the aid. One official said the move was the result of lessons the government has learned about the policy.</li><li><strong>Justice.</strong> The Supreme Court will begin a trial today on whether or not the &#8220;right to be forgotten&#8221; should exist in Brazilian law. While the right to privacy constitutes protecting information that is not publicly available, the right to be forgotten involves removing information that was publicly known at a certain time and not allowing third parties to access the information. This right does not technically exist in Brazil, though it is frequently used as an argument in cases brought before lower courts. Legal scholars struggle to agree on the issue, claiming that this right could increase internet censorship and allows for the rewriting of history.

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